no third solution

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Democracy and the Right of Exit

August 19th, 2009

I believe “democracy” is fatally flawed. It’s a topic about which I’ve been meaning to write for some time. On that topic, William inquires

Explain to me again why corporations and cooperatives come to decisions through majoritarian democracy? …And I’ve been struggling to comprehend this for nearly a decade. Seriously. What on earth could be more arbitrary and totally irrelevant to the efficient management or allocation of resources?

Indeed. Unfortunately, today is not the time for me to write about democracy per se, but this comment by William renewed my interest in the matter, and set up a tangent for me to follow, if only briefly. It seems to me that the subtext of his question is, “Isn’t there a better way to do things?”[1], in which case William’s inquiry is really one of organizational theory, a topic on which I do not pretend to be an expert.

But for the topic at-hand; is participatory democracy in these circumstances really “arbitrary and totally irrelevant to the efficient management or allocation of resources”? I disagree, conditionally.

Where the right of exit is denied the individual, the majority exercises tyranny over the minority.

When people organize, voluntarily and in a co-operative manner, decisions must ultimately be made which impact the constituent pieces of the organization. And the rules by which future decisions will be made ought to be the product of an unanimous decision. This is an important condition, without which tyranny (in one form or another) is assumed to be the default. The contributors must start from a position of equality with regards to one another, and they must maintain the right of exit or secession.

Thereafter, being dissatisfied with the way an organization is being run, the way resources are being allocated or projects are being managed, individuals have several options:

  1. Propose a better solution that the organization adopts (unfortunately, via majoritarian democracy)
  2. Bail out of the organization, taking with you that which is yours

The “exit” option is the alternative: disassociate, and take along whatever knowledge and capital is proper. However, for any sort of organization (cooperative, collective, corporation, etc.) comprised of more than one individual and their attendant (but collectively held) properties, divestiture can be a difficult process[2].

Where the right of exit is tolerated, abiding by a “majority” decision is tantamount to unanimity.

In the real world, transaction costs are not zero, and abiding by a majority decision may in many instances simply be the path of least resistance; in some circumstances the actors may judge that even though they disagree with the “majority,” the process of divestiture affords no greater opportunity, in which cases they agree to abide by the majority decision..

Although I welcome alternatives and I am open to suggestions, it is simply the only thing other than tyranny, that 10,000 years of collective human ingenuity has been able to achieve. There is no guarantee that its product will be perfect, or efficient, or even satisfactory, but so long as the right of exit is permitted, I have no serious objections with cooperative democracy.

  1. Of course, one never need rely on squishy techniques like “democracy”, in the absence of collaboration, but since the question presumes the existence of a collaborative organization this alternative is not an option.
  2. I presume divestiture would be nearly impossible in certain circumstances, namely those in which the right to private property is not recognized, and therefore the dissatisfied individual has no recourse to the tyranny of the majority, in all of his daily affairs.

no third solution

Blogging about liberty, anarchy, economics and politics