Why We Can’t Have Nice Things: Agency and Knowledge Problems Under Authority

by Kevin Carson

Why We Can’t Have Nice Things: Agency and Knowlege Problems Under Authority

I have a favorite spiel I keep in reserve for bureaucratic functionaries in government agencies and the corporate world — or just brown-nosing coworkers — who say “we have these rules and procedures for a reason.” Yeah, there’s a reason, all right. The reason is that the people who make the rules and procedures don’t trust you.

In every case, your direct contact of the situation and your skills and experience acquired dealing with similar situations over time make you better equipped to decide how to handle a situation than those who make the rules and procedures governing that situation. Nevertheless, those making the rules and procedures are afraid to trust you with discretion to use your own judgment or to apply your experience, skills and direct knowledge of the situation. They assume that were you given such discretion, you’d just use it to screw them — your superiors — over. That’s because they know your interests are diametrically opposed to theirs. They make a living screwing you over every minute of every day. And they’re afraid you know it.

The lack of trust built into authority relationships, essentially, makes human capital unusable.

Apologists for “the rules” like to spin them as necessary, inevitable, rational — and obvious — responses to some impersonal state of affairs. But they are not. They are responses to “reality” as it exists in the skewed and heavily filtered perception of legislators, bureaucrats and bosses. The decision-making process itself is distorted by the institutional mindset of the decision-makers — which, in turn, reflects the unstated assumption that the only feasible solution to any problem is one administered by people like themselves, and fully consistent with their existing level of power. Any feedback they receive on the effects of their decisions is distorted by the phenomenon remarked on years ago by R.A. Wilson: Nobody tells the truth to someone with a gun (or the power to fire them).

Hierarchical institutions are machines for telling naked Emperors how great their clothes look, and those at the top of such hierarchies live in almost entirely imaginary worlds. They tend to communicate better with their peers at the tops of other pyramids than with their subordinates below them in their own pyramids. That means most of their decisions will be based on “best practices,” as reported to them by those at the tops of other pyramids who are as clueless as they are about the internal workings of their own organizations.

Put all this together, and we get a situation in which authority relations almost completely divorce both decision-making power and incentives from those with the actual knowledge and experience to do a job. That’s why just about every activity in our society, except those done by self-organized groups of people acting to meet their own needs cooperatively, seems to be done as inefficiently as humanly possible. Our every dealing with a large hierarchical institution seems like a scene out of Terry Gilliam’s Brazil, where those with the common sense to fix a problem are quickly and easily constrained by a lot of Weberian bureaucratic work rules apparently designed to prevent anyone from ever doing anything.

When things do get done, it’s because the people doing the job have the common sense to ignore the rules and falsify the paperwork afterward. Indeed the fastest way to paralyze an organization, as anyone knows who’s ever engaged in a work-to-rule strike, is for the people doing the work to stop using their own judgment and obey all the rules on paper.

Society is able to function, despite the stupid rules made by stupid people in authority, only because smart people treat authority as damage and route around it.

The central problem of our society is that it’s ruled by a class of people — bureaucrats, landlords, usurers, rentiers — who live off those who actually know how to do stuff. Because they make their living robbing us, they can’t trust us to use our own knowledge to do our jobs. As a result, a major part of the total economic activity of our society is guard labor that serves no productive purpose, but rather prevents those engaged in productive labor from throwing off the rentiers who feed off their sweat and blood.

The solution is abolish coercive authority, and the ruling class that extracts rents through authority, and vest full decision-making power (along with the full fruit of their own labor) in those who know how to do the job. Without authority, there is no conflict of interest. Without authority, those who have knowledge and experience can be trusted to use it, because they do not exist in a zero-sum relationship with the institutions they serve.

3 responses to “Why We Can’t Have Nice Things: Agency and Knowledge Problems Under Authority

  1. A successful company is one where the staff are trusted and where they are trustworthy. Of course that is a procapitalist statement and Kevin hates capitalism (even denying there is any such thing as economies of scale in the steel business – with his dreams of people making steelin the backyards, Maoist style).

    As for governments. The argument that administrators should be allowed “discretion” is a common one, but it is flawed. Unlike a business enterprise government is coecive (Kevin claims that business corporations are also examples of coecion – but his claim is false), do we really want government administrators with coecive powers to have a wide discretion? Is not an other name for that “arbitrary power”?

    If government must get involved in X, Y, Z (and, contrary to the education system ideology and the media, most of the time government does harm by getting involved in X, Y, Z) then it should operate under fixed rules – that people can know in advance, and operate without favour to any person, club or other group.

    Of course (contra Hayek) government operating under clear, simple and nondisciminating rules does not (repeat not) prevent government being terrible sometimes (for example here is an example of a clear, simple and nondiscriminating rule “all human beings should have their head cut off”), but does deal with some of the forms of harm from government – the arbitrary power of officials.

    Of course a classic example of when we do need government employees to use their own judgement (and not, repeat not, operate under written rules) is war.

    To be successful in defeating the enemy an army (from the highest general down to private soldiers) must use individual judgement. If the established practice is to sit around waiting for orders then defeat is very likely.

    Even the German National Socialists (strategically collectivists) understood this – hence the doctrine of “mission command”. Tell the soldiers want you want done – but leave it to them to work out how to do it, in the rapidly changing (and unpredictable) environment of actual war.

  2. >>>A successful company is one where the staff are trusted and where they are trustworthy.

    And the only workplace where the staff is trustworthy is one in which they are direct stakeholders, i.e. they hold the means of production. This is not a capitalist argument at all. The statement is true, but what it demonstrates is the impossibility of ‘a successful company’ under capitalism (where large corporations’ ability to make any profit is clearly due to state coercion being used to provide privilege that keeps potential more efficient competitors out of the market).

    There is a reason why the only firms that can sustain growth are small, mostly decentralized startups that eventually are crushed and paralyzed under their own weight when the quick profit they make from taking the workers’ plusvalue is reinvested into the firm, transforming them in the very IBM, Apple, Microsoft and Oracle juggernauts that they were able to easily beat in ROI until they themselves got fat and diverted resources away from producers and unto parasites (CEOs and upper/middle managers).

    This problem is so acute that even large corporations like Oracle are starting to relax their hierarchies in an attempt to fight against it (you can only ignore basic natural laws for so long, even if you’re ideologically invested in ignoring them). SCRUM and similar management fads are an attempt at maximizing the decentralized aspect of the day to day workplace without putting in question the core economic problem behind it all.

  3. “And the only company where the staff are trustworthy is where they are direct stakeholders”.

    First the word “stakeholder” is meaningless – it is a fad term taken up by “Tony” Blair and co.

    However, if you mean “shareholder” you are simply wrong. Many staff (in many companies) are and have always been trustworthy. It is actually insulting to employees to say they are not trustworthy if they do not own part of the company.

    By all means give employees shares in your company if you wish to do so (perhaps in return for lower pay or not such a high level of conditions of work), but do not pretend that the “only” companies that have trustworthy staff are ones that do this. Because that simply is not true.