Institutional Senescence

Once I founded a non-profit organization where the bylaws said that only people under 30 years can be elected for the governing body, and if the governing body with N members cannot be elected (e.g. because there are not enough candidates), the organization is automatically disbanded and its resources transferred to an organization with most similar goals (specified in the bylaws; or selected by the previous governing body as their last act if the specified organization no longer exists).

The reason for this ageist rule was that we saw a few non-profits where the existing member base gradually lost contact with the outside world, lost the ability to recruit new members, and gradually became a club of old people who spent most of their time reminiscing about the glorious past, barely doing any activity anymore. So we wanted to block this option of "ending with a whimper". If the organization fails to attract N skilled young members for a decade, it probably fails to achieve its original goals (which explicitly included education and outreach), so it needs to wake up... or die quickly so that the vacuum becomes explicit.

There was no age limit for membership, or the non-governing roles, so the organization didn't have to lose expertise. Member above 30 could still remain in any technical role. But the organization as a whole needed to pay attention to recruitment of new members, at least enough to fulfill the quota for the governing body.

Almost 20 years later, the organization still exists and works according to the original plan.

(Not providing a link here, because I am no longer active in the non-profit, and it is unrelated to rationality.)

In this sense, Stalinist purges is a way of the institutional regeneration. Evert few years, a king replace and kill all his ministers and other officials, and put new people on their places, thus cleaning all Nash equilibriums. But one day they replace the king.

Upvoted for interest, but I'm not sure you've gone deep enough into the model. Specifically, you're mixing the analysis based on whether the institution in question is a closed system, or a partial equilibrium of participants, who also have extra-institutional interactions and goals.

suboptimal Nash equilibrium: Non of the stakeholders can do better by trying to solve it on their own. Such problems are, almost by definition, unsolvable.

Way oversimplified. that's the whole point of institutions - to give avenues for trade and outside-the-equilibrium motivation, in order to let stakeholders solve it together, rather than on their own.

It eventually destroys the institution and, if everything goes well, replaces it with a different one where at least the most blatant problems are fixed.

If these are unsolvable equilibria, how does a new institution fix it? What are the constraints that keeps the old institution from solving it when a new one can? Wouldn't you expect the new ones to be much worse at the problems that the old one _did_ solve?

Regarding the specific case of forgiving debt every N years: wouldn't lenders simply not offer loans that should be paid back after the next jubilee? Imagine, for example, that 2030 is a jubilee year. Then right now (2020) there would be lots of opportunities to take loans that expire, at most, in 10 years. In 2029, however, only short-term loans would be possible. Why would anybody lend you money to be paid back in 2 years if next year that debt will disappear?

Then if, in 2029, you desperately need to take out a long-term loan (e.g. to cover medical expenses), you would be incentivized to sign a contract where you wave away your right to have the debt forgiven. If this kind of contract is forbidden by law, you are incentivized to take out an illicit loan -- backed by illicit violence. Down the drain go the advantages of jubilee.

I can think of only one way to avoid this effect: have the debt-forgiving happen at random. There could be a minimal waiting period to guarantee two jubilees didn't happen too close to each other, after which it had a certain chance of being declared every 1st of January. The bonus would be that it incentivizes lenders to be careful with their landings. It disincentivizes (but doesn't destroy) the possibility of long-term landings, which is specially bad for people with a low income. But those same people would be the most positively impacted by the random debt-forgiveness, so it's a trade-off situation.

Is there another solution?