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bogus comments on Open Thread Feb 22 - Feb 28, 2016 - Less Wrong Discussion
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Comments (228)
In the absence of any state holding the monopoly of power a large corporation automatically grows into a defacto state as the British East India company did in India. Big mafia organisations spring up even when the state doesn't want them to exist. The same is true for various terrorist groups.
From here I could argue that the economics establishment seems to fail at their job when they fail to understand how coorperation can infact arise but I think there good work on cooperation such as Sveriges Riksbank Prize winner Elinor Ostrom.
If I understand her right than the important thing for solving issues of tragedy of the commons isn't centralized decision making but good local decision making by people on-the-ground.
The British East India Company was a state-supported group, so it doesn't count. But you're right that in most cases there is a winner-take-all dynamic to coercive power, so we're going to find a monopoly of force and a de-facto state. This is not inevitable though; for instance, forager tribes in general manage to do without, as did some historical stateless societies, e.g. in medieval Iceland. Loose federation of well-defended city states is an intermediate possibility that's quite well attested historically.
That wasn't the argument I was making. The argument I was making that in the absence of a state that holds the monopoly of force any organisation that grows really big is going to use coercive power and become states-like.
Sure, but that's just what a winner-takes-all dynamic looks like in this case.
The argument is about explaining why we don't see corporation in the absence of states. It's not about explaining that there are societies that have no corporations. It's not about explaining that there are societies that have no states.
Large companies can definitely coexist with small states, though. For instance, medieval Italy was largely dominated by small, independent city-states (Germany was rather similar), but it also saw the emergence of large banking companies (though these were not actual corporations) such as the Lombards, Bardi and Perruzzi. Those companies were definitely powerful enough to finance actual governments, e.g. in England, and yet the small city states endured for many centuries; they finally declined as a result of aggression from large foreign monarchies.