Leadership Is an Institution

Written by Professor SHENG Hong, Director of Unirule Institute of Economics

Translated by Mr. MA Junjie, Project Researcher of Unirule Institute of Economics

This essay was first published by FT Chinese on September 26th, 2017, the link is: http://www.ftchinese.com/story/001074456

Every state reveres heroes. If there isn’t one, a hero might as well be created. People like to give attributes such as grandeur, superb wisdom, and magnificent courage and strength to heroes. This fulfills our imagination for heroes and fit our tastes. Therefore, history is full of great leaders who created history itself. However, it is not true. The King Wu of Zhou who defeated the King Zhou of Shang was not as glorious as the official records registered; Zhuge Kongming did not rely on the east wind, and the Chibi Battle was in fact a masterpiece orchestrated by ZHOU Yu. Stories of heroes are better dismissed without any serious belief, otherwise, there might be issues. If we do get mesmerized by an omnipotent hero who has superb power and is always right in prophecy and action, and if a country or state’s decisions are purely dependent on the power of such a heroic leader, then there will be disasters. 

As a matter of fact, we are aware that everyone is common regular individuals. He or she is no, if any, brighter than anyone else. When such a common individual is placed as the leader of a group, the complexity of affairs is beyond the complexity of any individual life. In this case, such an individual is not possible bright and right about everything at any given time. If the members of the group is massive, to the extent of a country, then the complexity of affairs related may well be beyond the processing power of any human mind. In real life scenarios, human beings have learned from a very early stage to assign a structure made of multiple human beings instead of one to run the country. We can also say, human beings make use of institutions for decision making in order to make the best choices.

Only on the other hand, human beings take individuals as singular units when it comes to thinking and judging as individuals are also the unit for information output. A group, if it is to perform in the public sphere as an individual instead of having orders and decrees from multiple organizations, needs to assign a leader to represent itself. It would look like the leader makes all the decisions. However, this seemingly image seems to have convinced people that decisions have been made all by but one person, a reflection of this person’s will. If the policy decision is right or it brings good effect, then the leader gets all the credit; of course, on the other hand, when things go wrong, he should take all the blame. This is a fallacy, a seemingly right observation. It is merely another flaw of human mentality. 

In reality, right decisions come from a certain institution. Speaking of institution, it is a structure of multi-person interaction. Here I suppose that everyone has limits. Limited rationality, limited attention, limited capabilities, and limited information. I don’t deny that there are some people who are brighter, more focused, more capable, and more informed. That being said, the smartest man is no better than the institution that’s created by the interaction between multiple people from a philosophical point of view. In addition, there are always times when a person is sick, distracted, or aged, etc.. This multi-person interactive mechanism is a remedy for the limits of a person’s rationality. The specific form of such an institution is the communication between people, and the competition between opinions. The purpose is a sole conclusion, judgement, or opinions that everyone agrees upon in order to form a legislative decision, an executive one, or an administrative one. 

One example is the institution of a jury in a common law country. A jury is normally comprised of 12 people who sit in for the debate of a court between the plaintiffs and the defendants. After internal discussion, they will give a judgement of conviction or discharge. The members of a jury come from different walks of life with different identities, positions, vocations, of different races, sex, and with different levels of education. What they have is a very limited scope of knowledge. In their discussion, they communicate their information and opinions, and debate when needed. But they form their opinions after thinking about and digestion the different opinions on their own. After this process, they reach a conclusion. This conclusion is the result of different partial knowledge making wholesome. It is also a result more comprehensive and more thought through than any other decision made by any single individual. This is why the institution of jury works. 

The difference between individuals depends on, except knowledge, where people stand and their interest. When it comes to personal interest, people’s knowledge get distorted. He or she may exaggerate the factor that’ll benefit himself or herself, while understating the knowledge that’ll potentially harm himself or herself. This may bring about wrong decisions. The solution to this dilemma is communication, competition, and even conflict between people with different interests. One’s exaggerated knowledge gets set off by the other’s exaggerated knowledge, people come to their senses with fine-tuned knowledge, a natural equilibrium. This mechanism is best manifested by the market. We say market is an institution where the sellers who exaggerate their cost and the buyers who exaggerate the price bargain and reach a price they both agree upon. Similar cases can be found in a court debate as well, or the debate on a certain act in the legislative bodies where exaggeration is minimized thanks to the competition. 

There is a common misunderstanding that under monarchy there’s no decision-making mechanism that allows multi-person interaction. In fact, as Hume pointed out, “without the support of existed principle and opinions, the power of the monarchs I weak.” Back in the Zhou Dynasty, when Duke Shao advised King Li of Zhou, he said, “ It will cause more harm to stop the free flow of people's thoughts than to stop that of the rivers.”(防民之口,甚于防川) Then he added that for kings to govern, policy advices are collected from the dukes and scholars, down to the common citizens in order to scrutinize and decide wisely. That means the king need to collect different opinions before he considers and forms his own decision. This is exactly the multi-person interactive decision-making structure. Strictly speaking, it is also a consultative and reference mechanism. 

After Han Dynasty, till the Tang and Song Dynasties, this decision-making mechanism was further enhanced. The different opinions facilitate not only a competition of knowledge but also a veto/anti-veto mechanism. For example, an act can be proposed by an official, and the emperor issues his decrees to the Zhongshusheng Department. But the Zhongshusheng Department has the power to withhold the decree, which in fact is a practice of veto power. It can also modify the decree, or even return the decree to the emperor. Even when the decree has been passed by the Zhongshusheng Department, a Menxiasheng Review is due process before it get passed to the premier to sign and finally get passed to the Shangshusheng Deparment to execute. Therefore, in ancient China, there is a multi-person decision-making mechanism in play. 

In modern times, a certain someone thought he was superbly smart and his decisions guaranteed victory of an army. However, when the central committee of the CPC summarized the lessons of the Great Famine of 1958-1961 and the Cultural Revolution, the Mao Zedong Thoughts were not created by himself alone, but the “fruit of the group wisdom of the CPC.” It is for the purpose of enshrine Mao Zedong’s personal cult that he took all the credit. For example, the “ the anti-Japanese national united front program” was first proposed by WANG Ming, and Mao Zedong stole the term and took the credit. The policy of “reducing rent and interest” was first proposed and practiced by ZHANG Guotao in Northern Sichuan, and it was later practiced in Northern Shaanxi revolution base. 

However, this practice of attributing the group wisdom to one single individual has brought about tremendous negative effect later. Not only did millions of Chinese people thought the success of the CPC was MAO Zedong’s achievement, but there emerged the personal cult within the party. Some within the party leadership began flattering MAO Zedong, which convinced him of his power to suppress criticism, refuse to mend his wrongdoings, and become more despotic. LIN Biao was a veteran of the CPC. He used to harbor different opinions but he chose to cater to MAO in order to survive. He said that it was because of MAO’s right instruction that the national affairs were handled well, and without MAO’s governance, things would go wrong. He further claimed that MAO’s “words are all truth, one word of Chairman MAO is worth ten thousand words.” It is because one individual believes he is brighter than any other man so that he does not have to listen to different opinions that the decision-making mechanism was aborted, which led to the famine and the Cultural Revolution. For MAO himself, the tragedy took the biggest toll. 

For every society, there is a mainstream culture where the members of the society share “overlapping consensus”. However, in our society this pursuit of overlapping consensus often gets equated to “unified thought.” They are two different things. From the perspective of the one single leader, “unified thought” means all thoughts need to be unified to this one single thought. From what we discussed above, this means the different identities, backgrounds, and opinions are erased and ignored. The partial knowledge substitutes the wholesome institutional knowledge, which is apparently an unsatisfying result. The partial knowledge from different people will remedy the flaws of one individual’s partial knowledge. Therefore, in order to get the biggest overlapping cultural or mentality consensus, one way is to allow every member freely express themselves. In the beginning, people may fall into quarrels and debate, but after a while, the gap between people will narrow down and a consensus will emerge. 

Is it true, then, that there is only institutions but no heroes? Not necessarily. If only we know the leadership itself is a kind of institution. What should an ambitious leader do? Leaving aside the aspiration of global and national peace, or a eternal hero that’s celebrated by generations, what a leader should do? First and foremost, he should maintain such a good institution. If you think about it, individuals are not smarter than institutions, and we should let institutions work their magic. The decisions made this way is better than those by individuals. As a leader, he takes the credit for the good decisions made by the institution., Perhaps the true meaning of a hero is to defend the good institution for decision-making.

A hero should first defeat the thief in his heart. An institution like this constantly falls victim to human flaws, that is exaggerated individual capabilities. This flaw is further utilized by another flaw, that is people tend to enjoy flattery. There will always be people who flatter their leaders for the wisdom, vision, and heroic qualities. The leaders are so bright and right, they say, that they need not others’ advice. If there’s any criticism, they say, it must have been the stupidity of the criticizers to understand the leaders. To avoid falling into the trap of these petty flatterers, a true leader needs to rely on his judgement and integrity. He needs to recognize how small and limited he is in the vast universe. He would also require help from others. In ancient China, “avoid petty flatterers and befriend true gentlemen” is a quality a good emperor must have. There are various criteria for petty flatterers and true gentlemen, but one simple standard is consistent, that is petter flatterers flatter their leaders, and gentlemen criticize their leaders. 

Self-discipline is simply not enough. There is “hard” institution, too. The aforementioned decision-making mechanism, the institution of Taijian(台谏), parliament, the court debate, and the constitutional review all function when the self-discipline of the leader fails. Even a bright and wise leader cannot control himself well all the time, and he would understand the long-term good of institutions. The Emperor Taizong of Tang Dynasty had ZHANG Yungu, his aide, executed in his fury, but regretted greatly afterwards. He, therefore, modified the process for approval of capital penalty from the trice review to five-time review. He thought it took only one day for the previous trice review for capital penalty, but it would take another day for the five-time review, therefore, a sober reconsideration is made possible. However, the Emperor’s decisions was not only intended for himself, but also for his heirs. He developed it into an institution that can be applied upon later emperors who had no experience running a country. 

Many people think George Washington’s meritorious deeds are his victory in the war times, however, his real achievement lies in his voluntary decision to put the army under the discretion of the congress. In 1783, some young army officers wanted to start a mutiny because of delay of provisions, and they were stopped by Washington. The National Museum of American History introduced this act as follows, “(it) established a time endurable American principle: army is put under charge of the elected administration.” The American Constitution envisaged a government that’s under checks and balances in words, but this textual form has to be consolidated by leaders’ action and defense. In this sense, the institution Washington defended has led to prosperity of the society, and made him a revered hero. 

To uphold institutions makes leaders sensitive to the actions that jeopardize institutions. A common form of such jeopardy makes use of the weakness of a leader, such as flattery, denunciation of the effectiveness and function of institutions. For example, Emperor Taizu of Song Dynasty not only issued secret decree “not to kill those who submit letters to discuss issues”, but also created a mature institution of Taijian(台谏) which stipulated that royal censors(御史) should not request instructions from the Premier or the emperor even when they were assigned to report the crimes of an official by them. This way, flattery and cronyism was avoided. A censor called SUN Hue thought Emperor Shenzong of Song Dynasty was upset with a certain official, and to please the emperor, he reported some made-believe crime charges agains the official. In the end, SUN Jue was the one who got fired because he was only doing this for the purpose of making the emperor happy. This handling of SUN may look much too strict, but it also showcased how sensitive the emperor was when it comes to defending the institution.  

There are perhaps no one more thoughtful of human weakness than the Founding Fathers of the US. They pointed out in the Federalist Papers that “But the great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department the necessary constitutional means and personal motives to resist encroachments of the others. … It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. ” It is courageous to state that “government itself… the greatest of all reflections on human nature”. It is because of such recognition of human nature and weakness that US has great leaders such as Washington, Jefferson, Lincoln, Wilson, and Roosevelt. 

In China’s case, after DENG Xiaoping was repositioned to leadership in 1978, he set off restore the immature institutions shattered by MAO Zedong’s mistakes, including the decision-making mechanism. Even though he had the upper hand in drafting the agenda, he did not monopolies political power, but he made decisions through the official due process and non-official consultative process within the party and the government. At that time, CHEN Yun was also an authoritative figure within the party who did not share many of DENG’s opinions. DENG’s reform proposals were, as a result, compromises after integrating CHEN’s opinions. For instance, when DENG wanted to imply socialist merchandise economy, CHEN supported a “bird-cage economy”, that is a loosened planning economy. Even though DENG represented the direction of the reform, CHEN represented the pace of the reform. It is worth noting that such a decision-making mechanism was a intended one. It is said that CHEN was the first to support DENG as the leader of the CPC, but when differences happened, DENG sent people to report to CHEN for his opinion. 

Some people believe it will appear weak when a leader integrates the opinions of his opponents in his decisions. In doing so, a leader a not ambitious or assertive enough. Quite on the contrary, when your opponents’ opinions are integrated in the decisions, you manage to convert the objection of your opponents into support of your decisions. The decision-makers authority is further enhanced in doing so. If not, a leader may appear strong by refusing to lend listening ear, but in essence he is weak and he’ll face more objection and gain more enemies. Even worse, his decisions made get hindered in execution. The leadership gets weakened. True leadership is about getting the most support of the society, instead of being assertive and demanding. This is the discrepancy between words and reality. 

In certain times and circumstances, a leader’s snappy judgement is needed, such as in the emergency of war, or the unrest of the people. But remember, this is special institutional arrangement that has integrated the wisdom of multiple parties in the basic institutional background, which guaranteed its legitimacy. Such assertion is also made ban integrating the wisdom of the existing institutions, such as the judge’s judgement was built upon the jury’s decision, or the commander’s decisions was built upon the information collected by his aides. Most importantly, a leader should not be distracted or misled by these special occasions and believe he can replace institutions. In fact, a person should better rely on others’ opinion for assistance to make a right decision. There is no harm in that. 

After all, the meaning of “leadership is an institution” has two folds, one is that it is important to obtain more opinions from more members of a society in order to get an objective picture of an issue, and the other is that it is better to have all shareholders involved in decision-making. The first was reflected in Preface to Mao Poetry which wrote, “Ya(雅, or elegance) is the description of things and customs(风) in the universe. Ya is just, and it holds the secret of the rise and fall of an administration.” Here the customs referred to the speech or public discourse. When talking about public affairs, only by collecting difference opinions can one make a just and fair decision, or achieve Ya(雅). The second is the essence of democracy and rule of law. Democracy is best demonstrated in the direct voting of all shareholders, and true rule of law is best manifested in the execution of social orders that’s generated from the people. 

One last thing, it is understandable that all leaders want to make history. But leaders have to understand leadership is an institution instead an individual. If a leader uses his power to coerce the members of the society to execute his will, he is jeopardizing the institution, therefore, he lacks leadership. If a leader uses PR props to magnify his reputation in history, he is bound to fail. Good leaders don’t rely on publicity, and publicity is only phony floss of a bad leader. Those who believe publicity or propaganda works rarely rely on good institutions to get things done. They tend to neglect institutions and track records of achievements, which led to worse governance. In the long run, a good leader cannot possibly be made this way. Therefore, only by relying on institution, that’s what leadership really is, and by defending it, can the society benefit and the leaders make history.