A Theory of Institutional Decay via Parasitism

I'm sure I'm not the first person to make this observation, but I have not seen this published anywhere else.

We know that our institutions are failing. We swim in bullshit, from our work to our politics. The problem is not just that bullshit exists. The problem is that the bullshit seems to be all-consuming and seems to not leave room for much else. It is drowning out competence. We can no longer trust most institutions from delivering on their most basic promises. It remains an open question whether this has always been the case but remained unnoticed or if it's a new phenomenon. Regardless, it seems that awareness of it is ubiquitous today. What caused it?

Here's one theory I have on this: the rise of professional parasites.

Since industrialization, we started seeing concentration of wealth and power that were previously impossible. Thanks to technology, which removes friction in all domains it touches, governments and companies could get bigger than ever, and with that, they accrue more power and capital than ever before.

Any excess in power or capital (they're really interchangeable) attracts parasites. Parasites suck out as much excess power and capital as they can. This allows them to get wealthy and powerful in their own right, but since the total capital accrued is very large, the parasites can remain unnoticed.

Let's look at how this works in the context of corporations. I've observed this firsthand, and I see no reason to imagine the incentives are much different in the governmental context.

Large corporations typically enjoy some sort of moat. That is to say, their business operations are to a great degree shielded from competition. One that I worked at previously generated quarterly profits of approx. $3B, and it was effectively impossible for its business to be disrupted by any startup. These corporations are filled with well-paid middle managers, but the vast majority do very little actual work. So why are they there?

There are a lot of reasons that David Graeber expertly detailed in his wonderful book Bullshit Jobs. But the one that applies to most parasites that I'm talking about is Flunkies. The corporate environment is a feudal landscape with many nested hierarchies. Each individual expropriates (steals) money that belongs to the shareholders of the corporation and uses it to build his or her personal fiefdom. This fiefdom is used to secure and propel his or her career. Among many false metrics that these middle managers often wear as a source of pride is "number of people managed". In other words, if you do something as inefficiently as possible without being too obvious about it, you win. So middle managers hire flunkies to make themselves look and feel important. This goes beyond just optics though. He who manages a larger team gets a greater budget. I'm not joking when I say it's a feudal system.

"But Hirad, corporations are private, for-profit entities. They care about money. If what you're saying is true, the owners will simply fire the parasites and save what they were paying them."

Oh, you naive child.

The reality of large organizations diverges drastically from this theoretical image. I will go as far to say that – with the rarest of exceptions – there exists no large organization whose actual aim is its stated aim. Why? As I said above, large institutions always enjoy some measure of protection. In the case of large corporations, this can be scale economies or network effects that shield the business from new entrants. In the case of government organizations, of course, everything is a monopoly by fiat. In this protected environment, the performance of the "core" function of the org is necessary only to the extent that it maintains the protection. The head of a government organization only needs to convince some non-expert (and often ill-informed and uninterested) elected officials that his organization is performing a stellar job. This can be done very effectively through the one skill that parasitic white collar workers possess in spades – Powerpoint presentations. Numbers will get fudged, metrics cherrypicked, and narratives weaved until more funding is secured.

A similar dynamic is at play in large corporations. The company's protected position continues to spit out cash. This cash will go out to the parasites proportional to their success in "selling" the need for their department to get said cash. Is it the CEO's job to save this money that is unnecessarily spent? Sorta. But for one thing, most CEOs have no idea what's actually happening in the company, and they certainly can't tell to what extent their org has been saturated by parasites. It'll be hard for them to get rid of the parasites without resorting to some kinda blunt instrument. Additionally, most CEOs have risen through the ranks of the same feudal system that they would ostensibly have to kill. In fact, there's a theory that the higher up the ranks you go in a large organization, the less competent people get. The reason for this is that, those who want to do something meaningful with their lives tend to exit the corporate world. Those who remain are those who are incapable or unwilling to do anything meaningful. As such, there is a selection effect against competence as one looks higher on the corporate ladder.

I understand that many find this view implausible. I did too before I saw it for myself. You cannot overestimate the extent to which our large organizations are full of bullshit. If you work in a small company and have ever hired someone who spent a career in large corporations, you will have noticed this (and that you're bad at hiring). For the most part, these former flunkies are incapable of performing any task, other than building absolutely dazzling Powerpoint presentations. The world of large organizations goes around with narrative spinning and very little substance.

So these parasitic, middle manager feudal lords exist. What does this tell us about the institutional decay we're experiencing now?

I think this theory explains the rise and fall of all great social institutions. From today's corporations to the great empires of old (and to the great empire of today).

Great organizations are built by great founders. When I say "founders" I don't just mean the individuals with that particular title. I mean all the people who contribute to building something when the gains from it are uncertain. These are the people who take risks to build something and push humanity forward.

As time goes on and the organization is successful, it accrues power and capital. This accrued power and capital not only attracts parasites, it encourages parasitic behaviour. (If you saw a pile of cash sitting somewhere and nobody was looking at it, would you be strong enough to just walk away?). To some extent organizations can absorb parasitism and be fine. It may not even be optimal to try to stamp it out. But overtime, as the founding cadre retires/dies off, parasites take over greater and greater share of the workforce. These are people who a) have no idea why anything is built the way it is; and b) have no incentive to risk changing it. Their sole purpose becomes maintenance of status quo.

Once an organization becomes a mega-org, it's very difficult to displace. Usually these institutions maintain their position long after they've been hollowed out by the parasites, until they're destroyed by some catalyst, either a natural event or an external actor. When they fail, they fail all at once. A metaphor I love for illustrating this effect is sawing off a leg of a chair that you're sitting on. If you do this, the chair does not gradually approach the ground. It stays up until it doesn't and then it falls all at once.

Examples of natural events that lead to these downfalls are either natural disasters or more gradual changes in the environment that threaten the system by which the organization draws its profits. There are countless examples of companies whose core business was threatened by a new technology or a new business model and who completely failed to react even given ample time to do so. That's because parasites don't take risks and don't build for the future. They extract what they can today and when the host dies, they move on to another host. This is in contrast to founder-led companies who are often willing to take risks on new projects that can destroy their existing revenue streams (the classic example being of Apple launching the iPhone which ended up killing iPod, Apple's primary revenue driver for years).

In case of government organizations that have been hollowed out though, they have another ace up their sleeve. In their quest to maintain status quo, they can and will resort to force. We saw glimpses of this during the pandemic. In fact, nothing else could've created the now-widespread understanding that our institutions are failing as well as the flailing we observed between 2020-2022.

This model of institutional decay has been captured in several memes. It's the cycle of strong men creating good times, good times creating weak men, and weak men creating bad times. But it's important to know who these weak men are. Parasites are not evenly distributed. They're drawn predominantly to fields that are disconnected from "the real world kicking back". A parasite, for example, would not gravitate toward engineering – a bridge needs to truly stand up. The laws of physics will determine that, which means the engineer must truly master them to build a functioning bridge.

Parasites are drawn instead to fields where they can feign importance and expertise to justify taking a portion of the fruits of labour that has already been expended by others. That makes white collar work and electoral politics the perfect breeding grounds for them.

So what should we learn from this theory?

The first important insight is that without excess, parasitism is not possible. Parasites require a honey pot so big that their extractions can go unnoticed for a long time. A company that nets $12B in profits every year might easily be able to absorb one, two, or even five hundred million dollars in parasitic salaries. If the average mid-level manager parasite is making $300k per year, that's hundreds or even thousands of parasitic employees that can go unnoticed. Small organizations are more resilient to parasitism, although, because they're small, they're also less resilient to other threats.

The second important insight is that we must view organizations with suspicion as to their level of competence in proportion to their age and size. The bigger and older an organization is, the more likely it is to have been infiltrated by parasites at its most important decision-making levels. This is because much of management comes down to political skill, which is a parasite's only true skill. Additionally, since parasites don't actually do anything productive, they have more time and resources to devote to political maneuvering. This virtually guarantees their success in the political arena. It also means that the most important decisions of a large organization are not in fact made by experts but by those who use expert credibility for their own political gain.

Finally, we might be forced to accept that such parasitism is inevitable, and instead of trying to prevent it, we may be better off ensuring that the failure scenarios are not too catastrophic. It may even be that the failure scenario that parasitism brings about is a net positive. Much like death creates opportunity for human progress, organizational decay could serve the same purpose.