Why Self-Organized Networks Will Destroy Hierarchies
by DFW ALL Oct. 13, 2011
“Hierarchies are systematically stupid and inefficient, for the following reasons.
1. Hayekian information problems: The people in authority who make the
rules interfere with the people who know how to do the job and are in
direct contact with the situation. The people who make the rules know
nothing about the work they’re interfering with. The people who make
the rules are unaccountable to the people who do know how to do the
work. Consequently, all authority-based rules create suboptimal
results and irrationality when they interfere with the judgment of
those in direct contact with the situation.
People in authority make stupid decisions because the people who know
more than they do are their subordinates, and the only people who can
hold them accountable know even less than they do.
The only way the people doing the work can get anything done is to
treat irrational authority as an obstacle to be routed around, the
same way the Internet treats censorship as damage and routes around
it.
2. Groupthink: Hierarchies systematically suppress negative feedback on
the results of their policies. As R.A. Wilson said, nobody tells the
truth to a man with a gun. Hierarchies are very good at telling naked
emperors how good their clothes look.
Hierarchies also systematically suppress critical thinking ability in
their members. Psychological studies have found that people in
positions of authority become less likely to evaluate communications
based on their internal logic, and instead evaluate them based on the
authority of the source.
3. Opacity from above: A major theme of “Seeing Like a State,” by James
Scott, is that states try to make populations “legible” from above,
and hence more amenable to control. We might add a “seeing like
a boss” corrollary about the analogous phenomenon inside hierarchies.
The problem is that such legibility is very costly, if not
impossible, to achieve.
Hospitals are a good example. Most of the paperwork that nurses are
required to fill out results from the fact that management doesn’t
trust them to do what it wants them to do without some independent
means of verification. But the paperwork is worthless, unless
management operates on the assumption that those same nurses can be
trusted to fill out the paperwork honestly. It all boils down to the
fact that management knows their interests are diametrically opposed
to those of the nurses, but there’s no way to actually get inside the
nurses’ heads and look out through their eyes and thereby overcome
this fundamental agency problem. So bosses constantly look for new,
ineffectual gimmicks to get around the problem, resulting in endless
layers of new paperwork that are as useless as the old paperwork.
Conclusion: To the extent that hierarchical organizations leave
subordinates with freedom of exit, they are not coercive in the same
way that the state is. But given that hierarchies are artificially
prevalent because of state policies, and those who work within them
do so as a necessary evil resulting from artificial constraints on
the range of competing opportunities, the hierarchy resembles
a microcosm of statist society, in which the agency and knowledge
problems of authority internally mirror the irrationalities created
by state authority in society at large.
So long as the predominant production methods required large
aggregations of capital beyond the means of individuals and small
groups, and corporate hierarchies were propped up by state ones, the
cultural pathologies of hierarchy were surmountable. But
technological change is rapidly eroding the requirement for capital
outlays, nullifying the advantages of capital ownership, and
increasing the vulnerability of hierarchy to external and internal
attacks by self-organized networks.
So hierarchies, increasingly, lack the resources to compensate for
their handicaps — even with help from the state. The state will only
bankrupt itself, along with corporate hierarchies, in trying to prop
up the old order.”