I am puzzled by left-libertarianism’s prediction that a freed market will not contain a significant amount of “bossism,” to use Gary Chartier’s phrase in his BHL post. Alas, I have not read Markets, Not Capitalism, and perhaps the puzzle is something that is easily solved by reading the book. I offer the puzzle here because I suspect it may have occurred to other readers of this blog, and it may help elucidate important features of the left-libertarian view.

Workers in a coop in a freed market are allowed to sell their shares in the coop. Their rights to their shares in the firm include use rights, i.e., they decide the nature of work relations, working condition, pay differentials, managerial responsibility, etc., and income rights, i.e., they receive the net profits of the firms. There are two reasons why this sector will be likely be small.

First, it will be irrational for workers to concentrate their portfolio in their own firm, lest it go under. So they will want to sell some of their shares in their own firm and buy shares in other firms. Once that happens it is not hard to see how those who don’t work in the firm will come to own considerable shares of the firm (and of course that will include institutional investors) which means the end of an economy dominated by worker controlled firms. Now some coops may restrict outsiders’ rights in their firm, so that they are not able to have use rights, i.e., a say or a vote in how the firm is managed. But some coops won’t do this, and it is plausible that those who won’t do this and give outsiders full ownership rights will have a competitive advantage. This is because those who can attract more outside capital will have a competitive advantage in adapting to changing market conditions and those who will supply considerable capital will tend to want some way to monitor that their capital is being used in an efficient manner, which means some kind of say over how the firm is run.

Another reason workers will want to sell their shares is that when workers leave the firm—change jobs, retire, etc.—they will want to take their profits with them. Indeed, even before they leave they may want to cash out some of their profits, i.e., sell some of their shares. And for reasons I just mentioned, those buying them may not be content with nonvoting shares. So again we get the scenario of outsiders coming to have full ownership rights in the firms, and it’s not hard to see how this will lead fairly quickly to an economy which is dominated by capitalist firms.

Now the prediction that a freed market will not contain a significant amount of bossism does not, I take it, entail a prediction that there won’t be a substantial number of firms which are not coops. It only entails a prediction that most of these firms won’t be hierarchical firms where workers get bossed around. Those firms which are smaller and flatter, to use Roderick Long’s terminology, minimize or eliminate this function of bosses. But here my puzzle continues. How do left-libertarians know these firms will tend to be small and flat? Firms which are financed largely by equity will, in a freed market, be those that maximize shareholder value, and how do we know that a substantial number of those firms won’t be hierarchical firms? I endorse Roderick Long’s argument that the larger the firm the more likely calculation chaos will impede efficiency, and it’s also true that bossing people around can impede efficiency. But those are ceteris paribus claims, and it may be a firm needs to reach a certain size in order to be efficient, and that too little hierarchy can impede efficiency. So I remain puzzled.

My puzzle to some extent also crosses over to the moral opposition to bossism. Bossing people around can certainly be bad; indeed at times it is positively evil. One of the nice features of being an academic is that one has a fair amount of autonomy in one’s job, so as a personal matter I share Long and Chartier’s outlook. But as libertarians we favor a vigorously competitive market, which means firms will have to be quite attuned to consumer sentiment and shareholder value, and so as libertarians I would think we would have to distinguish between different kinds of bossism. Bossism in the context of a competitive market is regrettable or perhaps a bad we have to put up with for the sake of greater goods or a just society, whereas bossism that has no connection with the rigors of a competitive market is unequivocally oppressive. So I am also puzzled how left-libertarians can say that they are opposed to bossism per se.

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A brief addendum: in the above post, I only discussed coops and capitalist firms, but I did not discuss self-employed or being one’s own boss. But the same argument applies, perhaps a fortiori, to being one’s own boss. Being one’s own boss is quite a risky proposition, so I would be puzzled by a confident prediction that in a freed market this would be something a large percentage of people would choose even without state barriers that make it more difficult to be one’s own boss (occupational licensure, oppressive taxation, etc.) And morally, being one’s own boss is hardly an unequivocal good. I would suck at it, and I would be puzzled by anyone who argued that I should choose a life at which I have no comparative advantage.