While reading The Real Warren Buffet by James O’Loughlin, I encountered the concept of the “institutional imperative” as espoused by Warren Buffet. Contained in one of Buffet’s shareholders’ letter, he defined the concept as “the tendency of executives to mindlessly imitate the behaviour of their peers, no matter how foolish it may be to do so”. Months after reading that particular section, I encountered a scene that made me recall Buffet’s words.
A simple explanation of the institutional imperative would be the example of companies always looking for opportunities to grow. Business leaders “generally” seek to grow their firms through any means available as this seems as the most logical thing to do. In fact, stock prices tend to look down on companies without any seeming growth potential in the horizon. Hence, to grow, businesses would usually reinvest profits, and that’s where Buffet’s grouse lies. The wizard of Omaha argued that in following the push to grow, businesses ignore the illogicality when they could have gained more profit by investing profits elsewhere if such monies could yield greater returns than if ploughed back directly.
That’s quite some background on the institutional imperative. You might be wondering what it has to do with you or this article. I have seen that the herd mentality highlighted by Buffet also exists in several other spheres. I would call the one relating to the society as the “societal imperative”. However, I must be clear that this phrase was not coined by me. However, I might be using it in a different context. Let’s dive in.
I recently witnessed two persons, one lady and a guy, grilling a third person, male, about his marriage plans. This “grillee” seemed like someone in his late thirties. What caught my attention was the fact that although the three of them worked in the same large firm, they did not know themselves personally. What had brought them together was a training programme, and somehow, the married colleagues decided to question their younger colleague’s seeming ambivalence about getting married. I understand that some persons would be screaming “intrusion” right now, but I would plead you stay calm and see another perspective.
What would have made “strangers” feel they had to talk to someone else about his reasons for not yet getting married? They had no visible stake in his life nor had anything to benefit from him whether married or single, yet they took their time, with so much passion, to question him, trying to understand whether he had any reasons for remaining single. As I pondered on this, I remembered Buffet’s “institutional imperative” and my mind quickly brought up “societal imperative”. It was when I wanted to write this article that I realised the latter coinage already existed.
Alright. Societal imperative, you say. What’s that?
Look up at the explanation of the institutional imperative and see how that might play out in the larger society. I believe in the course of our socialisation within the community of humans, we get programmed with ideas designed to ensure the continuation of the human race. Just as a company’s board members “instinctively” feel continuous growth is the only way to ensure their firm remains in competitive existence, we, as members of the society, take actions to ensure the society continues for another generation. The best part about this is that we do this unconsciously. Those questioning colleagues had no clue they were simply acting based on a social coding.
What would happen if a substantial percentage of a society choose neither to marry nor have children? We can look at Japan, South Korea, Germany and China as examples of possible results. In the case of China, they realised the one-child policy would invert the population funnel, and so, it was scrapped. For Japan and others, the aging society has begun causing headaches for policy makers worried about the future. Someone may ask whether the society has to grow. I think the answer is “Yes” because of the way our society is structured. I see human societies as the world’s largest Ponzi scheme. Successive generations have to be larger than their predecessors to maintain or improve living standards. For example, if we look at pensions, the viability of pension schemes depends on having an increasing number of persons entering the workforce to “pay for” the pensions of those who have retired. This example is rather simplistic but gives an idea of how societies function.
The societal imperative is what makes societies willing to sacrifice most of their men if they can save the women and children. We can argue all we want about its rightness or wrongness. However, I believe it has its place, serving an important function. Having said this, being aware of it should enable us act a bit wiser when pushed subconsciously into haranguing another person. Maybe we just need to let the person be, as statistics show that one way or the other, most persons would at last bow to this imperative.
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