# Why Capitalist Corporations are Failing and What’s Next (Part 3 of 3)
Date: 2024-02-28
Previous Part: https://disrael.github.io/blogs/raw/why-capitalist-corporations-are-failing-and-what-s-next.part2.md

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> By the mid-19th century, opposition to the East India Company’s monopoly status reached a fever pitch in Parliament fueled by the free-market arguments of Adam Smith.

Perhaps though mercantilism and capitalism can be thought of more as phases of one system. The technology behind increased longevity and true AI are such daunting and risky tasks that free markets and individual status are very inappropriate — think atomic energy / nuclear weapons.

What would the equivalent of an East India Company given a monopoly over some form of long term research look like?

### Giant Bureaucracies

IP mercantilism is not the front runner for [replacing or augmenting capitalist corporations](https://hbr.org/2016/09/excess-management-is-costing-the-us-3-trillion-per-year).

> According to our analysis of occupational data provided by the U.S. Bureau of Labor Statistics, there were 23.8 million managers, first-line supervisors, and administrators in the American workforce in 2014. (This figure includes both the public and private sectors but does not include individuals in IT-related functions.) That works out to one manager and administrator for every 4.7 employees. Overall, managers and administrators made up 17.6% of the U.S. workforce and received nearly 30% of total compensation.

> How many of these 23.8 million overseers do we actually need? We can get an answer by looking at the management practices of a small but growing number of post-bureaucratic pioneers. Their experience suggests it’s possible to run complex businesses with less than half the managerial load typically found in large companies.

As status Ponzi schemes collapse one response would be to replace them with [more and more bureaucracy](https://hbr.org/2016/07/more-of-us-are-working-in-big-bureaucratic-organizations-than-ever-before). If nobody wants to work then we will assign people to force them to work and other people to force the people we assigned and so on and so on. Plus the more people the more status for those at the top.

Furthermore the levels of bureaucracy can be external as well. Financialization of the world economy is also ever increasing bureaucracy.

![Image](https://disrael.github.io/blogs/assets/why-capitalist-corporations-are-failing-and-what-s-next-72c40b1759.jpg)

The problem with giant bureaucracies is that, combined with short term investment, they might eventually implode the economy. Such a system must be continually bailed out by the government as its only advantage to society is fuller employment. Effectively a giant bureaucracy system is centrally planned fraud via emergency response.

What makes a giant bureaucracy system different from our current corporations is the low rate of turnover. In such a system today’s top corporations are also tomorrows and the next days — generational or even slower change instead of fairly frequent.

People might also work much fewer hours and for less pay. The stock market would be less volatile and retirement, if possible, would come from bonds and other interest rate dependent investments.

Overall quality of life might improve with communities, unions, etc. making a return — or not. Like IP mercantilism we can already see giant bureaucracy policy choices — monopolies are not divided, too big to fail is a thing, stock markets are federally managed — including even by direct investment, larger companies have percentage wise less regulation and taxes, and **less nationalized industries.**

Less nationalized / government run industries is a double whammy because not only do very large industries like private basic banking exist where they should not but the rent seeking by these industries makes smaller business too expensive to run. Pure rent seeking industries tend to hire large work forces to make it politically harder to unseat them.

Nor are giant bureaucracy, rent seeking industries always easy to spot. How much transportation costs exist in the US because we don’t have a reasonable rail system like other countries? How much of government sponsored “home ownership” is just rent seeking by industries profiting from ridiculously expensive urban sprawl? How much [prison industrial complex](https://sites.tufts.edu/prisondivestment/the-pic-and-mass-incarceration/) do we need?

Post COVID tremendously highlighted how far giant bureaucracies have come with the irrational attempt at rejecting all forms of remote work and rampant [greedflation](https://www.casey.senate.gov/news/releases/stop-shrinkflation-casey-introduces-legislation-to-crack-down-on-big-corporations-shrinking-products-without-reducing-prices). The success many companies have had moving to a [4 day work week](https://www.npr.org/2024/02/27/1234271434/4-day-workweek-successful-a-year-later-in-uk) is also only possible where giant bureaucracies forced 5 days in the first place.

The official declaration of the move from capitalism to giant bureaucracies is something that can only be made in retrospect after enough time passes without any market disruption. However it’s clear already that giant bureaucracies are pushing for the win and alternatives like IP mercantilism are up and comers in their infancy.

That we still declare ourselves as living in a capitalist society instead of a giant bureaucracies society maybe more a matter of marketing than anything else. Perhaps the extended life cycle of a merit is value, virtue signalling, bullying, *hypocrisy.*