In an important essay, “Corporations versus the Market, or Whip Conflation Now,” Roderick Long has identified a fallacy committed by both defenders and critics of libertarianism. Those who commit this fallacy identify too closely the institutions of a libertarian society with those of capitalism as it now exists. In doing so, they are blind to the manifold ways corporations, privileged by the state, distort a genuinely free market. Because of this distortion, left libertarians prefer to call what they want a “freed” market rather than a “free” market. (It should be noted, though, that a freed market is a species of free market. The left libertarians’ preference for the term “freed” hardly suggests that they would not also support a free market that arose without ever suffering from the distortions they deplore.)
Long’s point is a good one, but I think that he and other left libertarians sometimes go too far with it. I should like to distinguish two types of anti-conflation, weak and strong. Weak anti-conflation is the view that it is wrong to assume that the institutions of a libertarian society will resemble those that now exist under capitalism. We should not assume, e.g., that large, “hierarchical” corporations will be a prominent feature of the freed market. Strong anti-conflation goes further. Its advocates say that certain institutions that now exist will not be present, or at least won’t be present to the same extent, in the freed market. In brief, the weak anti-conflationist says, “Don’t assume that things will be the same in the freed market”; the strong anti-conflationist says, “We can assume that things will be different in the freed market.”
Weak anti-conflation seems to me a correct position, and strong anti-conflationists are clearly sometimes right. We can say, e.g., that state subsidies to businesses would not exist in a freed market: we are not confined to the anemic claim that we don’t know whether such payments would exist in a genuinely free market. Can we say the same about the claim that hierarchical corporations would be largely replaced in a freed market by worker-owned, non-hierarchical firms? I do not think so.
The argument that hierarchical corporations feature only in distorted, not genuinely free, markets goes something like this. People are strongly averse to taking orders from others and having little or no say about the conditions under which they work. If nevertheless many workers today have to labor in Dilbert-like settings, this is not the result of truly voluntary choices on their part. To the contrary, large corporations privileged by the state have substantially more bargaining power than workers. Faced with this disparity of bargaining power, workers have only poor options. If they do not accept the bad terms offered by their corporate employers, they may not be able to get a job at all. The situation is made worse by the fact that the weak bargaining position of the workers is itself the result of corporate and state acts of dispossession against workers and small property owners, both in the past and the present.
I don’t think that wages are determined by bargaining power in the way that left libertarians suggest, but this is not the issue that will be pursued here. Rather, the question I want to consider is this: Suppose that a genuinely free market exists. Would most laborers work in worker-owned firms, such as cooperatives, or be self-employed, rather than work in companies that they do not own?
One reason to think so is that people don’t like to take orders from others. Would workers not then prefer firms in which they themselves decide how the firm is to be run, rather than be subject to the whims of a boss? Here, though, there is a problem. It does seem entirely plausible that people dislike taking orders from others; in a worker-owned firm, though, each worker still has to take orders from others. The group of worker-owners makes the decisions, and individual workers must sometimes still do what they don’t want, unless what they want always is supported by the group’s decision procedure.
True enough, each worker has a say in setting policy; but to those who dislike taking orders, how much solace does this provide? The issue is analogous to that of citizens in a democracy: the fact that one has a vote hardly implies that one is deciding in a significant way what is to be done. Against this, of course, workers in a firm are likely to form a vastly smaller group than do the citizens of a modern state, so each worker will have more of a say; but it remains true that each worker counts as but one among many. This problem can be avoided in firms that consist of one worker only; but to expect an economy to arise in which most people are self-employed is surely an example of what Marx called “duodecimo editions of the New Jerusalem.”
Some might be inclined here to adduce workers’ solidarity: would it not be likely that those who decided to join together in a firm would have a similar sense of the policy the firm ought to follow? I think this suggestion underestimates the propensity to conflict among members of small groups.
Perhaps, though, there is more to the complaint against hierarchy than has so far been considered. People might dislike, besides having to follow the decisions of someone else, the fact that some particular person or group stands over them and is in a position to tell them what to do. In a worker-owned firm, no one occupies this superior role. If you lose a policy decision, then you have been outvoted by equals.
The strength of such a preference for equality of status is hard to estimate, but there is something on the other side that needs to be taken into account. How well the owner of a business does depends on the success of the firm. Many firms fail, and in the case the owner will receive nothing and may have to make up the firm’s debts from his own resources. Many people prefer to receive a fixed salary rather than to leave their fate to the market’s verdict. As an example, most academics receive a fixed salary. One can readily imagine another system, e.g., one in which professors’ salaries were entirely dependent on fees from students they were able to attract. European universities in the past sometimes operated, in whole or part, on this plan. It is highly doubtful, though, whether most academics today would prefer to entrust their financial fate to student choices in this way. If they want a fixed salary, then the risks of financial failure they decline to assume must be passed on to others: these risks cannot be conjured away. More generally, workers, even in a freed market, may prefer to leave the risks of decisions that will result in profit or loss to others. It seems perfectly sensible for workers to balance their desire to run things themselves against the costs of assuming the risks of loss and to find the latter consideration the weightier.
I do not say that this suffices to show that worker-owned firms would not prevail in a truly free market. My theme is more modest: we should not too readily assume that the institutions of a free market would overthrow the hierarchical structures that left libertarians oppose. Left libertarians who are sure that a freed market would sweep away hierarchy and other features of the present order that they dislike should remember the words of Talleyrand: Surtout, pas trop de zèle.
Per the request of BHL, the comments will be turned off here so that they can be redirected to the original article.