Abstract
Perhaps uncommon for an organization theorist in the ‘EGOS mould’, in my younger days I was actively involved with the Dutch Liberal Party for more than 20 years. At the beginning of this century that party irrevocably moved to the right, while I remained the progressive liberal I always was (at least, that is my cherished self-image), so our ways parted. However, I always have remained interested in freedom in and around organizations (e.g. Visser, 2019). In addition, especially since I moved from business administration to the economics department, I have been struck by how much the philosophical roots of neo-classical economics and libertarian (or neo-)liberalism actually overlap, up to the point that talking about a value-free or neutral economic science amounts to a contradictio in terminis. By the same token, it became clear to me how much organizational forms, ideas and practices are determined by global economic forces and relations. As a result, I readily embraced the opportunity to review the latest book by Rob Larson, which is exactly about these economic and organizational themes. Title and subtitle of the book already give a good indication of where the author is heading: the main title is a pun on Milton Friedman’s Capitalism and Freedom (1962), the subtitle on Friedrich von Hayek’s The Road to Serfdom (1944).
In the Introduction of his book, Larson outlines this central concept of freedom, which is often juxtaposed with power, where in a state context power has to be limited in order to protect and grant a realm of unrestricted freedom to individuals. The Russian-British philosopher Isaiah Berlin, in his inaugural lecture at Oxford in 1958, famously introduced the two concepts of negative and positive liberty, the first connoting an unrestricted realm of ‘freedom from’ state interference, the second a more substantive ‘freedom to’ be able to take part in social, economic and political life. For older philosophers like J. S. Mill, these two freedoms were almost equally important, but for newer philosophers or economists like Friedman and Hayek negative freedom became singularly more important than positive freedom. Furthermore, their central thesis was that such human freedom was best served by free market capitalism, a thesis that proved extraordinarily influential in the Thatcher and Reagan years of the 1980s and thereafter, until the present day. Against this, Larson makes it the central argument of his book that . . .capitalism and markets fail the test for both categories of freedom. Capitalism withholds opportunities to enjoy freedom (required by the positive view of freedom) and also encourages the growth of economic power (the adversary of liberty in the negative view of freedom). (p. 6, italics in original)
In Chapter 1 Larson explores markets, freedom and the distribution of wealth and power. He starts with a brief survey of free market economists and philosophers, with Friedman and Hayek featuring most prominently, but also libertarians like Murray Rothbard, Ayn Rand and Ludwig Von Mises. All of them extol the free market as the principal bulwark of human freedom, because it allows for competition between many suppliers of goods and jobs, giving both consumers and workers the freedom to buy from and work for whoever they wish; in Friedman’s words, they are all ‘free to choose’. Larson then describes how this ideal of an eternally competitive market is being subverted; in the first place, it is being subverted by the accumulation of wealth and capital ownership in the hands of the top 1% richest class over the past decades (Oxfam, 2017). The concentration of so much money in so few hands signifies a huge amount of hegemonial economic power, making the wealthy much more ‘free to choose’ than the less well-off. In the words of Larson, ‘not one person one vote, but one dollar one vote in the market place’ (p. 25). In the second place, the competitive market ideal is being subverted by tendencies towards concentration, when smaller firms lose market share or are taken over by bigger firms. Primarily driven by economies of scale among production companies, by trading monopolies among major merchant companies (like Wal-Mart and Amazon) and by network monopolies (like Google, Microsoft, Apple, Facebook and again Amazon), this means that most global and local markets are nowadays governed by monopolies or oligopolies of suppliers. In principle, governmental antitrust legislation could have restored market competition, but this has been weakened in the past decades because of its possible disturbance of that same free market (!). In the third place, the same tendencies towards wealth accumulation and market concentration work against a competitive labour market, because workers can no longer freely choose among many companies, competing for their services. The logical consequence of organizing workers into labour unions, however, is fiercely contested by free market libertarians as ‘labour monopoly’; this in spite of steadily declining degrees of unionization over the past decades. Together with the growth of debt and recurring financial crises, all these factors ‘point to a drastic reduction in the security and certainly the bargaining position of the workforce’ (p. 62; see also Fleming, 2017).
In Chapter 2 Larson discusses how the factors reviewed in Chapter 1 (market consolidation and wealth concentration) militate against a free flow of information across society. In theory, free markets are able to condense information about many individual decisions of supply and demand in the form of prices, but this holds true only for truly competitive markets without dominant players; it, therefore, does not hold for the many monopolistic and oligopolistic markets of today. Furthermore, other suppliers of information (newspapers, radio, television, social media) have seen a particularly strong consolidation into ‘network monopolies’, leading to a dissemination of information that is primarily driven by advertising, marketing and other commercial interests and thus remains ‘limited to conventional views of the social system’ (p. 98). It is ironic that Hayek, who saw the ‘road to serfdom’ reflected in even the tiniest of government interventions, largely remained silent on these gross interventions in the free flows of information by current captains of the media industry.
In Chapter 3 Larson explains how the concentration of financial wealth and power outlined in Chapter 1 influences political freedom and life, in the United States and elsewhere. Here, he follows the footsteps of economic historians like Charles Beard and Thomas Ferguson, in particular Ferguson’s ‘golden rule’: ‘to discover who rules, follow the gold’, i.e. ‘trace the origins and financing of the campaigns’ (p. 121). Larson first shows how the specific drafting and regulations of the US Constitution in 1787 fitted almost perfectly with the economic interests of the founding fathers. He then goes on to show how in the two centuries thereafter economic elites and vested business interests generally had the upper hand in policy making, even against policy changes favoured by fairly large majorities of the US population. Ferguson’s rule also holds for the New Deal era from the 1930s to the 1960s, where capital-intensive corporations coalesced with free-trade oriented Wall Street banks and labour unions against labour-intensive corporations to reconcile with workers, rather than oppress them. It proved to be an uneasy coalition, however, and while union rights were already curtailed in the 1950s, the early 1970s saw a rise of business investments in libertarian think tanks, economic thinkers (like Friedman and Hayek) and policy institutes, paving the way for the Reagan election in 1980. After that, US politics continued to be dominated by corporate financial and economic interests, but, as Larson shows with the example of the Tea Party within the Republican Party, this control was never absolute and sometimes backfired. The upshot of his argument is that ‘Friedman’s thesis, that political freedom will be advanced by his conceived freedom of the marketplace’ is simply false (p. 153). Friedman’s libertarianism is only concerned with public power, but fails to recognize the enormous extent to which private power infringes on both the negative and positive freedom of the people at large.
In Chapter 4 Larson discusses how the concentration of financial wealth and power outlined in Chapter 1 influences the life of future generations, in terms of environmental impact. Even Friedman and Hayek recognize that economic transactions can have so-called ‘externalities’ or ‘neighbourhood effects’, negative effects or damages that cannot be charged to any one property owner and thus cannot be expressed in the market price system. While this makes markets less efficient, Friedman still shies away from government regulation: ‘the imperfect market may, after all, do as well or better than the imperfect government’ (quoted on pp. 167–8). Larson then goes on to show the extent to which recent environmental developments have contributed to mass extinction of species, ecosystems and fauna and to global climate changes, far surpassing Friedman’s ‘neighbourhood effects’. The role of major corporations here is twofold: not only do they disproportionally contribute to pollution, extraction of natural resources and global exploitation and inequality, they also actively conspire to cast doubt on the whole issue of climate change, in spite of near-unanimous scientific consensus on that issue. This all will lead, Larson argues, to a thorough reduction of the positive freedom of future generations to enjoy and thrive in the natural environment of their times.
Finally, in Chapter 5 Larson outlines alternatives for capitalism, which he finds in ‘abolishing private ownership of productive capital’ and replacing it by forms of ‘democratic economic organization’ in a ‘free socialist society’ (pp. 193–4). It involves a dismantling of capitalist power centres and should lead to a bottom-up, democratic ‘workforce control over production and investment’ (p. 194), whereby coordination between democratic workplaces is accomplished by today’s (equally democratized) information and communication technology and which would allow far greater ‘empowerment of the rank-and-file working men and women’ than is currently allowed under capitalism (p. 203). Importantly, Larson is keen to associate his ideals with anarchism, instead of ‘big government’ or Soviet-style communism, to which Friedman and Hayek routinely refer when attacking socialism. In Larson’s form of ‘libertarian socialism’ there is no room for detailed blueprints for the new social structure; instead ‘the proper approach to these issues is an experimental one . . . encouraging different . . . communities and industries to try out different methods and configurations of participatory socialism’ (p. 204). Breaking up the capitalist molochs of our time would tremendously aid social, economic and ecological development around the world, in particular in developing countries.
Larson’s line of argumentation invites three comments. First, it is not clear from his book how the dismantling of corporate power positions actually will come about. Given the power these corporations wield in politics and media (and to which Larson rightfully draws attention), how and where will the revolution start? It is almost inconceivable that such dismantling will take place without government intervention, but, true to his anarchist inclinations, Larson is reluctant to replace corporate power with government power. Recently, however, there have been important re-evaluations of the role of the state, for example in driving societal innovation (Mazzucato, 2018) and in fostering new forms of democratic socialist planning (ironically inspired by some of the major corporations of today) (Phillips & Rozworski, 2019), which seem to imply that top-down planning does not need to interfere with bottom-up initiatives.
As a second comment, it is not very clear from the book how democratic workplace control is to be organized. Larson here places faith in the idea of workers’ councils, as developed by various Marxist and non-Marxist writers in the last century, but this idea could be supplemented and updated by forms of self-organization that currently exist, even under capitalist conditions. Examples are cooperatives, self-managing teams, holocracy, sociocracy and perhaps even some forms of worker empowerment as practised by Semler (1993).
As a third and more philosophical comment, Larson’s notion of freedom still hinges on Berlin’s negative versus positive freedom. Less known is that in that same 1958 inaugural lecture Berlin discussed at some length the desire for social status and recognition as coming very close to the desire to be a free and independent agent. This notion of recognition or social freedom, in which A is free in relation to B to the extent that A’s relation to B is mediated by reciprocal recognition of that freedom and vice versa, originates from Hegel and is currently elaborated with respect to societal problems by social philosophers like Axel Honneth, Judith Butler and others (Visser, 2019). This notion of social freedom would provide an admittedly more appropriate philosophical basis to Larson’s libertarian socialism than Berlin’s still individualistic and essentialist notions of freedom.
These comments, however, are by no means intended to detract from the fact that Larson has written a comprehensive, very readable and at times humorous and feisty book, one that touches upon some of the most important problems of today and that expounds alternative ways of thinking against the dominant tide of current-day neoliberal capitalism.