Small is beautiful, but also dangerous. That is the central insight in Darius Ornston’s 2018 book. Even good governance can go bad. Consensus makes it easier for a society to work together in facing the challenges presented by world markets. Backed by powerful social groups, political leaders can fend off adversity, compensate losers, agree on how to organize or reorganize machines and labor, and invest in the physical and human capital necessary for future prosperity. This insight will be obvious to anyone familiar with Peter Katzenstein’s classic works. What Ornston adds to Katzenstein’s argument is a cautionary note. The same consensus Katzenstein celebrated in his analysis of small states and world markets also makes it easier for political leaders to misallocate scarce resources and delude themselves and their followers into feeling safe when they are not. Finland’s embrace of Nokia and Iceland’s addiction to banking are good illustrations. Unfortunately, in both cases, the social requirement for conformism can drown out even the most constructive criticism or warning. Success and failure arise from the same dense networks that facilitate deliberation and reinforce trust.

Continue reading →