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Comment by mitthrowaway2 | Hacker News Reader

This is tangential to your point about globalization, but the funny thing is that within a firm, especially a vertically integrated one, there really are commissars sending out orders from central offices, dictating production quotas and setting prices. Most companies resemble a command economy on the inside, much more than a market economy.

And almost all economic activity and production is mediated and coordinated by firms. Very few transactions happen between unaffiliated individuals independently making and trading goods according to direct market incentives.

https://en.wikipedia.org/wiki/Theory_of_the_firm

https://en.wikipedia.org/wiki/The_People%27s_Republic_of_Wal...

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Yeah but those commissars act upon market forces and market forces alone. They screw up and overproduce? Bam! And financial punishment comes. Underproduce? Bam! All the lost could-have-been profit went elsewhere.

Any attempt to not have market as part of the loop just leads to long term inefficiency, punished as it should be. I wont be buying overpriced pencils from bad planners unless they are the only ones in the world, and in such case I may be motivated to look for alternatives.

Right, but pertinent to the pencil example, there can indeed be a single company that makes everything from the brass ferrules and the machines that stamp them, to the rubber and the graphite and the wood, coordinating all of the people involved, with the market mechanisms only acting at the periphery. And often this ends up being a cheaper and more efficient way to coordinate the people involved in pencilmaking than rival ferrule-salesmen independently pitching their brass ferrules in a market, and soliciting unaffiliated day-laborers to run their presses, because of the significant savings on transaction costs.

>Most companies resemble a command economy on the inside.

A whole lot of people need to be frequently reminded of this.

A whole lot of people work in corps, pretty sure they know how corps work.

> A whole lot of people work in corps

Agree

> Pretty sure they know how corps work.

Hard disagree

It needs to be paired with an understanding that they do this _with their own money_ and with _their skin in the game_, which are fundamentally missing from broader command economies.

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