What’s the difference between government and a coordinated group of service providers?
A belief in the authority of some people to initiate violence against other peaceful people.
Service providers have to operate based on voluntary agreements and contracts using free market forces. They have to maintain not only a good product or service, but also a good reputation in their communities to not only maintain an effective workforce, but also vendors, suppliers, and customers. If they were to use violence in self defense, for example, their actions would be judged based on the consensus of those they interact with. The daily choices of the individual determine the fate of the service provider. If they stop creating value, they go out of business. If they harm those they are meant to serve, they go out of business.
Many will rightly say this model is far too simple and the world is more complicated than that. Let’s unpack that a bit. When “corporations” are formed, the government is involved, takes fees, and defines what the entity can and can not do within the imaginary lines on a map known as borders the State has defined. They also choose which entities survive and which don’t vis bailouts, regulatory capture, and revolving door politics. They literally use threats of violence to ensure their companies (those which pay them taxes or employ people who do) prosper while other companies don’t (see the history of the petro dollar for one example). Companies understand this and are able to export their harm on the world to areas outside the State’s borders so it has less impact on the community they survive on. Nation states use this activity, along with terrifs, sanctions, and more to further strengthen themselves and weaken non-allies. Companies can harm a village somewhere “over there” as long as that group isn’t part of their up or down supply chain, and they can distance themselves enough to not harm their reputation. As soon as their actions directly impact the community of people they serve, their ability to do business goes down.
This model is only as effective as the integrity and character of the customer and the extent to which the company can hide the harm they cause. Even if it becomes know that the company is, for example, destroying the environment, if the customer is not personally impacted, they could look the other way to get a deal. The economic environment they live in and the amount of competing choices they have will often dictate whether or not they support a harmful company. Beggars can’t be choosers, as they say.
This is actually a bit of an argument for the benefit of globalization. If a company served the whole world in a transparent manner without respect to borders, it would have nowhere left to export its harm, other than the environment which, eventually harms us all.
The other major way that governments and service providers differ is that governments control the very tool used to measure value itself. Fiat money, or “money by government decree,” can be created or destroyed at will and the interest rates, the cost of borrowing new money into existence, is a lever they can use which completely distorts everything and essentially destroys the beauty of price discovery within a free market system for individual actors to understand the current consensus on value. We are social species who understand our world through our relationships and the consensus of our peers. X is only worth $Y because the people we love and respect would congratulate us for buying <$Y and selling for >$Y. The same people that wouldn’t buy bitcoin at $4,000 becuase it was “too expensive” will FOMO (fear of missing out) buy it at $8,000 when the only thing that changed is the consensus story of its current value. This is a hard truth, but it’s one that has to be embraced to understand what props up the financial system and how all economic value is determined through shared story telling. When unemployment is skyrocketing, the stock market “story” is a great example of this. People are gambling on the story of value more than that story accurately reflecting the health and wealth of most companies.
Most will say, “Okay, so governments create monopolies and they control the financial stories, so what. Seems to work out okay for me. What’s the big deal?” The big deal is we mostly don’t see the externalities of our choices in the marketplace or the impact of financial policy changes on countries beyond our own.
So what do we do about it? Get hyper local. Create coops and community organizations with shared goals (DACs/DAOs may help, but it can be done without fancy technology as well). Create your own local, competing currencies within your community with transparent monetary policy, ideally on a blockchain so it is immutable and impossible to cheat. I see this as a path forward to move from governments to service providers.
