Why the Economy Isn’t Controlled by One Big Corporation
More than a century of failure, mass murder, and ruined economies has not been sufficient to dissuade socialists form the idea that socialism—by which I mean Soviet-style socialism, not social democracy—can bring astounding prosperity once the planners work out the kinks.
Sure, the Soviet Union failed, North Korea is a basket case, and socialist countries routinely drive down local standards of living in pursuit of utopia. But success will be achieved just as soon as socialists can find the right way to combine new technologies like “big data” with the right public administration techniques. Then, at last, a functional and efficient socialist state will be at hand.
One of the latest schemes for finding the right “techniques and technologies” that will allow us to crack the socialist nut could recently be found at the avowedly socialist magazine Jacobin in May of this year.
The author, Paul S. Adler, is in search of a model that can allow current “capitalist” economies (which are really just third-way interventionist economies) to transition to a socialist model. He thinks he may have found it.
“We have something like a working model of such a system right under our noses,” Adler concludes, “in many of our largest corporations.”
And what is this model?
According to Adler, large private sector firms have shown that it is possible for one large organization to efficiently produce products and services based on a single internally created central plan. In other words, capitalists have shown that societies can be run using “strategic management,” which sidesteps capitalist competition and decentralization.
Large firms consolidate resources, monopolize whole industries, and then introduce a central plan to grow the firm and increase profits. In Adler’s mind, these firms are essentially self-governing bodies that can act in accordance with internal plans. That is, they may be prototypes for constructing successful socialist states.
Unfortunately for Adler, large firms—even very, very large ones—are not comparable to socialist states, and Adler’s strategy of modeling a socialist state on large capitalist firms is doomed to failure.
Do Corporations Act like Socialist States?
Adler makes the case for looking at large firms as organizations that successfully implement central plans akin to those employed by socialist planners:
Many of our CEOs behave like closet socialists. Most large firms are divided into more or less self-sufficient “strategic business units” charged with developing new products and assuring their production, sale, and profitability. In public, their CEOs defend the superiority of markets and competition over coordination and planning, but inside their own corporations, where they could leave these business units to compete with each other, they rely instead on comprehensive strategic management.
Such strategic management aims to ensure that the various business units that make up the corporation coordinate their production, investment, and other pl
Article from Mises Wire