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I define success as "the company is still around many years later". All the alternative ways to construct a company are nice, but they are worth nothing if the

I define success as "the company is still around many years later". All the alternative ways to construct a company are nice, but they are worth nothing if the company will not exist for long. The market is, in some very real sense, an evolutionary system. There is clearly a fitness function, and only the fittest companies survive. You can not freely pick your fitness function, it's implicitly defined by the boundary conditions of the market. Anti-trust laws are important facets of these boundary conditions, especially because they keep the market from falling into degenerated states. In the end, the different local markets, shaped by the laws of each country, are competing on a world scale. I am not saying that worker-owned companies wouldn't be nicer, but they are clearly less effective/less fit in the current market system. Otherwise we would have more of them. It is not clear to me that this is just because a "strong leader" system is cheaper and more easily extorts the workers. I am not convinced that steering by committee, especially if most of the committee members are maybe less educated than the average CEO, works very well from a long term strategy perspective.

eesmith 9y ago
In that case, most of the longest-lived companies are privately held. The current market system is built by capitalists, for capitalists, and include the goal of squeezing everything they can out of the workers. Of course a worker-owned cooperative will be a less effective fit. The current system should not be the final arbiter of what success means. You mentioned anti-trust laws. What of worker right laws, and laws related to unionization? (In the last, I include laws like the Taft-Hartley Act which limit what unions can do.) I don't understand your last sentence. Most large companies are already run by committee, no? There's an ongoing negotiation between the C-level officers and the board of directors. It isn't that the CEO sets policy by dictate. Perhaps https://en.wikipedia.org/wiki/CEO#Celebrities https://en.wikipedia.org/wiki/CEO#Celebrities is relevant? > Business publicists since the days of Edward Bernays and his client John D. Rockefeller and even more successfully the corporate publicists for Henry Ford, promoted the concept of the "celebrity CEO". Business journalists have often adopted this approach, which assumes that the corporate achievements, especially in the arena of manufacturing, were produced by unique talented individuals, especially the "heroic CEO". ... Journalism thereby exaggerates the importance of the CEO and tends to neglect the harder-to-describe broader corporate factors. There is little attention to the intricately organized technical bureaucracy that actually does the work. Hubris sets in when the CEO internalizes the celebrity and becomes excessively self-confident in making complex decisions. Indeed, there may be an emphasis on the sort of decisions that attract the celebrity journalists.
- davrosthedalek 9y ago
  That's my point. The current system defines what success means now. You cannot fault current companies for trying to stay alive. And indeed, I think the behavior is ethical, in the sense that they don't have a survival alternative. This does not mean that the situation is static. The current system can be changed, by setting different bounding conditions. Anti-trust, unions etc. are all instruments to affect such a change. But again: Since you cannot dictate the global boundary conditions, you have to build a system which can survive in the global economy. Socalist planned economy, for example, has been proofed by experiment to not work. Unions often work, if balanced in power. Consumer protection laws often work too. Note here: Survive, not be the biggest. Your economy can fulfill a niche role with better social aspects, but other downsides. Take Germany for example. The social security and general high level of living goes hand in hand with general good education and, for example, larger investment in science. On the other hand, this sets a minimal productivity a job must have to exist in the first place. There a no "Apple store greeters". This means that low-education jobs which pay enough to actually live in Germany are rare. These jobs are often filled by guest workers from countries where cost of living is significantly lower. The problem is that not everybody can be brought up to a high enough education level. Having not enough viable jobs available for those who cannot make that jump is tragic. While in Germany the social system takes care of them to some extend, not having a job is bad for your psyche even if you have enough money. I wouldn't say big companies, especially privately held ones, are run by committee in the sense that everybody has the same power. There is a hierarchy. But even if so, it's a committee consisting of selected people from a special pool, not from the general pool of workers. Regarding the celebrity CEOs: In the current state, it obviously works, otherwise companies which do not fall into this pattern would outperform those who do. If you want to change it, you have to change the system. It seems to me that focusing on the salary is not the right way though, because they follow from the celebrity system (which makes "good" CEOs more rare).
  - eesmith 9y ago
    I can completely fault current companies for inhumane and unethical practices, even if they are completely legal. Including outsourcing work to countries where child labor laws, sweatshop conditions, and environmental damage, while possibly illegal, are a simple bribe away. Sure, planned economies don't work. That's one of the reasons for social democracy ("... a political, social and economic ideology that supports economic and social interventions to promote social justice within the framework of a liberal democratic polity and capitalist economy as well as a policy regime involving a commitment to representative and participatory democracy, measures for income redistribution and regulation of the economy in the general interest, and welfare state provisions."; Wikipedia). But I don't see why this comment is particularly relevant? Abstractly speaking, a balance of power is good. Concretely speaking, I can't make sense of it. Does Germany have the right balance of power? Does the US? My sense is that unions rarely have enough power. Certainly not in the US, where workers don't even have the right to a representative on the company boards. "this sets a minimal productivity a job must have to exist in the first place" Sure. But given the several centuries of productivity improvements, why are we all still working as long in the first place? Quoting Wikipedia again, in the article on John Maynard Keynes: "Keynes thought that the pursuit of money for its own sake was a pathological condition, and that the proper aim of work is to provide leisure. He wanted shorter working hours and longer holidays for all." If we worked 28 hours per week, as IG Metall recently negotiated, then there would be more jobs. "not having a job is bad for your psyche" I'm of mixed feelings of this. I know a lot of people who would love to work on free and open source software, but cannot because it's not a viable source of income. If there was a basic income, which was enough to live on, then I think they would "have a job" doing software development, even if it wasn't really a job. A lot of rich people don't have a job, but volunteer to be on, say, an art museum board or other organization. I think this helps the psyche, even though it isn't a paying job. Regarding committees, I used it to point out that most companies are not run by a dictatorial head, which appears to be your argument. I brought up "celebrity CEOs" to point out that that might be more a marketing and journalism myth, or selection bias, than a reality. DuPont is one of the longest-lived companies in the US, so by your standard it's one of the most successful. What do you know of its management style? Probably nothing. It's simply not flashy enough to make the popular press. "It seems to me that focusing on the salary is not the right way though, because they follow from the celebrity system (which makes "good" CEOs more rare)." As I pointed out in the quote by Wolff, the high salaries are true for more than just celebrity CEOs. They are true of nearly all CEOs in mid-to-large companies, and to many college presidents, and many non-profits (the Wolff piece mentions the recent at a Chicago YMCA, but I can include the American Red Cross and Susan G. Komen for the Cure).

eesmith 9y ago

In that case, most of the longest-lived companies are privately held. The current market system is built by capitalists, for capitalists, and include the goal of squeezing everything they can out of the workers. Of course a worker-owned cooperative will be a less effective fit. The current system should not be the final arbiter of what success means. You mentioned anti-trust laws. What of worker right laws, and laws related to unionization? (In the last, I include laws like the Taft-Hartley Act which limit what unions can do.) I don't understand your last sentence. Most large companies are already run by committee, no? There's an ongoing negotiation between the C-level officers and the board of directors. It isn't that the CEO sets policy by dictate. Perhaps https://en.wikipedia.org/wiki/CEO#Celebrities https://en.wikipedia.org/wiki/CEO#Celebrities is relevant? > Business publicists since the days of Edward Bernays and his client John D. Rockefeller and even more successfully the corporate publicists for Henry Ford, promoted the concept of the "celebrity CEO". Business journalists have often adopted this approach, which assumes that the corporate achievements, especially in the arena of manufacturing, were produced by unique talented individuals, especially the "heroic CEO". ... Journalism thereby exaggerates the importance of the CEO and tends to neglect the harder-to-describe broader corporate factors. There is little attention to the intricately organized technical bureaucracy that actually does the work. Hubris sets in when the CEO internalizes the celebrity and becomes excessively self-confident in making complex decisions. Indeed, there may be an emphasis on the sort of decisions that attract the celebrity journalists.

davrosthedalek 9y ago
That's my point. The current system defines what success means now. You cannot fault current companies for trying to stay alive. And indeed, I think the behavior is ethical, in the sense that they don't have a survival alternative. This does not mean that the situation is static. The current system can be changed, by setting different bounding conditions. Anti-trust, unions etc. are all instruments to affect such a change. But again: Since you cannot dictate the global boundary conditions, you have to build a system which can survive in the global economy. Socalist planned economy, for example, has been proofed by experiment to not work. Unions often work, if balanced in power. Consumer protection laws often work too. Note here: Survive, not be the biggest. Your economy can fulfill a niche role with better social aspects, but other downsides. Take Germany for example. The social security and general high level of living goes hand in hand with general good education and, for example, larger investment in science. On the other hand, this sets a minimal productivity a job must have to exist in the first place. There a no "Apple store greeters". This means that low-education jobs which pay enough to actually live in Germany are rare. These jobs are often filled by guest workers from countries where cost of living is significantly lower. The problem is that not everybody can be brought up to a high enough education level. Having not enough viable jobs available for those who cannot make that jump is tragic. While in Germany the social system takes care of them to some extend, not having a job is bad for your psyche even if you have enough money. I wouldn't say big companies, especially privately held ones, are run by committee in the sense that everybody has the same power. There is a hierarchy. But even if so, it's a committee consisting of selected people from a special pool, not from the general pool of workers. Regarding the celebrity CEOs: In the current state, it obviously works, otherwise companies which do not fall into this pattern would outperform those who do. If you want to change it, you have to change the system. It seems to me that focusing on the salary is not the right way though, because they follow from the celebrity system (which makes "good" CEOs more rare).
- eesmith 9y ago
  I can completely fault current companies for inhumane and unethical practices, even if they are completely legal. Including outsourcing work to countries where child labor laws, sweatshop conditions, and environmental damage, while possibly illegal, are a simple bribe away. Sure, planned economies don't work. That's one of the reasons for social democracy ("... a political, social and economic ideology that supports economic and social interventions to promote social justice within the framework of a liberal democratic polity and capitalist economy as well as a policy regime involving a commitment to representative and participatory democracy, measures for income redistribution and regulation of the economy in the general interest, and welfare state provisions."; Wikipedia). But I don't see why this comment is particularly relevant? Abstractly speaking, a balance of power is good. Concretely speaking, I can't make sense of it. Does Germany have the right balance of power? Does the US? My sense is that unions rarely have enough power. Certainly not in the US, where workers don't even have the right to a representative on the company boards. "this sets a minimal productivity a job must have to exist in the first place" Sure. But given the several centuries of productivity improvements, why are we all still working as long in the first place? Quoting Wikipedia again, in the article on John Maynard Keynes: "Keynes thought that the pursuit of money for its own sake was a pathological condition, and that the proper aim of work is to provide leisure. He wanted shorter working hours and longer holidays for all." If we worked 28 hours per week, as IG Metall recently negotiated, then there would be more jobs. "not having a job is bad for your psyche" I'm of mixed feelings of this. I know a lot of people who would love to work on free and open source software, but cannot because it's not a viable source of income. If there was a basic income, which was enough to live on, then I think they would "have a job" doing software development, even if it wasn't really a job. A lot of rich people don't have a job, but volunteer to be on, say, an art museum board or other organization. I think this helps the psyche, even though it isn't a paying job. Regarding committees, I used it to point out that most companies are not run by a dictatorial head, which appears to be your argument. I brought up "celebrity CEOs" to point out that that might be more a marketing and journalism myth, or selection bias, than a reality. DuPont is one of the longest-lived companies in the US, so by your standard it's one of the most successful. What do you know of its management style? Probably nothing. It's simply not flashy enough to make the popular press. "It seems to me that focusing on the salary is not the right way though, because they follow from the celebrity system (which makes "good" CEOs more rare)." As I pointed out in the quote by Wolff, the high salaries are true for more than just celebrity CEOs. They are true of nearly all CEOs in mid-to-large companies, and to many college presidents, and many non-profits (the Wolff piece mentions the recent at a Chicago YMCA, but I can include the American Red Cross and Susan G. Komen for the Cure).