The longest windup i've never intentionally created
I write about other stuff i'm thinking about on facebook, and here's a two day long train of thought:
1) I think there is a fundamental flaw in our conception of the scaling up from "sole proprietor" to "company" to "corporation." That flaw is what i would call the ownership of labor.
As we incorporate into larger networks of relationships we tend to confuse division of labor with acquisition of labor to such a degree that we begin to personify the incorporation itself.
That's an incredibly dense paragraph, and requires very strict unpacking. First, this is a theoretical model. It cannot be elaborated by specific example until its constraints are fully defined. Second, real life examples are difficult to show because we all to some extent participate in the flawed reasoning i am describing.
A sole proprietor is what you might call a dictionary capitalist. An individual who owns the means of production for whatever product they produce or service they provide. The success or failure of that real person is not dependent on the labor of others within the limited context of the business; we assume that he or she already possesses the resources necessary to complete some objective. We also remove any speculative endeavor. For example, we assume that a carpenter isn't simply making a table in the mere hope of selling it, i.e. the carpenter is making a table for an established trade (be it money, or simply to have a stable surface for some purpose). The purpose for labor already exists.
Now imagine that the need for tables exceeds the individual's ability to produce them, to the point that a second fully independent carpenter is needed to make a second table at the same time. This brings us to a point of contention that we must understand. These two carpenters are not competing to win the reward, their labors must be essentially identical. This relationship can be accomplished in different ways. The first carpenter might view the second carpenter as an employee, or as a partner. Either way we call the resulting combination of labor a "company." However, if the first carpenter views the second as an employee, then there has been a tacit assumption that the conjunction of labor itself is fully owned by the first carpenter. He mistakenly thinks of himself AS the company, when in fact he is merely half of the labor in this abstract combination. In other words, there has been a division of labor, but no recognition of that division.
Now imagine that the need for tables has grown larger than the ability of the abstract company itself to acquire materials. It becomes necessary to form a larger combination of companies. One company acquires the necessary materials (chops down trees or whatever) and a second company manufactures tables. This abstract union of companies is called a corporation.
If the very first carpenter still believes that he owns all of these divisions of labor, then he will mistakenly think of himself as the corporation. He will in essence be the primary beneficiary of all subordinate labor while assuming complete responsibility for the continued operation of the corporation at large.
In essence, he has elevated the value of managing the abstract network by refusing to acknowledge the divisions of labor, thus devaluing the labor itself.
Note that we are still operating in a fully abstract context, without any application of real world forces (money, scarcity, environment, deception or fraud, law, etc.). My choice of making tables was merely an example i think everyone can wrap their head around. I have limited it to only 1 division of labor at each stage to make the inverse relationship between labor and management as visible as possible.
It's easy to jump ahead and say paul thinks corporations are evil, or that i'm some nefarious 'merica hater, but don't. I want to understand my understanding of this phenomenon and the only way i know how to do it is put it down in writing and let you see it. If some part of my thinking doesn't make sense, feel free to ask me about it. Am i missing something? Did i skip a logical step? Am i making a false assumption somewhere? Those are the things i would like to talk about. That fundamental understanding is what i see lacking in most public discourse, and why i refuse to participate in most of it.
2) In theory, a corporation is simply an abstract body of rules and procedures used to coordinate separate but interdependent companies. That's why we say cities and states and businesses with multiple departments are all "incorporated." They are generally managed by a governing body that is wholly separate and generally unconcerned with the specific business of any particular subsidiary company. Instead, the only concern of a corporation is the continued interaction or transaction between these companies.
There are no "employees" from the corporation's perspective, only functions. To use yesterday's table making example, there is a function that produces raw materials and a function that produces tables from those raw materials. The corporation cares only about the success of the process:
obtain-transfer-produce.
Should one of these stages fail in some way, the corporation has only 1 decision to make, replace the failing component or dissolve the corporation itself. I say replace for lack of a better word; i simply mean correct whatever failure is taking place in some way without eliminating the component function itself. Remember, there are no people involved in this model, it consists only of two functions and a link between them. The corporation exists only to monitor that link and decide how to correct or remove the failure.
For example a failure to obtain resources might entail relocation, substitution, or elimination of that subsidiary function. That does not necessarily mean that the function ceases to operate, in only means that it is no longer considered part of the corporation's resources. A failure of transaction might involve bringing the two functions into closer proximity, or adding a third function that manages the transaction itself as a subsidiary company. A failure of production is essentially the same as a failure to obtain resources.
If your brain is buzzing with examples of how people have misused or misunderstood this model, i don't blame you, but please push those thoughts away for now. I am only concerned for now with the fundamental structure, not its real world manifestations.
At this point, i have outlined 3 unequal functions. They are unequal because 2 of those functions exist in isolation, while the third monitors the interaction between them. They are also unequal in that 2 of the functions are regulated, but the third is not. There is no overseer who determines if the corporation itself has properly assessed the interaction. Nor can there ever be a "regulator" of the corporation, as inventing one will simply be redundant to infinity; a check on the check of the check....
The real lesson in all of this is that the structure of this corporate business model is inherently uneven, and biased toward successful transaction over either component production. The corporation itself inherits an invention of pure human imagination; the overriding rule of self preservation. For the corporation, it is more important to sustain successful interaction and it will subsume all external forces into that unequal relationship.
As i said before, have i made a mistake? Am i missing a step? I am after all building a theory from the ground up, and i can only draw from my own self taught knowledge of systems in general.
Or, enjoy any of the delightful albums from the band that helped make the electric guitar an acceptable instrument for public consumption, the Ventures. I say, Let's Go! No thinky words, i promise.
P.S. No, this wasn't an elaborate ruse to bring my separate trains of facebook thought into a productive but pointless pun on "business venture," but you can be assured that as soon as i realized i COULD do it, i knew i had to, and i enjoyed a hearty giggle on the inside.
Next
1) I think there is a fundamental flaw in our conception of the scaling up from "sole proprietor" to "company" to "corporation." That flaw is what i would call the ownership of labor.
As we incorporate into larger networks of relationships we tend to confuse division of labor with acquisition of labor to such a degree that we begin to personify the incorporation itself.
That's an incredibly dense paragraph, and requires very strict unpacking. First, this is a theoretical model. It cannot be elaborated by specific example until its constraints are fully defined. Second, real life examples are difficult to show because we all to some extent participate in the flawed reasoning i am describing.
A sole proprietor is what you might call a dictionary capitalist. An individual who owns the means of production for whatever product they produce or service they provide. The success or failure of that real person is not dependent on the labor of others within the limited context of the business; we assume that he or she already possesses the resources necessary to complete some objective. We also remove any speculative endeavor. For example, we assume that a carpenter isn't simply making a table in the mere hope of selling it, i.e. the carpenter is making a table for an established trade (be it money, or simply to have a stable surface for some purpose). The purpose for labor already exists.
Now imagine that the need for tables exceeds the individual's ability to produce them, to the point that a second fully independent carpenter is needed to make a second table at the same time. This brings us to a point of contention that we must understand. These two carpenters are not competing to win the reward, their labors must be essentially identical. This relationship can be accomplished in different ways. The first carpenter might view the second carpenter as an employee, or as a partner. Either way we call the resulting combination of labor a "company." However, if the first carpenter views the second as an employee, then there has been a tacit assumption that the conjunction of labor itself is fully owned by the first carpenter. He mistakenly thinks of himself AS the company, when in fact he is merely half of the labor in this abstract combination. In other words, there has been a division of labor, but no recognition of that division.
Now imagine that the need for tables has grown larger than the ability of the abstract company itself to acquire materials. It becomes necessary to form a larger combination of companies. One company acquires the necessary materials (chops down trees or whatever) and a second company manufactures tables. This abstract union of companies is called a corporation.
If the very first carpenter still believes that he owns all of these divisions of labor, then he will mistakenly think of himself as the corporation. He will in essence be the primary beneficiary of all subordinate labor while assuming complete responsibility for the continued operation of the corporation at large.
In essence, he has elevated the value of managing the abstract network by refusing to acknowledge the divisions of labor, thus devaluing the labor itself.
Note that we are still operating in a fully abstract context, without any application of real world forces (money, scarcity, environment, deception or fraud, law, etc.). My choice of making tables was merely an example i think everyone can wrap their head around. I have limited it to only 1 division of labor at each stage to make the inverse relationship between labor and management as visible as possible.
It's easy to jump ahead and say paul thinks corporations are evil, or that i'm some nefarious 'merica hater, but don't. I want to understand my understanding of this phenomenon and the only way i know how to do it is put it down in writing and let you see it. If some part of my thinking doesn't make sense, feel free to ask me about it. Am i missing something? Did i skip a logical step? Am i making a false assumption somewhere? Those are the things i would like to talk about. That fundamental understanding is what i see lacking in most public discourse, and why i refuse to participate in most of it.
2) In theory, a corporation is simply an abstract body of rules and procedures used to coordinate separate but interdependent companies. That's why we say cities and states and businesses with multiple departments are all "incorporated." They are generally managed by a governing body that is wholly separate and generally unconcerned with the specific business of any particular subsidiary company. Instead, the only concern of a corporation is the continued interaction or transaction between these companies.
There are no "employees" from the corporation's perspective, only functions. To use yesterday's table making example, there is a function that produces raw materials and a function that produces tables from those raw materials. The corporation cares only about the success of the process:
obtain-transfer-produce.
Should one of these stages fail in some way, the corporation has only 1 decision to make, replace the failing component or dissolve the corporation itself. I say replace for lack of a better word; i simply mean correct whatever failure is taking place in some way without eliminating the component function itself. Remember, there are no people involved in this model, it consists only of two functions and a link between them. The corporation exists only to monitor that link and decide how to correct or remove the failure.
For example a failure to obtain resources might entail relocation, substitution, or elimination of that subsidiary function. That does not necessarily mean that the function ceases to operate, in only means that it is no longer considered part of the corporation's resources. A failure of transaction might involve bringing the two functions into closer proximity, or adding a third function that manages the transaction itself as a subsidiary company. A failure of production is essentially the same as a failure to obtain resources.
If your brain is buzzing with examples of how people have misused or misunderstood this model, i don't blame you, but please push those thoughts away for now. I am only concerned for now with the fundamental structure, not its real world manifestations.
At this point, i have outlined 3 unequal functions. They are unequal because 2 of those functions exist in isolation, while the third monitors the interaction between them. They are also unequal in that 2 of the functions are regulated, but the third is not. There is no overseer who determines if the corporation itself has properly assessed the interaction. Nor can there ever be a "regulator" of the corporation, as inventing one will simply be redundant to infinity; a check on the check of the check....
The real lesson in all of this is that the structure of this corporate business model is inherently uneven, and biased toward successful transaction over either component production. The corporation itself inherits an invention of pure human imagination; the overriding rule of self preservation. For the corporation, it is more important to sustain successful interaction and it will subsume all external forces into that unequal relationship.
As i said before, have i made a mistake? Am i missing a step? I am after all building a theory from the ground up, and i can only draw from my own self taught knowledge of systems in general.
Or, enjoy any of the delightful albums from the band that helped make the electric guitar an acceptable instrument for public consumption, the Ventures. I say, Let's Go! No thinky words, i promise.
P.S. No, this wasn't an elaborate ruse to bring my separate trains of facebook thought into a productive but pointless pun on "business venture," but you can be assured that as soon as i realized i COULD do it, i knew i had to, and i enjoyed a hearty giggle on the inside.
Next
Comments
Post a Comment