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January 29, 2009




But does such an analysis lead you to anywhere except:
1. The idea all organisations should be small enough for people to feel a sense of practical engagement with them, whether through ownership or 'small group bonding' by staff of the sort encouraged in armies by the formation of small platoons. Which doesn't feel particularly practical.

2. That a properly balanced pluralism is the least inefficient default micro culture within any organisation? I fear that this idea could be reduced further, if anyone ever tried to implement it, to some hideous game of picking the right balance of staff according to a compulsory Mayers-Brigg test....


"The failure of markets lay in the fact that they did not restrain these organizational failures. Indeed, it’s arguable whether they even failed in this regard...Why assume that markets must work gently and pre-emptively?"

Because they didn't restrain the organisational failures? You can't restrain something after the fact.

Larry Teabag

"Why assume that markets must work gently and pre-emptively?"

Presumably because we're using the word "work" with an implicit meaning of "to our benefit". Otherwise an uninhibited free market in nuclear weapons could "work" perfectly, and self-correct beautifully in leading to the annihilation of homo sapiens.

Nicole S

Is it not in a bank's interest to abolish the bonuses that encourage traders to act against the bank's interest?

Tristan Mills

I believe Rothbard started looking in this direction by pointing out that the calculation and organisational problems which affect government also affect big businesses.

Kevnin Carson's new book on Organisational Theory is probably another place to look for more about this.

I'm not sure how the paradigm you mention is both hierarchical and individualist - the two ideas seem incompatible to me (at least an enforced hierarchy such as that found in most organisations).


Shortcomings in Company Law? You could blame the government for that.


This post could be summed up in 3 words: 'Bureaucracies are incompetent'


You speak to generally some of the banks behaved stupidly. Mainly British and American. But not all banks and large investors did.

One of the key differences between large corporations and governmet organisations is that mistakes by government organisations affect us all. Either directly through poor service or indirectly through wasted taxes. While mistakes by large corporations won't because we're not all associated with them.

It would be very naive to pretend that there are not some people and industries who have and will do very well out of this recession.


Of course there are public choice issues in any organisation, private or public. The difference is that private organisations can go out of business if they engage in too much agency type behaviour. The problem is that state owned organisations can't. What is so scary about the current situation is that from banks to car makers the government seems determined to prevent anyone from going out of business.

Alderson Warm-Fork

"While mistakes by large corporations won't [affect us] because we're not all associated with them."

Forgive me if I'm stating the obvious, but surely the last few years are a good example of large corporations making mistakes that have then affected everyone else?

Kevin Carson

Thanks, Tristan.

In the case of the largest corporations, I don't think the public-private distinction is even meaningful. Shareholder ownership is as much a myth as worker ownership of the old Soviet economy. Corporate management, like the Soviet managerial bureaucracy, is a self-perpetuating oligarchy in control of a free-floating mass of unowned capital. And the boundary with the state is very porous, what with the common pool of personnel constantly rotating between senior management and the political appointees of the executive branch. It makes as much sense to call the largest corporations private businesses as it would to have called the Duke of Burgundy a private landlord. The large corporations occupy the commanding heights of state power in the same way that feudal landlords did in the Old Regime. What we really have is an interlocking directorate of oligarchies.

Bob D

Did markets fail?

I think we should remember that financial asset markets screwed up. Had we forgotten that such markets over-shoot?

Lots of markets work fine almost all the time.


I think you're right about the significance of cultural theory analysis, but I'd suggest the banking failure is now being seen as a failure of regulation (hierarchical organisation)in the face of rampant deregulation (individualist organising). A fatalist view of the markets is given by Nassim Taleb. An egalitarian view is found in David Korten's new book, Agenda for a New Economy (among other places).

patek philippe watches

This is just one idea, and perhaps displays no more than my limited imagination. If there are better ideas out there, that amount to more than "implement something called "market socialism" and then - alacazam! - full employment!" then I'd love to hear them. http://www.watchgy.com/ mostly bank deposits, fell by £143.2bn in Q1. And of course there’s no guarantee such buying will continue.

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