Something that used to be a matter of human judgement gets replaced by a formal process. Suddenly, nobody makes any deliberate decisions. Instead, a formal process is followed. In fact, the process may be executed on a computer, with no human involvement at all. There's nobody to blame for anything. There’s nobody to complain to when the process goes awry. Everybody’s ass is safely covered. In any organization, incentives to replace human judgement by process are strong. Decisions may be controversial. More often than not someone's interests are at play and any decision is going to cause at least some bitterness, resentment and pushback. Introducing a non-personal process allows the decision to be made in automated manner, without anyone being responsible, without anyone having to feel guilty for hurting other people.

The one most important contribution of Davies' book is simply giving this phenomenon, that we all know and lovehate, a name. And a name, at that, which highlights the crux of the matter, the crux that all too often goes unsaid: Formal processes may be great for improving efficiency. The decision is made once and then applied over and over again, getting the economies of scale. Formal processes may improve safety, as when a pilot goes over a check list before the take-off. Are flight controls free and correct? Are all the doors and windows locked? And so further and so on. Processes also serve as repositories of institutional memory. They carry lessons from countless past cases, often unknown to the person following the process. Problems once encountered, solutions once devised, all of that is encoded into a set of steps. But in the end, deep in the heart of any bureaucracy, the process is about responsibility and the ways to avoid it. It's not an efficiency measure, it’s an accountability management technique.

Much has been written about how markets act as information-processing machines, how they gather dispersed data from across society and use it to optimize the allocation of scarce resources. Much less is known about how the lack of accountability gives entrepreneurs the ability to take huge risks. If your company fails, the blame is yours and yours only. No one will come after you. There’s no need to play it safe. While ignoring the law of supply and demand may have been the primary cause for the failure of communist economies, the fact that the management of every company was accountable to the higher-ups and eventually to the communist party must have meant that they tried to avoid any risks at any cost, which eventually led to terrible performance in implementation of new technologies — even if they were discovered by the scientists — and business practices and to the overall economic stagnation.