Markets inside the organization

By | August 12, 2012


  1. Free markets are the best way to organize society
  2. Central planning and command leadership is the best way to organize large organizations such as corporations and government

The first claim is regularly heard in political discourse, while the second is rarely made openly, but is instead implied by the status quo. The double standard comes from the fact that absent some clear distinction, if market-based solutions are the best approach to organizing society at large, they ought also to be the best approach to organizing large organizations. Worse, the first argument is most commonly heard from people established in positions of power within some centrally planned organization. Given that, it’s very hard to hear this as anything other than hypocrisy designed to maintain power and wealth.

This issue is not unknown to economists. This afternoon, I read Yanis Varoufakis discussing the issue in the context of Valve, a game company that uses a radically different management structure to most companies that is arguably much closer to the philosophic ideals behind free markets. He describes the situation as follows:


The full article is a little long, and could use a little editing, but really interesting, particularly if you’re interested, as I am, in how to build organizations that can attract good people to work on interesting consulting jobs and projects in an open and distributed manner.

Read the article: Why Valve? Or, what do we need corporations for and how does Valve’s management structure fit into today’s corporate world?