It seems that your saying organizations based on libertarian principles only produce “better” results once the organization reaches a particular size. That size isn’t a hard value X, but it is some value at which it is impossible to gather enough information to make good central decisions for the organization. The Sears example seems to show that (for modern businesses at least) X is larger than the number of employees in the company.
So, in scientific terms, we have a lower bound for X. Is there any data that provides an upper bound? I’m really not being facetious here, but it seems as though this argument implicitly concedes (for business at least) central planning is possible and that it produces “better” results for most organizations (at least those with <X autonomous members).
I have left “better” in quotes because I’m not sure yet how libertarians define this social welfare function. I suspect many libertarians value freedom so much they would always rate a “free” system as producing better results regardless of any other criteria-- this is the basis of your first reason to oppose central planning, and perhaps ultimately the only one that really matters to them.
No, he’s saying libertarian principles can’t be applied to organizations at all. They’re for countries. Would you call it a failure of democratic socialism if an employee-owned corporation went bust?
You shouldn’t say “ever” here, technology may advance to the point that a computerized central plan can outperform the free market. On that day, it’d be wise to work at adopting the new system.
Actually, that doesn’t even begin to address it. The issue to many of those aboard the Board is that you’ve basically asked, “Why isn’t a tennis ball edible like an orange? They’re both round, citrus-colored, and about the same size?” It’s hard to answer because the basic concepts and assumptions about the world are so fundamental that explaining them is hard. Hence most of the irritated answers tend to be of the “Because you can’t F*%#@! eat tennis balls you idjit!”
Not really; Sears’ problem was that they ended up stuck between one end and the other. Let me lay out another scenario to explain.
Let us say instead of trying this specific strategy, Lambert had decided to break his company up even further. Each division would develop its own internal structure, but after some planning periods every division would “own” (or own the remaining lease) on the space it occupied in all its stores. So Men’s Clothing would “own” all its floor space, Housewears has its space, etc. From then on, they source their own products, have their own org chart, and their major goals are to increase their own sales, not respecting each other’s. They open when they choose (respecting any previously agreed-upon contracts until those run out, of course) and target customers. The old store managers are now floor space managers who watch over the common hallways and make sure things work, taking the fees necessary to keep it running. Would this work? I mean, it’s Libertarian-topia. Government is, at best, a distant possibility since it would only be necessary if one of the departments tried to steal somebody else’s space, so clearly we have a law-and-order problem. And how could this possibly work with stores side-by-side vying for customers and eyeing each other’s prices - it’d be absolute anarchy! The Mean’s Clothing department might decide to target athletic women’s wear, while the Jewelry section might introduce a line of shoes, and wouldn’t that be inefficient? Meanwhile, Lambert would be sitting up presiding over the whole disaster and surely losing a fortune, right?
Except I just described a mall. And while some malls in some areas are having a hard time of it, many major urban malls are racking up the sales like gangbusters - which had led some commenters to suggest that the big anchors departments stores are actually economically inefficient uses of mall floorspace. Sure, there’s no guarantee it would work, but it’s the same situation: people and companies with common interests banded together to serve those interests. Rules exist both in private contracts and in universal agreements to govern the private and common interest. Everyone makes money, and if they can’t hack it then nobody really worries over it.
I’ll go a little further and say it’s like asking why consumers’ dislike for tennis ball juice isn’t a damning indictment of the orange juice industry.
True Scotsmen agree: Eddie Lambert was not running his company along Libertarian principles. Of course he was a huge Ayn Rand fan and liked to hand out audio books of Atlas Shrugged. No matter, he couldn’t have been a libertarian: no true libertarian would have done what he did.
Although to be fair, there are a fair number of libertarian leaning economists who would make an argument similar to John Mace: markets tend to select profitable companies and drive the remainder out of business. Milton Friedman made such an evolutionary argument for example.
The problem is John Mace also seemed to drink the no coercion kool aid, which puts the glib back into glibertarianism.
You miss the point. Malls don’t own the stores: they own the property and rent it out to individual businesses. Firms form because some sorts of arms-length contracts don’t work very well. Others do.
Big corporations have the disadvantage of red tape, but the advantage of permitting greater cooperation and long term relationships across business units. If you think the business units can work effectively with arms-length arrangements, why would you ever have one owner run them all?
Cite: Chandler, Williamson, Coase. This stuff has actually been studied at depth.
So if Sears had become extremely successful you’d have just said well gosh, good for them? Nothing to see here folks?
I just don’t see the connection of internal corporate structure to the economy. The most profitable companies are tyrannical oligarchies. But you probably don’t think this is instructive.
The biggest difference between this example, and a country set up on libertarian principles is the front doors. Customers are free to come, or not, depending on how they like your store today. They might even change their minds, tomorrow. Citizens have a much harder time leaving, and immigrants have a much harder time entering, so you have far less competition between countries for ‘customers’ than a store does.
What does that even mean, though? That Sears under his watch made individual liberty their highest ideal? That’s obviously not the case, people still had to do their work or be fired, and follow the orders of those above them. That he split the company into semi-autonomous units? What Libertarian principle is that, again?
Not sure what thread you’re reading, only jayarod7 wrote that Lambert wasn’t a true libertarian.
Goes off to write on the blackboard a hundred times…*
“I will read the whole thread before I post.”
“I will read the whole thread before I post.”
“I will read the whole thread before I post.”
“I will read the whole thread before I post.”
Too general. In some circumstances teamwork is better than individual efforts. In others it’s not.
Plus, in a huge organization like Sears, you’re always going to have different teams working on different things. It’s a question of how those different groups work together, not whether they will work together at all. They have to work together, by definition.
Such as? I’m drawing a blank- I can’t think of any team sport where individual performance is more important to winning than group effort. And for non-sports, the only thing I can think of *might *be car sales, but even that relies on a group of people supporting individual salesmen.
I’m really not sure why you feel the need to use insulting language here. Please don’t confuse the explanation of the principle with an agreement with that principle. I favor certain libertarian approaches, but I am absolutely not a Libertarian.
Well, I wasn’t thinking about sports at all. If that’s what you meant by “team” then we might be talking past each other. I was thinking a “team” in terms of a team of people in company or organization.
I would say just about all Sales is made up of individual efforts. Sales efforts are in many cases individual people, or small teams of individuals. They don’t and shouldn’t care too much about efforts of other individuals or other sales teams in their same organization.
If I’m selling widgets in the Northeast, I don’t particularly care about how you’re doing selling widgets in the Soutwest. Indeed, sales management systems such as Salesforce.com and Siebel are built around this concept. They attempt to prevent the salespeople from stealing customers from each other and channel conflict. That’s the job of the Sales Operations management. They care about the whole effort. But the individual people? They just want to sell.
Every sales compensation system I’ve ever seen is based on individual performance, or possibly the performance of the sales team working on a common goal. Not the entire organization. That wouldn’t make sense to motivate individuals to work hard on their deals. If I’m a salesperson at IBM, compensating me on how many deals I’ve landed makes sense. Or perhaps how many my team including pre and post sales engineers is doing. But the whole organization? That wouldn’t even be a sales compensation plan. That would be simply profit sharing. There wouldn’t be any motivation for me to close deals.
I don’t know if sales is the best example. Ideally if salespeople can collude and universally and arbitrarily set a price that’s higher than the market value, it would be better for everyone involved - that is unless of course the demand drops to which the maximum profit dips below what they would have sold at a lower price and higher volume.
I’ll suggest Research and/or Development. Different teams set out hypothesizing different means that may end up trying to prove the same conclusion and each thinking that the experiment they designed will best achieve whatever end they’re looking for. Finding the dead ends this way is much more efficient than the world pooling their resources and take on one experiment at a time.