Contents

Part One: State Capitalist Intervention in the Market

Chapter One. A Critical Survey of Orthodox Views on Economy of Scale
Chapter Two. A Survey of Empirical Literature on Economy of Scale
Chapter Three. State Policies Promoting Centralization and Large Organizational Size

Part Two: Systemic Effects of Centralization and Excessive

Organizational Size
Chapter Four. Systemic Effects of State-Induced Economic Centralization and Large
Organizational Size
A. Radical Monopoly and Its Effects on the Individual
B. Systemic Effects on Institutional Culture
C. The Large Organization and Conscript Clienteles
D. The New Middle Class and the Professional-Managerial Revolution
Postscript: Crisis Tendencies
Appendix 4A. Journalism as Stenography

Part Three: Internal Effects of Organizational Size Above That

Required for Optimum Efficiency

Chapter Five. Knowledge and Information Problems in the Large Organization

A. The Volume of Data
B. The Distortion of Information Flow by Power
Conclusion and Segue to Chapter Six
Appendix 5A. Toilet Paper as Paradigm

Chapter Six. Agency and Incentive Problems in the Large Organization

Introduction
A. Mainstream Agency Theory
B. Radical Agency Theory
Summary

Chapter Seven. Economic Calculation in the Corporate Commonwealth (the corporation

as planned economy)
A. The Divorce of Entrepreneurial from Technical Knowledge
B. Mises vs. Hayek on Distributed Knowledge
C. Rothbard's Application of Mises' Calculation Argument to the Private Sector
Conclusion

Chapter Eight. Managerialism, Irrationality and Authoritarianism in the Large

Organization
A. The Corporate Form and Managerialism
B. Self-Serving Policies for "Cost-Cutting," "Quality" and "Efficiency"
C. The Authoritarian Workplace: Increased Hierarchy and Surveillance
D. Authoritarianism: Contract Feudalism
E. Authoritarianism: The Hegemony of "Professionalism"
F. Motivational Propaganda as a Substitute for Real Incentives
Appendix 8A. Blaming Workers for the Results of Mismanagement
Chapter Nine. Special Agency Problems of Labor (internal crisis tendencies of the large
organization)
Introduction
A. The Special Agency Problems of Labor
B. Labor Struggle as Asymmetric Warfare
C. The Growing Importance of Human Capital: Peer Production vs. the Corporate Gatekeepers
D. Austrian Criticism of the Usefulness of Unions
Conclusion
Appendix 9A. Sabotage in a London Nightclub: A Case Study
Appendix 9B. Yochai Benkler on Open-Mouth Sabotage: Diebold and Sinclair Media as Case Studies in
Media Swarming

Chapter Ten. Attempts at Reform from Within (Management Fads)

A. New Wine in Old Bottles
B. Lip Service and Business as Usual
C. Management by Stress
D. Dumbing Down
Conclusion
Appendix 10A. The Military Origins of Quality Control

Part Four: Conjectures on Decentralist Free Market Alternatives

Chapter Eleven. Structural Changes: The Abolition of Privilege

A. Reciprocity
B. Privilege and Inequality
C. Specific Forms of Privilege, and the Effect of Their Abolition
Appendix 11A. Reciprocity and Thick Libertarianism

Chapter Twelve. Structural Changes: The Cost Principle

Introduction
A. Peak Oil and the "Long Emergency"
B. The Scale of Possible Savings on Energy Inputs
C. Path Dependency and Other Barriers to Increased Efficiency
D. The Cost Principle and the Work-Week
E. The Cost Principle and Local Autonomy

Chapter Thirteen. Dissolution of the State

A. Revolution vs. Evolution
B. Dialectical Libertarianism and the Order of Attack
C. The "Free Market" as Hegemonic Ideology
D. Gradualism and the "Magic Button"
E. "Dissolving the State in the Economy"
F. Counter-Institutions
G. Counter-Institutions and Counter-Economics
H. The Two Economies and the Shifting Correlation of Forces
I. Privatizing State Property

Chapter Fourteen. Decentralized Production Technology

Introduction: Basic Goals and Values
A. Multiple Purpose Production Technology
B. Polytechnic
C. Mumford's Periodization of Technological History: Eotechnic, Paleotechnic, and Neotechnic
D. Decentralized Agriculture

Chapter Fifteen. Social Organization of Production (cooperatives and peer production)

Introduction
A. Self-Employment: Increased Productive Efficiency
B. Cooperatives: Increased Productive Efficiency
C. Innovation Under Worker Self-Management
D. Social Benefits of Worker Empowerment
E. Peer Production
F. The Social Economy and the Crisis of Capitalism

Chapter Sixteen. Social Organization of Distribution, Exchange and Services

A. Demand-Pull Distribution
B. Local Exchange Systems, Household and Informal Economies
C. Certification, Licensing and Trust
D. Social Services
E.. Mutual Aid and the Voluntary Welfare State
F. Education
G. Healthcare

Bibliography

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
twenty-first 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 contemporary
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... entitled to its
full product. Unlike the rest of the socialist movement, the individualist anarchists 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 management 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 small-scale 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.

The chapters of this book 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 dialogue with other
organization theory bloggers and writers. So in a sense this is a collaborative product,
and I owe my readers a debt of gratitude.

NOTES

1. Kevin A. Carson, Studies in Mutualist Political Economy. Self-published via

Blitzprint (Fayetteville, Ark., 2004), p. 9.