Before the current economic crisis erupted, a new trend for doing business called Public Private Partnership (PPP) was developing, and it has been in effect in some places around the world for some time now. A while ago a number of interesting questions regarding the trend began to surface but they generated little debate. The questions are still valid today and, given the recent developments in the world economy, the answers to them have become more urgent than ever before.
The two most important questions to ask at this time are the following: First, is the PPP an organic trend in the sense that it is a natural outgrowth of the evolution of economics? Second, will the trend survive the current crisis and co-exist with or even replace the practices spawned by the nascent age of globalization?
When we think about these matters we realize that we are facing a dilemma of sorts. Because modern commerce increasingly relies on the exchange of complex industrial products rather than rely on the barter of simple products gathered in nature, the economy is becoming ever more unpredictable. This is due to the fact that new products are constantly being developed and they have the potential to render obsolete existing ones if not upset the entire commercial setup.
Because each new invention tends to create nefarious consequences for those whose livelihood depends on the existing order, it should not be surprising to learn that the dilemma of the new -- something that is desirable in itself -- has caused people to oppose change throughout modern history. However, it must also be noted that such opposition seems to have been tamed in the sense that it is becoming less frequent, less organized and less violent.
This taming of the opposition has no doubt come about because few people would now deny that the cultures which rejected change in the past were left behind while those which embraced it have advanced. The most glaring example in this category is the story of China and Japan where the first rejected modernism and was pushed well behind its neighbor. China then embraced modernism and started to catch up with Japan.
Yes, the fear of being left behind is a motivation powerful enough to make nations and ordinary people go against their immediate narrow interest and embrace change when they would rather live without it. But while the example of Japan and China speaks eloquently to this notion, the question remains: What about the changes that occurred in the countless cultures that have come and gone since the beginning of time? Was there not something more fundamental to the human character which gave impetus to the changes that those cultures have experienced?
To respond to this question we note that what separates us from the rest of the animal kingdom is one important characteristic. We are creative, a trait that allows us to innovate and to try new things all the time. This empowers us to cause the changes that we envisage but it also brings something new to the table. The inventions we create become the things that we trade among ourselves, they expand the base of the economy and they constantly change its outlook. Thus, to have a better idea as to where we are taking the economy, we need to understand the nature of the human trait we call creativity.
Creativity may depend to some degree on one’s ability to analyze things and to separate their fine points but the word itself must be defined as the act of synthesizing a multitude of bits and putting them together in a manner that is so new and different, the resulting product is seen as a creation like nothing that existed before.
And because creativity is the making of one thing out of many, the act of creation can only be accomplished by a single individual and not a group. Therefore, innovation can only be the domain of the individual and not that of a committee. It must also be asserted that while a group may adopt a new project and develop it to its ultimate expression, only the individual can initiate an original project and give it life.
Another important point to note is that since the ultimate committee devised by man is government, this institution is the most ill suited to be an innovator. For this reason, it is a good idea to keep government out of the business of innovation and to put the private sector in charge of it because the private sector is where the individual lives, dreams, works and creates.
The historical examples to give credence to this point abound. In fact, when it comes to economics post the Industrial Revolution, innovation has been the driving force behind the great advances made by nations. For instance, America became the economic giant that it is because America is where many of the inventions were made or were embraced early on. These were the light bulb, the phonograph, the electric motor, the internal combustion engine, the various home appliances, the wireless modes of communication, the computer and many other inventions.
But most important, not one of these inventions was made by a committee or anything that resembles a government. Instead, they all came about as a result of the efforts made by the individuals who thought, experimented and worked hard -- usually alone -- to achieve the breakthroughs that made the inventions possible. The ideas of those pioneers piled up on top of each other, and when they reached a critical mass, they were utilized to give shape to the products that shifted the cultural paradigms and forever altered the way that humans do commerce and live.
This history argues in favor of nurturing private enterprise and doing away with the public sector. In fact, such calls have been made throughout the decades since at least the onset of the Industrial Revolution. Each time, however, the excesses of private enterprise -- blamed on the approach to doing business called laissez faire -- manifested themselves and argued in favor of public supervision of the economy if not the full participation in it. And this, in fact, was realized through a form of governance called Socialism. Such calls are now being made again, triggered by the excesses that led to the current near collapse of the world economy.
But Socialism has been tried in a big way and it proved to be inadequate precisely because it stifled the effort of individuals and made it impossible for innovation to take root and to flourish. In fact, Socialism led to the stagnation of economies such as those that existed in the Communist systems of Eastern Europe and elsewhere during most of the Twentieth Century.
Enter the PPP experiment where a partnership was attempted between the private sector and the public one in some places and where it was envisaged that the best of both worlds can be adopted, and the deficiencies of either avoided. As such, the PPP can be considered a hybrid that is the natural outgrowth of the evolution of economics. So far the jury is out on the success or failure of this experiment but the signs are that it may succeed and impose itself as the wave of the future, one that will sweep the age of globalization and shepherd it to its ultimate potential.
It is not that PPP was not tried in earnest; countries like Sweden and a few others have dabbled with it for some time now and they report success in some areas of governance. But it is impossible at this time to give a comprehensive assessment of the project because the economic system of the world is still fragmented. That is, we have two contradictory trends working against each other at the same time. We have diverse forms of government around the planet being affected by one unifying force called globalization. Regrettably, along with its positive aspects, globalization does the unification by creating conduits among nations that contaminate every place on Earth with the excesses of each jurisdiction.
Thus, the PPP experiment in one place has always been affected if not totally frustrated by developments in the other places. And the net effect is that it is nearly impossible to assess the merits and demerits of the experiment. But what is different this time is that the current economic crisis made it imperative for all the jurisdictions to cooperate in finding a cure to the current economic crisis, and to work for the creation of institutions that will prevent the crisis from erupting again. The result may prove to be that globalization will finally meet its match, a global response to its ill effects. It will then be possible to implement and to fully assess the effectiveness of Public Private Partnership.
Finally, because all nations are now forced to act together in search of a balance between the desire to avoid the excesses of Capitalism on one hand and the stifling nature of Socialism on the other, they will have no choice but to adopt PPP and do so in concert. Unlike the past, however, the trend may now survive a long time and perhaps at perpetuity. Thus, from an experiment that was tried with timidity, PPP may become the wave that will stand strong and become a permanent feature of human civilization. If this happens, it will be a fitting development because PPP is about balance, and balance is why the Universe exists at all. Take balance away and the Cosmos will go back to being a Singularity, a small point in existence that could never fulfill its destiny.