Draft Manuscript Chapter
Here is a very rough draft of a chapter from my forthcoming book on the anarchist theory of organizational behavior:
Chapter One: A Critical Survey of Orthodox Views on Economy of Scale.
Chapter One: A Critical Survey of Orthodox Views on Economy of Scale.
posted by Kevin Carson | 11:47 AM
14 Comments:
Although it's a rhetorical tact you like to use, I don't think much is served by quoting Lazonick's argument and then saying he has not offered any evidence or argument; if that's false then you've misread him, and if it's true why bother including it? Or did you want to make the point that liberals, in addition to having faulty arguments, are just plain crazy and irrational? (Not that I disagree with that of course!)
Thanks for taking the time to read it and give me the feedback (you had to do a lot of reading just to get to that part).
My point about Lazonick was that he painted a very eloquent word-picture elaborating his a priori assumptions (on the superior innovativeness and cost-efficiency of the large capita-intensive organization), but provided no evidence as to why those assumptions were valid. Like Schumpeter and Galbraith, he starts with an aesthetic affinity for the Weberian organization, but takes for granted that it is more efficient at R&D, process improvement, etc.
The idea was to quote Lazonick's extensive statement of his thesis, and then to critique it in the light of reality.
Kevin,
Have you looked at the "Speeches, debates, resolutions, list of the delegates, committees, etc" from the 1899 Chicago Conference on Trusts? Tucker's "Attitude of Anarchism Toward Industrial Combinations" is one of the highlights, but there are also quite a wide range of other responses. Reading your chapter, I was struck again by how many of the midwest progressives and cooperators also accepted the "economy of scale" notion. Samuel "Golden Rule" Jones basically waves away the concern with trusts, although he wants them to be controlled by the people. If I recall correctly, Laurence Gronlund takes a similar position. The assumption was certainly also part of large-scale cooperation ideology.
I've got the Samuel Jones piece scanned, and will post that. I may also have some useful material from the Bradford Peck/Hiram Vrooman/Lewiston, Maine cooperation movement.
Kevin,
Great stuff. Working my way through it (slowly - I came down with some kind of upper respiratory thing that's making it hard to concentrate - sigh).
I got the part about the Austrians who believe that "roundabout" methods are innately more efficient and got to wondering if you're going to address some of the stuff about the Austrian Business Cycle Theory.
Such as here:
http://www.mises.org/journals/qjae/pdf/qjae4_3_4.pdf
By my admittedly limited understanding (I have almost no formal economics education, so some of this stuff is still beyond me), the guys working on this claim that boom/bust cycles are caused by artificial credit expansions, which then cause a mistaken investment in more roundabout production schemes than the market truly desires. The bust occurs to correct this mistaken investment in more roundabout processes.
My first reaction seems to be that the "optimal" level of "roundaboutness" is directly related to an average time preference in the marketplace. Only in a market/culture with very low (approaching zero) time preferences will there be anything like an unlimited horizon of efficiency for increasing roundabout-ness. Otherwise, the natural limit is directly related to just how high the average time preference for the marketplace is.
Anyway, if you're already on this track in your unpublished work, sorry for stealin your thunder :) But really, I'm tremendously curious to see if my initial reaction is reasonable.
Again, keep up the great work - even if I don't agree with mutualism per se, this stuff is a badly needed light on a neglected field of study.
Hi Kevin, I haven't read the entire chapter, but I thought a couple of things might be confusing:
1) The meaning of "liberals": I know what you mean when you say "technocratic liberal" but I think that most (American) readers will equate "liberal" with "Democrat" and they will immediatelly get lost. Maybe a footnote would be helpful on that point, or a footnote pointing to a glossary.
2) You (and the authors you quote) seem to waver between a number of related concepts, and it isn't always clear what concept is being discussed.
For example, DeLeon praises "size"...but it sounds like he is just saying that we benefit from having more capital. It seems important to distinguish between organizational size in terms of persons, and size in terms of capital.
Again, with the Austrians, it seems that they are simply saying that capital is good, not that all capital should be organized into a large institution. In fact, when the austrian mentions the decreasing return on investment (Positive Theory of Capital, Book II, Chapter II), that sounds like the beginning of an argument for dispersal of capital among many different processes rather than concentrating capital on particular processes.
The quote from the Communist Manifesto seems to just describe a historical process that the communists plan to take advantage of. I don't think that it implies that this process is inevitable in free market economies or that centralization increases efficiency, only that it is inevitable in the capitalist economy which the state manipulates in order to allow further concentration of wealth.
3) I don't know what "pomo capitalism" is. It may not matter, but you may want to define that term.
I believe "pomo capitalism" stands for "postmodern capitalism".
I believe "pomo capitalism" stands for "postmodern capitalism".
Lol in my browser's font I thought you said "porno capitalism". That would be like a system where capitalists are the pimps exploiting the "working class" prostitutes, right? :)
I'm no grammarian, but shouldn't "transportation" in the last paragraph p. 10 be capitalized?
Kevin, I've been reflecting on this chapter recently at my own blog (http://freedomdemocrats.org/node/897) and thoughts about the institutional advantages corporations. I wanted to run some thoughts by you. You observe that the system of transportation and communication infrastructure built by the government that placed transaction costs on the taxpayer and the consumer was one factor in the concentration of the market. To what degree did the legal institutions available to capitalists also play a role? The corporation's special privileges make it particularly appealing as means of concentrating capital. Without a legal structure to allow for consolidation, how do you think the transportation and communication networks would have impacted the economy?
Thanks, Printer! That's just what I was looking for!
Shawn,
Jones certainly fits in with the same general attitude as the other figures in the chapter. He seems to assume as a matter of course that the large department store is an efficiency gain over fifty small stores in the same way the small stores are a gain over peddlers.
But Tucker's attitude toward the trusts was really odd. Toward the end of his life, he thought the concentration of economic power in trusts was so far gone as to be irreversible through a mere removal of legal privilege. But the only legal privileges he considered were his four monopolies, and them only to the extent that they affected individual exchange. The extent to which corporate power was propped up by *structural* connections between business and the state (subsidies, regulations, etc.) seemed to have escaped him entirely.
quasibill,
Austrian business cycle theory reminds me a lot of (believe it or not) the neo-Marxist theory of overaccumulation. And both have a big bearing on the state's policies of encouraging over-investment. In a lot of specifics, the Austrian "crackup boom" resembles the crisis theory of Paul Mattick and James O'Connor.
Adam,
I tried to put the term "liberal" in a bit of historical perspective by rooting it in the "progressive" era. It might help if I also tied it to the concept of corporate liberalism (which has certainly been more identified with the Democratic Party).
Since most of my sources tend to make little distinction between large size and capital-intensiveness as Good Things, and some seem to equate them, I didn't make much effort into distinguishing between the two ideas. The two strands are so closely associated that it seemed to make sense to treat them together, at least tentatively.
To the extent that Schumpeter, Galbraith and Lazonick treat them as different things, they consider the monopoly benefits accruing to large size as a secondary matter, simply a prerequisite for the reduced risk that capital-intensiveness and long-term development depend on. But they also tend to make a direct correlation between large size and the division of labor.
While the Austrians don't necessarily make an unlimited correlation between size and roundaboutness, the size they would associate with maximum roundaboutness is probably far beyond the threshold of internal calculational chaos. The B-B quote, as I read it, does not speak of a decreasing return on investment, but of a reduced rate of increase. So there would still be an absolute increase in efficiency.
Marx and Engels, to my reading, seem to be praising the productive feats of the bourgeoisie to high heaven (or to the historical process). Their argument, and that of vulgar Marxists who have taken it an run with it, is that the progressive development of productive forces under the bourgeoisie has been an unqualified good; the problem is that the social structure is incapable of encompassing the increased social forces of production without being destroyed. So the economic achievements of the bourgeoisie were good in themselves--the technical basis for communism's economy of abundance was created by the capitalists, but can only be managed without contradiction by a workers' state.
By "pomo capitalism" I just meant the kind of new agey, hipster capitalism Frank parodied in One Market Under God (remember the commercial where that skater punk with blue hair introduced his boss to day-trading?).
Carlton,
I've seen it done both ways stylistically--treating the material after a colon as a clause of the same sentence, or following the colon with a series of new sentences.
Logan,
Thanks a lot for the link. I tried to comment a couple of days ago, but for some reason had trouble getting the page to load. I don't know if it was the Freedom Democrats site or Firefox.
Printer,
Hey, great! Do you have an ink cartridge site-ring I can join?!!!
Logan,
I had a post on corporate personhood several months ago that linked to a lot of good debate on the subject.
My initial inclination was to believe that limited liability toward creditors and corporate personhood might both be established contractually, but not tort liability toward third parties. But some articles the anti-personhood advocates linked to made me question whether the ownership of productive assets by a legal entity entirely separate from the individual owners could be established by non-statist means.
http://mutualist.blogspot.com/2006/04/corporate-personhood.html
Jeremy,
To the extent that I deal with "fundamental principles of human behavior that aggregate into principles of society and basic organizational dynamics," it will be mainly in the context of the large organization in the existing corporate economy, as contrasted to decentralized and bottom-up ways of doing things. I think the fundamental principles are already out there; so this is more an attempt at applied organizational theory in an anarchist context than at a new set of anarchist principles.
The one unique thing I'm doing on a theoretical level, if there is one, is tying the values of people like Illich, Goodman, etc., to the market mechanism, much as I tried to tie the goals of libertarian socialism to the market mechanism in my last book. The point is to show that Illich's "counterproductivity" and "second watershed," and Goodman's crowding out of alternatives by the hegemonic large organization, are not things that spontaneously happen because of superior efficiency. I think this runs somewhat parallel to your generalization that "organization naturally occurs in a particular manner, and then the State subverts that through interventions," but it will likely be implicit in the concrete analysis for the most part, or stated in passing in that analysis, rather than presented in a separate theoretical section.
On Galbraithian "push" distribution models, my purpose was to state the contrast as starkly and simply as possible. It's possible I went too far in the direction of cartoonish overstatement. I may quote your alternative language (demand being "moderated and channeled" or "neutered and manipulated," and the range of choice artificially limited) , which is very good, in future drafts.
Jeremy,
Odd as it might seem, most of the basic principles behind my analysis of subsidies and their effect on economy of scale, and on the systemic effects of shifting scale economies upward, are either explicit or implicit in orthodox economics. I'm just developing their implications in a certain direction and tying them together. On the same pattern as MPE, I'm arguing from the avowed principles of orthodox theory that the free market is the best way to achieve the ends of Goodman and Illich.
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