Melançon Enterprises • a multidivision multinational since 1980

A couple quick thoughts relevant to ye old grande thesis which will be written, ten years after it could have had a useful impact on the world. (Nah, i'm kidding, if i have an underlying life philosophy it's that it is never too late.)

Here is the larger fact, which undergirds any other claims.
Power differences matter.

It's pretty weird to have to make this claim, but much of economic theory is based on imagining power differences away. This lunacy allows – or rather requires – F. A. Hayek to argue that a man in a hole is as free as a man outside.

Admittedly, I use power and freedom in a practical, even crass sense. Even if I'm tied to the post with the firing squad aimed at me, my captors do not have any control over me or curtailing of my freedom on an intellectual or spiritual level. But they certainly can kill me, so let's start there.

Starting with a reasonable claim, freedom is about choice, we can take a closer look at power.

If I am held up at gunpoint and told "your money or your life" I might, like Jack Benny, think it over– but it's a very limited choice.

The power imbalance drastically restricts my freedom, and all economic transactions will fall somewhere on the spectrum of power and freedom, with "do this or die" at one extreme but "take these limited job options or starve" and "keep working here or your family probably loses health care" very much on that spectrum too.

And it is those restrictions on freedom – not due to anything inherent in economic activity or markets, but due to differences in power – that make free markets not free, and theory based on the efficiency of choices made in this economic system bunk.

Power imbalances are inefficient.

That's quite an assertion and I'm not sure how to gather data to back it up. Anecdotally and logically, the counter-argument is that you need someone to take charge for stuff to happen, to avoid an endless discussion among equals.

However, it is new companies that create the most economic growth, and that tend to be much flatter hierarchically. Also I recall from somewhere that having more than one founder increased the chances of a companies success (there's multiple reasons for this, but it argues against the idea that sharing power is inefficient).

Simply being able to speak one's mind and act is what really makes equality of power efficient and prosperity-promoting.