Q18- Negative(?) Metacapital #1: Corruption

To say that human capital consists of skills, experience or knowledge is correct but grossly incomplete. Yes, skills do contribute to effective group action. But other, and I believe even more important, things also do.

In April 1975, the most powerful nation on earth — economically, politically, technologically and militarily — was defeated by a much smaller, poorer and technologically inferior nation. I refer to the hasty and humiliating retreat by the American forces in the fall of Saigon to the northern Vietnamese army with the aid of the Vietcong southerners. How did it happen?

Leading towards 1975, many American citizens have ceased to believe in the moral rightness of waging war in Vietnam. Hundreds of thousands have been demonstrating in Washington D.C. and many U.S. cities. Maimed American soldiers were coming back home only to face a lifelong agony because their own country men and women doubt or criticize the value of their personal sacrifices. The national will behind the Vietnam War became more and more divided and eroded.

On the other hand, Vietcong guerillas remain committed to their cause — despite the devastating effects of superior American military technology: carpet bombing by B52 bombers, Agent Orange defoliants, etc. Vietcong guerillas, upon waking up in the morning, would embrace each other and say in Vietnamese “One heart, one mind, one mission.” Vietnamese are a proud people (in the 13th century, after China succumbed to the Mongols under Chinggis Khaan, the Mongols under Kublai Khan failed to occupy Vietnam despite three attempted invasions). Vietnamese national will behind the Vietnam War remained strong.

Will is the more important ingredient in human capital. I keep saying in this blog, KM is not enough, because “know-how” without “willing-to” will not result in effective group action. That is why most KM initiatives must incorporate elements of change management; we described our experiences on KM+CM in our website (click the change management block at the bottom of the CCLFI homepage).

Unwilling-to or anti-group-willing-to can frustrate effective group action.

In one of my KM workshops, a participant asked, “If people are our best assets, can people also be our worst liabilities?”

“Definitely”, I answered. A willing skillful person is a big plus, but an unwilling or counter-willing skillful person is a big NEGATIVE (I wrote an article for the next issue of KM for Development Journal where I propose the model for effective action: Know-How X Willing-To = Effective Action). It is all about intent.

Let me give a real world example.

In the 1990’s I was Chair of the National Committee of the UNDP GEF Small Grants Programme in the Philippines. Among the grants we approved was one for a micro-hydropower project for a small community. The project was a failure. The reason is: the community leader who was responsible for the project spent the grant money for his election campaign. His intent was not for the community; his intent was for his personal political gain.

Corruption is a skill that destroys group effectiveness and frustrates group value creation. It happens in small communities as well as in big nations. Corrupt national leaders amass ill-gotten wealth (personal value creation) and hide them safely away in Swiss banks — which in turn use Swiss privacy laws for their corporate value creation through secret bank accounts.

From Economics 101 we learned that there is no such thing as “negative human capital” or even “negative capital” because the factors of production — land, labor and capital — in the production function are always positive. And so we turn to the Accounting 101 framework, where an entry can be an asset (positive) or a liability (negative). In this sense, we can say that corruption — or unwillingness or anti-group willingness — is a “negative metacapital” (see previous blog post on metacapital). It is negative because it destroys group value and frustrates group value creation. Corruption is the use of knowledge that results to costs to the group.

What do you think?

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One Response to “Q18- Negative(?) Metacapital #1: Corruption”

  1. Pages tagged "philippines" Says:

    […] bookmarks tagged philippines Q18- Negative(?) Metacapital #1: Corruption saved by 4 others     Shinogu978 bookmarked on 03/08/09 | […]

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