Michael:

I had no idea that the W brothers would force something like Derrida on Keanu Reeves. I'm torn between thinking "shame on them" and giggling at the idea for a piece of sketch humor on "Teaching Actors Postmodernism."

Paul:

I'm not contending that employees are getting screwed. They're big boys and girls and they make their own choices--choices that I believe are far more rational than postmodern liberation theorists seem to believe. I find it perhaps significant that none of these theorists--to my knowledge, anyway--have had considerable experience in the business world.

To dilate on my probably silly theory, however, I believe that in virtually all cases, an employer-employee relationship could be turned into a service business owned by the employee, or by a group of employees, and that such a business would be able to charge a premium above the former salaries of those employees. Why would an employer want to deal with such a service business? For several reasons: (1) when the former employer's business is slow, he's not obligated to keep up the same level of activity, so there's a transfer of risk away from him to the service business; (2) his former employees would be more useful because they would start dreaming up "value adds" that would never occur to them as employees; (3) his former employees would develop their own vision of the future and bet on it by investing in new techniques, technologies and training, which would make them more valuable (employers don't have the time, money or energy to maximize more than a small fraction of the various aspects of their business, and this "fragmentation" of his business into constituent parts would ultimately increase productivity, quite possibly drastically); (4) his former employees would start branching out and working for companies other than his, so they would provide a channel for useful information on how other organizations handle similar challenges, etc., etc. I further believe that employees don't do this for many reasons, which include (1) like most people, employees are trained from childhood to not believe in themselves and to believe in authority figures (a truly disfunctional religion--which may well be genetic, since it so obviously is resistant to experience with real world authority figures, all of whom are so obviously fallible); (2) many employees aren't interested in making more money if it comes at the cost of things they like better, such as hobbies, family, spare time--I don't believe most people are income maximizing, or even close to being so; (3) lack of training and experience in developing a vision of the future--I'm not aware of any schools or training programs that focus on it, per se.

Annette:

I think you're right (see my response to Paul), and I want to stress that the point of this post was not to criticize people for not being entrepreneurs. I just used the well-known small-minority status of entrepreneurs as an example to illustrate my more general point that most people appear to be fairly comfortable with the notion of other people leading them. This has led me to wonder if elites truly possess systems of control that are really so wonderfully powerful (a la the fantasies of Postmodern theorists), or if a simpler explanation is possible: that hierarchies ("power relationships") exist because people--including the "underlings" as well as "elites"--are comfortable with that arrangement. I have frequently speculated that the "leaders" are actually the ones being subtly controlled by the masses--conned into doing their dirty-work for them.

Tim:

Again, thanks for doing all my heavy lifting by summarizing the po-mo political position on your blog; I would never slog through enough of that stuff to be able to sum it up so neatly on my own. In the one book by Derrida I tried to read I ended up with serious intellectual doubts about the very first, most basic example he used to introduce his ideas (I didn't think it illustrated the point he was trying to make at all, but rather a very different one), and concluded this book and I weren't made for each other. I guess I'm just a wimp, intellectually.

However, I think you missed one key point in my piece (which was probably obscure--ergo, my fault). I'm not trying to criticize Po-Mo by linking it to a "deviant" sexual practice (i.e., sadomasochism); what I was saying was that Po-Mo theorists who are obsessed with power but want to talk about it in terms of liberation (or even in terms of the impossibility of liberation) are morally similar to a masochist who doesn't want to be honest about being a masochist--in short, my criticism is that Po-Mo looks like a very complicated way of not taking responsibility for one's actions/obsessions. (Small aside: why do you think Plato's not a Gnostic? Surely you don't think he dreamed up a whole set of ideas that appear to have been kicking for millenia totally independently, do you? I guarantee you he was working off a non-Greek source; remember Nietzsche's very perceptive comment that Plato's real ambition was to found a new religion, not to practice philosophy.)

J.C.:

Thanks for the endorsement of my new book on management: it'll be in bookstores early next month.

I don't think it's nearly as hard to get what you refer to as alpha cred. When I went out on my own, I dressed up in a suit and went to many business meetings, thinking privately the whole time: "I am such a fake." Very gradually it came to me that I wasn't fooling anyone; they just found it in their interests to do business with me, because I was standing there in front of them offering them a deal that appeared to address their needs and there was nobody with any more credibility in sight. In short, if you can think your way into the situation of your customers, partners, etc., and figure out a solution that nobody else is offering (at that exact time or place) most people will take a flyer on you. That goes double for employees: nobody's going to work for you as an employee if they have a viable opportunity to work for IBM, but...guess what? That's not an option for very many people. The whole art of business is to recognize the risks of everybody involve, and to offer them deals that won't be perfect, but are better enough than their current alternatives.

I suspect that this is what minority women are figuring out--that there's a lot more space between existing economic structures than inside them. Granted it helps to be a bit of a salesman. But that's a topic for another post--why salesmen and saleswomen are the most important people on the planet.

Posted by: Friedrich von Blowhard on May 27, 2003 1:19 AM

I'll readily agree that salespeople are vitally important. I'm an aweful opener but a great closer, which has influenced my career a lot.

Part of the problem with extreme levels of outsourcing loke you describe are that politics always resurfaces in the newly factored service business as a way to determine what THEY do. And sharing information about other clients with one is anathema to that entire approach. But the benefits of organizational specialization of labor that you point out are indeed there: that's why outsourcing is perpetually such the rage in technology.

Stock options (and increasingly, outright grants to employees) are a way of getting that extra emotional involvement from employees, and ownership DOES seem to be a very big motivator to otherwise uninspired rank-and-file workers.

One big frustration of myself and other entrepreneurs in tech that was not, in retrospect, surprising, was that the during the Internet Boom traditional old-boy networking ended up being far more important to funding than one would have thought by reading Wired magazine. It just all seemed more egalitarian because EVERY idiot with any connections to big money was getting funded. Things that had no chance on their face of making a dime were being gushed over and implemented, all because of who somebody's frat brothers were. Such as it ever was.

But I must be a risk junkie, as I was a founding employee of 2 startups before inflicting one on the universe myself, and am still a consultant looking for the next opportunity. And it's a hard habit to kick, as a resume like that makes folks leery to hire you, as they're certain you "won't like to take orders very well", no matter how desperately at times you'd like to just bite your tongue and get a regular paycheck and health insurance again for once.

But at a level of course they are right.

Posted by: David Mercer on May 27, 2003 3:08 PM

Special "Hi" to Friedrich.

In answer to your queries: First of all, I wasn't defending postmodernism from the taint of sadomasochism. Instead, I was defending sadomasochism (which, like most sex acts, is only "deviant" if you don't get into it) from the taint of postmodern radicalism. Most S&M-B&D devotees I know don't strike me as pomo because their experiences haven't been theorized and rarefied right out of existence. There's still a real whip to swing, and a real body to feel it.

As for Plato being or not being a Gnostic, I probably ought to reconsider that one. I tend to think that Gnostics are Platonists and not the other way around, because as far as we can tell Plato got there first, but I'll acknowledge that in terms of their overall world view, Plato and the Gnostics are difficult to tell apart. Still, I tend to think of Plato's dialogues as a bit earthier than Gnostic treatises (I've always had a fondness for Socrates's horse-breeding analogies), which perhaps signals a more fundamental difference in both emphasis and method. But I'm not sure I have the expertise to delve into that difference further.

Posted by: Tim Hulsey on May 27, 2003 5:24 PM

BDSM isn't deviant any longer? Damn. I hate the way everything has been de-devianted. Everything's become much too shameless and healthy. Where does a fan of creepy, shameful, deviant sex turn these days?

Posted by: Michael Blowhard on May 27, 2003 5:29 PM

Japan?

Posted by: David Mercer on May 27, 2003 5:58 PM

Friedrich,

Your theory is not silly at all, but unless you are advocating “extreme outsourcing” (as David Mercer calls it), where everyone is a sole proprietor, (the IRS would have a fit over this!), then maybe its not really your theory. You describe the costs of large organizations, that I think everyone would agree with, but you are ignoring economies of scale and the costs faced by small businesses. I think conventional econ calls this the “theory of the firm” --- why do firms, even small ones, exist at all? Because of lower transaction costs….

So, I may take that back. Your theory is silly to the extent that you are saying that you are better at weighing the costs and benefits of outsourcing, and determining the distribution of firm size, rather than the actual result produced by the market order.

On the other hand, to the extent that the cost of running a small business is artificially driven up by government regulation (and I think it is), this skews the market towards the formation of larger firms, (and something should be done about it!)

In practice, there is always an endless oscillation between doing it in-house and farming it out, both because of fashion and actual experience. When you do a significant amount of outsourcing in a particular area, you tend to focus on the direct costs, and ignore all the expenses that the sub pays, and think, hey, I can do it cheaper. When it is in-house, you realize how lousy a job is being done, how hard it is to keep good employees, etc.

Posted by: Paul Mansour on May 27, 2003 6:18 PM

Lordy, I'm glad I don't run a business. Even though it does sound semi-fascinating sometimes, I'm glad there's still a place in the world for all us half-hearted employee types...

Posted by: Michael Blowhard on May 27, 2003 10:50 PM

Paul, in my opinion, puts his finger right on it!

The costs of regulation to small business can indeed be crippling, I've got a pile of horror stories about that. Definately doesn't help the transaction costs of the smaller fishes.

The "extreme outsourcing" idea has been explored in sci-fi by some authors, I'd have to dig through Amazon to find the best titles (if anyone is interested in that, drop me an email).

Or, who knows, maybe I'll actually do a bit of digging and blog about it. I've gotten burned out on political writing, perchance a bit of culture writing will pick me up!

Posted by: David Mercer on May 28, 2003 12:50 AM

Paul:

I think focusing on transaction costs misses the point here. I believe the real issue is emotional: most people are not confident that this sort of arrangement could work, or would work for them. If everyone had the necessary belief structure to rationally consider whether to be an employee or a service business owner (a condition that does not obtain today, in my opinion), then I'm sure the market would sort out the proper ratio between these two options. But if people are constrained by their belief system, the market can't work.

There's another, larger truth floating around here, which is that motivation counts for more than efficiency in the business world. Notions of efficiency work fine as long as everyone accurately understands what they are ("to mine coal from this particular vein, the most efficient structure looks like this.") But the fact is, such a complete understanding of economic problems almost never obtains--everyone operates in a condition of uncertainty. And the real point of market based, decentralized systems is that they allow a much more thorough exploration of uncertainty. Perhaps I can't figure out how to solve a certain problem, but some smart sumbitch out there can, and we're all better for it. Or else a dumb sumbitch out there has access to a critical piece of information that I don't have.

So even thought it might seem idiotic to assume that anyone other than Westinghouse or Rolls Royce could compete with GE in building jet engines (a highly profitable business that requires oodles of capital, human and financial), I would bet that lurking under such a mountain of apparent certainty are tons of unanswered questions. I can't figure out how to beat GE at its own game, but I bet a lot of GE employees know ways GE could improve its performance, possibly greatly. The same goes for employees of a local bank, or the corner bakery.

In short, flexibility, which my "service business" system has in spades, will almost always beat an optimized system (i.e., a large corporation)--not because flexible players are more efficient, but because they have (jointly) more information and ingenuity.

Posted by: Friedrich von Blowhard on May 28, 2003 12:57 AM

You're right, emotional issues are important to people. Most of them (especially those with children) are scared to death to work for a startup, let alone start a business or work for themselves.

I've seen this up close and personal at 3 startups, it can make recruiting VERY difficult, especially when you aren't already well financed.

You're also right that people together DO have more information, which is one of the reasons that corporations form, aside from issues of transaction costs and capital concentration.
It's an emotional form of circling the wagons, a type of voluntary collectivism born out of the tribal instinct.

It also aligns self-interest collectively, which makes open cooperation easier. When everyone is effectively a free agent, you're always watching your back for betrayal. There's even a name for it in the consulting industry, the vampire consultant. A sub or co-contractor who intentionally acts as helpful as possible, to make it easier to later steal the client entirely for themselves (and THEIR subcontractors).

Nasty business that, one of the reasons free agents don't cooperate more in hi tech, and why firms win almost all outsourcing jobs.

So in a more altruistic world, you're proposal would work just dandy, but then again so would communism! :-)

And liability issues when something goes wrong are another big disincentive to cooperative free agent agreements, clients want ONE party to sue if things go south, and you don't want several liability for the screw ups of those other contractors you're cooperating with.

It can get ugly, I've seen all of the above more than once in the last 15 years.

Posted by: David Mercer on May 28, 2003 3:44 AM






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