Life on Mars

March 7, 2009

In a recent post by Cork, he quotes the following from Rothbard:

But more deep than that is the fact that Karl [Hess] after having been an anarcho-capitalist for some time shifted over to become an anarcho-communist or anarcho-syndicalist. I don’t really see any basis for collaboration between the two groups, because even if we are both against the existing state, they would very quickly come up with another state. I don’t think you can be an anarcho-communist or an anarcho-syndicalist. You know if the commune runs everything, and decides for everything, whether it is a neighborhood commune or a mass country commune – it really does not matter in this case, somebody’s got to make the communal decision. You can’t tell me that you’ll have participatory democracy and that everybody is going to equally participate. There is obviously going to be a small group, the officiating board or the statistical administrative board or whatever they want to call it, whatever it’s going to be, it’s going to be the same damn group making decisions for everybody. In other words, it’s going to be a coercive decision for the collective property. It will be another state again, as far as I can see. So I really can’t see any basis for collaboration. That is really part of a broader analysis of the communist versus the individualist position.

However, I see a big blind spot in the logic here. It operates from the view that in an anarcho-capitalist society, all interactions will be market interactions and that there will be nothing approaching the social anarchist’s “preferred institutions”. There won’t be “a small group of elites controlling and planning the economy”. But what about the firm? Is the firm not a large part of life?

Herbert A. Simon describes the reality:

A mythical visitor from Mars, not having been apprised of the centrality of markets and contracts,…approaches the Earth from space, equipped with a telescope that reveals social structures. The firms reveal themselves, say, as solid green areas with faint interior contours marking out divisions and departments. Market transactions show as red lines connecting firms, forming a network in the spaces between them. Within firms (and perhaps even between them) the approaching visitor also sees pale blue lines, the lines of authority connecting bosses with various levels of workers. As our visitor looked more carefully at the scene beneath, it might see one of the green masses divide, as a firm divested itself of one of its divisions. Or it might see one green object gobble up another. At this distance, the departing golden parachutes would probably not be visible.

…[T]he greater part of the space below it would be within green areas, for almost all of the inhabitants would be employees, hence inside the firm boundaries. Organizations would be the dominant feature of the landscape. A message sent back home, describing the scene, would speak of “large green areas connected by red lines.” It would not likely speak of “a network of red lines connecting green spots.”

…When our visitor came to know the green masses were organizations and the red lines connecting them were market transactions, it might be surprised to hear the structure called a market economy. “Wouldn’t ‘organizational economy’ be the more appropriate term?” it might ask.¹

I can also imagine that living among the aliens is their own “Murray Rothbard”, who might be heard saying something like this:

I don’t really see any basis for collaboration between the Martian ideal of pure markets and Earth’s capitalist “organizational economy”, because even if we are both against the existing states on our respective planets, they would very quickly come up with another state, at least in the sense that almost all of the inhabitants would be employees. I don’t think you can be an anarcho-”organizationist” or an anarcho-capitalist. You know if the company runs everything, and decides for everything, whether it is a small business or an international corporation – it really does not matter in this case, somebody’s got to make the company decisions. You can’t tell me that you’ll have participatory democracy and that everybody is going to equally participate. There is obviously going to be a small group, the officiating board or the board of directors or whatever they want to call it, whatever it’s going to be, it’s going to be the same damn group making decisions for everybody. In other words, it’s going to be a coercive decision for the company property. It will be another state again, as far as I can see. So I really can’t see any basis for collaboration. That is really part of a broader analysis of the company or organization versus the individualist position.

I agree with Cork’s general concern. Reading Le Guin’s The Dispossessed will give anybody a good insight into the hidden problems of anarcho-communism or anarcho-syndicalism. But let’s keep it real: these problems are not just the problems of social anarchism. The inside of a capitalist firm may not involve “mob rule” but does it involve individualist market transactions?  Is central planning non-existent? If anything it goes in the opposite direction. Market anarchists also need a theory of organizations as much as they need a theory of markets; they need to recognize the mechanisms that develop within firms and then begin asking new questions and finding new ways of “doing business” that might be needed if we are to remain consistently anarchists.

¹ Simon, Herbert A., “Organizations and Markets”, The Journal of Economic Perspectives, Volume 5, Issue 2, (Spring 1991), pp. 27-28.

5 Responses to “Life on Mars”

  1. Cork Says:

    Thanks for the mention. As we’ve discussed before, the division of labor is inherently hierarchical. Business decisions cannot be compared to political decisions. A company is not a political structure or government; it’s just a free association of individuals trading with eachother. There’s no reason why people at a company should be able to “participate” in decisions that lie outside their expertise.

    Companies are not arbitrary dictatorships; they are subject to market forces and ultimately controlled by consumers.

    It’s impossible to have large-scale association without hierarchy and leadership, because there’s no other way to organize people. In any project, the person(s) in charge is naturally going to direct others. The question is whether this leadership is voluntary or based on coercion. I would recommend Ben O’Neill’s article on this:

    http://mises.org/story/3304

  2. Neverfox Says:

    Cork,

    You’re welcome but I think you misunderstood the general thrust of what I wanted to say here. Rothbard is taking issue with “the same damn group making decisions for everybody” within a commune yet at no point does he describe the commune as lacking the same “at will” exit option that companies have. So even with the option to “quit” implied, Rothbard still has a problem with it because it lacks “market-ness”. In other words, I’m talking less about hierarchy and more about central planning and the lack of a market mechanism within companies.

    If two people decide to act jointly but one person makes the decision as to how to act, it may be voluntary, but it is nevertheless a centralization of decision making, a move toward central planning. This isn’t a normative judgment about power. It’s just a fact about the dynamics of the system. The option to leave by the non-decision maker isn’t a decision within the context of the joint enterprise. The concern here is not with any “private tyranny” or what “differentiates freedom from slavery” but rather that organization is antithetical to markets. It might be a good thing but it operates on different principles that seek to override the self-organizing and self-allocating features of markets.

    You said it yourself when you called it a “way to organize people”; it implies a conscious form of organization, a central planning of the internal “economy” of the firm; firms are not unlike miniature national economies. The possibly vast resources are allocated among members and employees based not directly on price or quantity signals but on decisions by “central planners”. They may be responding to external signals from markets and consumers but they don’t carry that inwards as a “fractal”.

    I simply not doing anything remotely like “a free association of individuals trading with each other” when I’m at work. Yes, I’m freely associating with the whole of the company (do I stay or do I go) but when I interact with the guy in the next office, I’m not bargaining with him over the price of the TPS report I’m “selling”. I can’t just decide to withhold my resources to negotiate a concession (I realize that some things like this do happen on a subtle scale but in general you can’t just run your own interests the way you can in the market). Instead we are allocating company resources based on the planning of a small group of people, necessary or not, right or wrong, free or tyrannical. I think you are focused on the exit strategy angle, where people are free to come and go; to that extent it interfaces with and operates as a market. But once inside the walls of company, the decisions and interactions between divisions and departments are rarely about resource allocation, profit maximization, supply & demand, utility and all the other tools that are used to describe market interactions. We aren’t a world of individuals trading with each other except in certain (and far fewer than all) settings.

  3. Cork Says:

    Rothbard is taking issue with “the same damn group making decisions for everybody” within a commune yet at no point does he describe the commune as lacking the same “at will” exit option that companies have.

    Actually, he does. He made this pretty clear in the several essays he wrote on social anarchism. In one of them, he wrote “All of the left-wing anarchists have agreed that force is necessary against recalcitrants.” In the snippet we’re discussing, he says he thinks it would be another state.

    In other words, I’m talking less about hierarchy and more about central planning and the lack of a market mechanism within companies.

    ‘Central planning,’ in and of itself, is not a bad thing. The market will determine how far it can go. If the level of planning really is antithetical to markets, it will collapse. It’s not necessary that Bill Lumbergh pay me for every individual TPS report, or for me to pay the Subway dude after every cheese slice and banana pepper he adds.

    It’s only when a state or coercive commune tries to plan the entire economy that it should matter.

    We aren’t a world of individuals trading with each other except in certain (and far fewer than all) settings.

    Oh, but we are. ;)

    Each and every one of us is an independent contractor. Well, sorta. Try to think of capitalism this way: everyone is self-employed and performing a certain service for a client. “Firms” are an illusion, man. Think about it!


  4. “Try to think of capitalism this way: everyone is self-employed and performing a certain service for a client. “Firms” are an illusion, man. Think about it!”

    Apparently, it is your brain that is an illusion. What drugs are you on?


  5. [...] one of his entries, Roman Pearah quotes from Herbert A. Simon, who describes capitalism in this way: A mythical [...]


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