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[ox-en] Re: Inefficiency in capitalism



Hi Robin and all!

2 months (62 days) ago Robin Green wrote:
I want to stray off-topic a bit and talk about large organisations of
all types.

I don't consider it really off-topic because these are indeed
important questions. When I talk of superiority then efficiency is of
course something to consider.

Right-wingers love to talk about how government is
supposedly inefficient, but many of their criticisms also apply to
many corporations and indeed charities.

Absolutely. I've seen this all over the place in companies -
escpecially in big ones. AFAICS it gets worse if competition is low -
or even not existent like in governmental institutions.

Now, I must note that I'm not trying to say that large organisations
are in an *absolute* sense inefficient. It may be that the savings you
get from economies of scale *sometimes* outweigh the "inefficiencies of
scale". I'm saying it's not necessarily a trivial question to answer,
because you have to take into account all sorts of ways in which "the
market" deviates from the "rational free agent" model, i.e. entities
deciding what are their wants, and then making the choice which best
satisfies those wants.

That's certainly one point. The other point Michel already made in
this thread: Relative efficiency is enough. This brings me to my first
point I'd like to make.

I think Free Software and generally peer-X is exactly superior because
the goal of Selbstentfaltung is not relative but absolute quality. And
quality here may well mean efficiency [1]_.

.. _[1] See all the frameworks and useful tools created as Free
	Software. If efficiency (of development) would not be a goal
	these would not exist.

In endeavors driven by competition you don't need absolute efficiency
to make the endeavor a success. It perfectly suffices to be just a bit
more efficient but usually similarly efficient as your competitor.
This is a result of the alienated relation of those working to the
endeavor itself: They don't do it *because* of the endeavor but for
reasons *external* to it - such as making money.

Indeed that is the source of the hell which those people experience
who are *really* interested in the endeavor (such as me :-( ...). At
some point they better learn that inefficiencies are part of the game
or otherwise you get really unhappy. In other words: Selbstentfaltung
is not possible - or at least severly limited - in alienated
relationships.

But *regardless* of whether these inefficiencies swamp the economies of
scale you sometimes get by consolidating companies, charities or
government agencies into larger units, there is an important question
here. Allowing all of these inefficiencies to exist is, well, stupid,
*even on capitalism's own terms* - unless it's somehow inevitable. But
is it inevitable? That is to say - is it inevitable that in a large
organisation you will have large amounts of money continually being
wasted by people who put their own interests above that of the
organisation - or who misperceive what will best serve the
organisation's goals? Or is it possible to have a more accountable,
responsible large organisation which better minimises such leaks? If the
latter, why isn't capitalism adopting it already, at least in the case
of corporations? I am very interested in these questions (even though
they may be a bit offtopic for this list).

The second point I'd like to make is that the notion of efficiency
need to be questioned critically - and this can be done on a couple
axises.

One axis is whether it is inefficient for those who directly benefit
from these inefficiencies. Of course not. For them it perfectly makes
sense or othewise they would change something. The reasons Grahman
outlined are just one example. The interesting question here is indeed
the governance question: Is it possible and if so is it efficient(!)
to stop those people? I tend to say: A bit of misuse you have to
accept in every social system because the (governance) costs to stop
it are higher than the outcome.

Another axis is the question of the field in which efficiency is
strived for. You mainly gave examples of monetary efficiency. But even
here there are different efficiency considerations for long and short
term. In a world where monetary efficiency is more and more
short-termed it is clear that long termed efficiency is harder to
achieve if it contradicts short-termed efficiency.

The picture of course changes again if you consider non-monetary
efficiency which then can be efficiency in many regards. Environmental
efficiency may come to most minds here but also saving work is a valid
point (in which capitalism works very well). Those types of efficiency
are simply not on the agenda of monetary efficiency as long as they
have no price.

Peer production changes this at least to some degree because there is
not something like money which dictates a lot of the frame in which
you are acting. Peer production opens the possibilities to consider
all these different types of efficiencies one can think of. This is of
course a great chance for environmental considerations though I'd like
to stress that there are other things which also need consideration.
And even environmental considerations are often not so simple. But
that is a result of acting in a system which is not dominated by one
thing - money in this case, God in former societies.

I think what is more likely, though, is that in many cases an
inefficiency which would be terminally stupid for a small business,
because it would be so costly relative to revenues, is tolerated by
huge multinationals because it does not have much of an impact.

Certainly.

I wonder, what other "innovations" in organisational behaviour
and structure are being overlooked because they are simply too far from
the mainstream, or too threatening, to be on the radar?

I think working openly in cooperative structures is one such
innovation which is tried to integrate into capitalism. However, I
think it can not work on an absolute scale because that would mean to
tear down the borders of corporations. Free Software companies are a
good example: They basically sell add-on services - not the software
as such.

In sum: capitalism is supposed (by its most ardent advocates, at least)
to be supremely efficient. Nonsense. Inefficiencies are all over the
place. Of course it's considerably more efficient than, say, the Soviet
system, but that's like stating "hey, at least the United States is
more moral than Nazi Germany". It's such a low basis for comparison.

There is also another point to make here: The Soviet block adopted the
alienated money system but on top of this created another super
structure. This second level of alienation in relation to the pure
money based system had no chance in the long run.

I expect some people are wondering - why do you care so much about
capitalism's inefficiencies? Who cares if capitalists make stupid
mistakes and shoot themselves in the foot? Well, this leads to several
important lines of thought:

* To what extent are these inefficiencies solvable by the capitalist
system? To what extent will this happen anyway due to "market
forces" and to what it extent will it require some, shall we say,
"prodding"?

I think they are not solvable by the capitalist system because if they
would it would have been done already. However, as I said on your
notion of efficiency. For instance parallel development can be a waste
of time but it also can give room for new ideas.

* Are there further, new opportunities for peer-production/peer-X to
"out-compete" capitalist entities in their own terms? To what extent can
peer-X coexist inside capitalism, as seeds of the future?

On the abstract level I'd say that the power of Selbstentfaltung sets
absolute goals rather than relative ones. That's an intrinsic and
irreducible feature of Selbstentfaltung.

* How will capitalists invested in the old ways (i.e. almost all of
them) attempt to unfairly compete with / slant the playing field against
peer-X? How should we fight back?

I think they structurally they are worse off.


						Grüße

						Stefan

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