In a recent post on Linkedin, author and business consultant Tim Williams explains the “Complexity Tax,” contending that in many cases “growth actually produces diseconomies of scale.” The idea, as Williams describes it, is that growing a firm, adding more services and personnel, also necessarily adds layers of hierarchy and “significantly more overhead,” giving rise to all sorts of internal inefficiencies. These arguments are likely to sound very familiar to followers of Kevin Carson’s work, particularly as it is contained in his book Organization Theory: A Libertarian Perspective.
So if it is indeed true that, as Williams argues, many U.S. firms are too large, their organization models too complicated, how is it that smaller, leaner, more efficient competitors don’t overcome them from below? Put simply, to the extent that we actually had a free market in the United States (and in the world generally), smaller firms would do just that. The giants of American capitalism are less a result of competition and innovation than they are of a convoluted system of what the nineteenth century free market anarchists used to call “class laws” — consisting of subsidies and of barriers to entry that are virtually impenetrable. Today’s defenders of the free market must follow Lysander Spooner and Benjamin Tucker, to name a couple, in rejecting today’s corporate capitalism on free market grounds.