Family Feudal Firm

The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account

Why don’t I watch Game of Thrones? Well…

Nothing annoys me more than when I have an idea and promptly discover that someone has already done it better than me. In this case, Elizabeth Anderson’s two Tanner lectures from 2015 and this more recent article for Vox. A brief summary of the lectures:

  • Lecture 1 discusses the association of the free market with left-wing radicals until the advent of the industrial revolution. Masterless artisans were very keen on the free market and private property because it safeguarded their autonomy from feudal, landed lords and avaricious kings. The industrial revolution changed that dynamic. Production that had previously been the preserve of small proprietors became the domain of huge corporations that could operate at scale. Private property ceased to be a place of financial refuge for individuals and was instead the branding mark of the capitalist.
  • Lecture 2 extends this notion into the present day. Business seek to control not only the behaviour of their staff in the workplace but also their actions off the clock and the ideas that occupy their minds. Anderson – in a deliciously provocative move – equates their actions with those of Communist dictatorships. Corporations act as “private governments” – states within states with their own laws, norms and mechanisms of enforcement.

The lectures are well worth reading so I am not going to rehearse their arguments here. Rather I want to riff off the analogy in the second lecture based on my 20-odd years working in the private and public sectors:

  • Virtually no workplaces follow democratic principles. Perhaps the closest I have encountered to a democratic workplace was PwC – where the CEO was voted in. The catch being that the CEO is voted in by the partners (individuals with an equity stake in the firm) and key decisions (major merger and acquisitions) were put to partnership votes. Partners make up around 10% of the firm (in Australia, about 450 of 5,000). This is reminiscent of ancient Athens where adult male citizens who had completed their military training could vote and they made up only 10% of the population (women, children, foreigners and slaves being in eligible). The division between partners and non-partners was rigidly enforced (communciations had to start with “Dear Partners and Staff”).
  • Some organisations are built around families. These tend to resemble monarchies – with a court forming around the king, sorry, managing director and rival factions led by different family members. The challenge for any monarchy is the death of the king and the smooth transition of power. Needless to say, this transition is seldom smooth.
  • Perhaps the dominant political form for many organisations is feudal. In the feudal system, resources are owned by lords. Lords may all submit to the authority of a king and pay regular tribute but they have power within their own domain. Lords will compete with each other for resources and power. They may come together to fight external threats. Individual lords may also leave the state at any time and ally themselves with enemies and take their retinues with them. Now depending on the organisation, resources may be “bodies” (staff reporting to you), customer relationships, profit & loss responsibility, revenue streams, control of physical or intangible assets, etc. Lords offer protection to those under their rule but demand loyalty and tribute in return.
  • Very few organisations are genuine bureaucracies where processes rule. Many organisations camouflage themselves as such to outsiders but do not assume that this is how insiders see them.
  • Most organisations are some mix of all of the above.

While we talk about our societies being modern and democratic, much time (perhaps the majority of lived experience) is spent in enviroments our medieval ancestors would recognise. Our lives are largely non-democratic.

Incidentally, this is why Jeffrey Pfeffer‘s work still resonates. Pferrer’s work on power has been described as “machiavellian” and this is truer than most of his commentators know. Machiavelli was a humanist operating in a time where feudal power struggles were just starting to be eclipsed by the globalised mercantilism that we know today. Northern Italy has the centre of this transformation – just as the Northern California in which Pfeffer is located is centre of our current transformation of capital. Like Machiavelli, Pfeffer is ultimately a humanist counselling future princes (of both genders) in the dark arts of statecraft. The reason that his work resonates while drawing upon pre-modern sources is that our world is fundamentally pre-modern.

N.B. These non-democratic institutions are not especially free market either. French historian Fernand Braudel theorised that capitalism is actually an anti-market – suppressing and supplanting market exchanges. Coase’s theory of the firm states that firms exist because market pricing includes expensive transaction costs that firms can avoid through control of their value chains. Only suckers buy on the market.

Libertarians spend a lot of time decrying the repressive possibilities of democratically-elected governments. And they are not wholly wrong to do so. But they have no concept of the threat posed by private governments and anti-markets. And those threats are real.

So why don’t I watch Game of Thrones? Well, after 20 years in the service of lords and ladies, citizens and monarchs, it hold no escapism for me. Even the dragons seem tame compared to the world that surrounds me. Their breath can only scold the skin, not the heart that lies within.

This is part of the Into The Maelstrom series.

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