legibility and control in the work of james scott

8/20/2019 Legibility and Control in the Work of James Scott

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Legibility & Control: Themes in the Work of James C. Scott

by Kevin A. Carson

Jeremy Bentham's Panopticon Design, ca. 1787

Center for a Stateless Society Paer !o. "# $Winter%Sring #""'


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(acity an) Legibility. In Seeing Like a State, Scott develops the central theme of “legibility,”which will be involved in most of our lines of analysis below. It refers to

a state's attempt to make society legible, to arrange the population in ways that simplified the classic statefunctions of taxation, conscription, and prevention of rebellion. aving begun to think in these terms, Ibegan to see legibility as a central problem in statecraft. !he premodern state was, in many crucial respects,partially blind" it knew precious little about its sub#ects, their wealth, their landholdings and yields, their

location, their very identity. It lacked anything like a detailed “map” of its terrain and its people. It lacked,for the most part, a measure, a metric, that would allow it to “translate” what it knew into a commonstandard necessary for a synoptic view. $s a result, its interventions were often crude and self%defeating.

....ow did the state gradually get a handle on its sub#ects and their environment& Suddenly, processesas disparate as the creation of permanent last names, the standardiation of weights and measures, theestablishment of cadastral surveys and population registers, the invention of freehold tenure, thestandardiation of language and legal discourse, the design of cities, and the organiation of transportationseemed comprehensible as attempts at legibility and simplification. In each case, officials tookexceptionally complex, illegible, and local social practices, such as land tenure customs or naming customs,and created a standard grid whereby it could be centrally recorded and monitored....(

ow were the agents of the state to begin measuring and codifying, throughout each region of an entirekingdom, its population, their landholdings, their harvests, their wealth, the volume of commerce, and so on&...

)ach undertaking... exemplified a pattern of relations between local knowledge and practices on onehand and state administrative routines on the other.... In each case, local practices of measurement andlandholding were “illegible” to the state in their raw form. !hey exhibited a diversity and intricacy thatreflected a great variety of purely local, not state, interests. !hat is to say, they could not be assimilated intoan administrative grid without being either transformed or reduced to a convenient, if partly fictional,shorthand. !he logic behind the re*uired shorthand was provided... by the pressing material re*uirements ofrulers+ fiscal receipts, military manpower, and state security. In turn, this shorthand functioned... as not #usta description, however inade*uate. acked by state power through records, courts, and ultimately coercion,

these state fictions transformed the reality they presumed to observe, although never so thoroughly as toprecisely fit the grid.-

It's not clear to what extent Scott's concept of legibility is directly influenced by ichel /oucault'sanalysis in Discipline and Punish. ut it seems likely a significant influence is there. Scott cites thebook several times in Seeing Like a State, including once in a manner that suggests a direct relationshipto his own treatment of legibility+

0hat is new in high modernism, I believe, is not so much the aspiration for comprehensive planning. anyimperial and absolutist states have had similar aspirations. 0hat are new are the administrative technologyand social knowledge that make it plausible to imagine organiing an entire society in ways that only thebarracks or the monastery had been organied before. In this respect, ichel /oucault's argument in Discipline and Punish... is persuasive.1

In any case, /oucault's analysis in some passages is almost a word%for%word anticipation of Scott, to theextent of even using the term “legibility” in essentially the same sense.

entham's 2anopticon, as described by /oucault, is #ust one example of an institution

( 3ames Scott, Seeing Like a State 45ew aven and 6ondon+ 7ale 8niversity 2ress, (99:;, p. -.- !id., p. -


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architecturally designed to render its inmates as legible as possible to those in authority. /oucaultapplies the same panoptic principle of legibility to monasteries, military formations and camps,hospitals, asylums, schools and factories. In every case the basic principle is partitioning, in order toeliminate ambiguity and organie the institution>or society>on the basis of “)ach individual has hisown place" and each place its individual.”

$void distributions in groups" break up collective dispositions" analyse confused, massive or transientpluralities. ?isciplinary space tends to be divided into as many sections as there are bodies or elements to bedistributed. @ne must eliminate the effects of imprecise distributions, the uncontrolled disappearance ofindividuals, their diffuse circulation, their unusable and dangerous coagulation" it was a tactic of anti%desertion, anti%vagabondage, anti%concentration. Its aim was to establish presences and absences, to knowwhere and how to locate individuals, to set up useful communications, to interrupt others, to be able at eachmoment to supervise the conduct of each individual, to assess it, to #udge it, to calculate its *ualities ormerits.<

In the factory, this meant “distributing individuals in a space in which one might isolate them andmap them...”A !he layout of the @berkampf manufactory at 3ouy, as designed by !oussaint arrB in(=9(, for example, was such that it was

possible to carry out a supervision that was both general and individual+ to observe the worker's presenceand application, and the *uality of his work" to compare workers with one another, to classify them accordingto skill and speed" to follow the successive stages of the production process. $ll these serialiations formed apermanent grid+ confusion was eliminated+ that is to say, production was divided up and the labour processwas articulated, on the one hand, according to its stages or elementary operations, and, on the other hand,according to the individuals, the particular bodies, that carried it out+ each variable of this force>strength,promptness, skill, constancy>would be observed, and therefore categoried, assessed, computed and relatedto the individual who was its particular agent. !hus, spread out in a perfectly legible way over the wholeseries of individual bodies, the work force may be analysed in individual units. $t the emergence of large%scale industry, one finds, beneath the division of the production process, the individualiing fragmentation oflabour power" the distributions of the disciplinary space often assured both.C

In every case the institution was an “observatory” in which power and discipline resulted from theability to see+

!he exercise of discipline presupposes a mechanism that coerces by means of observation" an apparatusin which the techni*ues that make it possible to see induce effects of power, and in which, conversely, themeans of coercion make those on whom they are applied clearly visible.=

$rchitecture was so designed as to “make people docile and knowable,” to “permit an internal,articulated and detailed control>“

to render visible those who are inside it" in more general terms, an architecture that would operate totransform individuals+ to act on those it shelters, to provide a hold on their conduct, to carry the effects ofpower right to them, to make it possible to know them, to alter them.:

< ichel /oucault, Discipline and Punish" #he Birth o$ the Prison, !ranslated by $lan Sheridan (9==. Second Dintage)dition 45ew 7ork+ Dintage 2ress, (99A;, p. (


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“!he perfect disciplinary apparatus,” in short, “would make it possible for a single gae to seeeverything constantly.”9 !hat was, essentially, the purpose of entham's 2anopticon+ “to induce in theinmate a state of conscious and permanent visibility that assures the automatic functioning of power.” (E

!his principle applied above all to the relationship between the state and the citienry in society atlarge. !he /ourierist #ournal La Phalange, with deliberate irony, described the implicit philosophy

behind a #udge's remarks to a vagrant prosecuted in his court+

!here had to be a place, a location, a compulsory insertion+ '@ne sleeps at home, said the #udge, because, infact, for him, everything must have a home, some dwelling, however magnificent or mean" his task is not toprovide one, but to force every individual to live in one.' oreover, one must have a station in life, arecogniable identity, an individuality fixed once and for all+ '0hat is your station& !his *uestion is thesimplest expression of the established order in society" such vagabondage is repugnant to it, disturbs it" onemust have a stable, continuous long%term station, thoughts of the future, of a secure future, in order toreassure it against all such attacks.' In short, one should have a master, be caught up and situated within ahierarchy" one exists only when fixed in definite relations of domination....((

$nother work whose analysis overlaps considerably with Scott's is ).2. !hompson's “!ime, 0ork%

?iscipline, and Industrial Fapitalism.” Scott's treatment of legibility of the work%process, as an aid tomanagerial control, can be usefully compared to !hompson's treatment of ob#ective, legible systems oftimekeeping>like the clock and the pace of machinery>as means of pacing work to management'sstandards in preference to the traditional pattern of alternating bursts of intense labor and idleness,“Saint onday,” the calendar of holy days, etc., chosen by self%employed labor.(-

!he emergence of an ob#ective, legible system of timekeeping, as described by !hompson, isanalogous to the legible systems of land title, weights and measures, money, surnames, etc., imposedby states. $nd the purpose was exactly the same>to increase the amount of appropriable labor. In thecase of legible systems of timekeeping, that meant overcoming “the people's old working habits,”(1 bywhich laborers typically worked only enough to procure necessities>as little as three or four days in

the week. $s the laboring classes were deprived of their previous independent access to the means ofsubsistence and production by such expedients as the )nclosures, and the factory system replaced self%employment, “GtHhe leisured classes began to discover the problem... of the leisure of the masses.” !hepropertied, employing classes were horrified by the fact that so many manual workers, after finishingtheir day's work, still had “several hours in the day to be spent nearly as they please.” (by the division of labour" the supervision of labour" fines" bells and clocks" moneyincentives" preachings and schoolings" the suppression of fairs and sports>new labour habits were formed,

9 !id., p. (=1.(E !id., p. -E(.(( !id., p. -9(.(- ). 2. !hompson, “!ime, 0ork%?iscipline, and Industrial Fapitalism,” Past and Present 1= 4(9C:;+ pp. AC%9=.(1 !id., p. :A.(


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and a new time%discipline was imposed.(C

Scott an) *ayek: Mētis an) *i))en Kno+le)ge.

Scott's concept of “m%tis” 4 JKLῆ ;, in Seeing Like a State, is the culmination of a long line ofprevious thought. &%tis is “practical knowledge,” or “knowledge embedded in local experience,” asopposed to techne 4a systematic body of formal, general, abstract knowledge which is deducible fromfundamental principles;.(= It “represents a wide array of practical skills and ac*uired intelligence inresponding to a constantly changing natural and human environment.”(:

$ny experienced practitioner of a skill or craft will develop a large repertoire of moves, visual #udgments, a sense of touch, or a discriminating gestalt for assessing the work as well as a range of accurateintuitions born of experience that defy being communicated apart from practice.(9

&%tis is ac*uired through>and applicable to>“broadly similar but never precisely identicalsituations re*uring a *uick and practiced adaptation that becomes almost second nature to thepractitioner.” It “resists simplification into deductive principles which can successfully be transmitted

through book learning...”-E

!he classic example of m%tis is the received story of S*uanto 4or, variously, assasoit; providingthe )nglish settlers with the Indians' local knowledge of climate and weather, soil and native plantgrowing cycles, and thereby averting mass starvation.-(

!his should sound familiar to any student of /riedrich ayek. In his classic essay “!he 8se ofMnowledge in Society,” ayek wrote of “distributed knowledge”+

$ we possess all the relevant information, i$ we can start out from a given system of preferences, and i$we command complete knowledge of available means, the problem which remains is purely one of logic.

!hat is, the answer to the *uestion of what is the best use of the available means is implicit in ourassumptions. !he conditions which the solution of this optimum problem must satisfy have been fullyworked out and can be stated best in mathematical form+ put at their briefest, they are that the marginal ratesof substitution between any two commodities or factors must be the same in all their different uses. G0hichamounts to a fair summary of the neoclassical view of the firm as a “black box” guided by a productionfunction which is given.>M.F.H

!his, however, is emphatically not the economic problem which society faces....

!he peculiar character of the problem of a rational economic order is determined precisely by the factthat the knowledge of the circumstances of which we must make use never exists in concentrated orintegrated form but solely as the dispersed bits of incomplete and fre*uently contradictory knowledge which

all the separate individuals possess. !he economic problem of society is thus not merely a problem of howto allocate “given” resources>if “given” is taken to mean given a single mind which deliberately solves theproblem set by these “data.” It is rather a problem of how to secure the best use of resources known to anyof the members of society, for ends whose relative importance only these individuals know. @r, to put it

(C !id., p. 9E.(= Scott, Seeing Like a State, pp. 1((, 1-E.(: !id., p. 1(1.(9 !id., p. 1-9.-E !id., pp. 1(A%1(C.-( !id., pp. 1((%1(-.


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briefly, it is a problem of the utiliation of knowledge which is not given to anyone in its totality. --

!oday it is almost heresy to suggest that scientific knowledge is not the sum of all knowledge. ut alittle reflection will show that there is beyond *uestion a body of very important but unorganied knowledgewhich cannot possibly be called scientific in the sense of knowledge of general rules+ the knowledge of theparticular circumstances of time and place. It is with respect to this that practically every individual hassome advantage over all others because he possesses uni*ue information of which beneficial use might be

made, but of which use can be made only if the decisions depending on it are left to him or are made with hisactive co%operation. 0e need to remember only how much we have to learn in any occupation after we havecompleted our theoretical training, how big a part of our working life we spend learning particular #obs, andhow valuable an asset in all walks of life is knowledge of people, of local conditions, and of specialcircumstances.-1

If we can agree that the economic problem of society is mainly one of rapid adaptation to changes in theparticular circumstances of time and place, it would seem to follow that the ultimate decisions must be left tothe people who are familiar with the circumstances, who know directly of the relevant changes and of theresources immediately available to meet them. 0e cannot expect that this problem will be solved by firstcommunicating all this knowledge to a central board which, after integrating all knowledge, issues itsorders.-<

&%tis overlaps to a considerable extent with what ichael 2olanyi calls “tacit knowledge”+ skillsac*uired through muscle memory or otherwise through practice, that can only with difficulty 4or not atall; be reduced to a verbal formula and conveyed in the form of spoken or written instruction. -A Scottgives the example of “trying to write down explicit instructions on how to ride a bike....”-C ence“most crafts and trades re*uiring a touch or feel for implements and materials have traditionally beentaught by long apprenticeships to master craftsmen.”-=

$lex 2ouget suggests one reason that so much situational knowledge resists reduction to a verbalformula. Some neurologists believe the brain functions as a ayesian calculating device, “takingvarious bits of probability information, weighing their relative worth, and coming to a good conclusion

*uickly”+

...GIHf we want to do something, such as #ump over a stream, we need to extract data that is not inherentlypart of that information. 0e need to process all the variables we see, including how wide the streamappears, what the conse*uences of falling in might be, and how far we know we can #ump. )ach neuronresponds to a particular variable and the brain will decide on a conclusion about the whole set of variablesusing ayesian inference.

$s you reach your decision, you'd have a lot of trouble articulating most of the variables your brain #ustprocessed for you. Similarly, intuition may be less a burst of insight than a rough consensus among yourneurons.-:

$n interesting point Scott makes is that m%tis is by no means necessarily a matter of purely

-- /riedrich ayek, “!he 8se of Mnowledge in Society,” Individualism and )conomic @rder 4Fhicago+ 8niversity ofFhicago 2ress, (9


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traditional knowledge, nor is it conservative. Indeed he deliberately eschews terms like “traditionalknowledge.”-9 Rather, m%tis fre*uently reflects a great deal of ingenuity and invention. !heinnovations and expedients produced by means of m%tis are fre*uently a more rational and effectiveresponse to a presented situation than are those mediated by a managerial hierarchy.

$s Scott points out, “the poor and marginal are often in the vanguard of innovations that do not

re*uire a lot of capital. !his is not at all surprising when one considers that, for the poor, a gambleoften makes sense if their current practices are failing them.”1E e points to the hypothetical exampleof two fishermen,

both of whom must make their living from a river. @ne fisherman lives by a river where the catch is stableand abundant. !he other lives by a river where the catch is variable and sparse, affording only a bare andprecarious subsistence. !he poorer of the two will clearly have an immediate, life%and%death interest indevising new fishing techni*ues, in observing closely the habits of fish, in the careful siting of traps andweirs, in the timing and signs of seasonal runs of different species, and so forth.1(

!his parallels my own line of analysis elsewhere. It is the privileged classes, with their largeproperties, and the large corporations with their heavily subsidied inputs, that can afford to expand

production by extensive addition of inputs and to be relatively inefficient in terms of output per unit ofinput. Small%scale producers, without access to large amounts of capital, on the other hand must ofnecessity be extremely creative in finding ways to make more intensive use of limited inputs. encethe countereconomy, or informal and household economy, is the source of a great deal of innovation inlow%overhead, low%cost technologies. In -rganiation #heory" Li!ertarian Perspecti/e, I wrote+

...G!Hhe owning classes use less efficient forms of production precisely because the state gives thempreferential access to large tracts of land and subsidies the inefficiency costs of large%scale production.!hose engaged in the alternative economy, on the other hand, will be making the most intensive and efficientuse of the limited land and capital available to them. So the balance of forces between the alternative andcapitalist economy will not be anywhere near as uneven as the distribution of property might indicate.

If everyone capable of benefiting from the alternative economy participates in it, and it makes full andefficient use of the resources already available, eventually we'll have a society where most of what theaverage person consumes is produced in a network of self%employed or worker%owned production, and theowning classes are left with large tracts of land and understaffed factories that are almost useless to thembecause it's so hard to hire labor except at an unprofitable price. $t that point, the correlation of forces willhave shifted until the capitalists and landlords are islands in a cooperative sea>and their land and factorieswill be the last thing to fall, #ust like the 8.S )mbassy in Saigon.1-

!his is the same general principle that 3ohn Robb, drawing on engineering terminology, calls“S!)I compression,” what ucky /uller called “ephemeraliation,” what amading Feesay calls the“economics of agility,” and 5athan Fravens calls “productive recursion.” !hey all amount, in practical

terms, to the more efficient extraction of outputs from inputs.11

!he official account, the received version of authorities like Schumpeter and albraith, tells us thatthe large, highly%capitalied, managerial organiation is central to technological progress" the high

-9 Scott, Seeing Like a State, p. 11(.1E !id., p.


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modernist ideology of the managerial classes includes a “reflex” of “contempt for history and pastknowledge.”1thingswhich cost little in the way of new investment, and which workers are usually best e*uipped todetermine>can result in greater productivity increases than the introduction of a new generation ofmachinery. $ large share of technical innovation consists of creative mashups of existing off%the%shelfbuilding block technologies. $nd a disproportionate amount typically comes out of small skunk workswhich attempt to replicate the small shop within a corporate bureaucracy.

$s often as not 4or more often than not;, it is large, capital%intensive oligopoly corporations thatactively suppress competition from smaller%scale, lower%cost, more efficient technologies.

$nd it is precisely because of their privileged>and subsidied>access to large *uantities of land,

1< Scott, Seeing Like a State, p. 1EA.1A 3oseph $. Schumpeter, *apitalism, Socialism, and Democracy 45ew 7ork and 6ondon+ arper T rothers 2ublishers,(9


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capital and other resources that large%scale producers can afford to be inefficient. !hroughout most ofthe -Eth century, $merican industry grew mainly through extensive addition of inputs rather thanintensive extraction of more output per unit of input. !he intensive cultivation practices of the !hird0orld peasant or small $merican farmer typically produce several times more per acre than the largehacienda which holds :EV of its land out of cultivation, or the large agribusiness operation that makesmore money holding land idle as a 8S?$%supported real estate investment than by actually farming it.

?espite the “we feed the world” rhetoric of the 8S?$%agribusiness complex, the most productive useof land is 3ohn 3eavons' biointensive system of raised%bed farming, which can feed one person on onlya tenth of an acre.

In fact, contrary to albraith, it is often the market power of the large organiation that enables it tosuppress innovation. !he large and inefficient producers, having cartelied an industry betweenthemselves by erecting entry barriers against more efficient techni*ues, have thereby insulatedthemselves from the competitive ill effects of inefficiency. 0ith the industry divided up between ahandful of large producers with the same inefficient techni*ues and the same pathologicalorganiational cultures, there is no competitive penalty for inefficiency because everyone is e*uallyinefficient. !he dominant firms can agree to delay adoption of new technology until their existing plantand e*uipment is worn out>a situation in which, in 2aul oodman's words, “GtHhree or fourmanufacturers control the automobile market, competing with fixed prices and slowly spooned%outimprovements.”1:

$ccording to 0alter $dams and 3ames rock, the consolidation of a comparatively large number ofmid%sied firms into the ig !hree after 00II led directly to a significant slackening in the pace ofinnovation. !hey sat on innovations like front%wheel drive, disc brakes, fuel in#ection, and the like, foryears.19 !o take one example, the ma#or auto manufacturers entered into an agreement in the late 'AEsthat no company would announce or install any innovation in antipollution exhaust devices without theconcurrence of the others" they exchanged patents and agreed on a formula for sharing the costs ofpatents ac*uired from third parties.not in bureaucratic hierarchies like those of the government agency orlarge corporation. $nd the character of the communication itself which is distorted involves primarilythe legitimacy of the class order rather than the information needed for optimal design of policies or

1: 2aul oodman, People or Personnel, in People and Personnel and Like a *on3uered Pro/ince 45ew 7ork+ Dintageooks, (9C1,(9CA;, p. A:.19 0alter $dams and 3ames rock, #he Bigness *omple4" ndustry, La!or and 5o/ernment in the merican +conomy.Second edition 4Stanford+ Stanford 8niversity 2ress, -EE


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organiation of tasks. ut the general principle he describes is certainly applicable to our area ofinterest here. 7ou don't have to take his line of analysis much further to get R. $. 0ilson's dictum thatnobody speaks the truth to a man with a gun. $s 0ilson argued in “!hirteen Fhoruses for the ?ivinear*uis,”

$ civiliation based on authority%and%submission is a civiliation without the means of self%correction. +$$ecti/e communication flows only one way+ from master%group to servile%group. $ny cyberneticist knowsthat such a one%way communication channel lacks feedback and cannot behave Wintelligently.W

!he epitome of authority%and%submission is the $rmy, and the control%and%communication network ofthe $rmy has every defect a cyberneticist's nightmare could con#ure. Its typical patterns of behavior areimmortalied in folklore as S5$/8 4situation normal>all fucked%up;, /8$R 4fucked%up beyond allredemption; and !$R/8 4!hings are really fucked%up;. In less extreme, but e*ually nosologic, form theseare the typical conditions of any authoritarian group, be it a corporation, a nation, a family, or a wholeciviliation.


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$s we shall see below in the section “Seeing 6ike a oss and the $rt of 5ot eing anaged,” thisinability of the master class to abstract sufficient information, and this perception of management byworkers as “a highwayman,” result in the hoarding of information by those below and their use of it asa source of rents.

Radical organiation theorist Menneth oulding, in similar vein, wrote of the value of “analysis ofthe way in which organiational structure affects the flow of information,”

hence affects the information input into the decision%maker, hence affects his image of the future and hisdecisions.... !here is a great deal of evidence that almost all organiational structures tend to produce falseimages in the decision%maker, and that the larger and more authoritarian the organiation, the better thechance that its top decision%makers will be operating in purely imaginary worlds.and acknowledges his debt to anarchist thinkers like Mropotkinand 2roudhon for the insight.the person actually doing the work>isin a position of e*uality.

Interestingly, R.$. 0ilson had previously noted the same connection between mutuality>bilateralcommunication between e*uals>and accurate information>in “!hirteen Fhoruses.” $nd he includedhis own allusion to 2roudhon, no less+

2roudhon was a great communication analyst, born (EE years too soon to be understood. is system ofvoluntary association 4anarchy; is based on the simple communication principles that an authoritarian

system means one%way communication, or stupidity, and a libertarian system means two%waycommunication, or rationality.

!he essence of authority, as he saw, was 6aw > that is, fiat > that is, effective communication runningone way only. !he essence of a libertarian system, as he also saw, was Fontract > that is, mutual agreement > that is, effective communication running both ways. 4WRedundance of controlW is the technical cyberneticphrase.;

In his book 9hose eality *ounts: Putting the ;irst Last , Robert Fhambers describes howauthority relations distort information flow in the making of !hird 0orld development policy.

!he central focus of his book is what he calls “embedded” 4as opposed to “embraced”; errors. $n

embraced error is one that, in the presence of a healthy feedback mechanism, is recognied and used asa learning tool to correct future attempts at policy%making. )mbedded errors, on the other hand, “tendto spread, to be self%perpetuating, and to dig themselves in.” !hey do this because they “fit what


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powerful people want to believe,”


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5o matter how insightful and resourceful they are, no matter how prudent, as human beings indealing with actual reality, nevertheless by their very nature hierarchies insulate those at the top fromthe reality of whatZs going on below, and $orce them to operate in imaginary worlds where all theirintelligence becomes useless. 5o matter how intelligent managers are as indi/iduals, a bureaucratichierarchy makes their intelligence less usa!le. !he only solution is to give discretion to those in direct

contact with the situation. $s ruce Schneier writes in regard to security against attack+

ood security has people in charge. 2eople are resilient. 2eople can improvise. 2eople can be creative.2eople can develop on%the%spot solutions.... 2eople are the strongest point in a security process. 0hen asecurity system succeeds in the face of a new or coordinated or devastating attack, it's usually due to theefforts of people.A:

!he problem with authority relations in a hierarchy is that, given the conflict of interest created bythe presence of power, those in authority cannot a$$ord to allow discretion to those in direct contactwith the situation. Systematic stupidity results, of necessity, from a situation in which a bureaucratichierarchy must develop some metric for assessing the skills or work *uality of a labor force whoseactual work they know nothing about, and whose material interests militate against remedying

management's ignorance. 0hen management doesn't know 4in 2aul oodman's words; “what a good #ob of work is,” they are forced to rely on arbitrary metrics.

ost of the constantly rising burden of paperwork exists to give an illusion of transparency andcontrol to a bureaucracy that is out of touch with the actual production process. ost new paperwork isadded to compensate for the fact that existing paperwork reflects poorly designed metrics that poorlyconvey the information they're supposed to measure. “If we can only design the perfect form, we'llfinally know what's going on.”

In a hierarchy, managers are forced to see “in a glass darkly” a process which is necessarily opa*ueto them because they are not directly engaged in it. !hey are forced to carry out the impossible task of

developing accurate metrics for evaluating the behavior of subordinates, based on the self%reporting ofpeople with whom they have a fundamental conflict of interest. $ll of the paperwork burden thatmanagement imposes on workers reflects an attempt to render legible a set of social relationships thatby its nature must be opa*ue and closed to them, because they are outside of it. )ach new form isintended to remedy the heretofore imperfect self%reporting of subordinates. !he need for newpaperwork is predicated on the assumption that compliance must be verified because those beingmonitored have a fundamental conflict of interest with those making the policy, and hence cannot betrusted" but at the same time, that paperwork relies on their self%reporting as the main source ofinformation. )very time new evidence is presented that this or that task isn't being performed tomanagement's satisfaction, or this or that policy isn't being followed, despite the existing reams ofpaperwork, management's response is to design yet another>and e*ually useless>form.

0eberian work rules result of necessity when performance and *uality metrics are not tied to directfeedback from the work process itself. It is a metric o$ work $or someone who is neither acreatorOprovider not an end user. $nd they are necessary>again>because those at the top of thepyramid cannot afford to allow those at the bottom the discretion to use their own common sense. $bureaucracy cannot afford to allow its subordinates such discretion, because someone with thediscretion to do things more efficiently will also have the discretion to do something bad. $nd because

A: ruce Schneier, Beyond ;ear" #hinking Sensi!ly !out Security in an ?ncertain 9orld 45ew 7ork+ Fopernicus ooks,-EE1;, p. (11.


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the subordinate has a fundamental conflict of interest with the superior, and does not internalie thebenefits of applying her intelligence, she cannot be trusted to use her intelligence for the benefit of theorganiation. In such a ero%sum relationship, any discretion can be abused.

ence the bureaucratic nightmare>like something straight out of Brail >that 2aul oodmandescribed in the 5ew 7ork Fity public school system.

0hen the social means are tied up in such complicated organiations, it becomes extraordinarily difficultand sometimes impossible to do a simple thing directly, even though the doing is common sense and wouldmeet with universal approval, as when neither the child, nor the parent, nor the #anitor, not the principal ofthe school can remove the offending door catch.A9

eanwhile, “GaHn old%fashioned type of hardware is specified for all new buildings, that is kept inproduction only for the 5ew 7ork school system.”CE ave you got a /orm -=%&

@n the other hand, subordinates cannot afford to contribute the knowledge necessary to design anefficient work process. R.$. 0ilson's “highwayman” analogy *uoted earlier is a good one. 0orkerssee management as robbers who will use any information they obtain against them. ary iller, in

&anagerial Dilemmas, argued that trust was the main distinguishing feature of firms that made themost productive use of human capital. e cited work by behavioral economists and game theoristsshowing that relationships of trust are built up through repeated interactions, when the parties knowthey will be dealing with one another in the future. e used piece rates as an illustration. In the shortrun, management might have a rational incentive to elicit greater effort through piecework rates, andthen cut the rates. ut in the long run, it's only possible to elicit greater effort if the workers areconfident that management won't change the rules of the game and screw them over" otherwise, therational strategy is for workers to shirk and avoid ratebusting. anagement can elicit greater effortthrough prolonged confidence%building measures to demonstrate their lack of intent to expropriate theproductivity gains of greater effort. anagement can only elicit workers' investment of effort and skillin the productivity of the enterprise by giving them long%term property rights in their share of

productivity gains, with credible safeguards against expropriation. $nd the trust relationships on whichworker willingness rests to invest effort and skill, to reveal their hidden knowledge, are all extremelyfragile and easily disrupted if management betrays that trust.C( Relationships of trust built uppainstakingly over time can be destroyed overnight by the typical idiot $ who thinks he can goosehis stock options by laying off half the work force.

In this light, the 3apanese practice 4at least until recently; of providing lifetime #ob guarantees, andthe comparatively strong #ob security under $merican Fonsensus Fapitalism, were not *uite the stuff of“entitlement culture” and inefficiency the right%wing makes them out to be. !hey were almost ideal formanaging human capital as a long%term investment, and eliciting the effort, skills and hiddenknowledge of the workforce. $s 0addell and odek point out, people “will not work harder if

management has defined the ultimate goal to be a lights out factory, while they soar like hawks over theplant hunting for #obs to eliminate and people to lay off. 2eople... will not work harder for someonewho has defined them as a variable cost.”C- 0hen workers are defined as a variable cost, “they find #obsecurity by making sure that the work is never complete.”C1 !o take #ust one example, before a Range

A9 oodman, People or Personnel, p. ::.CE !id., p. A-.C( ary iller, &anagerial Dilemmas" #he Political +conomy o$ 0ierarchy 45ew 7ork+ Fambridge 8niversity 2ress,(99-;, pp. -E(%-E-.C- 0illiam 0addell and 5orman odek, #he e!irth o$ merican ndustry 4Dancouver+ 2FS 2ress, -EEA;, p. (A:.C1 !id., p. (C9.


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Rover factory in the 8M made a lifetime employment pledge in the early '9Es, only ((V of employeesentered the annual employee suggestions competition out of fear that increased efficiency would lead todownsiings. $fter the guarantee, the figure rose to :or hoarded >knowledge ofworkers is directly analogous to the \omian peasants' tubers hidden underground to avoid confiscation

by the state's raiding armies.

!he rents that result from the private knowledge of skilled workers, given the ero%sum relationshipbetween management and labor, are an unacceptable barrier to the appropriation of labor's product.

C< 3ohn icklethwait and $drian 0ooldridge, #he 9itch Doctors" &aking Sense o$ the &anagement 5urus 45ew 7ork+!imes ooks, (99C;, p. -E9.CA Sanford 3. rossman and @liver ?. art, “!he Fosts and enefits of @wnership+ $ !heory of Dertical and 6ateralIntegration,” Journal o$ Political +conomy 9


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Increasing management's control of the work process, and hence the appropriability of the output> making the organiation more legible so as to increase the net appropriable product>is the real agendaat the heart of deskilling strategies like !aylorism. !o repeat iller's metaphor, when given a choicebetween efficiency and control>between a larger pie and a larger slice of a smaller pie>managementusually prefers to maximie the sie of their slice rather than the sie of the pie. $s Scott argues,control trumps efficiency+

$s Stephen arglin's early work has convincingly shown, capitalist profit re*uires not only efficiencybut the com!ination of efficiency and control. !he crucial innovations of the division of labor at the sub%product level and the concentration of production in the factory represent the key steps in bringing the laborprocess under unitary control. )fficiency and control might coincide, as in the case of the mechaniedspinning and weaving of cotton. $t times, however, they might be unrelated or even contradictory.“)fficiency at best creates a potential profit,” notes arglin. “0ithout control the capitalist cannot realiethat profit. !hus organiational forms which enhance capitalist control may increase profits and find favorwith capitalists even if they affect productivity and efficiency adversely. Fonversely, more efficient ways oforganiing production which reduce capitalist control may end up reducing profits and being re#ected bycapitalists.”

0hen artisanal production was more efficient, it was “difficult for the capitalist to appropriate theprofits of a dispersed craft population.”C=

In agriculture, likewise, “the mere efficiency of a form of production is not sufficient to ensure theappropriation of taxes or profits.”

Independent smallholder agriculture may... be the most efficient way to grow many crops. ut such forms ofagriculture, although they may present possibilities for taxation and profit when their products are bulked,processed, and sold, are relatively illegible and hard to control. $s is the case with autonomous artisans andpetit%bourgeois shopkeepers, monitoring the commercial fortunes of small%fry farms is an administrativenightmare. !he possibilities for evasion and resistance are numerous, and the cost of procuring accurate,annual data is high, if not prohibitive.C:

?ispersed production by craft methods was almost always an impediment to control andappropriation. !he goal of !aylorism was to abolish hidden knowledge and the attendant rents on it.!aylorism was a way by which “human labor as a mechanical system... could be decomposed intoenergy transfers, motion, and the physics of work.” !his “simplification of labor into isolated problemsof mechanical efficiencies” facilitated “scientific control of the entire labor process.” $nd scientificcontrol meant legibility and expropriability.

/or the factory manager or engineer, the newly invented assembly lines permitted the use of unskilled laborand control over not only the pace of production but the whole labor process.C9

!he genius of modern mass%production methods, /rederick !aylor, saw the issue of destroying m]tis andturning a resistant, *uasi%autonomous, artisan population into more suitable units, or “factory hands,” withgreat clarity. “8nder scientific management... the managers assume... the burden of gathering together all ofthe traditional knowledge which in the past has been possessed by the workmen and then of classifying,tabulating, and reducing this knowledge to rules, laws, formulae.... !hus all of the planning which under theold system was done by the workmen, must of necessity under the new system be done by management inaccordance with the laws of science.” In the !ayloried factory, only the factory manager had the

C= Scott, Seeing Like a State, p. 11C.C: !id., pp. 11=%11:.C9 !id., p. 9:.


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knowledge and command of the whole process, and the worker was reduced to the execution of a small,often minute, part of the overall process.

!his could sometimes result in an increase in efficiency, Scott said>but was al(ays “a great boon tocontrol and profit.”=E

!aylorism not only disempowered workers" #ust as importantly, it empowered managers andtechnicians. It was a subspecies of what Scott calls the “high modernist ideology,” and morespecifically of its $merican branch 4the 2rogressive movement of the early -E th century that was thedirect progenitor of mid%-Eth century liberalism;. 2rogressivism and its !aylorist component reflected,and served as a legitimiing instrument for, the will to power of the white collar managerial%professional classes. Industry was to be governed by a set of “best practices,” 0eberian work rules,which were best knowable to the specialists at the top of the hierarchy. $nd the regime of efficiencyand rationality>what Scott calls “slide rule authoritarianism”>would replace class conflict with “classcollaboration” by increasing production and rationally promoting the common interests of all.=(

In this regard, !aylorism within the corporation was a microcosm of the high modernist ideology of2rogressivism in society at large.

igh modernist ideologies embody a doctrinal preference for certain social arrangements.... ost of thepreferences can be deduced from the criteria of legibility, appropriation, and centraliation of control. !o thedegree that the institutional arrangements can be readily monitored and directed from the center and can beeasily taxed 4in the broadest sense of taxation;, then they are likely to be promoted.=-

!his set of preferences is as true of corporate management as it is of the political and social system as awhole.

If there was one apostle of the mid%-E th century model of industrial organiation>the modelassociated with the politico%economic organiation variously called “corporate liberalism” or

“consensus capitalism”>it was $lfred Fhandler.

0here the underlying technology of production permitted, increased throughput from technologicalinnovation, improved organiational design, and perfected human skills led to a sharp decrease in thenumber of workers re*uired to produce a single unit of output. !he ratio of capital to labor, materials tolabor, energy to labor, and managers to labor for each unit of output became higher. Such high%volumeindustries soon became capital%intensive, energy%intensive, and manager%intensive.=1

ut I suspect such capital%intensive mass production methods were not as efficient in so many casesas even Scott imagines. Such methods, as pointed out by such writers on lean production as 3ohn0omack, or 0illiam 0addell and 5orman odek, tend to be more efficient at each individual stage ofproduction>minimiing the unit cost of each particular machine and maximiing its>while creating amore than offsetting cost increase from overall inventory, overhead, and marketing and distribution.

In any case, m%tis and dispersed knowledge can never be completely !ayloried out of theproduction process. $ttempts by those in authority to minimie discretion by reducing tasks to

=E !id., pp. 11C%11=.=( !id., p. 99.=- !id., p. -(9.=1 $lfred ?. Fhandler, 3r., #he @isi!le 0and" #he &anagerial e/olution in merican Business 4Fambridge and 6ondon+!he elknap 2ress of arvard 8niversity 2ress, (9==;, p. -


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standardied routines and anticipating all possible contingencies in the rules can only result in a seriousdegrading of efficiency, precisely because it is impossible to anticipate all contingencies or to come upwith general rules that will not re*uire exceptions in the face of unexpected circumstances.

!he utopian dream of !ayloriation>a factory in which every pair of hands was more or less reduced toautomatic movements, on the model of programmed robots>was unrealiable. 5ot that it wasn't tried.?avid 5oble has described the well%funded attempt to make machine tools through numerical controls

because it promised “emancipation from the human worker.” Its ultimate failure came precisely because thesystem had designed out m]tis>the practical ad#ustments that an experienced worker would make tocompensate for slight changes in material, temperatures, the wear on or irregularities in the machine,mechanical malfunction, and so forth. $s one operator said, “5umerical controls are supposed to be likemagic, but all you can do automatically is produce scrap.” !his conclusion could be generalied. In abrilliant ethnography of the work routines of machine operators whose #obs appeared to have beenthoroughly de%skilled, Men Musterer has shown how the workers nevertheless had to develop individualskills that were absolutely necessary to successful production but that could never be reduced to formulas anovice could immediately use.

In the incident Scott alluded to, as 5oble described it, “GtHhe workers increasingly refused to takeany initiative”

>to do minor maintenance 4like cleaning lint out of the tape reader;, help in diagnosing malfunctions, repairbroken tools, or even prevent a smash%up. !he scrap rate soared... along with machine downtime, and lowmorale produced the highest absenteeism and turnover rates in the plant. 0alkouts were common and, underconstant harassment from supervisors, the operators developed ingenious covert methods of retaining somemeasure of control over their work, including clever use of the machine overrides.

....!he part of the plant with the most sophisticated e*uipment had become the part of the plant with thehighest scrap rate, highest turnover, and lowest productivity....=<

In fact hierarchical organiations depend for their continued functioning on the willingness of

workers to treat authority%based rules as a form of irrationality and route around them. Scott gives theexample of the 8SSR, where a congress of agricultural specialists who met during orbachev's perestroika

were nearly unanimous in their despair over what three generations had done to the skills, initiative, andknowledge of the kolkhoniki.... Suddenly a woman from 5ovosibirsk scolded them+ “ow do you thinkthe rural people survived sixty years of collectiviation in the first place& If they hadn't used their initiativeand wits, they wouldn't have made it through[=A

)xactly. /or our purposes, the Soviet 8nion can be treated as a case in which a single corporationowned an entire national economy, with the 2olitburo as board of directors, the M as 2inkertons, andthe industrial ministries as production divisions within a gargantuan %form structure. ecause theentire Soviet economy was owned by a single conglomerate, with autarkic barriers to competition fromoutside, the only limits on the level of inefficiency it could afford were set by the need to preventeconomic or political collapse. @r to invert the comparison, the large corporation is a microcosm of theSoviet planned economy, in which workers use their initiative to work around the bureaucraticirrationality imposed from above.

=< ?avid /. 5oble, ;orces o$ Production" Social 0istory o$ ndustrial utomation 45ew 7ork+ $lfred $. Mnopf, (9:


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!he large corporation tacitly depends on the workers who develop work%arounds and disregardirrational rules, to keep production going in spite of management, in the same way that the inistry ofFentral Services in Brail depended on people like arry !uttle. !he disappearance of the blackmarket and nale/o activity would have had the same practical effect in the 8SSR as a work%to%rulestrike in a corporation.

Scott writes that it is impossible, by the nature of things, for everything entailed in the productionprocess to be distilled, formalied or codified into a form that is legible to management.

...G!Hhe formal order encoded in social%engineering designs inevitably leaves out elements that areessential to their actual functioning. If the G)ast ermanH factory were forced to operate only within theconfines of the roles and functions specified in the simplified design, it would *uickly grind to a halt.Follectivied command economies virtually everywhere have limped along thanks to the often desperateimprovisation of an informal economy wholly outside its schemata.

Stated somewhat differently, all socially engineered systems of formal order are in fact subsystems of alarger system on which they are ultimately dependent, not to say parasitic. !he subsystem relies on a varietyof processes>fre*uently informal or antecedent>which alone it cannot create or maintain. !he more

schematic, thin, and simplified the formal order, the less resilient and the more vulnerable it is todisturbances outside its narrow parameters....

It is, I think, a characteristic of large, formal systems of coordination that they are accompanied by whatappear to be anomalies but on closer inspection turn out to be integral to that formal order. uch of thismight be called “m]tis to the rescue....” $ formal command economy... is contingent on petty trade,bartering, and deals that are typically illegal.... In each case, the nonconforming practice is an indispensablecondition for formal order.=C

...In each case, the necessarily thin, schematic model of social organiation and production animating theplanning was inade*uate as a set of instructions for creating a successful social order. y themselves, thesimplified rules can never generate a functioning community, city, or economy. /ormal order, to be more

explicit, is always and to some considerable degree parasitic on informal processes, which the formalscheme does not recognie, without which it could not exist, and which it alone cannot create or maintain.==

!he same is true, of course, in the “collectivied command economy” of the large 0esterncorporation. $ good example is the hidden knowledge of call center workers at a privatied utility.

$s successive problems with the systems emerged, it became clear to the staff that the people who haddesigned the systems had an inade*uate knowledge of the content of clerical work, and assumed it to be farless complex than it was in reality. Somewhat ironically, the introduction of systems intended to simplifyand standardie clerical work actually drew the clerks' attention to the fact that they provided the companywith a kind of expertise that cannot easily be written into a computer programme. $s one clerk noted, “)achsection involved knowledge that has to be picked up, that can't be built into the systems”.... $ supply clerk

explained+

.... don't think (e realied !e$ore Aust ho( much management depends on us kno(ing a!out the Ao!....#hey thought they kne( all (hat (e did, they said 9e kno( the procedures, (e'/e got it (ritten do(n.C think it's !een a !it o$ a shock to them to $ind out they didn't kno(, that procedure is not necessarily ho( you

do the Ao!, Ao! descriptions can't co/er e/erything.C=:

=C !id., pp. 1A(%1A-.== !id., p. 1(E.=: 3ulia @'Fonnell ?avidson, “!he Sources and 6imits of Resistance in a 2rivatied 8tility,” in 3. 3ermier and ?. Mnight,eds., esistance and Po(er in -rganiations 46ondon+ Routledge, (99


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$nd, formal disobedience aside, the difference between what @liver 0illiamson called“consummate cooperation” and merely “perfunctory cooperation>a distinction that hinges on theworker's active contribution of her dispersed knowledge or m%tis to the production process, as opposedto doing the bare minimum necessary to avoid being fired>makes an enormous difference in its levelof functioning.

Fonsummate cooperation is an affirmative #ob attitude>to include the use of #udgment, filling gaps, andtaking initiative in an instrumental way. 2erfunctory cooperation, by contrast, involves #ob performance of aminimally acceptable sort.... !he upshot is that workers, by shifting to a perfunctory performance mode, are

in a position to “destroy” idiosyncratic efficiency gains.=9

$s 3. ). eade argues, it's simple utility%maximiing behavior+ $ wage employee “will have toobserve the minimum standard of work and effort in order to keep his #ob" but he will have noimmediate personal financial motive... to behave in a way that will promote the profitability of theenterprise.... G$Hny extra profit due to his extra effort will in the first place accrue to theentrepreneur....”:E

$nd hidden knowledge means, 0illiamson writes, that it's impossible to “determine whetherworkers put their energies and inventiveness into the #ob in a way which permits task%specific cost%savings to be fully realied....”:( $s 2aul ilgrom and 3ohn Roberts put it, “only the agent knows whataction he has taken in pursuit of his or the principal's goals, or only the agent has access to thespecialied knowledge on which his action is based.”:-

0illiamson's concepts of consummate and perfunctory cooperation are implicit in this passage fromayek+

!o know of and put to use a machine not fully employed, or somebody's skill which could be better utilied,or to be aware of a surplus stock which can be drawn upon during an interruption of supplies, is socially

*uite as useful as the knowledge of better alternative techni*ues.:1

....Is it true that, once a plant has been built, the rest is all more or less mechanical, determined by thecharacter of the plant, and leaving little to be changed in adapting to the ever%changing circumstances of themoment&

....In a competitive industry, at any rate... the task of keeping cost from rising re*uires constant struggle,absorbing a great part of the energy of the manager. ow easy it is for an efficient manager to dissipate thedifferentials on which profitability rests and that it is possible, with the same technical facilities, to producewith a great variety of costs are among the commonplaces of business experience which do not seem to bee*ually familiar in the study of the economist.:<

$nd @liver 0illiamson wrote, in the same vein, that “GaHlmost every #ob involves some specific

=9 @liver 0illiamson, &arkets and 0ierarchies, nalysis and ntitrust mplications" Study in the +conomies o$ nternal-rganiation 45ew 7ork+ /ree 2ress, (9=A;, p. C9.:E 3.). eade, W!he !heory of 6abour%anaged /irms and 2rofit Sharing,W in 3aroslav Danek, ed., Sel$)&anagement" +conomic Li!eration o$ &an 4ammondsworth, iddlesex, )ngland+ 2enguin )ducation, (9=A;, p. 19A.:( 0illiamson, &arkets and 0ierarchies, p. C9.:- 2aul ilgrom and 3ohn Roberts, “$n )conomic $pproach to Influence $ctivities in @rganiations,” merican Journalo$ Sociology, supplement to vol. 9< 4(9::;, p. S(AA.:1 ayek, “!he 8se of Mnowledge in Society,” p. :E.:


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0hat is happening, in effect, is that valuable resources are being disposed of and earnings given a short%term, artificial boost. 5o management would stand for such cavalier treatment of physical assets.... Sincehuman resources do not appear on the balance sheet, they can be li*uidated at will by managers oriented to“the bottom line” ...in order to give a spurious in#ection to earnings.:=

!wo decades later, during the downsiing wave of the '9Es, Mim Fameron listed the problems thattypically resulted from downsiing+

...4(; loss of personal relationships between employees and customers" 4-; destruction of employee andcustomer trust and loyalty" 41; disruption of smooth, predictable routines in the firm" 4


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2urchasing, and between ? 2urchasing and suppliers.

5ot only is there a language dialect barrier, but the purchasing people in India don't know the“language” of $merican hardware>or even what half the stuff the stores and suppliers are describing evenis.

I am told that an incredible amount of time, money, and energy is being wasted>all in the name of what

was in all likelihood a bonus%driven goal for cutting headcount and making T$ expenses look low 4“look”low because the expenses have been pushed down to the stores and suppliers;.9-

!he practice was parodied on ing o$ the 0ill in the person of the pimply%faced teenager in the bluesmock at “egalo%art,” who lacked the most basic clue as to where ank could find a hammer.8nfortunately, it wasn't really a parody. I've seen it with my own eyes in the garden department at6owe's. !he staff's invariable response to a re*uest for any help in finding a product is something like“I dunno. I guess if you don't see it we ain't got it.”

!hat kind of deliberate deskilling of service workers at the expense of *uality, in order to shiftresources upward from customer support staffing to F)@ salaries and bonuses, could only occur in an

industry where competition in *uality of customer services has been suppressed by carteliation. 0henthe market is controlled by a handful of giant oligopoly firms with the same dysfunctional culture,firms can afford shoddy, half%assed service.

$s mentioned earlier, all of this reflects the Sloanist metrics by which senior corporate managementmeasures cost and efficiency, which are roughly comparable to the metrics by which the folks inosplan tried to manage the Soviet economy.

6udwig von ises argued, in Bureaucracy, that the corporate hierarchy as such wasn't abureaucracy in the strict sense. ureaucracy of necessity was rules%based management, with processesdefined along 0eberian lines, rather than profit%based management, because produced no marketable

product and its output had no market price. !he large business enterprise, on the other hand, was> thanks to the miracle of double%entry bookkeeping>an extension of the entrepreneur's will. !heentrepreneur could track the profits and losses of each subdivision, and act in accordance with the datato shift investment from one division to another and discipline or replace managers.91 !his amounted toa mirror%image of the neoclassical approach of treating the firm as a unitary actor in the marketplaceand its internal workings as a black box.

ises' emphasis of the entrepreneurial nature of the corporation neglects a number of facts. /irst,the internal transfer pricing of the corporation amounts to that proposed by the market socialist @skar6ange, which ises dismissed as “playing at capitalism.” ecause most of the intermediate goodsproduced by a firm>product components, components of components, and the like>are product%

specific, there is no external market for them. So the internal transfer prices must be estimatedindirectly, on a cost markup basis, at several removes from any actual market prices>exactly the sameway that the Soviet economic planners relied indirectly on market price information from the 0esterneconomies for setting their own prices.9<

9- lumer comment under Mevin Farson, “)conomic Falculation in the Forporate Fommonwealth, 2art II+ ayek vs.ises on ?istributed Mnowledge 4)xcerpt;,” &utualist Blog" ;ree &arket nti)*apitalism, arch (C, -EE=Nhttp+OOmutualist.blogspot.comO-EE=OE1Oeconomic%calculation%in%corporate.htmlQ.91 6udwig von ises, Bureaucracy. )dited and with a /oreword by ettina ien reaves 47ale 8niversity 2ress, (9


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Second, the management of the typical large corporations are not, de $acto, hired servants of theentrepreneur or investor. In the real world, proxy fights almost always fail, hostile takeovers have beenrare since management developed countermeasures in the (9:Es, and most new investment>asopposed to mergers and ac*uisitions>is financed internally through retained earnings. In reality, theshareholder is #ust another class of contractual claimant that's entitled to whatever dividend

management sees fit to issue 4if any; and to participate in the empty ritual of a shareholder's meeting.!he real residual claimant, at least in large, publicly held “mature corporations” where stock ownershipis diffuse, is senior management. In practice, the management of such corporations is a self%perpetuating oligarchy in control of a free%floating mass of unowned capital>much like thebureaucratic management of the old 8SSR. So senior management, like 6ange's market socialistfactory managers, are “playing entrepreneur”>gambling capital which they did not contribute fromtheir own past efforts, and which they do not stand personally to lose, on the chance that they mightwin big if the gamble pays off.

!hird, there is no politically neutral or immaculate metric, whether “double%entry bookkeeping” oranything else. !he information processing functions of a hierarchy fre*uently impede the aggregationof dispersed knowledge>in the corporation as well as the state. !he metrics of efficiency, profit andloss in the large corporation reinforce the interests of management. In the dominant Sloanistmanagement accounting model, as described by 0illiam 0addell and 5orman odek, labor is virtuallythe only direct, variable cost which management attempts to minimie. $dministrative costs likemanagement salaries, general overhead, inventory warehousing costs, etc., are treated as fixed, directcosts. aximiing the R@I of each stage of production, by maximiing flow%through and minimiingdirect labor hours, is virtually the only cost%cutting measure which is considered. anagement salariesand other administrative costs, wasteful or irrational capital outlays, etc., don't count because, asoverhead, they're incorporated 4by the miracle of “overhead absorption”; into the transfer prices offinished goods which are “sold” to inventory. $nd under Sloanist accounting, inventory is a li*uidasset which adds to the book value of the company>even if there are no orders for it and it winds upbeing marked down and sold at a loss, or even written off as unsellable. !he practice amounts to“goosing the numbers by sweeping overhead under the rug and into inventory.”9A

So despite the fact that production workers' wages and benefits are typically ten percent or less oftotal unit costs, without fail you see the $s obsessively straining with a sieve to eliminate everyspare second of direct labor>meanwhile gulping down overhead from administrative costs and capital%spending ratholes by the oceanful.9C !he corporation's administrative costs and Rube oldberg%styleorganiation typically resemble those of the inistry of Fentral Services in Brail, and the allocation ofinvestments in physical plant and e*uipment typically resemble the uneven development of a centrallyplanned economy.

!he irrational capital investments in the large corporation resemble ises' predictions for planningunder state socialism>i. e., it “would involve operations the value of which could neither be predictedbeforehand nor ascertained after they had taken place.”9= $s Richard )ricson said of the communist

in Farson, -rganiation #heory, particularly subsection F 4pp. -(A%--(;.9A See 0addell and odek, pp. (1A%(


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regimes, the corporation can achieve great feats of engineering without regard to cost.

0hen the system pursues a few priority ob#ectives, regardless of sacrifices or losses in lower priority areas,those ultimately responsible cannot know whether the success was worth achieving.9:

I regularly see examples of this in the hospital where I work. oney is poured into multi%milliondollar expansions of the )mergency Room, and remodelings of entire floors that radically alter thelayouts>limited only by the presence of load%bearing walls>in ways that make them less functional.anagement procures enormously expensive high%tech machinery like a ?a Dinci surgical robot, andexpands its range of expensive high%tech procedures like heart catheteriation>all for the publicprestige value>while cutting nursing staff and turning the patient care wards into s*ualid, understaffedshitholes and causing costs from falls and RS$ infections to go through the roof.

In short, the internal allocation of capital in the large corporation follows a pattern very much likeayek's description of the state socialist planned economy+

!here is no reason to expect that production would stop, or that the authorities would find difficulty in usingall the available resources somehow, or even that output would be permanently lower than it had been before

planning started.... G0e should expectH the excessive development of some lines of production at theexpense of others and the use of methods which are inappropriate under the circumstances. 0e shouldexpect to find overdevelopment of some industries at a cost which was not #ustified by the importance oftheir increased output and see unchecked the ambition of the engineer to apply the latest developmentelsewhere, without considering whether they were economically suited in the situation. In many cases theuse of the latest methods of production, which could not have been applied without central planning, wouldthen be a symptom of a misuse of resources rather than a proof of success.

@ne example he cites>“the excellence, from a technological point of view, of some parts of theRussian industrial e*uipment, which often strikes the casual observer and which is commonly regardedas evidence of success”>is directly comparable to the above%mentioned ?a Dinci robot. 99

!he problem ayek describes is complicated by the fact that “output” itself is a meaningless metricunder these circumstances. 0ith Sloanist “overhead absorption” as with Soviet central planning, thesystem of internal transfer pricing based on the consumption of inputs, and the passing on of costs tothe consumer via cost%plus markup, mean that any consumption of inputs that can be incorporated intothe “price” of finished goods>as such>is an output.

!he dominant players in an oligopoly market can get away with all these forms of irrationality>thesuppression of newer, more efficient technologies, deskilling their workforce and substituting technefor m%tis, because the big boys share the same organiational culture.

The Art of !ot eing 1overne): State Saces an) !onstate Saces. 0hat Scott calls “statespaces and nonstate spaces” are the central theme of #he rt o$ 6ot Being 5o/erned. State spaces,Scott wrote in Seeing Like a State, are geographical regions with high%density population and high%density grain agriculture, “producing a surplus of grain... and labor which was relatively easilyappropriated by the state.” !he conditions of nonstate spaces were #ust the reverse, “thereby severely

9: Richard )ricson, “!he Flassical Soviet%!ype )conomy+ 5ature of the System and Implications for Reform,” Journal o$ +conomic Perspecti/es A+< 4(99(;, p. -(.99 /riedrich ayek, “Socialist Falculation II+ !he State of the ?ebate 4(91A;,” in ayek, ndi/idualism and +conomic-rder 4Fhicago+ 8niversity of Fhicago 2ress, (9


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limiting the possibilities for reliable state appropriation.”(EE

!his might have served as the topic sentence for his next book, #he rt o$ 6ot Being 5o/erned. Infact, according to Scott,(E( Seeing Like a State was actually an offshoot of the research that eventuallyled to #he rt o$ 6ot Being 5o/erned. is original line of in*uiry was “to understand why the state hasalways seemed to be the enemy of 'people who move around'....” In his studies of “the perennial

tensions between mobile, slash%and%burn hill peoples on one hand and wet%rice, valley kingdoms on theother,” along with assorted nomads and runaway slaves, Scott was diverted into a study of legibility asa motive for state policies of sedentariation. aving developed that topic, he came back to hisoriginal focus in #he rt o$ 6ot Being 5o/erned.

In the latter book, Scott surveys the populations of “\omia,” the highland areas spanning thecountries of Southeast $sia, which are largely outside the reach of the governments there. e suggestsareas of commonality between the \omians and people in nonstate areas around the world, upland andfrontier people like the Fossacks, ighlanders and “hillbillies,” nomadic peoples like the ypsies and!inkers, and runaway slave communities in inaccessible marsh regions of the $merican South.

States attempt to maximie the appropriability of crops and labor, designing state space so as “toguarantee the ruler a substantial and reliable surplus of manpower and grain at least cost...” !his isachieved by geographical concentration of the population and the use of concentrated, high%value formsof cultivation, in order to minimie the cost of governing the area as well as the transaction costs ofappropriating labor and produce.(E- State spaces tend to encompass large “core areas” of highlyconcentrated grain production “within a few days' march from the court center,” not necessarilycontiguous with the center but at least “relatively accessible to officials and soldiers from the center viatrade routes or navigable waterways.”(E1 overnable areas are mainly areas of high%density agriculturalproduction linked either by flat terrain or watercourses.(E


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centralied control;, the friction of terrain or altitude, and the friction of seasonal weather.(E: In regardto the latter, for example, the local population might “wait for the rains, when supply lines broke down4or were easier to cut; and the garrison was faced with starvation or retreat.”(E9

In \omia, as Scott describes it+

Dirtually everything about these people's livelihoods, social organiation, ideologies, ...can be read asstrategic positionings designed to keep the state at arm's length. !heir physical dispersion in rugged terrain,their mobility, their cropping practices, their kinship structure, their pliable ethnic identities, and theirdevotion to prophetic, millenarian leaders effectively serve to avoid incorporation into states and to preventstates from springing up among them.((E

In order to avoid taxes, draft labor and conscription, they practiced “escape agriculture+ forms ofcultivation designed to thwart state appropriation.” !heir social structure, likewise, “was designed toaid dispersal and autonomy and to ward off political subordination.”(((

I suggest that the concepts of “state space” and “nonstate space,” if removed from Scott'simmediate spatial context and applied by way of analogy to spheres of social and economic life that are

more or less amenable to state control, can be useful for us in the kinds of developed 0estern societieswhere to all appearances there are no geographical spaces beyond the control of the state.

State spaces in our economy are sectors which are closely allied to and legible to the state.5onstate spaces are those which are hard to monitor and where regulations are hard to enforce. Statespaces, especially, are associated with legible forms of production. In the 0estern economies, theeconomic sectors most legible to and closely allied to the state are those dominated by largecorporations in oligopoly markets.

In general, the state has a strong affinity for large%scale, centrally organied forms of production. Inthe case of agriculture, Scott writes+

In agriculture, as in manufacturing, the mere efficiency of a form of production is not sufficient to ensure theappropriation of taxes or profits. Independent smallholder agriculture may, as we have noted, be the mostefficient way to grow many crops. ut such forms of agriculture, although they may present possibilities fortaxation and profit when their products are bulked, processed, and sold, are relatively illegible and hard tocontrol. $s is the case with autonomous artisans and petit%bourgeois shopkeepers, monitoring thecommercial fortunes of small%fry farms is an administrative nightmare. !he possibilities for evasion andresistance are numerous, and the cost of procuring accurate, annual data is high, if not prohibitive.

$ state mainly concerned with appropriation and control will find sedentary agriculture preferable topastoralism or shifting agriculture. /or the same reasons, such a state would generally prefer largeholding tosmallholding and, in turn, plantation or collective agriculture to both.... $lthough collectiviation and

plantation agriculture are seldom very efficient, they represent... the most legible and hence appropriableforms of agriculture.((-

!he state has a similar affinity for the large corporate form in general, and not #ust in agriculture,according to en#amin ?arrington. If the large corporation depends for its survival on the state, the

(E: !id., p. C(.(E9 !id., p. C1.((E !id., x.((( !id., p. -1.((- Scott, Seeing Like a State, p. 11:.


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state>even aside from the fact that it is composed largely of representatives of the corporate rulingclass>has a rational interest in promoting the large corporation as the dominant economic form.

6arge centrally organied firms facilitate the governmentZs task of maintaining its hegemonic position insociety. !he ability of the government to effectively regulate the economy depends on the existence ofeconomic institutions with organiational structures that can be easily monitored and controlled. !heregulation of a large number of small businesses re*uires greater duplication of effort to inspect financial

records, ensure regulatory compliance, and collect taxes. Small organiations are harder to punish for notcooperating with the law because they have less total value to seie and the owners are more likely to fightthe government since it is their money and business directly at stake, not to mention the fact that smallbusiness are looked upon more favorably by the general population than seemingly faceless and distantcorporations. !he e*uipment used by small enterprises does not lend itself to certification, regulation, andsafety testing, and the labor employed does not lend itself to the effective enforcement of laws concerningthings like labor negotiations, minimum wage, minimum age, professional licensing, racial and sexual*uotas, citienship re*uirements, maximum hours, etc. Informal and small scale economic relationships arealmost beyond the range of government efforts to enforce its mandates and collect taxes. y makingbusiness an agent of policy the state also creates a useful scapegoat for diverting the ire of the public towardsthe ini*uity and exploitation of existing economic relations and positions the state to act as “white knight” toprotect the public and avenge the evils and excesses of “private enterprise.”((1

!he same effects achieved through spatial distance and isolation and the high costs of physicaltransportation in Scott's \omia can be achieved in our economy, without all the inconvenience, throughexpedients such as encryption and the use of darknets. Recent technological developments havedrastically expanded the potential for non%spatial, non%territorially based versions of the nonstate spacesthat Scott describes. 2eople can remove themselves from state space by adopting technologies andmethods of organiation that make them illegible to the state, without any actual movement in space.

Such technologies and methods of organiation include encrypted e%currencies like Ripple anditcoin as the medium of exchange in darknet economies, ?aniel de 8garte's “phyles” 4distributed civilsocieties which provide networked platforms for supporting business enterprises, certification and

reputational mechanisms, arbitration and ad#udication services, insurance and legal services, etc.;, and3ohn Robb's “)conomy as a Software Service.”((<

In the realm of physical production, new micromanufacturing technologies offer unprecedentedpotential to evade enforcement of industrial patents and other similar state entry barriers. In the casetraditional mass%production industry, the transaction costs of patent enforcement were lowered by astate of affairs in which a handful of oligopoly manufacturers in a cartelied industry produced alimited range of competing products 4often further restriction product competition by pooling orexchanging patents among themselves;, and marketed their limited product lines through a handful ofnational chain retailers. 0hen ^(E,EEE worth of homebrew F5F tools in a garage factory can produceoutput comparable to that of a million%dollar factory, in small batches distributed through neighborhood

((1 en#amin ?arrington, “overnment Freated )conomies of Scale and Fapital Specificity” 2aper presented at $ustrianStudent Scholars Fonference, -EE= Nhttp+OOagorism.infoOPmediaOgovernmentPcreatedPeconomiesPofPscalePandPcapitalPspecificity.pdfQ.((< ?aniel de 8garte, Phyles" +conomic Democracy in st *entury Nhttp+OOdeugarte.comOgomiOphyles.pdfQ" “2hyles,”2-2 /oundation 0iki Nhttp+OOp-pfoundation.netO2hylesQ. 3ohn Robb, “)aaS 4)F@5@7 as a S)RDIF);,” 5lo!al5uerrillas, 5ovember =, -E(E Nhttp+OOglobalguerrillas.typepad.comOglobalguerrillasO-E(EO((Oeaas%economy%as%a%service.htmlQ. 2hyles and )conomy as a Software Service are discussed in Fhapter !wo of my online draft manuscript@pen Source overnment, under the subsection “6egibility, Reputational and Derification echanisms”Nhttp+OOdl.dropbox.comOuO


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markets, the transaction costs of suppressing knockoffs will skyrocket>at the very same time theabundance economy is destroying the state's tax base for enforcement.

@ther affordable technologies for small%scale household production, coupled with informalexchange via barter network, offer new potential for home%based, low%overhead microenterprises>e. g.home%based microbakeries using an ordinary kitchen oven, cab services using a family car, etc.>to

evade local oning, licensing, “health” and “safety” codes.

!he transaction costs of overcoming opacity and illegibility, and enforcing obedience in anatmosphere of non%compliance, function as a tax, making some “spaces” 4i.e. sectors or areas of life;more costly to govern than they're worth. Scott argues that for a ruler, the relevant metric is not ?2but “State%$ccessible 2roduct” 4S$2;. !he greater an area's distance from the center, the higher theconcentration of value or value%to%weight ratio a unit of output must have to be worth appropriating andcarrying off to the capital. !he further from the center an area is, the larger the share of its economywill cost more than it's worth to exploit.((A It's somewhat analogous to the concept of )R@)I in thefield of energy" if the purpose of the state is to extract a surplus on behalf of a privileged class, the“governance tax” reduces the amount of surplus which is extracted per input of enforcement effort.

$nything that reduces the “)R@)I” of the system, the sie of the net surplus which the state is ableto extract, will cause it to shrink to a smaller e*uilibrium scale of activity. !he more costlyenforcement is and the smaller the revenues the state 4and its corporate allies, as in the case ofenforcing digital copyright law or suppressing shanhai knockoffs; can obtain per unit of enforcementeffort, the hollower the state capitalist or corporatist system becomes and the more areas of life itretreats from as not worth the cost of governing.

@ur strategy, in attacking the state's enforcement capabilities as the weak link of state capitalism,should be to create metaphoric nonstate spaces like darknets, as well as forms of physical productionwhich are so small%scale and dispersed as to present serious surveillance and enforcement costs, andthereby to shift the correlation of forces between nonstate and state “spaces.”

/rom our standpoint, technologies of liberation reduce the cost and inconvenience of evasion. InScott's work, for people in state spaces the more labor they have sunk into their fields over generations,the more reluctant they are to leave in order to escape the state's taxation. ((C In \omia, “not beinggoverned” fre*uently entailed adopting “subsistence strategies aimed to escape detection and maximietheir physical mobility should they be forced to flee again at a moment's notice.” !his could involve areal sacrifice in *uality of life, in terms of the categories of goods which could not be produced, thecategories of food that were unavailable, etc.((= istorically, when not being governed re*uired spatialdistance and inaccessibility, creating a nonstate space meant a choice of technologies of living based onthe need to be less legible. In many cases this translated into “abandoning fixed cultivation to take upshifting agriculture and foraging,” the deliberate choice of a more “primitive” lifestyle for the sake ofautonomy, and the conscious choice of less productive methods of cultivation and a smaller surplus. ((:

!o put this in 0estern economic terms, liberatory technologies now offer the potential to eliminatethe necessity for this tradeoff between autonomy and standard of living. 0e want to render ourselvesas ungovernable as the people of \omia, without the inconvenience of living in the mountains and

((A Scott, #he rt o$ 6ot Being 5o/erned, p. =1.((C !id., p. CA.((= !id., p. (:(.((: !id., p. (::.


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re*uired someone to push some buttons on a cable box in a certain se*uence to get free cable !D& If thatperson published those instructions on the Internet, it could increase the number of nonpaying customers bymillions and significantly affect the company's profitability.(-1

@pen%source insurgencies or fourth generation warfare organiations, as described by 3ohn Robb,are *uickly adaptable because any individual contribution, or any information adopted by a single cell4e.g. an improved I)? design or placement strategy developed by a cell in $l Yaeda Ira*;, *uickly

becomes available to the entire network without any administrative intermediation.

!he decentralied, and seemingly chaotic guerrilla war in Ira* demonstrates a pattern that will likelyserve as a model for next generation terrorists. !his pattern shows a level of learning, activity, and successsimilar to what we see in the open source software community. I call this pattern the baaar. !he baaarsolves the problem+ how do small, potentially antagonistic networks combine to conduct war& 6essons from)ric Raymond's W!he Fathedral and the aaarW provides a starting point for further analysis. ere are thefactors that apply 4from the perspective of the guerrillas;+

` Release early and often. !ry new forms of attacks against different types of targets early and often.?onZt wait for a perfect plan.

` iven a large enough pool of co%developers, any difficult problem will be seen as obvious by someone,and solved. )ventually some participant of the baaar will find a way to disrupt a particularly difficulttarget. $ll you need to do is copy the process they used.

` 7our co%developers 4beta%testers; are your most valuable resource. !he other guerrilla networks in thebaaar are your most valuable allies. !hey will innovate on your plans, swarm on weaknesses youidentify, and protect you by creating system noise.(-<

!he rapid innovation in Improvised )xplosive ?evices 4I)?s; achieved by open%source warfarenetworks in Ira* and $fghanistan is a case in point.(-A $ny innovation developed by a particular cell of$l Yaeda Ira*, if successful, is *uickly adopted by the entire network.

In the file%sharing movement, it's not enough that ?R be sufficiently har

legibility and control in the work of james scott

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