So why do large companies manage to run centrally planned systems whereas centrally planned states seemed doomed to fail?
The main advantages of the market seems to be that failure is usually localized and containable -- although we came frighteningly close to a widespread meltdown in 2008 -- and, arguably, markets are better at promoting information flow and responding to new demands (although I suspect the growth of IP law and the existence of trade secrets counteract this to some extent).
But it's worth noting that the mean life expectancy of a publicly quoted corporation is around 30 years -- and the USSR made it through just over seven decades.
The first world war put an end to the old order and made nationality non-discretionary -- and we're still dealing with the fallout today (as witness the permanent floating founder visas thread on HN).
Everyone has obligations that tend to reduce their freedom. The ones who think they don't are called psychopaths.
In personal development, an early stage is to understand that you can be independent. E.g. you can choose how to act and how to react to the outside world.
A higher level of development is to realize that we're inter-dependent. No man is an island.
There will always be constraints on our options. I don't like it, but I'm getting used to it.
There is no absolute freedom, and there are no truly free contracts.
Think evolution of organizations, economically inefficient ones die. People learn (in the Lamarckian way, too) what works best at the present time.
Also...
To quote an argument from your blog, there are many tens of millions of people needed to keep our civilization working efficiently (some specialized jobs might only have a few dozen practitioners, according to you).
And to keep up with research and new methods, in every decade a large percentage of all those jobs will be totally different.
Centrally planned system just can't touch that -- they can't even avoid traffic jams with a few million cars! (And those cars aren't [yet] genetically and culturally programmed to optimize their behavior individually and in groups.. and change a lot culturally every generation.)
Own petard, etc. :-)
Edit: A bit clearer, hopefully. Non-native language.
Scale matters. Most of the time when companies in a market system collapse, very few people starve or die.
The Soviet Union was a prison state.
http://en.wikipedia.org/wiki/List_of_Soviet_and_Eastern_Bloc...
Soon after the formation of the Soviet Union, emigration restrictions were put in place to keep citizens from leaving the various countries of the Soviet Socialist Republics,[1] though some defections still occurred. During and after World War II, similar restrictions were put in place in non-Soviet countries of the Eastern Bloc,[2] which consisted of the Communist states of Eastern Europe.[3][4]
http://www.nytimes.com/2010/06/18/opinion/18beckerman.html
Most in the group were pessimistic about their chances — but none more than Mr. Mendelevich. He felt sure they would get caught, but to his mind, a group suicide was preferable to a life of waiting for an exit visa that would never arrive. Even a botched attempt, he figured, would at least attract the eyes of the world.
Early the next day, as the plotters walked onto the tarmac, they were, indeed, caught. The K.G.B. had known of their plan for months. And the two leaders were later sentenced to death.
But Mr. Mendelevich was also right that their desperate act would make their demand for free emigration impossible to ignore. Now largely forgotten, this planned hijacking, and the Soviet government’s overreaction to it, opened the first significant rip in the Iron Curtain, one through which hundreds of thousands would eventually flee. With great drama, it undermined Communist orthodoxy. After all, if the Bolsheviks had built the perfect society, why would any well-adjusted citizens want to leave, let alone risk their lives to do so?
The essential weakness of the Soviet Union was exposed: to survive, the regime had to imprison its own population. This would be the beginning of the end.
Jews were understandably at the forefront of the emigration battle. Even as they were forbidden to exercise any kind of Jewish identity, they also had no option to assimilate in Soviet society. Their internal passports were stamped “Jew,” a word that three generations after the 1917 revolution signified little more than their status as outsiders. Many had come to feel that their existence inside the Soviet Union was untenable, that the only way to escape this paradox was to move away. But the doors were firmly shut; those who requested permission to leave were refused and then ostracized.
The push to emigrate, which had begun in the early 1960s as an underground movement, had grown by 1970 into an open campaign. Letters to the United Nations were signed by hundreds of Soviet Jews. Only a few months before the hijacking attempt, the Kremlin had called for a public relations counteroffensive that would paint Zionism as “a vanguard of imperialism.” A large press conference was arranged with “acceptable” Jews, including the prima ballerina Maya Plisetskaya and the comedian Arkady Raikin, vowing loyalty to the Soviet Union and denouncing Zionism as expressing “the chauvinistic views and racist ravings of the Jewish bourgeoisie.”
Sergei Brin, who you mention, was his family also shot? If you applied for the paperwork properly you were allowed to leave.
Yes, the country effectively had closed borders, and yes, it was downright impossible for most people to leave. A trickle of emigrants who were begrudingly permitted to leave officially began in the 1970s owing to international Jewish repatriation policies and so on, but that was not an option for most people.
Nevertheless, to suggest that people were simply shot for attempting to leave is an absurd level of hyperbole. They weren't shot, they were just prevented from doing so via the usual bureaucratic means.
There is the small number of people who attempted a beeline across the border - similarly to the Berlin Wall climbers - past the spotlights and the guards and all. Thankfully, there were not many of them, as this is a very stupid approach to crossing any national border anywhere. The American-Mexican border may prove to be an unusual exception.
My point is, there was a lot to see inside the country. Were we technically "trapped" there? Absolutely. But to grok the actual significance of this, consider the single-digit percentage of Americans that hold foreign passports. Vanishingly few Americans have ever traveled outside the country, and a non-trivial number have never left their state or been beyond a neighbouring one.
So, while the fact that the borders were closed is important, and if that's your sole point, well, sure, but if you're likening it experientially to a prison, I think that's a little over the top. There were certain people who really wanted to leave and for whom that was undoubtably true. But as with most Americans, most Soviets were somewhere in the middle on that.
This is not an apologia or a whitewashing of the fact that our borders were closed, but an attempt to convey the human factor in a more nuanced, perceptive way.
>>The constant comparisons to a prison reflect the theoretical reality of leaving the country accurately, but poorly reflect the psychological perception of the issue by most citizens.
Of course, with information control from the cradle...
>>Vanishingly few Americans have ever traveled outside the country, and a non-trivial number have never left their state or been beyond a neighbouring one.
I thought Soviet didn't allow people to move to the place they wanted? Or was that just the big cities?
But sure, people traveled in the military service...? :-)
In the 90's big companies developed the technique of paying the big accounting firms for consultancy work which subverted the independence of the auditors and paved the way for Enron. The accounting treatment of leases and uncancellable suggests that there have been similar "successes" in subverting the setting of accounting standards.
Elsewhere we see big companies having sufficiently close ties to political power that they can subvert the police and the courts and even the law making process. This also ends badly.
I don't see any prospect of researching how large companies work and then turning that into a blue print for socialism 2.0. Large companies seem to be viable because of a separation of business and government that is fundamentally incompatible with the common ownership of the means of production.
An employee is free to resign if he would prefer to work for someone else. He can't be sent to a gulag. Customers aren't forced to accept a company's product or service, and can choose a competitor instead. Managers can fire incompetent or insubordinate workers. Customers can criticize a product without fear of being shot.
Customer, manager, employee, investor -- everyone is in the situation voluntarily, so they must negotiate on the basis of mutual self-interest. The company as an entity is more stable because its constituents aren't essentially at war with one another.
Let's be honest, job mobility even in market economies is a difficult affair for everyone but highly qualified professionals. The fact that IT workers can get a new job in a month is not indicative of the economy at large.
GM should have collapsed, all the megabanks and companies that were too big to fail show us how central planning works without control.
Some things need central planning(mass production), communism is state capitalism with only one megacompany. That is a supermonopoly.
I have friends that were in communist Russia, if you made -talked something that upset some member of the party(they were God), depending on the offense, you, your sister, your son won't be able to work anywhere(there is only one company after all). Nothing else was needed to control every one.
As an organization grows, it requires people in support structures that are less linked to the ultimate bottom line. Ludwig von Mises proposed the idea that an organization requires a level of bureaucracy, in the absence of market signals. So to the extent that an employee is removed from from the direct market operations of the company, a bureaucracy is required.
Now, the reason companies don't outsource all their work to bidding contractors is that there is some value in holding resources in reserve. A bid-contractor is only as good as the next assignment, he may leave for another company when you need him the most. The solution is to have a contract where the particular individual will reserve his time and energy to one company (a.k.a. an employee). The employee will be effectively "slacking off", but will be on call for when his resources are needed.
Imagine if the company was all of society.
What I'm more interested in is this idea of democracy (inefficent, but least of a number of evils) vs. enlightened dictatorship (efficient, sucks if your priorities are different from leader's).
Small is beautiful in part because you don't need to convince a lot of people with disparate motivations to do something.
The same pattern arises in startup vs. bigco, and visionary CEO vs. design by committee.
Second, even huge megacorps are tiny compared to countries. Microsoft is about the same population as Antigua and Barbuda, and if Antigua and Barbuda tried to go the Soviet state controlled economy route I predict that they would be much more successful at it than the Soviets were because its much easier to govern a smaller country.
Examples abound in the last economic downturn.