Talent Wants to Be In Control

Many thanks to Deven and Orly for organizing this online symposium and for letting me join in.  Talent Wants to Be Free is a real tour de force: original and engaging, thoughtful and thought-provoking.  Orly is likely the only person who could have written this book, as it deftly combines research from a variety of academic literatures to make novel observations while at the same time remaining understandable and even approachable.  As other participants have mentioned, I do hope it gets read by policymakers and thought leaders who are contemplating how to bring more innovation to their city, state, or country.  Given the burgeoning interest in entrepreneurship (see, e.g., this program on St. Louis), the book should find a place on many bookshelves.

Since I’m starting in the midst of an already heady discussion, I wanted to build on what Shuba and Vic mentioned about the theory of the firm, as well as Orly’s response.  I argue in a forthcoming paper that our notion of “employment” is completely connected to our idea of the economic firm: you can’t have employees without an employer, and the employer is a firm.  Why do we have these mechanisms for joint production?  The short answer, I think, is that we need firms to facilitate joint production.  There’s only so much we can do on our own, and once we start working together we need legal and economic structures to manage that collaboration.  Shuba and Vic both discuss how the theory of the firm literature might provide an antithesis to Orly’s thesis in terms of the benefits of organized team structures that, to some extent, constrain individual workers. Orly’s response agrees that firms play a useful role, but she argues that much of the existing theory-of-the-firm literature depends on the “orthodox” model of employer protectionism.  However, I think both sides are missing an important aspect of the issue: namely, the governance of firms.

In both academic and popular literature, employers/firms/corporations are characterized as large, faceless institutions that act autonomously in their own self-interest.  But firms are just collections of individuals with various economic and legal relationships who are acting together in the context of a legal entity.  In other words, employers are people too — not individual persons, but groups of people.  Do some of the restrictions we are talking about look less onerous if we think of employers as groups of people?  Let’s take, for example, the work-for-hire doctrine.  Does that doctrine look less punitive if five people create a firm to work together on a collection of projects, and they jointly agree to share their intellectual property rights with one another?  If one of the five breaks the deal and takes off with the rights to a key component of the research, the work-for-hire doctrine looks like it’s pro-employee — at least, for the four other employees involved.  Although Orly’s Evan Brown example (pp. 141-44) looks like blatant opportunism by a large corporation, in other instances employees as a whole may end up better off if one of their number can’t defect to the detriment of the joint enterprise.

Modern corporations are organized such that employees provide production for the enterprise but do not generally participate in governance.  This separation of production from control is what creates the underlying unfairness.  The corporation sucks the productivity out of the worker but then divvies up the spoils in ways that favor managers and shareholders.  Moreover, employees miss out not only on profits but also on voice; they lack a say in how the ship will be navigated.  The ability to have such a voice — to have control — is one of the great attractions of entrepreneurship.  Sure, you might be spending 16+ hours a day in a food truck selling Korean-style tacos, but you are your own boss, in control of your own fate.

So while I think talent does want to be free to pursue its own best options, and it does want appreciation for its manifold contributions, it ultimately wants to be in control.  Talented people want to run the show, or at the very least have a say in how the joint enterprise is run.  Perhaps most employees have grown accustomed to their role in back seat, doing as they are told.  And law reinforces this separation: corporations are run by shareholders who largely contribute capital, while labor law removes the “core of entrepreneurial control” from the list of bargaining subjects for employee representatives.  But this separation of production from control is inequitable and ultimately inefficient.  We might take a different view of some of the employee restrictions discussed in Talent if the restrictions were jointly negotiated and agreed upon by a group of people who collectively governed and were governed by one another.

But that leads me to a more radical alternative, one that I think lies within Talent but deserves more exegesis: namely, whether we should eliminate the concept of employment entirely.  The idea of “employment” is not a natural concept in the slightest: it is a socially constructed and primarily legal notion that helps categorize certain kinds of economic relationships.  But maybe we should get rid of it.  What if each person were always an independent contractor?  Or what if workers organized themselves into small groups of self-governing units that formed temporary or longer-term joint ventures  as necessary for particular tasks?  Frank has already talked about the dystopian possibilities of a radically decentralized labor market.    But such a future could also be more democratic and egalitarian: a post-industrial Jeffersonian economy.  I hope to hear more from Orly about the broader ramifications of increasing employee freedom, and what kind of world it might lead us towards ultimately.

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1 Response

  1. Shubha Ghosh says:

    Matt’s post his many a nail on the head with one small smack to the thumb towards the end. I think questions of governance are an explicit part of my point on understanding the organizational structure within which creativity occurs. My concerns are with an uncritical embrace of freedom and an equally uncritical embrace of organization (and loyalty) as a flight from the dark side of freedom. The governance structures suggested by Matt are the right ones to think about, especially what I would describe as cooperative organizations. I do think there are ways to get around the collective action problems posed, in theory, by these entities. Examples ranging from the work of Elinor Ostrom to Union Cab in Madison, WI (touted by Jim Hightower as a model for worker cooperatives) support the point that Matt and I share about different forms of organizations. The answer lies in recognizing a plurality of governance structures in order to move beyond false dichotomies of freedom and loyalty, or individualism and collectivism. That is why I have to strongly disagree with Matt’s point about independent contractors. That would be awful, an every worker for herself option, that represents the distributional concerns noted by Frank and Brett, and the kind of freedom as anarchy that I find troubling. Such radical freedom has strong appeal in American culture, whether articulated by a Hoffman or a Cruz. Also do keep in mind that the Jeffersonian economy was base, at least implicitly, on slavery. Perhaps Jefferson wanted to move towards “contract labor” but one can speculate how that contract may have worked in practice.