Harnesses and muzzles: greed as engine and threat in the standards process

■ The central lesson of economics is that if we design our institutions right, the pursuit of self-interest leads to good results, not to bad ones. As Adam Smith wrote, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Modern economists have built on Smith’s insight that, when harnessed by well-functioning market institutions, selfishness and greed can lead “as if by an invisible hand” to good outcomes. But as you learned in kindergarten, it’s not always that way: selfishness and greed can also lead to bad results, which is what you’d probably expect. tandards institutions are no exception. They can harness greed, and make it (as Smith would hope) a force for good, or (as your kindergarten teacher would fear) a force for evil. How can standards institutions harness greed and yet muzzle its bad side? Of course, standards participants are not driven purely by greed, as an economist caricature might assume. But the classic answer to the question “What do economists economize?” is “They economize love.” Altruism, public-spiritedness, and even love are out there, but economists suspect it’s better not to rely too heavily on them if instead we can harness the more reliable and enduring force of greed. It’s some kind of greed, in the end, that sends most participants to standards meetings. People attend because they, or their employers, hope to get something out of it. In this sense greed drives the process. As long as standards organizations have to rely on volunteer participation, it’s important that the process provides incentives for people to come and put in the effort. At the same time, strong rewards, if badly structured, can themselves stall the process.