I am puzzled by left-libertarianism’s prediction that a freed market will not contain a significant amount of “bossism,” to use Gary Chartier’s phrase in his BHL post. Alas, I have not read Markets, Not Capitalism, and perhaps the puzzle is something that is easily solved by reading the book. I offer the puzzle here because I suspect it may have occurred to other readers of this blog, and it may help elucidate important features of the left-libertarian view.

Workers in a coop in a freed market are allowed to sell their shares in the coop. Their rights to their shares in the firm include use rights, i.e., they decide the nature of work relations, working condition, pay differentials, managerial responsibility, etc., and income rights, i.e., they receive the net profits of the firms. There are two reasons why this sector will be likely be small.

First, it will be irrational for workers to concentrate their portfolio in their own firm, lest it go under. So they will want to sell some of their shares in their own firm and buy shares in other firms. Once that happens it is not hard to see how those who don’t work in the firm will come to own considerable shares of the firm (and of course that will include institutional investors) which means the end of an economy dominated by worker controlled firms. Now some coops may restrict outsiders’ rights in their firm, so that they are not able to have use rights, i.e., a say or a vote in how the firm is managed. But some coops won’t do this, and it is plausible that those who won’t do this and give outsiders full ownership rights will have a competitive advantage. This is because those who can attract more outside capital will have a competitive advantage in adapting to changing market conditions and those who will supply considerable capital will tend to want some way to monitor that their capital is being used in an efficient manner, which means some kind of say over how the firm is run.

Another reason workers will want to sell their shares is that when workers leave the firm—change jobs, retire, etc.—they will want to take their profits with them. Indeed, even before they leave they may want to cash out some of their profits, i.e., sell some of their shares.  And for reasons I just mentioned, those buying them may not be content with nonvoting shares. So again we get the scenario of outsiders coming to have full ownership rights in the firms, and it’s not hard to see how this will lead fairly quickly to an economy which is dominated by capitalist firms.

Now the prediction that a freed market will not contain a significant amount of bossism does not, I take it, entail a prediction that there won’t be a substantial number of firms which are not coops. It only entails a prediction that most of these firms won’t be hierarchical firms where workers get bossed around. Those firms which are smaller and flatter, to use Roderick Long’s terminology, minimize or eliminate this function of bosses. But here my puzzle continues.  How do left-libertarians know these firms will tend to be small and flat? Firms which are financed largely by equity will, in a freed market, be those that maximize shareholder value, and how do we know that a substantial number of those firms won’t be hierarchical firms? I endorse Roderick Long’s argument that the larger the firm the more likely calculation chaos will impede efficiency, and it’s also true that bossing people around can impede efficiency. But those are ceteris paribus claims, and it may be a firm needs to reach a certain size in order to be efficient, and that too little hierarchy can impede efficiency. So I remain puzzled.

My puzzle to some extent also crosses over to the moral opposition to bossism. Bossing people around can certainly be bad; indeed at times it is positively evil. One of the nice features of being an academic is that one has a fair amount of autonomy in one’s job, so as a personal matter I share Long and Chartier’s outlook. But as libertarians we favor a vigorously competitive market, which means firms will have to be quite attuned to consumer sentiment and shareholder value, and so as libertarians I would think we would have to distinguish between different kinds of bossism. Bossism in the context of a competitive market is regrettable or perhaps a bad we have to put up with for the sake of greater goods or a just society, whereas bossism that has no connection with the rigors of a competitive market is unequivocally oppressive. So I am also puzzled how left-libertarians can say that they are opposed to bossism per se.

************************************************************************

A brief addendum: in the above post, I only discussed coops and capitalist firms, but I did not discuss self-employed or being one’s own boss. But the same argument applies, perhaps a fortiori, to being one’s own boss. Being one’s own boss is quite a risky proposition, so I would be puzzled by a confident prediction that in a freed market this would be something a large percentage of people would choose even without state barriers that make it more difficult to be one’s own boss (occupational licensure, oppressive taxation, etc.)  And morally, being one’s own boss is hardly an unequivocal good. I would suck at it, and I would be puzzled by anyone who argued that I should choose a life at which I have no comparative advantage.

Print Friendly
 
  • BleepbloopImACommenter

    Damn good point! Maybe one could respond by noting that freer markets tend to have higher churn, and since large, hierarchical businesses take awhile to build up, then in the freest market, there’s a pretty good a priori probability that the high churn will devour most business, thus making hierarchy both difficult to create and maintain for long periods of time.

    Perhaps diseconomies of scale, chaos calculation etc… help explain/cause why that churn-marketfreedom relationship exists, but regardless of that, I think the relationship certainly does exist…

    • martinbrock

      My comment largely elaborates on yours.

  • Richard Patton

    One argument is that the success of a firm is fundamentally related to the fit between its culture and its mission. Control cultures (like the Army) tend to be quite good at operational efficiency – Walmart, UPS and so on. Competence cultures (like a University) tend to be good at product innovation – Sony, Microsoft and so on. Collaboration cultures tend to be good at customer intimacy (accounting firms) and Cultivation cultures (like a Church) tend to be good at radical innovation (early startup) and charity work. There was a book written on this – can’t remember the title.

  • martinbrock

    I read Markets, Not Capitalism, and I don’t recall much discussion of bossism. Frankly, “the end of bosses” sounds like sloganeering. Freed markets don’t imply an end to superior/subordinate relationships in productive organizations or even dominance and submission in social relationships. It only implies more options for developing these relationships. Entrepreneurs will still formulate business models, and many people will still prefer to follow an established model rather than trying recruit followers for their own models.

    A freed market doesn’t imply more syndicalism, but while people might prefer to diversify their investments, opportunities to invest in organizations in which one does not participate directly are fewer, because organizations are more fluid. Individuals and corporations have a weaker grip on many resources in a market freed of many monopolies. A free community might respect an author’s copyright for example, but with different communities free to establish different standards, every community will not respect precisely the copyrights dictated now by the United States.

    The first copyrights in the U.S. lasted fourteen years, at a time when publishing a book required printing pages one at a time, binding books by hand and delivering them to market on horseback. That copyrights are now longer rather than shorter is incredible, and some communities might choose not to respect copyrights at all. Other communities might limit communication with these communities by some technological means, but however this change plays out, authors have a looser grip on their recorded words, and people generally have a looser grip on many other resources. A freed market increases wealth while deferring consumption becomes more difficult.

    A looser grip on resources implies more dynamic organization of resources. More dynamic organization can hasten progress, but it hastens progress by speeding the dissolution of organizations. Less productive organizations die that more productive organizations may live. Defeating the cockroach is so difficult, because cockroaches are very highly evolved genetically. They’re so highly evolved, because they’re so short lived. A cockroach has far more ancestors than a human being.

  • Evergreen Libertarian

    Being a half assed economist or maybe not even that much allow me to ask a question. How does the Mondragon coop deal with that?

    “The MONDRAGON
    Corporation is a corporation and federation of worker cooperatives
    based in the Basque region of Spain. Founded in the town of Mondragón in 1956, its
    origin is linked to the activity of a modest technical college and a small
    workshop producing paraffin heaters.
    Currently it is the seventh largest Spanish company in terms of asset turnover and the leading business group in the Basque Country. At the end of 2011 it was providing employment for 83,869 people working in 256 companies in four areas of activity: Finance, Industry, Retail and Knowledge. The MONDRAGON Co-operatives operate in accordance with a business model based on People and the Sovereignty of Labour, which has made it possible to develop highly participative companies rooted in solidarity, with a strong social dimension but without neglecting business excellence. The Co-operatives are owned by their worker-members and power is based on the
    principle of one person, one vote. 2]”

    http://en.wikipedia.org/wiki/Mondragon_Corporation

    • martinbrock

      I’ve read a bit about Mondragon, and I read that the business model is expanding to the U.S., but I wonder how the financial meltdown in Spain has affected the organization. I’m also a little skeptical. Sounds too good to be true.

      There’s an irony here:

      http://en.wikipedia.org/wiki/Mondragon_Corporation#Wage_regulation

  • http://www.facebook.com/russnelson Russ Nelson

    Bossism seems to be held as a negative, as if someone would never choose to have their labor organized by someone else. And yet, athletes voluntarily select a coach to direct their sporting activities, and lend that coach substantial authority over their lives.

    • Sean II

      Yes, very much yes. I hate being a boss. I find it awkward and embarrassing to tell other people what to do, and I’ve never got used to it. And that’s not even the worst part. In terms of time, trouble, and effort required, being a boss usually feels like the opposite of a privilege.

      But from that vantage point I’ve noticed certain things. One of them is that many people, including even skilled professionals, actually value NOT being in charge of their own work. They like to show up, exercise their talent without making too many decisions or worrying about how it all comes together, and then leave, knowing that some other schmuck will get the phone call if anything goes wrong. Work for them is like playing an XBOX game at a friend’s house. They walk in, pick up the controller, try out a few moves, knowing that any damage done won’t be charged to their own player profile.

      This seems especially true of lower-skilled workers and young workers. Perhaps the lower skill workers know they’re not very good at the organizing activities, while the younger workers have sufficiently active personal lives that they simply don’t give a shit, and want someone else to take the responsibility until they’ve grown older and slowed down a bit.

      There is no reason to think these factors would cease to exist under a freed market order.

  • Adam Ricketson

    I can’t speak for Chartier, but in my conception of left-Libertopia, the reduction of bossism is a function of particular changes to the law, and the elimination of laws that restrict people’s opportunities to initiate their own economic endeavors.

    For instance:
    1) Intellectual property
    2) State employment and large government contracts

    Some might be seen as limitations on the right to contract, such as making the following non-enforceable:

    1) non-compete, non-disclosure clauses of employment contracts
    2) confiscation of a debtor’s property
    3) legal ownership being transferable independent of possession/use

    Finally, if any collection of reforms result in a more equal distribution of wealth, then more people will have the opportunity to be self employed.

    I think that bosses only seem oppressive when there is no option to work without one (and it is difficult to switch bosses). This leads to abuse of power and non-meritocratic advancement. As a general way of organizing economic activity, many people will probably be happy with a professional manager of their work even if they have other options. But they need to see those other options in order to judge whether the manager is actually providing value that justifies his authority and income. They will want to see that the manager’s authority comes from the respect of the workers, not from some distant capitalist.

    • martinbrock

      I think that bosses only seem oppressive when there is no option to work without one (and it is difficult to switch bosses).

      Me too.

  • Sean II

    I’m hardly a good spokesman for left-libertarianism, but a couple of thoughts:

    1) Applying capital to markets is a specialized talent like any other. Some people will be good at it, and other people will become their institutional clients. As long as they are prevented from evading liability, setting up coercive rents, socializing losses, or getting free money from central banks, it shouldn’t be necessary for everyone to go work on a marketized kibbutz, in order to fulfill the vision of left-libertarianism.

    2) A de-bossified workplace is a good like any other, and it will always compete with other goods. In a libertarian society, presumably people would value that good much more than they do now, and even be willing to trade income for it. It all comes down to that: if workers really CHOOSE a non-hierarchical life, if down-with-the-bosses really is their demonstrated preference, then they’ll find a way to get that under a freed market.

    Not too long ago I was fortunate enough to closely observe a labor action, and what I saw there was very instructive.

    When small groups came in shifts to air their grievances at the union hall, everybody sounded like a left-libertarian: they were infuriated by the irrational decision making of agency central planners, they wanted more discretion but were willing to accept more responsibility, they wanted to work smarter but were willing to work harder, etc.

    Guess what happened when everybody came together at the plenary session? It took about 90 minutes for all that talk to evaporate, and for the group to settle on a list of demands that did absolutely nothing to change the workplace dynamic. Now, all any of them wanted was: 1) No one gets fired, ever, 2) 8% across-the-board pay raise, 3) The fee for family medical should be the same if you have two kids or twelve, 4) All promotions should be presumptively based on seniority.

    I was stunned (shame on me for that), because I’d let myself buy into the rhetoric. When the moment came to choose, everybody said “to hell with self-actualization, give me something tangible!”

    It would be foolish, and deeply naive, if we weren’t prepared to see workers in a free market make the same choice, even when they have more options than they do now.

    • martinbrock

      1) Entrepreneurship is specialized and also highly risky, but I’m not sure this fact accounts the compensation of bosses in large, established organizations. I doubt that these bosses are so entrepreneurial, in the usual sense, in reality. The political process, rent seeking and gaming entitlements, is also a specialized task.

      • Sean II

        I wasn’t trying to account for the compensation of any bosses, certainly not any bosses we have today.

        I’m merely pointing out that if you wiped out every fortune on earth tomorrow tomorrow, and left everybody with a meager $1,000 worth of capital, some people would have good ideas about how to use it, some would have bad ideas, and most would have no ideas at all.

        It wouldn’t take long for us to start noticing the difference. People would be saying: “Don’t invest with Post-Apocalyptic Sean II. He’s the damn fool who wanted to build a tanning salon in New Mexico. Go invest with Martin Brock, the Wizard of the Wasteland. He’s he guy who backed that oil refinery down in Australia with his partner Mad Max. That guy sure knows how to pick winners in a bear market!”

        • martinbrock

          When Libertopia finally arrives, I’m sure I’ll be the master of all I survey in no time … or is that an Objectivist utopia?

          Somehow giving everyone $1000 in capital and destroying all the rest is not my idea of progress in the right (or left) direction. That’s roughly equivalent to blowing everything up and giving every individual a small bulldozer, designed for light yard work, with one tank of gas. No need to pick winners. We’re all dead before any winners emerge.

          But possible trajectories from here to there are interesting. Too bad we aren’t discussing them.

    • WWW Du Bois

      “Applying capital to markets is a specialized talent like any other.”

      Well, no, it’s not “like any other,” because it’s as much about how much capital you have to apply as it is about how much talent you have. Thus, it’s completely different from — for example — talent in baseball.

      • Sean II

        You’re mistaken. Lots of talents, including playing baseball, have snowball effects and incumbent advantages like the one you’ve got in mind.

        Alex Rodrigeuz started with talent, and now he operates with a combination of talent, fame, and just plain inertia. He is allowed to have bad days and fluctuations in performance that would send an unkown player down to the Mexican minor leagues to play with Kenny Powers.

        But in the end, A-Rod must still play baseball, and there is a threshold below which even he will not be allowed to fall.

        And yes, if tomorrow Warren Buffet started investing in a chain of porn museums that cater only to women, the market WOULD probably jump in after him like a flock of sheep. Anyone who called the top and sold quick might make a lot of money in the stampede. But in the end, those museums would lose money, and even Warren Buffet’s massive store of capital wouldn’t be able to save them.

        In other news, Tom Hanks’ salary is not solely based on his great acting talent…PhD programs don’t always graduate the smartest people, only the most determined…girls sometimes pick guys for the wrong reasons…the thing that works in natural selection isn’t the best thing, it’s the first thing.

        So what?

        • martinbrock

          The fittest thing so far works in natural selection, but the fittest beings actively seek their own destruction by striving to create beings fitter than themselves, even if they don’t consciously realize it. Rent seeking proprietors don’t naturally operate this way, but natural parents do. They can’t stop themselves. They’re addicted to their own destruction, because they’re in love with their competitors.

  • Neverfox

    Workers in a coop in a freed market are allowed to sell their shares in the coop.

    Are they? Why do you assume that, in a freed market, “ownership of the firm” will still be a thing at all? That is to say, that firm membership will be a property right as opposed to, say, a personal right that goes along with the functional role of being a worker in the firm? If one’s right to a share of the residual claim is not a property right, but a personal right, your objections are non-starters.

    If we assume that being in a freed market means that, by definition, we’re all operating on consistent and just principles of rights and property, it’s not clear to me that “ownership of firms” is a concept that can legitimately survive the transition. If I’m right about that, not only would there not be many firms “financed largely by equity,” there wouldn’t be any because the contracts needed to make them happen would be as invalid as contracts for involuntary slavery or coverture marriage.

    But as libertarians we favor a vigorously competitive market, which means firms will have to be quite attuned to consumer sentiment and shareholder value, and so as libertarians I would think we would have to distinguish between different kinds of bossism. Bossism in the context of a competitive market is regrettable or perhaps a bad we have to put up with for the sake of greater goods or a just society, whereas bossism that has no connection with the rigors of a competitive market is unequivocally oppressive. So I am also puzzled how left-libertarians can say that they are opposed to bossism per se.

    Does favoring “a vigorously competitive market” mean “as vigorously competitive a market as is conceivable by any means”? Or does it mean “as vigorously competitive a market as is consistent with other commitments we should have as libertarians“?

    • martinbrock

      In a free community, membership in the community is voluntary, and adherence to community standards (including respect for the property rights of members) is the price of membership. A worker’s coop could be a free community, or it could be one form of economic organization within a free community, permitted but not required by the community’s standards.

      A free community may permit members (and even non-members) to be absentee owners of resources within the community and may require members to respect this ownership, by respecting an absentee owner’s right to vote on a corporate board, receive a dividend or sell a share. A freed market rules none of this out.

      Of course, an absentee owner of resources within a community, particularly an owner who is not a member of the community, must accept the community’s standards governing this ownership. An owner doesn’t decide the rights of an owner. He only decides what he’ll pay for these rights. Furthermore, community standards are subject to change, and an owner must also accept these changes.

      At some point, more dynamism may be less productive, so I don’t expect the most productive communities to be the most dynamic. On the contrary, I expect the many communities to conserve many standards of propriety now common among less mobile people, with fewer options, subject to states.

      The standards ultimately governing the most productive communities are not obvious to me, and I doubt that any deterministic calculus can predict these standards, but I also doubt that the most productive communities will look very “libertarian” in the thickest sense. I expect these communities to regulate recreational drug use for example, even to forbid much drug use among members. Productive communities may also require members to participate regularly in religious rituals. Freedom of association rules out none of this.

  • http://www.facebook.com/mark.lebar1 Mark LeBar

    Great post, Danny. One thought, which may be just a different take on ideas expressed below, is that not just skills in management of capital but skills in management of people, are things that emerge in the division of labor. Some people want to be managed! And it is hard work being free. Some people may choose to invest their creative capital in other walks of life and agree to advance other people’s ends for compensation (which is really want working under a boss amounts to).

    It’s interesting, in the defenses of left-libertarianism in previous comments, how quickly libertarian rights in property and contract go overboard. Prediction seems to have gone away in favor of objective.

  • Sergio Méndez

    “Now the prediction that a freed market will not contain a significant amount of bossism does not, I take it, entail a prediction that there won’t be a substantial number of firms which are not coops. It only entails a prediction that most of these firms won’t be hierarchical firms where workers get bossed around. Those firms which are smaller and flatter, to use Roderick Long’s terminology, minimize or eliminate this function of bosses. But here my puzzle continues. How do left-libertarians know these firms will tend to be small and flat? ”

    Well, there are a number of arguments that left libertarians have given on that issue (the size of the firms):

    1) The calculation problem (without interference of the state in favor of large corporations, those will not be able to maintain a larger size and equilibrate the costs of organizational chaos it implies)

    2) Competetion. Without the state favoring big buisness, it seems more likely more small firms will arise competing with larger firms and bringing them down.

    3) In a really free market the chances that more persons will start their own small buisness increase, so there will be less cheap labor big corporations need in order to function.

    I think what can be dispusted is the degree of change there will be between a free market based society and the actual existing capitalistic one. But I think, in face of the priviledges big buisness enjoy in the actual model, the change will neceseraly affect them in a negative way.

  • Bob_Robert

    What’s wrong with bosses? It’s a natural result of the division of labor.

    I don’t want to have to sell the product, find buyers, find suppliers, decide what the schedule is, or fire people. But there are individuals who are good at those things, and letting them do their job makes me more productive by letting me focus on what I do best.

    A freed market is not a market free of the laws of economics, it is merely free from coercion. An employment contract is not coercion.

    • http://socialmemorycomplex.net Jeremy Weiland

      What’s wrong with bosses? It’s a natural result of the division of labor.

      What’s wrong is that it presumes that the division of labor is natural as it presently exists. Why should we that be our presumption when the market is presently lacking so much freedom?

      • Bob_Robert

        ” it presumes that the division of labor is natural as it presently exists”

        If there is a more efficient division, do it. The greater efficiency will prevail. That’s not a presumption, it’s a reality.

        “Why should [that] be our presumption when the market is presently lacking so much freedom?”

        Because that’s also what happens when people are left alone.

        • http://socialmemorycomplex.net Jeremy Weiland

          Efficient with respect to what? Do you humans always select for efficiency? Is this the only goal to be maximized with greater freedom and autonomy?

          The realities you speak of are only real when everything is reduced to economics. As a left libertarian, I expect a broader construing of human ends to prevail–once people have a chance to consider it for themselves.

          • Bob_Robert

            Efficiency of achieving your ends.

            “Do you humans always select for efficiency?”

            People use means to achieve ends. Individual’s judgements of what the “best” means are, are based upon their effectiveness (efficiency) at achieving those ends.

            If your ends are achieved best by not having a “boss”, then do it that way, and I wish you the greatest success.

            Be careful not to be intolerant of others merely because they have different judgements of what the efficiency of various means are, lest your own means be so judged.

          • http://socialmemorycomplex.net Jeremy Weiland

            A big part of our project is showing the pragmatism of things like anti-hierarchy. But pragmatism implies goals that you’re working towards, as you state. Now, you may see economic wealth as the value to be maximized, and that’s fine as long as you’re clear about it. But to say that’s maximizing wealth is “natural”–and not a learned coping mechanism for a society constructed to give wealth primacy–well, I’d have a problem with that.

          • Bob_Robert

            Why do you think that my values that I wish to maximize have anything to do with anyone else’s?

            The way you wrote this, it seems as if you’d “have a problem with that” if what I wanted was to maximize wealth.

            Why do you think your values are so perfect that you get to “have a problem with that” if someone else chases some other dream?

            Do I get to “have a problem with that” if you chase a dream I don’t like?

  • Daniel Shapiro

    A few quick comments. On bossism: the full title of the anthology edited by Gary Chartier and Charles Johnson is Markets Not Capitalism: Against Bosses, Corporate Power, and Structural Poverty. I had mistakenly thought Gary Chartier used the phrase “bossism” in his BHL piece. It has been used in left libertarian literature, and in any event, I would run the same argument I made in my post about a prediction that bosses would be minimized in a freed market or that there is a weighty moral objection against someone being a boss or the function of bosses. Second, on the Mondragon cooperatives: it’s unclear what conclusion we can draw from them. A key question is whether the kind of competition that exists in Spain is comparable to the vigorous market competition in a libertarian society with a freed market. Third, workers would have to be able to sell their shares in a freed market, for if the law prevented them from doing so this would be quite oppressive and anti-libertarian, and it’s hard to see how one would want to be an owner of a firm if one couldn’t sell one’s share.
    I am quite busy this week, so I won’t have any more time now to respond to comments. I am grateful for the comments, and I am looking to how the symposium on left-libertarianism proceeds!

  • Scruffy Nerd Herder

    Bleeding Heart Fascists

  • Pingback: Query For Left-Libertarians | The Libertarian Alliance: BLOG

  • Pingback: Outsourcing My Critique of Left-Libertarianism - Unofficial Network

  • Pingback: Carson on Masters and Bosses | Bleeding Heart Libertarians

  • http://www.facebook.com/erik.mn.9 Erik Mn

    neverfox touched on your points in his comment. He’s referring to David Ellerman’s idea of a mis-framing of consent vs. coercion in contracts, and the idea that no employment contracts short of ‘democratic’ worker-owned cooperatives are really valid (http://www.blog.ellerman.org/category/classical-liberalism/). I think Ellerman’s re-framing is correct, but it seems he falls short of being an outspoken advocate for anarchism, though I think its implied in that workplace democracy can be direct or participatory, in lieu of representative to avoid alienation. There’s also the potential for consensus. I don’t know that this does a good job, but I tried: https://docs.google.com/file/d/0BxtZ-hLgmVaVZlZIUjM1dXJDajQ/edit?pli=1

  • Andrew

    The author assumes too much, i.e., that a free market requires firms to emphasize shareholder value above all else. Quite the contrary, this is a legal requirement of corporate law, imposed by the state, as is the legal fiction of corporate personhood and limited liability. A counter-example exists in Japan, which has a stakeholder’s model, and the result is a more democratic corporate structure with greater input and protections for workers — almost a voluntary mini welfare state within each company. Hostile takeovers are also much rarer there (and in fact no foreign corporation has successfully done it).

Set your Twitter account name in your settings to use the TwitterBar Section.