- What is the “calculation problem”? Why does Carson believe corporations and similar organizations can suffer from this problem just like states? Do you agree? Why?
- What does Carson mean by advocating “asymmetric warfare” in the workplace? Do you agree with the position he defends? Why or why not?
- What subsidies to organizational size does Carson identify? Do you believe these putative subsidies play the roles Carson assigns to them? Why or why not? Are there other subsidies to organizational size he should have identified but did not? Are other factors more important than these subsidies in explaining the large sizes of some organizations? If so, which ones?
Wednesday, July 21, 2010
Welcome to MGMT 654
Kevin Carson’s Organization Theory is a remarkable book, full of provocative insights and unexpected intersections. For this week, please reflect on the following questions:
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The Calculation Problem is the situation that arises when there is a need to distribute the resources in a that are available in a reasonable form in an economy. There is usually a system by which this is done, particularly through pricing levels based on cost of production. However, Carson points out that there is a disconnection between the “knowledge of the value of producer goods” and the “knowledge of the technical possibilities for using them”. For the system to work, one must be integrated with the knowledge of the other. The people who are administrating these policies have little or inadequate knowledge of the impact that their decisions will have on the production process. He also points out that it is partly the results of the Sloan model of management accounting and “the culture of the so-called ‘FIRE economy’ ”. It is a lack of efficient resource allocation programs. The fact that there are big firms doesn’t mean that they are more efficient in any form or fashion. It is one of Carson’s arguments in this book that the cause for this false appearance is because of state intervention in which the costs of transactions has been raised and other distortions on the market. I agree that there are cases in which the people who are in this position of power do not really see or aren’t capable of seeing the big picture, and if they are, other influences win them over to blind them from seeing the big picture and the impact that decisions have on others.
ReplyDeleteAsymmetric warfare occurs when there are differences in power and control and rather than try to use the system (if any) in place to deal with ‘concerns’, other measures are taken. This in an effort to get or achieve what is wanted of an organization or firm who, through other means would not partake in dialogue for these concerns or do anything about them. These methods of warfare include strikes, disruption in work, creating a network within the organization of those who share these thoughts (unions?) among others. Carson does not agree completely with the idea of “sit-downs and monkey-wrenching” infringe on the property rights of the owners, but he also assesses that if these organizations are only there because of state subsidies, then the workers, who provide the state with the resources to give these subsidies, then they are entitled to do these actions of asymmetric warfare. I agree with this view because if the workers are, in a way, be it directly or indirectly, contributing to the organization and the status that it has, they also have some right to do these tactics of asymmetric warfare that causes a stir and calls for a response from management.
Carson identifies various state policies and agreements that ultimately help a large organization as a subsidy to continue their operations through a support by the ultimate consumers (via the state) other than the revenue from their sales. These include transportation and communication infrastructure, patents and copyrights, tariffs, and the tax policy of the state. I do believe that these subsidies play the role that Carson attributes to them. The effect that the transportation and communication system that is subsidized by the people create the better conditions for the companies to continue to survive despite their size. I believe that these conditions are primary to the reasons why these organizations still exist and have power and control. Another reason could be because of this sense of power that they instill on themselves that people buy into them through financial means and support them not only via governmental subsidies but through financial instruments like stocks and bonds.
Darla Martin Tucker said ... this is a test post, because I can't seem to figure out how to do this. Let's see if I got it right this time! :)
ReplyDeleteHurray! let the comments commence...
ReplyDelete1. The calculational problem across corporate America encompasses a number of problematic issues: management's inability to calculate the value of production goods/finished goods given their disconnect from the production process and refusal to include rank and file employees who handle production in the calculation process; the inability to know whether a corporation is actually profitable given management's double-entry bookkeeping to track divisional financial performance (and other creative bookkeeping activities), and a corporation's reliance on government subsidies as opposed to profitability resulting solely from external market performance. Governments also make decisions and move around large chunks of money, supposedly investing in the well-being of the country, but lacking cognition of the daily needs of its people. I do agree with Carson's likening of the governmental and corporate activities and resulting calculation problems, however citizens of a democracy have (or supposedly have) more power to effect change given their access to public information, ability to openly vote, lobby, etc. Usually employees have virtually no access to company data, aside from what they can dig from the Internet (or pilfer from company files), and aside from a union contract, do not have the ability to actually push for change and can't 'vote' someone out of a corporate office.
2. Carson likens asymmetric warfare to guerilla fighters who have their own communication system and who strike the opposing organization repeatedly & unexpectedely. He advocates for a system of employee resistance that involves use of the Internet to post blogs, Web sites and chatter that reveal a company's harmful activities, to undermine customer confidence and sales, post and distribute documents that reveal corrupt and unfair business practices. He also advocates such questionable activities as covert destruction of company property, i.e., 'accidentally' dumping a cup of coffee on a hard drive. He argues that if a company's profits result from patents and other subsidized activities, then the company is actually an arm of the state & its assets are public property. Employees can also refuse to work overtime & delay reporting equipment malfunctions. I agree with some of these actions if direct communication has failed. However I would leave a job before I would purposefully destroy equipment, but would feel compelled to publicly reveal harmful company practices if I believed I had the facts in hand & others were being harmed by the company's behavior.
3. Carson identifies nation-wide railroad, freeway & aviation networks, telephone networks & more recently, satellite communications & Internet networks as corporate subsidies. These subsidized transportation corridors resulted in creating huge market opportunities for businesses that once serviced a small geographic area. And along with these huge new markets came massive distribution costs & the creation of marketing & advertising industries to sell more stuff. Additional subsidies include incorporation laws to the exclusion of individual contracts & corporate tax breaks (for R&D activities, for hiring certain types of workers, buying certain types of equipment, locating in certain areas,etc. - as an example, the Agua Mansa Enterprise Zone here in Riverside). I do believe these state subsidies play the role Carson assigns them. However Carson didn't mention the subsidy of the consumer & their decisions to make purchasing choices. Apple computer is no doubt benefiting from the recent California law that allows large corporations to choose which part of their sales will get taxed, but if all of their customers suddenly stopped buying any & all Apple products, & they were unable to generate a new customer base, I doubt Apple would remain in business, even with its government tax breaks & subsidies.
The calculation problem is a criticism of central economic planning. It states that those in power are unable to calculate the value of goods needed due to their disconnection. Management is unable to see the results of the decisions that are made on others. Corporations can suffer from this problem because centralized planning does not deeply take into consideration what is needed. Also, what is needed cannot always be planned. I agree with Carson’s thinking because, a socialist environment lacks the needed competition to survive and improve.
ReplyDeleteWhen Carson mentions asymmetric warfare in the workplace, he is referring to employee’s rights to speak up through strikes or different means in efforts to get justice from a firm who otherwise, would not negotiate. Asymmetric warfare can be a way of revealing harmful company activities. Carson also mentions that organizations that are state subsidized are public property therefore employees are entitled to asymmetric warfare. I agree that asymmetric warfare is somewhat necessary because it is a way of keeping the company balanced. Without pressure to “do the right thing” many companies would treat employees according to what is most profitable. Allowing employees to reveal harmful activity, would keep the company in line with human rights.
Carson identifies subsidies such as Subsidies to transportation and communication infrastructure, patents and copy rights and, tariffs. These subsidies allow companies to continue or expand even if they are inefficient. The subsidies do play the roles assigned to them. Without them, many large corporations would not exist due to their inefficiency.
just test checking....
ReplyDeleteThe calculation problem is a criticism of the socialist economies first proposed by Ludwig Mises and Hayek. The problem refers to how to distribute resources rationally in an economy where individuals have the ability to decide how goods should be distributed based on their willingness to give money for it. This calculation argument can be applied not only to a state-planned economy, but also to the internal planning of the large corporation under interventionism, or state capitalism. I concur with Jose on the fact that the size of a firm does not make them more efficient and according to Carson, the cause of the false appearance is because of state intervention in which the costs of transactions have been raised. Carson also states that there is a disconnect by the policy makers making them unable to calculate the value of goods and the knowledge of the technical possibilities for using them. I believe that market in factors of production is necessary for pricing production inputs so that a planner may allocate them rationally.
ReplyDeleteDarla Tucker: It's true that the power of corporations is somewhat limited by the power of customers to refuse to buy their products. But corporate collusion with government limits the range of products that are permitted to compete for business in the first place. Even the U.S. Postal Service is limited by the refusal of people to do business with it--but if they want to send 1st class mail, where else are they gonna go?
ReplyDeleteRe the asymetric model of labor relations, I think Darla and Vanessa have got it right: it's about power relations. The rules are set up in the interest of those who make the rules. The way to win is to stop playing by rules set by the people who run the system.
Darla Tucker wrote ...
ReplyDeleteMr. Carson, thank you for your response to my comment about consumer subsidy. I certainly agree that corporate-government collusion limits competition. But I was wondering about your view of business bankruptcies that occur across the board to companies large and small. If corporations are only somewhat limited by consumer sales, wouldn't it follow that bankruptcies would cease to occur?