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Organization Theory by Kevin Carson

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Mutualist/individualist anarchist Kevin Carson's first book. The book discusses the labor theory of value, the history
of the capitalist system, and the theory and practice of mutualism, a strain of anarchism founded by the French
political theorist Pierre-Joseph Proudhon. Required reading for all libertarians.



If you download, please consider donating money to the author at his blog, Mutualist Blog: Free Market
Anti-Capitalism.



Authors Preface:



This book had it origins in a passage (the “Fiscal and Input Crises” section of Chapter Eight) of my last
book, Studies in Mutualist Political Economy. If you read that passage (it’s available online at Mutualist.Org),
you’ll get an idea of the perspective that led me to write this book. The radical thoughts on organizational
pathologies in that passage, both my own and those of the writers I quoted, dovetailed with my experiences of
bureaucratic irrationality and Pointy-Haired Bossism in a lifetime as a worker and consumer. To get the rest of the
questions on my perspective out of the way, I should mention that the wording of the subtitle (“A Libertarian
Perspective”) reflects a long process of indecision and changes, and is something I still find unsatisfactory. I
vacillated between the adjectives “mutualist,” “anarchist,” “individualist
anarchist,” and “left-libertarian,” not really satisfied with any of them because of their likely
tendency to pigeonhole my work or scare away my target audience. I finally ended up (with some misgivings) with plain
old “Libertarian.” It’s a term of considerable contention between the classical liberal and
libertarian socialist camps. I don’t mean the choice of term in a sense that would exclude either side. In fact,
as an individualist in the tradition of Tucker and the rest of the Boston anarchists, I embrace both the free market
libertarian and libertarian socialist camps. I chose “libertarian” precisely it was large and contained
multitudes: it alone seemed sufficiently

broad to encompass the readership I had in mind. I write from the perspective of individualist anarchism, as set forth
by William B. Greene and Benjamin Tucker among others, and as I attempted to update it for the twentyfirst century in my
last book. Here’s how I described it in the Preface to that book:



       In the mid-nineteenth century, a vibrant native American school of anarchism, known as

       individualist anarchism, existed alongside the other varieties. Like most other contempo-

       rary socialist thought, it was based on a radical interpretation of Ricardian economics. The

       classical individualist anarchism of Josiah Warren, Benjamin Tucker and Lysander Spooner

       was both a socialist movement and a subcurrent of classical liberalism. It agreed with the

       rest of the socialist movement that labor was the source of exchange-value, and . . . enti-

       tled to its full product. Unlike the rest of the socialist movement, the individualist anar-

       chists believed that the natural wage of labor in a free market was its product, and that

       economic exploitation could only take place when capitalists and landlords harnessed the

       power of the state in their interests. Thus, individualist anarchism was an alternative both

       to the increasing statism of the mainstream socialist movement, and to a classical liberal

       movement that was moving toward a mere apologetic for the power of big business.



I belong to the general current of the Left so beautifully described by the editors of Radical Technology (“the
‘recessive Left’ of anarchists, utopians and visionaries, which tends only to manifest itself when dominant
genes like Lenin or Harold Wilson are off doing something else”). As such, I tend to agree with the Greens and
other left-wing decentralists on the evils to which they object in current society and on their general view of a good
society, while I agree with free market libertarians on their analysis of the cause of such evils and how to get from
here to there. In short: green ends with libertarian means.



My analysis of the large organization is informed by the same principles as my study of the state capitalist economy,
namely: 1) that the exercise of power creates conflict of interest, within the nominally “private”
corporation as well as in the larger economy; 2) hierarchy, by separating authority from knowledge, leads to the same
informational problems within an organization that Hayek described at the level of political economy; and 3) by
externalizing effort and reward on different actors, authority creates fundamental incentive problems. The primary
function of authority is to create privilege: the wielder of power is able to externalize the costs of his decisions on
others, while appropriating the benefits for himself. The result, when the costs and benefits of action are not
internalized by the same actors, is that particular forms of organization are adopted beyond Pareto-optimal levels, and
self-reinforcing distortions in feedback lead to a series of synergetic instabilities and interventions of the sort
Mises described at the level of the economy as a whole. In short: state capitalism, along with the large, pathological
organizations it breeds, is unsustainable.



The central question of Part One is that of Ronald Coase: If markets are more efficient than hierarchy and planning, why
are the latter so prevalent? Why do we find the phenomenon that Coase remarked on—islands of corporate central
planning in an economy supposedly governed by the market? Coase’s answer was that firm boundaries—the
boundaries between market and hierarchy—are set at the point at which the transaction costs of market contracting
surpass than those of administration and planning. The subject of Part One is the extent to which the state artificially
shifts these boundaries upward, so that the size of the dominant organization is far larger than warranted by genuine
considerations of efficiency.



Part Two (consisting of a single chapter, Four) considers the pathological effects of large size, centralization and
hierarchy, on a systemic level, under the hegemony of the corporation and the centralized state. That is, it considers
the effect of the predominance of the large, hierarchical organization, and of the professionalized and bureaucratic
culture it spawns, on the character of society as a whole.



Part Three examines the effects of large size and hierarchy within the large organization. Chapters Five and Six are
brief surveys of the literature on information and incentive problems within the large organization, both by
conventional organization theorists and by radical thinkers like Robert Anton Wilson and Paul Goodman. Chapter Seven
applies the Austrian critique of central planning to the corporation. Chapter Eight is a broad-ranging examination of
the irrationality and authoritarianism of the large organization, and of the general pathologies of managerialism: in
particular, it is a critique of the currently prevailing MBA model of downsizing human capital, stripping assets, and
gutting long-term productive capabilities in order to game management bonuses and stock options. Chapter Nine is a study
of the internal crisis of governability of the large corporation, and—based on conventional literature on
incomplete contracting—applies an asymmetric warfare model to labor relations within the corporation. And Chapter
Ten examines the broad range of manage-

ment theory and reform gimmicks, which I argue either serve as a mere legitimizing ideology of lip-service, or amount to
an attempt to incorporate libertarian and decentralist elements into the old framework of corporate hierarchy rather
than making them the building blocks of a fundamentally new form of society.



Finally, Part Four—of which I am especially proud—surveys the range of technical and organizational
alternatives that might prevail in a decentralist, cooperative, genuinely free market economy. Chapters Eleven and
Twelve discuss the twin structural principles of a genuinely libertarian society: the abolition of privilege and its
replacement by a genuinely free market governed by the unfettered operation of the cost principle. Chapter Thirteen
discusses the most feasible process for dismantling the state and moving toward such a society, summed up by the Wobbly
slogan “Building the structure of the new society within the shell of the old.” Chapter Fourteen examines
the technological building blocks of a decentralized economy (especially small-scale general-purpose production
machinery, desktop production machinery, and community-supported agriculture) based on smallscale production for local
markets. Chapters Fifteen and Sixteen, finally, examine the organizational building blocks of production (cooperatives,
peer production, and the informal and household economies) and distribution.



This book, for better or worse, is an example of peer production. The chapters have all appeared as rough drafts online,
and much of the material within them appeared before that as posts on my blog (Mutualist Blog: Free Market
Anti-Capitalism). The final form of this book reflects the enormous amount of fruitful discussion in the comments at my
blog, and the helpful questions and criticisms raised by my readers, and the insights I have gained from dia-

logue with other organization theory bloggers and writers. I’ve received invaluable help in identifying typos and
other errors from readers (particularly Matthieu Gues) who have compiled painstaking errata lists from reading the
online drafts. Both the pdf I submitted to the publisher and the beautiful cover design are the work of Gary Chartier.
So in many ways this is a collaborative product, and I owe my readers a debt of gratitude.

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