on November 17, 2009 by eldar in Corporate Parasites, Evolutionary Marxism, Comments (0)

Smallpox of the American Economy

Imagine a group of people, a sort of community, where everyone works together and is supposed to share the results of their joint efforts. There is a hierarchical structure of officials who control the work process and distribution of benefits. People at the top define vision and goals of the whole community. Those who contribute to these goals are rewarded; those who do not contribute are punished. The hierarchical structure of power is used to ensure that. The community may be large enough and encompass hundreds of thousands of people. What would you call such a community?

COMMUNISM! That is probably the thought of those who remember the Cold War. And they are right. Such a system is popularly called “communism.” Let’s clarify one minor detail first. There has really been no such thing as communism throughout history. The countries of the communistic block practiced a social order known as “socialism.” OK, maybe a communistic flavor of socialism.

Socialism is characterized by an administrative hierarchical power structure to control the economy. This sector is comprised of people who don’t own anything, yet control everything. Whole countries and significant parts of the world were deep red merely twenty years ago. You may wonder, why am I talking about something that’s gone in history?

The answer is that I was not talking about communistic countries in the first place. Look at the description again … does it remind you of something else? Something you see every day here and now? It sure does.

I am talking about large American corporations.

If you have any doubts, read the first passage again and see for yourself.

Shocking, isn’t it? Russia was red, but it seems that America today is covered with red pockmarks everywhere you look. But maybe it’s not so bad, is it? Let us recall why it is that we did not like communism. Of course, there was that plainly evident fact that the Communists were strong, and we wanted the whole world, not merely half of it. They wanted peace, and in their language peace and world are the same word … but that’s not what our mass media said we were worried about. We were concerned with the system, right? So, what’s in the system that we did not like? Of course, there is an issue of human rights … although Pinochet in Chile, Saddam Hussein in Iraq, and a few other dictators that we brought to power are not exactly champions of human rights (not to mention former CIA operatives Manuel Noriega from Panama and Osama bin Laden.) So, there should be something else that was the principal problem of communistic states. And actually, there was.

According to our beliefs, a socialistic/communistic economy is simply not efficient. Without free internal competition progress stagnates, productivity falls, and the whole thing heads straight for a disaster. People are simply not interested in performing in such a system. Hierarchical management systems bring biases into the goals and execution that are incompatible with the survival of the system and the prosperity of the people. With the complexity of the system up, control drops, and being a pet of your boss becomes more rewarding than really doing your job. More to that, soon the pets rather than the workers are getting promoted. In no time the guy on top is only good at being somebody’s pet and fighting off the competition, no longer good as a worker. Once it happens, the system is doomed. Which, as many Americans believe today, was confirmed about twenty years ago.

What is really puzzling for me is this: How is it that we think that communism is inefficient, yet still practice it every day inside our own businesses? How is it that we practice communism in large corporations – sometimes corporations the size of small countries – and still be surprised that they turn out inefficient, moronic, and don’t care about their employees or shareholders?

Granted, sometimes non-mercantile relationships work. An average atomic family with a mom, a dad and two kids lives in a perfect communism where common resources are shared by the members of the family. This is without counting who brought them in and without granting monetary rewards for helping each other … and it works great. As another example, if you own a small company with 10-20 employees, you control the system directly and everything is fine as well.

However, somewhere between 400 and 600 employees is where things start to get sour. It may also be said that somewhere around the fourth level of management, businesses go through a significant change and arrive at the worst. It is almost like at a certain number of employees, the negative effects of communism in the corporate structure grows out of control, and then we get irresponsible managers, favoritism, and a system that goes astray.

Does this magic number of 600 people, or four levels of management, remind you of something? Yes, the level of the organizational complexity that we talked about in previous chapters. In fact, the systematic negative effects of communism are exactly the way in which the drop in control due to complexity shows up in organizations. That is what’s happening in large American corporations all over the country.

Russians were red. They’ve changed their minds. Our economy is covered now with the red pockmarks of large corporations. We need to do something about it. We need to change the way large corporations are governed and managed. We need a cure for this mini-communism. Fortunately, we do not have to demolish our whole political system to achieve that in the manner that Russians had to do. We can do that one company at a time. We can heal and turn around one company at a time. But we need to do that soon … because our shirts are at stake.

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