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I don't really care whether small businesses are the engines of growth because I agree with Edward Abbey that unlimited growth is the philosophy of the cancer cell.  I prefer small businesses and small farms for reasons other than growth.  First, they provide more autonomous opportunities to more people than the large industry models.  Second, they bring control and production as close to one another as possible, and typically in the same hands.  Third, they place control and production on a human level (individual/family/community) instead of on a corporate level.  Fourth, they decentralize the system and make people harder to control.  I saw an interesting article in the Kiev Post a few days ago in which a Ukrainian economist talked about authoritarians preferring centralized, industrial work over small businesses for that exact reason.
by rifek on Wed Feb 23rd, 2011 at 11:36:06 PM EST
[ Parent ]
I have often wondered how the number of independent or autonomous economic actors in an economy could be defined and categorized as I have suspected that their relative number says something significant about a society. Economic autonomy, tentatively defined as having a broad enough customer base that the loss of any one or two customers would not put you out of business, inherently has political dimensions.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 24th, 2011 at 12:03:06 AM EST
[ Parent ]
We're on the same page.  I am of the unswerving opinion that you have the rights you can defend, and unless there is systemic collapse, that defense is fundamentally economic.  Without economic autonomy, your rights are reduced to those given by noblesse oblige.
by rifek on Thu Feb 24th, 2011 at 12:21:52 AM EST
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I think this analysis mistakes cause and effect.

Small businesses have very little power. Their suppliers are mostly large businesses, their customers can easily go elsewhere, their financial situation is perilous compared to that of a large business. The list goes on. This is why they are the first to go out of business during a downturn. I would propose that what you are observing is that small business has an easier time thriving in a society where power is decentralised and economic policy is designed to favour the common citizen, than in a society run by, of and for incumbent insiders.

And as a tool for defending society from insider predation, small businesses and freeholders have historically proven greatly inferior to the mass organisation of labour that becomes possible within the large industrial firm.

Small firms may be desirable on other grounds, of course. As you note, it is possible to prefer small business for their tradition of craftsmanship, or similar aesthetics. I happen to disagree - I rather like the industrial aesthetic - but that is a matter of society's taste and custom, so this is an area in which reasonable people can disagree.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 24th, 2011 at 08:07:09 AM EST
[ Parent ]
Determining cause and effect can be problematic, but it seems several of us agree on the dynamic. Large scale coordination of the overall economy is essential. Accomplishing this by an oligopoly of monopolies is probably the lowest energy option, which thus forms a well into which societies tend to fall. Then the oligarchs can point to the necessity of the coordination which they are providing as justification, all while directing their employees and propagandizing others to keep the walls as steep and as high as possible.

The essential challenge to creating more humane alternatives is that of designing and then implementing a means of governance that is far less responsive to the economic inducements of the powerful. So far most of what the last three hundred years has demonstrated is that republics tend to oligarchies, as Montesquieu noted.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 24th, 2011 at 09:41:10 AM EST
[ Parent ]
A collection of oligopolies or monopolies or both might only appear to be the low energy position ~ the position to engage in barrier to entry maintenance for a monopolist and in arms-race type rivalry games for an oligopolist can easily consume any hypothetical energy savings.

IOW, there's no reason to believe that its a thermodynamic equilibrium, when its just as easily a far from thermodynamic equilibrium state that happens to be a power bloc equilibrium

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Feb 24th, 2011 at 04:12:12 PM EST
[ Parent ]
However, oligopolies and monopolies have the advantage that the infrastructure of economic planning already exists in the regular operations of the business firm. So when an overriding social imperative requires government planning, the government only has to co-opt the existing planning systems, not make up new ones out of whole cloth.

The downside is that firms that are capable of planning and regulating economic activity on a large scale in the normal conduct of their business might instead decide to co-opt the government...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 24th, 2011 at 06:21:25 PM EST
[ Parent ]
That's an advantage if you expect that corporate planning infrastructure will tend to pursue goals that are more or less in the general public interest. If the corporate planning infrastructure will tend to pursue goals that are more or less antithetical to the public interest, than the existence of that planning infrastructure requires more countervailing planning infrastructure than if it did not exist.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu Feb 24th, 2011 at 09:41:19 PM EST
[ Parent ]
There is also the possibility that the private planning system will pursue interests that are orthogonal to the public interest, rather than directly aligned or opposed to it. All it requires for them to be a net benefit is that, on average, they do not work directly against the public interest.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 25th, 2011 at 05:42:59 AM EST
[ Parent ]
That would also be nice, but given the effectiveness of the commercial corporate sector as an externalizing machine, equally counterfactual.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Fri Feb 25th, 2011 at 06:36:12 AM EST
[ Parent ]

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