In the modern world of business and politics the desire to do what is right is overtaken by the necessity to do what is easy to defend.

---

The University of Cambridge has put online the complete works of Charles Darwin. Not just On The Origin of Species but also his personal papers, his views on matrimony as well as his views on evolution.

Darwin, scientific rationalist and child of the Enlightenment, set out in two opposing columns the pros and cons of marriage. A wife would provide “children, companionship, the charms of music and female chit-chat”. She would be “an object to be beloved and played with”, though he did not seem to attach great weight to this, conceding only that a wife was in this respect “better than a dog anyhow”. But Darwin also noted the disadvantages. The absence of the conversation of clever men at clubs, the prospect of “being forced to visit relatives, and to bend in every trifle”. Above all, the loss of time.

Most people feel, I suspect, that there is something not quite right about this cold-blooded evaluation. It concerns marriage in general, rather than marriage to any particular woman. Despite his commitment to rationality, Darwin seems to have thought this too. Below his assessment he scrawled: “It is intolerable to think of spending one’s whole life, like a neuter bee, working, working – only picture to yourself a nice soft wife on a sofa.” He ends: “Marry – marry – marry QED.” The following year, Darwin wed Emma Wedgwood. They had 10 children.

QED stands for quod erat demonstrandum, used by mathematicians to end a proof, which translates as “that which was to have been proved”. With that expression, Darwin gives the game away. His purpose was not to guide himself to the correct decision, but to rationalise a decision he had already made.

For a time, I ran a company that sold models to large corporations. Although we urged clients to use these models in their decision-making, we did not actually do so ourselves. When I posed the question why, I realised that our analysis served the same function for our clients as Darwin’s list of pros and cons. People did not use our models to help make decisions, but to justify decisions they had previously taken. The results might be used internally to seek approval for an investment or an acquisition, or externally to persuade investors or regulators to give support. The board, or the main shareholders, would insist on the appearance of the formal process we were hired to provide.

The modern world of business and politics is plagued by spurious rationality and bogus quantification. Almost everyone who has been responsible for a big decision in a large organisation will have had the experience of picking the best person for the job – and then sitting down to invent objective-sounding reasons for the choice. And if this process is at best distracting, firing someone involves extensive play-acting that frequently undermines the morale of everyone involved. The desire to do what is right is overtaken by the necessity to do what is easy to defend.

In the new economy bubble, analysts devised new valuation metrics. Their use faded as rapidly as the share prices of the companies they were used to assess. The purpose of the calculations was not to inform those who were uncertain whether to buy, but to give reassurance to those who had already decided to buy. That rationalisation helped inflate the bubble: the story influences the outcome.

Evidence-based policy is sought by government, but mostly the result is policy-based evidence. Only facts and arguments that support the desired policy are admitted, so the analytic basis of decision-making is eroded not enhanced. In the run-up to the Iraq war, the results were disastrous. In the Middle East, British and US governments, like banks in the credit crunch, enjoyed the most extensive information and analytic capabilities available. Yet they made elementary and catastrophic mistakes. Darwin saw through his own pretence of rationality. But bureaucracies engaged in self-justification frequently mislead themselves – more often, perhaps, than they mislead the public. That is how the organisations that place most emphasis on rationality and transparency in decision-making come to make such bad decisions in practice.




John Kay