Procedural Self-Interest And The Good Society

Whether ideas or interests motivate most human behavior is a useful debate. In the final analysis people usually agree that most human action is driven or guided by a mixture of ideas and interests. I will imagine here that discussion of the role of ideas in motivating human action is finished or postponed, and smart people generally agree that most people are usually motivated by some mix of three types of interest:

1. a person’s status interest (gaining respect, esteem, etc., which can also be the motivation of a group, organization, or even a country);

2. a person’s ideal interest (another large category which can include motivations based on ideas, ideology, or values which could include, for example, notions of fairness);

3. a person’s material interest (the typical category of motivation, whose most common subcategory is economic interest, often understood as ‘vested’ interest).

For this underutilized distinction between three types of interest, we are indebted -- as always -- to the master of social science.

Now I want to suggest a brand new 4th category of interest: procedural interest.

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The convention for patenting a new concept in social science is to define it.

So, I define “procedural interest” as the interest of individuals and groups in the procedural practicality and ease of an activity.

A few examples of routine procedures: Formal procedures exist for passport applications, enrollments in universities, registering with a medical practitioner, and voting in an election. Informal procedures exist for making and keeping friends, serving and eating food, and for celebrating and grieving.

All such procedures are instruction frameworks for achieving a goal expeditiously and in a socially acceptable manner. They are so common in life we hardly recognise them as ‘interests’. Yet without them life becomes impractical. A procedural interest is an interest in the rule structure that provides some certainty about outcomes of action.

In advanced societies many unnecessary procedural obstacles persist. However, people in developing countries are almost certainly more starkly aware that their procedural interest precedes their other interests. If it is just too difficult in procedural terms to pursue and satisfy a status, ideal, or material interest, a person might abandon the effort altogether.

In other words, satisfaction of an economic interest will depend initially on being able to satisfy a ‘procedural’ interest in the ease of pursuing the economic goal. In that sense procedural interest can be a more significant cause of human action than any of the other three interests.

Predictability, reliability, and impartiality are typical characteristics of a procedure that motivates or satisfies. Behavioral norms and known rules of action generate certainty about how things should be done in a given situation, and about the likely expectations and responses of other people who will be encountered during the action.

I dreamt up this concept of procedural interest when thinking about priority reforms for countries in transition to capitalism. The important procedural interests have to do with the formal state institutional procedural norms, which are efficacious and efficient in a variety of instrumental ways. Perfect examples are state regulations determining the ease and practicality of procedures for everyday business, which affect the livelihoods of between ⅓ and ⅔ of all people in developing countries. There they were, conveniently listed on the contents page of every World Bank Doing Business report between 2006 and 2011:

- ‘starting a business’
- ‘dealing with licenses’ or ‘permits’
- ‘employing workers’
- ‘registering property’
- ‘getting credit’
- ‘protecting investors’
- ‘paying taxes’
- ‘trading across borders’
- ‘enforcing contracts’
- ‘closing a business’

Doing Business 2012 dispensed with this contents format in favor of case studies, yet the message remains the same:

“A fundamental premise is that economic activity requires good rules that are transparent and accessible to all. Such regulations should be efficient, striking a balance between safeguarding some important aspects of the business environment and avoiding distortions that impose unreasonable costs on businesses. Where business regulation is burdensome and competition limited, success depends more on whom you know than on what you can do. But where regulations are relatively easy to comply with and accessible to all who need to use them, anyone with talent and a good idea should be able to start and grow a business in the formal sector.”

The entire world has a procedural interest in improving the ease of doing business in developing countries. One could even go so far as to say the entire world has a procedural interest in understanding the principles of how institutions operate efficiently to encourage the motivation and satisfaction of procedural interests. 

The sociologist and economist Talcott Parsons said: ‘it is a fundamental proposition of social science that no system of the play of interests can be considered stable unless these interests are pursued within an institutionalized system [for the] structuring of the interests'.

People respond to institutional reform in terms of their respective sets of status, ideal, material, and procedural interests. By breaking up ‘interest’ into these four categories it is possible to move beyond the quite primitive and limiting tendency to divide the world into irreconcilable competing interest groups. In reality, every person, every group, no matter how small or large, is an expression of very complex conflicting and compatible interests.

What I am describing as ‘procedural interest’ is an instrumental motivation of interest in the outcome of means-end processes. It has little to do with happiness or fairness.

Instrumental interest in procedural efficiency may well overlap or coincide with common law natural-justice notions of procedural fairness. But it is important to recognize why fairness is not the same thing as efficiency. A procedural interest is about achieving what you need to achieve with a high degree of utility and minimal cost. It is not about feelings of pleasure or fulfilling values of social justice with respect to the procedure.

Of course it is very unfair that bias is often embedded in the legal system. Of course it is also unfair that in many Latin American, Asian, and African countries you employ some kind of ‘broker’ to perform bureaucratic procedures, to be your intermediary with the customs agency, or negotiate bribes needed to obtain a permit to operate a business.

It is unfair that rich people can afford routinely to do this, whereas poor people cannot.

From a utilitarian perspective of procedural interest the question of fairness is secondary. These processes are inefficient because they waste time, increase transaction costs, and create unnecessary complexity. They are not effective means-to-ends. They are counterproductive. The inefficiency of process produces unfair outcomes.

A common gut-reaction to unfairness is a demand for more regulation. More regulation means complexity. Yet complex regulation may be less effective in promoting good conduct than no regulation at all. In an underdeveloped or overstretched institutional setting, complex regulations multiply the opportunities for collusion and create chances for evasion.

By designing regulation that ensures effectiveness of simple procedures, the emphasis shifts toward better impersonal regulation at the margin with automatic enforcement, and away from detailed regulation of conduct that requires intrusion and discretion.

Research in China finds that having more money did not make people ‘happier’. The daily number of popular protests in China is growing exponentially at the same time as exponential growth in wealth. It turns out that unrest is not mainly about perceived unfairness of wealth inequalities. What makes people most angry is “procedural injustices, abuses of power” and the corruption that distorts everyday processes. Life is complicated when it does not have to be, and there are material, ideal, or status interests lurking behind the procedural obstacles.

To repeat, instrumental procedural interest has to do with a practical interest in the predictability, reliability, and impartiality of processes that everybody faces as everyday means-to-ends. Procedural interest is a general utility principle which might, but does not necessarily, include pleasure.

Swiss economist Bruno Frey takes a different view. In Happiness: A Revolution In Economics, Frey defines ‘procedural utility’ as the ‘non-instrumental pleasures and displeasures of processes’. He discusses gains in ‘well being’ from ‘institutionalized processes that contribute to a positive sense of self and address innate needs for autonomy, relatedness, and competence’, fulfilling emotional needs, sensations of belonging to a community, like love or subjective feelings of ‘self-worth’.

In particular, Frey places high premium on ‘subjective well being’ that comes from direct democracy and participation or perceptions that an organizational or legal process is ‘fair’.

I say Frey’s non-instrumental utility belongs in the category of ‘ideal interest’ alongside other ideologies, values or spiritual longings, not in a general utility category of procedural interest.

In my view the pleasure principle is only icing on the cake, a personal sensation gained in a non-essential process. It does not encompass the primary procedural motivation in normal conditions of adversity and scarcity when your priority is to make life easier in order to get essential things done. Procedural self-interest fits with objective universal public interest that benefits everybody except those with a vested interest in exclusion (because, for example, they possess a political or economic monopoly) that limits opportunities for others.

If owners of businesses in developing countries could tick all the ease-of-doing-business boxes they would be more likely to accumulate wealth that provides them greater choice in deciding their own optimum pleasure utility.

The present crises of European welfare states is throwing the average person more towards the practical utility end of the spectrum in conditions of scarcity and adversity. Happiness research, perhaps itself a product of the over-expanded welfare state, now seems a luxury.

Final topical example: Northern eurozone countries see a procedural interest in fiscal union that lays bare and makes calculable the processes of distributing costs, benefits, duties, and responsibilities of a common market with monetary union. At this moment of crisis southern eurozone countries might conclude their interest is on balance for opaque uncertain arrangements which allow them influence over renegotiation and discretion at each pressured stage of developmental brinkmanship. I suspect European citizens on the whole recognize their individual and group interests lie with a procedurally predictable Europe, clear well-understood union with limited simple and transparent regulations, which will make it easier for them to get on with their lives in a larger rule-leveled open market in the absence of redundant hinderance and complexity.

The definition of “procedural interest” as the motive for seeking practical procedures that ease the performance of recurrent activity could prove to be useful in the toolbox of social science alongside the existing tools for understanding material, status, and ideal motives. 

http://prosyn.org/Nf6lILe;
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