Civilization as Risk Architecture: Fairness and fragility are the same ledger, read twice

I have signed the small version of that deal, on the wrong side of it. A contract can be written so the client keeps the schedule float and the margin while the subcontractor absorbs the currency swing, the late payment, and a warranty tail nobody quoted for. The risk did not vanish. It moved onto whoever had the least room to say no, which on more than one job was me. I once ran an outfit that looked stable only because one crew quietly ate every overrun. When that crew finally walked, the unfairness that had held the thing together and the fragility that brought it down turned out to be the same ledger, read from two sides.

The sociologist Ulrich Beck called this a risk society, a society organized around the hazards its own progress manufactures. Economists have named the moving parts one at a time. An externality is a cost pushed onto an uninvolved third party. A moral hazard is the incentive to take on more risk when someone else will carry the cost of it. Garrett Hardin's 1968 Tragedy of the Commons, in the journal Science, showed a shared resource ruined because each user pockets the gain while everyone splits the damage. Limited liability caps an investor's exposure at the value of the shares while the sole proprietor stays liable for every debt. Run the subprime crisis of 2007 to 2010 through the same reading and the public bailout that followed was the loss finding its way to the people who never booked the profit. John Rawls, in A Theory of Justice in 1971, asked how a society should share its benefits and its burdens. That is the same question as who has been arranged to absorb its shocks. Read the ledger as fairness and it is a matter of justice. Read it as fragility and it is a matter of survival. They are one arrangement.

This is a short book about the social allocation of risk in plain terms, risk-shifting and externalization across a society, moral hazard and the tragedy of the commons, who is shielded and who is loaded, distributive justice, and civilization read as a risk architecture whose fairness and whose fragility are the same ledger.

This book is written from an Indonesian operator's context, but the same arrangement of who absorbs the risk shows up in other emerging-market and small-business settings.