This Blog Has Moved!

My blog has moved. Check out my new blog at

Your Ad Here

Saturday, August 4, 2007

Dictatorships are Inefficient

A dictatorship is an extremely inefficient way to run an organization. All large organizations are dictatorships. Government is a dictatorship, although the dictators are chosen by "elections". The military is a dictatorship. All corporations are a dictatorship, headed by the CEO and board of directors. Political organizations are dictatorships. Churches typically are a dictatorship; for example, the head Catholic is the pope.

In the 18th century, the only large dictatorship organization in the USA was the military. Most people were farmers or small business owners. In the present, almost every job is part of a large dictatorship organization.

Most dictatorships are set up for the benefit of a specific person or group of people. Government benefits the lobbyists who supported candidates. Corporations benefit the CEO and board of directors, with some benefits for shareholders. The military is set up for the benefit of the government insiders. Political organizations are set up for the benefit of the sponsors.

The idea of a non-dictatorship organization is foreign to most people. Schools train people for living and working in a dictatorship, not for true independent thinking and action. However, any such organization would have a tremendous advantage, if implemented properly.

That's why al Qaeda can't be effectively eradicated by killing or isolating its leaders. Its distributed nature makes it hard to shut down. If it had a dictatorship structure, it could be neutralized by killing its leaders. With a distributed structure, each group is empowered to make its own decisions. Any group can train and recruit others who can then act independently. With easy duplication of electronic materials, manuals can be easily copied and disseminated.

There are several reasons why dictatorships are inefficient.

First, there is no check on the dictator making poor decisions. If a dictator makes a poor decision, his followers have no choice. They can object, but if the dictator overrules them they are stuck. If the organization is one where the followers can leave, such as a corporation, that acts as a partial check. However, most people are trained to accept lousy working conditions rather than shopping around for a better deal. Besides, switching jobs is just replacing one dictator for another. Most corporate jobs are lousy due to the fundamental structural flaw in the monetary system and taxation system. If the organization is one the followers can't leave, such as a government, then the followers are stuck.

Second, there is chaos if the dictator dies, resigns, or is assassinated. The organization may not have a clear purpose until a new dictator is established. There will be inefficiencies during the transition period to a new dictator.

Third, a dictatorship organization can be infiltrated. If the dictator is chosen contrary to the goals of the organization, he can subvert its purpose. A CEO typically is more concerned with lining his pockets than advocating for shareholders. Congress and the President were successfully infiltrated by international bankers to get the Federal Reserve and income tax laws passed; they successfully subverted the original intent of the Constitution. It is well-known that the government plants spies in citizen activist groups. If the spies obtain positions of influence in the organization, they can corrupt its purpose.

Fourth, a dictator has subordinates who are mini-dictators. In a large organization, the dictator can't keep track of everything, even if he is highly skilled. The dictator delegates some of his authority to his subordinates. There is immense temptation for the mini-dictators to act in their own interest instead of in the interest of the dictator or the stated goals of the organization. The organization can be infiltrated not by corrupting the dictator, but by corrupting some of the mini-dictators. If a mini-dictator is infiltrated, all his subordinates can be effectively rendered incompetent.

The only thing a dictatorship can accomplish is maximizing the power and influence of the dictator. It doesn't matter if it's government, a corporation, or any other organization.

It was the inefficiency of the US dictatorship-government that allowed it to be infiltrated. That was how the Federal Reserve and income tax were passed.

A distributed organization should have many more opportunities for efficiency than a dictatorship. The members can be convinced to work towards a common goal, and given reasonable guidelines to follow. If there was a true free market, distributed decision-making organizations should eventually out-compete and replace dictatorship organizations. This has not happened in the US because schools train people to be dictator-followers rather than independent thinkers. This has not happened in the US because the US economy is not a true free market. The Federal Reserve, income tax, and government regulations create huge market distortions. A massive government subsidy is required to keep large corporations profitable.

Guerillas can defeat a larger, better-equipped army. Guerillas are usually fighting to protect their home turf. They know who the bad guys are, and they don't need a commander to order them. A dictatorship-organization hampers an individual's ability to think for himself.

A dictatorship-organization is necessary when the workers disagree with the goals of the dictator. If workers are owners, then a distributed organization structure works. If the workers are wage slaves, then a dictatorship structure is needed. In a typical employer/employee relationship, a worker's salary is largely uncorrelated with the amount of actual work done. That's why almost all work organization structures are dictatorship organizations.

A dictatorship-organization is needed when the goal of the workers is different than the goal of the leaders.

There are a handful of people who control almost all of the world's resources. The world economy is essentially one big dictatorship.

A large corporation is not optimized for efficiency. A large corporation can't price its internal costs properly. For example, suppose the corporation manufactures part A and uses it to make product B. If part A is only manufactured inside this large corporation, it has no idea if it is making part A efficiently or not. The large corporation only sees the total price of product B. If the large corporation has a monopoly or oligopoly, then the price of product B itself doesn't communicate any information about whether the corporation is efficient or not. This is the same allocation of labor problem experienced by a communist dictatorship.

A large corporation is maximized for exploiting the defects in the financial system and taxation system. A large corporation can borrow at a slight discount to the Fed Funds rate, whereas a small business or individual has to borrow at a higher rate. A large corporation is optimized for extracting perks from the government; it can lobby for laws that directly benefit it. A large corporation is optimized for exploiting workers. All large corporations offer the same lousy working conditions, and people must work to survive. A large corporation is not optimized for efficiency; it's optimized for exploitation.

Some people have analyzed this, and they've come to the conclusion that a couple of skilled people working in their basement with the right tools can produce things way more efficiently than a large corporation. Someone would have to apply modern engineering techniques to small-scale manufacturing. The assembly-line factory model is optimized for worker exploitation and government exploitation, not for efficiency and quality.

There is some hope, temporarily. The Internet has a distributed organization, not a dictatorship organization. Someone could write software that enabled people to act effectively as a distributed organization. The Internet would enable efficient communication and information sharing. I suspect that is one reason why abolishing network neutrality is a high priority.

No comments:

This Blog Has Moved!

My blog has moved. Check out my new blog at