Sunday, February 25, 2007

Communism within Companies Within America

Has it ever occurred to you that, although we live in a democratic society with a free enterprise economy, for those of us who work in a large corporation, we actually operate in a communist society, with a communist-centrally planned economy? It's almost as if we are living in a bunch of little communist countries INSIDE one larger democratic free-enterprise country.

Most large corporations have several thousand employees. Some that I've worked in, have many tens of thousands of employees. These companies are like a microcosm of society itself. Like little countries within the larger country.

Within a large corporation, the CEO is like the communist dictator. He sits at the top of the food chain there and he was appointed, rather than voted into office. There was no general election. He did not campaign on a platform. He has all the power in that system. He has ultimate decision-making ability over all projects, over all aspects of the company, and over all the people. He determines what the rules are, and how to enforce them, and what the penalties are for people if they do not obey them. He decides whether or not they go to war with another company. He decides what they produce and how much and how many. He decides how much and when to invest in the supporting infrastructure.

He sets up a top-down hierarchy of control, with those at the top having the most control and those toward the bottom having less control. The lowest level in this hierarchy is the worker level. This is where the production actually happens. They are the citizens in this system.
The citizens of this society have no decision-making capabilities about where they will sit, what kind of workspace, what their phone number will be, who they will work with, etc.

And from an income perspective, working for a corporation, you do not decide how much money you make. The boss and the rules decide. You are paid a fixed salary - just like a communist worker.

In a free-enterprise system, if you own a shoe store and wish to sell shoes to the public, you can decide what kind of shoes to offer and what prices to set for them. You can decide whether to open up your shop in the most expensive location and a large shop with extremely high rents, or you can open it up in a less expensive location and make it a small store. In each case, you decide whether you will sell the articles with the right profit margin and the right volume to justify the expense levels. You decide. It's a business decision, but you have the freedom to guess where and how much and what kind and how big or small, and how much to advertise and where and who to hire and when and how much to pay them, etc. You decide if and when you will take a vacation and how much time you can afford to take off without hurting your business. You have control over your fate and so you will either succeed or fail, but it will be based on the business decisions you made. You take the responsibility, and you live with the consequences, good or bad.

But in a corporate environment, you do not have any of those options as a worker. Only if you are higher up in the management hierarchy do you make those assessments - and then they are not decisions so much as recommendations to a yet higher authority. It is very hierarchical.

Also, the trade-offs for working in this corporate environment are similar to those of working in a communist country. In exchange for surrendering your freedoms and decision-making prerogatives, you receive a guaranteed salary regardless of the profitability of the company. You are given guaranteed vacation days and sick days, and you are provided with medical care, and old age pension, and other basics of life.
And in the opposite case, if you are an independent business owner, you have the trade-off of having to live with the insecurities of a completely unreliable income, and no guarantees, but on the other hand - you get to make all the decisions, that might affect these things.

I find it fascinating that, as a culture, we tend to praise freedom, and free enterprise and a democratic way of life, and we have traditionally felt that communism was evil and bad and inefficient and just doesn't work, and we must fight it everywhere. In fact, for decades, our soldiers fought to the death to prevent us from becoming communist, and to preserve our freedoms - and yet here we are on a daily basis living our lives in a completely communist environment. The free enterprise system is an illusion to those of us inside corporations, or working for the government. Government organizations work the same way, don't they? Large organizations, hierarchical, run by rules, no freedoms or decision-making at the lower levels. Your salary is dictated by the senior levels and by the rules and guidelines. There is no entrepreneurial aspect to your job or deciding your income, etc.

Some might argue that sales positions allow you to make a flexible income based on your own performance, but I think that is a fallacy. You still are hemmed in by the sales compensation plan. You still make what they decide you will make - it's just within a certain pre-defined flexible range is all. For example, you cannot decide that you can make more money if you simply lower the prices of your products and services in order to sell high volumes. Or to increase the prices to sell at a higher margin. You simply can't make those calls. That's another department, other people - and they have their rules and guidelines, and their own limitations.

Now please understand, I am not complaining about the terrible work conditions of working in a corporate environment or anything. It is not terrible at all, in fact. I am merely observing the strange philosophical dichotomy that it represents between Democracy and free-enterprise and Communism noting the facts of what we really have here. Once again - it's all about the trade-offs, isn't it?


At 2/26/2007 8:19 PM, Anonymous igor said...

interesting ... very un-orthodox point of view!

At 2/26/2007 9:33 PM, Blogger Val Serrie said...

Thank you, Igor.
As I wrote it, I was thinking about you and wondering what you would think since you have lived in a communist system before. I wondered if you might see the same patterns emerging in microcosm within the corporate environment.


At 2/28/2007 9:17 PM, Anonymous igor said...

Oh, yes, you are absolutely right. After the communism I worked for PwC - a big company is a big company. well, PwC is not ... exactly ... a mini-communism - because it's a partnership, not a faceless pyramid of clerks with a CEO on top, still very close, as you said.


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