Essence of DSK: Do Leaders Matter?

Following the DSK imbroglio, one related story is that during a period of international financial crises the IMF (a critical institution) is leaderless. Of course, they have a deep bench of technocrats to make the trains run on time. On the other hand the present multiple financial meltdowns may be so severe and fundamental that nothing the IMF does would really make a difference – there are grand historical forces at work.

I mention this because a fundamental tenet of bureaucratic politics is that individuals and their preferences matter. If there is a single aspect to that perspective rooted in data rather then anecdote it is the question of “who is in the room.” Does it matter that the IMF doesn’t have a person of top rank to sit in on meetings. There is, of course, a number two but will DSK’s top office effectively respond to the number two’s leadership style?

This could be boiled down to the perspectives offered in the poli-sci classic Essence of Decision.

Model 1 (Rational Actor) vs. Model 2 (Organizational Behavior): Does the IMF matter or are events being shaped by deeper forces?

Model 2 (Organizational Behavior) vs. Model 3 (Governmental Politics): Will the IMF pretty much do its thing regardless of its leadership, or does DSK’s personal influence matter?

Really, my whole point here is best summed up by a far wiser Frenchman then DSK. Alexis de Tocqueville wrote:

I have come across men of letters who have written history without taking part in public affairs, and politicians who have concerned themselves with producing events without thinking about them. I have observed that the first are always inclined to find general causes whereas the second, living in the midst of disconnected daily facts, are prone to imagine that everything is attributable to particular incidents, and that the wires they pull are the same as those that move the world. It is to be presumed that both are equally deceived.

Sidenote, DSK’s behavior is one good argument for the VP – someone needs to be available to step into the breach when less appealing aspects of human nature cause top leaders to be unable to attend to their duties.

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3 Responses

  1. "Will the IMF pretty much do its thing regardless of its leadership, or does DSK’s personal influence matter?"

    It isn't his personal leadership. It's the fact that the IMF traditionally makes decisions top-down. (An insider once characterized it to me as "Stalinist.") So, with no leader—Lipsky is too much of a lame duck—the organization will be unable to make difficult decisions or major changes in direction.

    Not a problem if, for example, you are the National Weather Service during a U.S. presidential transition. But with the European financial situation blowing up again, and the Europeans needing an adult in the room to tell them what do to…well, the IMF is not going to go out of its way to take that role right now.

    It's not DSK personally, its the absence of somebody—you, me, or Paul Krugman—that matters.

  2. Great point! That would be a model 2.5 (between the organization and bureaucratic models). The institution needs a legitimate leader to do its thing.

    Two questions follow:

    But what if that leader is really inept (say me) and either made bad decisions or just couldn't make decisions?

    Second, that DSK was a known player among political leaders around the world would seem to be helpful. What if the governors quickly approved Lipsky or some other unknown technocrat – would they really be as capable?

    Thanks again for the thoughtful comment.

  3. A technocrat might actually be better. Having somebody with European political ambitions has probably pushed the IMF in directions it should not have gone.

    Imagine if Ben Bernanke was a potential U.S. Presidential candidate.

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