You are told that capital tyrannizes over labor. I do not deny that each one endeavors to draw the greatest possible advantage from his situation; but, in this sense, he realizes only that which is possible. Now, it is never more possible for capitalists to tyrannize over labor, than when they are scarce; for then it is they who make the law — it is they who regulate the rate of sale. Never is this tyranny more impossible to them, than when they are abundant; for, in that case, it is labor which has the command.
– Frederic Bastiat, from Capital and Interest
A persistent criticism of capitalism as an ideology is that it is authoritarian by nature, and can only lead to tyrannical bosses ruling over dependent staff who are forced – by fear of poverty and starvation – to remain under their command. Certainly, if we take our example from the workplaces of today, most of them are hierarchical, and many of them pretty authoritarian – in extreme cases staff even need to ask permission to go to the bathroom. So there appears to be some credibility to this thesis.
In reality there is nothing inherent in the market that necessitates hierarchy, and many businesses have been successfully ran with decentralised structures. Ricardo Semler is an example of an entrepreneur who had such success running his business on a non-hierarchical model that he turned to teaching other capitalists to do the same. All the same, crappy bosses who like to throw their weight around the shop or office are ten a penny, and since no one likes working under a dictatorship we really have to question why more egalitarian models are diminishingly rare at the moment.
My theory is that this is because the tendency of a market it use the skills and propensities which the people within it already have, because it is costly and time consuming to inculcate them with new ones. For example, workplaces will look for staff who have experience rather than train them if they can afford to do so (especially where there is a high minimum wage.) Companies will sooner offer a raise to hold on to employees with a good work-ethic than take on new recruits and try to train one into them. The fact is humans qualities are less malleable than other factors of production, and so it’s usually going to be preferable to try and court the kind of employees you want rather than try to foster whoever walks in the door into a new sort of character; especially considering people have their own proclivities and desires for themselves as to what kind of ways they want their character to develop. This is why most of the companies that run in cooperative or non-hierarchical structures begin with this idea in their nature, and they will tend to attract a certain kind of person who shares in the vision and is competent to enact it. (Tim Kelley, an expert who currently helps companies adapt to what he calls “The New Paradigm in Business” states that as they do usually some number of employees flee, unable to adapt to the rights they are afforded, and responsibilities they must shoulder, under the changed system.)
Now am I saying that people are naturally slavish and therefore tend towards hierarchy in a free market?
Not at all!
The average person who enters the workplace has been through 11-13 years of a mandatory education system which is highly authoritarian and hierarchical at a time in their life (childhood) where they are most impressionable and their personalities are forming. Their proclivities have already been adapted to what was necessary for them thrive or at least survive under that system. Interestingly the empirical evidence on how people best learn seems to suggest that a cooperative learning environment is far more productive than the individualist one that is the dish of the day at school. A crappy boss is not that unfamiliar in aspect from a crappy teacher, and it’s hard to imagine that a population exposed to a long period of cooperative and mutually edifying education along the lines of the empirical evidence would be so tolerant of poor treatment from authority. If schools would teach reasoning, social skills, emotional handing, conflict resolution, and other soft skills, far more people would have the skills to run organisations. start business enterprises, or create egalitarian ones.
The Marxist ideal of workers owning the means of production is perfectly compatible with free market capitalism, and there is no reason why there should not be more worker run cooperatives, communally owned business, and organisations with polycentric structures – other than the fact that currently, workers have no idea how to own the means of production or run a business. Partly because this requires different skills from what is required to complete their jobs from day to day, and partly because they are pre-conditions by years of hierarchical and authoritarian state education. If Marx was right and bosses provide no value, only skimming profit off the top, then workplaces without bosses will surely be more efficient and out-compete workplaces that shell out unnecessarily on paying them – but we will never know until we reform our education system.
Source: Seeing the Unseen