This past week I have been traveling in the Emilia Romagna region of Italy (specifically, Reggio Emilia and Bologna). Mercedes came here as part of her early childhood education masters program (which is based on the Reggio Emilia philosophy), and I tagged along.
One of the interesting things we learned is that the Reggio education program has been deeply influenced by the region’s ties to the communist resistance in WWII. After WWII, the region was also the center of support for Italy’s Communist Party (PCI). So it got me thinking about the history and philosophy of Communism.
Alienation
One of the main problems that Marx identified with capitalism is that it causes alienation of workers. That is, work in a capitalist system dehumanizes people. I have recently used the term ‘cog’ to describe something similar, so I am pretty sympathetic to the idea.
One could argue that communist countries haven’t done a great job of humanizing workers. Also, the idea that people ought to be able to express themselves and feel ownership of their work is sometimes viewed with a bit of skepticism by conservatives, who feel like liberals are going to bring down society by trying to have everyone work as social justice warriors and not really getting anything done. But even if you don’t like the solutions offered by a communist (or socialist) regime, you can respect that alienation of workers is a real problem.
I think that alienation stems from three major issues with the modern work environment:
- Our work relationships are too transitory to hold deep meaning for us;
- We work itself isn’t really well suited to who we are as individuals; and
- We don’t own the fruits of our labor (i.e., equity).
The Firm
Here’s a quick model that might help us understand whey capitalism in particular is dehumanizing: a firm is made up of overlapping functions that take inputs, transform them by some pattern of behavior, and produce outputs. The outputs become the inputs to other functions, and the end result is one giant machine that takes all of the primary inputs and spits out all of the primary outputs. Then the outputs can be sold on the market (hopefully, for more than the cost of the inputs).
So, a capitalist entrepreneur comes up with an idea for a machine that can make a profit, figures out the component functions, and gets some funding to put all of the pieces together (i.e., gather the necessary inputs, as well as machines and people perform the functions). As part of this process, they identify what all the patterns of behavior need to look like, and go out and hire people to perform those behaviors. The objective is to make money for the entrepreneur and those who provide the capital.
The first thing I want to note about this model is that it starts with an idea for a machine, develops patterns of behavior, and then gets people to fit into those patterns. Fitting a person to a pattern of behavior is basically what it means to make someone a cog. This is pretty much taken for granted in a modern firm, and honestly, it works pretty well. Without predictable patterns of behavior that fit together into a cohesive plan, things just don’t get done.
The second thing I want to note about the model is that the purpose of the firm is to make money. Like the idea of fitting people to patterns, this is pretty much taken for granted. People (specifically, shareholders) have all different kinds of needs and desires, but putting all that aside and providing everyone with a fungible benefit for participation (i.e., profits) is one of the foundations of the modern economy.
Tribal Firm
So the capitalist model is basically that we can make money for shareholders by turning workers into cogs. I want to define a “tribal firm” as an alternative meets the following criteria.
- The firm serves a dual mandate of creating profit and providing a fulfilling work environment for the members;
- Therefore, the design of the firm is constrained by the types of work patterns that are suitable to the members; and
- Profits are shared equally among the members.
Let’s break this down a little. On one level, the end purpose of every firm is to create happiness, and they do it by creating money first, and then letting the shareholders figure out how to spend their money. But the problem is that how we spend money isn’t the only thing that determines our happiness. How we make money is important, too. So a tribal firm isn’t just going to create happiness for the shareholders by giving them money, it is tasked with providing them an environment where they can engage in meaningful work (i.e., so they are not alienated).
Also, in a typical firm the workers aren’t the same as the shareholders. But since the point of the tribal firm is to find meaningful ways for the members (i.e., the owners) to engage in productive work, the owners and the workers must be the same.
So if a firm is a machine made up of behavioral patterns, the tribal firm doesn’t start with a machine and then push people into the roles needed by the design. It starts with people, determines what kind of roles would be fulfilling for those people, and then constructs a machine that incorporates those roles. If the people change (i.e., the firm gets new people or if the existing members undergo changes), then the machine must change to match the people, not vice versa. The members will have to be a little bit flexible about what type of roles they perform, but for the most part, their needs are primary.
In a way, a tribal firm is kind of like art that starts with the materials. One way of doing art, like the traditional way of building a business, is to start with the idea for the finished product and then choose the appropriate materials. Another way is to start with a material and then imagine how it can be incorporated into a meaningful piece of art.
Let me point out that a tribal firm doesn’t necessarily take all of its people as a starting condition — just the members. It can also have other associates, business partners, contractors, etc that help flesh out the machine. It just starts with the goal of incorporating specific people and then fleshes out the rest as needed.
In the end, a tribal firm is still a machine that transforms inputs based on patterns of behavior, but the members are not cogs because the patterns are designed to fit around the people, not vice versa.
Constraints
Because it starts with constraints, a tribal firm is somewhat handicapped compared to a traditional firm. That is, there are limits on the design of the machine because it has to match a pre-existing set of people. However, there are also some potential advantages.
First, providing people with a work environment tailored to their needs will probably make them more efficient. For less complex firms, the advantages in the efficiency of individuals might dominate the inefficiency that comes with having constraints on the overall design. Second, even if a tribal firm is not as efficient at producing money for shareholders, it may be more efficient at producing happiness for shareholders.
The level of complexity of the tribal firm will be limited. It is not an easy task to design a working firm that takes into account the needs and potential for a large number of people. Plus, the more people that are joined in such a communal effort, the more dilute the incentives to work become. To some extent, this reduction in incentives can be offset by other things (i.e., commitment to each other, social pressure, etc). But the tribal firm can’t really scale beyond a certain point.
In addition to things that determine the size of traditional firms (i.e., information and transaction costs), a tribal firm is limited by psychological factors like the number of people with whom we can develop intimate relationships. I think they will ultimately be limited in size to about 2–12 members (plus any number of additional associates necessary to flesh out the machine). More complex organizations would only be possible by combining the efforts of multiple firms.
In other words, I don’t think this is going to be one giant command economy. By now everyone should pretty much accept that hard communism doesn’t work well on a massive scale. But a tribal firm might be considered a form of micro-communism, like a kibbutz.
In a way, a tribal firm is kind of like the Oreo cookie: a bite sized crunch of hard capitalism on the outside and soft, creamy communism on the inside. Compare this to a traditional firm, which is kind of like capitalism on the outside and a right-wing dictatorship on the inside.
Class Struggle
Another objection to the tribal firm is that it doesn’t really solve the problem of alienation for everyone. Specifically, each firm in my model is going to have first class members who are not cogs because the system is designed to fit around them, and second class members who are designed to fit into a system designed for someone else.
And really, isn’t this kind of how society operates anyway? Elites get the world handed to them on a platter. They get into the schools they want regardless of merit, and then go into fulfilling careers like professor or non-profit administrator (after a brief stint at Goldman Sachs). The less fortunate get careers such as McDonald’s drive-through cashier that clearly treat them as cogs.
The real class war in society is between professional classes that get to write their own ticket to a career where they can express themselves and those who have to cram their personality into a drive-through shaped mold.
This is a valid critique, and I don’t really have a way to save everyone from alienation. But the thing that baffles me is that in the US, even most elites are pretty alienated from their jobs. I mean, heck, I went to Harvard Law School, which is pretty much the definition of privilege and let me just say that a fair number of my friends do not love their jobs. (Of course, being elites they all have the option of choosing a more expressive career, and many have done exactly that).
Life Cycle
However, I believe that becoming a member of a tribal firm can be an option for everyone if it becomes an established part of the human life cycle. That is, after someone becomes an adult (i.e., graduate from school) they might go to work as a cog in various capacities in order to understand their identity and then become a member of a tribal firm once they are ready to settle down.
Thus, even if there are a lot of “second class” citizens at any particular point in time, over the course of any given life, each person has the experience of working both as a cog and as a member.
Plus, since a tribal firm is necessarily limited in size, when it scales up it must do so by making room for new firms (which might be joined in some kind of alliance). That is, working as a cog can be viewed as more of an apprenticeship than the end of the road.
Ok, so to recap, I believe that work in a capitalist system really is dehumanizing, and to combat this we should develop new institutions (i.e., tribal firms) that are based around our needs as human beings. In particular, once we come to an understanding of who we are, we should strive to join together in firms that strive to maximize our happiness both by providing for our needs (i.e., through economic profits) and by engineering meaningful work patterns.
