Adam Smith Revisited and the Emergent Disruption of Democracy in America
IK/CMH: In our years of exploring disruptive innovation with Clay Christensen, we often found ourselves applying his insights to unexpected domains. Today, we’re seeing a pattern that would have fascinated Clay: what we’re calling the “Tragedy of the Elite”—a disruptive twist on Garrett Hardin’s classic “tragedy of the commons.”
IK: As a rabbi, I’ve long observed how religious institutions can become so focused on serving their most committed members that they create barriers for others. We’re seeing something similar in American politics, but with a crucial difference: while Hardin’s tragedy stemmed from unintentional collective behavior, our political elites are making conscious choices that preserve their power while eroding our democratic commons.
CMH: Think about it through Clay’s lens of disruption theory. In business, when established companies over-serve their best customers, they create opportunities for disruptive innovators. But in our political system, the elites have created a self-reinforcing cycle that actively prevents disruption. They’re not just over-serving; they’re deliberately building barriers to maintain their position.
The Trust Deficit
IK: In Judaism, we have a concept called “machloket l’shem shamayim”—disagreement for the sake of heaven. It’s the idea that authentic debate, even strong disagreement, can be holy when it serves a higher purpose. But what we’re seeing in American politics is the opposite: disagreement for the sake of power, with trust as the casualty.
CMH: Clay always emphasized how disruptive innovation often starts by serving “non-consumers”—people overlooked by established systems. In our political landscape, we’ve created millions of “non-consumers” of democracy: citizens who feel disconnected from and distrustful of the very institutions meant to serve them.
The Polarization Machine
IK/CMH: During our work on identity-centric innovation, Clay helped us understand how people’s core identities can either accelerate or resist change. What we’re seeing in American politics is the deliberate exploitation of identity for political gain. It’s like a reverse disruption—instead of creating new access points for participation, our political elites are building walls between communities.
CMH: Remember how Clay worried about terrorism, parenting, and religion as areas needing disruption? He saw how established systems could become so rigid that they created the conditions for their own upheaval. Our political system may be heading toward a similar crisis point.
The Way Forward
IK: In our work on disruptive spiritual innovation, we learned that creating new access points to meaning doesn’t require destroying traditional structures. Similarly, reclaiming our political commons doesn’t mean dismantling our institutions—it means creating new ways for citizens to meaningfully participate in governance.
CMH: What we need is what Clay would have called a “good enough” solution—new approaches to political participation that might not be perfect but are accessible enough to engage those currently left out of the system. Think of it as creating political on-ramps for the disengaged and disillusioned.
A Call for Political Innovation
IK/CMH: The solution to the Tragedy of the Elite won’t come from within the current system. Just as Clay showed how disruptive innovation often comes from unexpected places, the renewal of American democracy might emerge from where we least expect it—from new forms of civic engagement, from technology that enhances rather than divides, from communities finding ways to bridge rather than deepen divides.
The Disruption We Need
CMH: Here’s what Clay taught us about disruption that’s crucial to understanding our current political crisis: true disruption doesn’t just replace existing systems—it transforms them by creating new patterns of access and participation. When we developed the Disruptor Awards, we specifically looked for innovations that weren’t just clever technologies but fundamentally changed how people engaged with essential services and ideas.
IK: And this is where our political system desperately needs innovation. Just as we found in our work with spiritual communities, the solution isn’t to abandon traditional structures entirely but to create new, more accessible ways for people to participate meaningfully.
The Identity Factor
IK/CMH: In our Off White Papers with Clay, we introduced the concept of identity-centric innovation—the idea that when people’s core identities are at stake, innovation behaves differently than in purely utilitarian contexts. This insight is crucial for understanding our political crisis. The elites aren’t just protecting their economic interests; they’re defending their identities as power brokers and influencers.
CMH: It’s like what we saw in the financial sector before the 2008 crisis—systems that become so focused on serving their own interests that they lose sight of their fundamental purpose. Clay would have recognized this as a classic case of an industry disrupting itself through over-serving.
Adam Smith Revisited and the Emergent Disruption of Democracy in America
Tragedy of the Elite: Overgrazing in the Pastures of the American Political commons
In 1968, Garrett Hardin introduced the metaphor of “tragedy of the commons.” His theory explains the dynamic between self-interest and the common good. He describes how unfettered “overgrazing” by sheep in a meadow with no guard rails inevitably leads to a collapse of the meadow and in turn collapse of the entire ecosystem. Similarly, even with abundance of fish in a pond, overfishing will ultimately destroy the equilibrium meading to the the collapse of the ecosystem.
The American spirit, freedom and liberty versus the wellbeing of the community creates an unresolved challenge: how to best balance these two competing value vectors. In attempting such a reconciliation, it is interesting to explore how Adam Smith’s Wealth of Nations (laissez fair, greed is good) was never integrated into necessary conditions of the moral compass of empathy, compassion, humility and fellow feeling espoused in what we believe was his true magnum opus, The Theory of Moral Sentiments, and equitable distribution of public resources. Rare is the community, a collection of individuals pursuing their own interests, that can survive without some moral foundation. A failure to reconcile will ultimately result in a breakdown of the social contract.
The late Clayton Christensen’s theory of disruptive innovation has traditionally been applied to business and technology. However, his framework offers surprising insights into America’s current political crisis. What we are witnessing is not simply political polarization or institutional dysfunction, but what we call the “Tragedy of the Elite”—a systematic erosion of democratic norms by those best positioned to protect them.
Defining the Tragedy of the Elite and Political Commons
Unlike Garrett Hardin’s classic “tragedy of the commons,” where individual actors unknowingly deplete shared resources, America’s political elites are consciously making choices that preserve their power while eroding democratic institutions. This represents a perverse form of disruption—one that prevents rather than enables broader participation in the political process.
The pattern mirrors what Christensen observed in failing companies: organizations so focused on serving their most valuable customers that they become vulnerable to disruption. In America’s political landscape, elites have created a self-reinforcing system that actively resists positive disruption, leading to decreased civic participation and eroding trust in democratic institutions.
The Identity-Centric Challenge
Our work with Christensen on what we termed “identity-centric innovation” revealed that when stakeholders’ core identities (world views, values and belief systems) are challenged, traditional patterns of innovation and adoption break down. This insight is crucial for understanding America’s political gridlock. Political elites aren’t merely protecting their economic interests; they’re defending their identities as power brokers and decision-makers.
This identity-driven behavior creates what we refer to as “threshold resistance” a term coined and implemented by Alfred Taubman, the late shopping mall pioneer. This resistance creates visual, emotional and economic barriers to political participation in the pastures of the political commons. Just as consumers might hesitate to enter an intimidating luxury store, many citizens feel blocked from meaningful political participation by both practical, economic and psychological barriers.
Paths to Democratic Renewal
The solution lies not in destroying existing institutions but in creating what Christensen called “good enough” alternatives—new forms of political participation that might not be perfect but are accessible enough to engage currently disenfranchised citizens. This could include:
- Digital Democracy Platforms: Creating verified, secure spaces for civic engagement that bypass traditional power structures while maintaining democratic integrity.
- Community-Based Policy Innovation: Enabling local communities to experiment with new forms of governance and participation.
- Cross-Identity Dialogue: Developing structured ways for people with different political identities to engage in meaningful discourse.
- Transparency Technologies: Implementing blockchain and other technologies to make political processes more accessible, visible and accountable.
The Role of Elite Leadership
Paradoxically, addressing the Tragedy of the Elite requires engagement from forward-thinking members of the elite themselves. Just as business leaders must sometimes cannibalize their own successful products to remain competitive, political leaders must be willing to transform systems that have served them well but are failing the broader population.
Looking Forward
The challenges facing American democracy are not merely political; they are systemic and structural. Christensen’s insights about disruption suggest that solutions will not come from within existing power structures but from unexpected sources and new forms of civic engagement.
As we saw in our work on religious and spiritual innovation with Christensen, himself the Elder for New England and Canada for the Mormon Church creating new access points to participation doesn’t require destroying traditional structures. Instead, it means developing parallel systems that serve those currently excluded from meaningful participation in democratic processes.
The urgent task facing American democracy is not just to resist authoritarian tendencies or to reform existing institutions, but to actively create new, more accessible forms of democratic participation. The future of American democracy may well depend on our ability to disrupt the very systems that have created our current crisis.
This is not just a political challenge but a design challenge: How do we create systems of governance that serve all citizens, not just elites? How do we develop political innovations that, like successful business disruptions, begin by serving the underserved and gradually transform the entire system?
The Technology Paradox
CMH: Our experience with the Tribeca Disruptive Innovation Awards taught us something crucial about technological change: the same tools that can democratize access can also consolidate power. We’re seeing this play out dramatically in our political sphere, where social media and big data have simultaneously empowered grassroots movements and enhanced elite control.
IK: It reminds me of what Clay often said about disruptive innovations starting at the bottom of the market. In our political context, we’re seeing genuine grassroots movements emerge through technology, but they’re often co-opted or neutralized by elite interests before they can achieve genuine disruption.
The Morality Market
IK/CMH: One of Clay’s most profound insights, shared during our last conversations, was his concern about the erosion of moral frameworks in modern society. He saw this as intimately connected to the crisis in both religious institutions and democratic governance. The parallel to Adam Smith’s twin works—”The Wealth of Nations” and “The Theory of Moral Sentiments”—becomes particularly relevant here.
Just as Smith recognized that market economies require a moral foundation to function properly, democratic systems need a shared ethical framework to survive. The Tragedy of the Elite isn’t just about the concentration of power; it’s about the erosion of the moral commons that makes democratic governance possible.
Practical Solutions for Democratic Renewal
Drawing from our work in disruptive innovation, we propose several concrete steps for addressing the elite crisis:
- Institutional Innovation
- Create new forms of citizen assemblies empowered with real decision-making authority
- Develop blockchain-based voting and transparency systems
- Establish independent oversight bodies with genuine enforcement power
- Educational Transformation
- Redesign civic education to emphasize practical participation skills
- Create “democracy labs” where citizens can experiment with new forms of governance
- Implement cross-community exchange programs to bridge political divides
- Technological Integration
- Develop platforms for verified, meaningful political discourse
- Create tools for tracking political promises and outcomes
- Enable secure, accessible forms of direct citizen participation in policy-making
- Cultural Intervention
- Support arts and media projects that bridge political divides
- Create spaces for cross-cultural dialogue and understanding
- Develop new narratives about political participation and citizenship
The Role of Business
CMH: One often overlooked aspect of this crisis is the role of business leadership. Clay’s work on disruption began in the business world, and business leaders may be uniquely positioned to understand and address these challenges.
IK: Yes, and just as we’ve seen with spiritual innovation, sometimes the most effective solutions come from unexpected combinations—business principles applied to civic problems, spiritual insights applied to political challenges.
Looking Ahead: The Next Disruption
The future of American democracy may depend on our ability to facilitate what Clay might have called “catalytic innovation”—changes that transform systems by creating new patterns of participation and engagement. This requires:
- Recognition of the current crisis as systemic rather than merely political
- Understanding that solutions must come from outside existing power structures
- Creating multiple entry points for civic participation
- Developing new metrics for democratic health beyond electoral outcomes
- Building systems that reward long-term democratic stability over short-term political gains
Conclusion: Beyond the Tragedy
The Tragedy of the Elite isn’t inevitable. Just as Hardin’s tragedy of the commons led to innovative solutions for resource management, our current crisis could catalyze new forms of democratic participation and governance. The key lies in understanding that true disruption often comes from unexpected places and takes unexpected forms.
As Clay Christensen taught us, the most powerful innovations often start by serving those who are currently excluded from existing systems. The renewal of American democracy may well begin not in Washington or Wall Street, but in communities and technologies that create new ways for citizens to engage with and shape their political future.
The challenge before us isn’t just to reform our current system but to reimagine how democracy itself can work in an age of rapid technological change and global interconnection. The solution to the Tragedy of the Elite may lie not in confronting elite power directly, but in creating new forms of democratic participation that make current power structures obsolete. Hardin’s essay brought into focus the realization that adaptive resource management can help tame the unfettered self-interest of the individual in order to better balce the needs of the community. Failure to achieve this balance, in the long run, will inevitably cause a collapse of the system. If only as matter of self-preservation of their own seat at the grown ups table table, incumbents would be well advised to seek out and listen to new ideas from the entrants who they view as sitting at the kiddie table. Otherwise the pattern of anthropological observation suggests that the kiddie table will quickly become more influential seating arrangement.
This all begs the question: Can emergent disruptive innovations of democracy in America bring a halt to the conscious, subconscious and unconscious overgrazing in the pastures of the political commons by the elite? Stay tuned.
