03 September 2016

Checked Power

The latest from cyborg_nomade at antinomiaimediata is a wide-ranging poking at the cracks of the neoreactionary/Moldbuggian concepts of Sovereignty and Responsible Government.

As I said on twitter, cyborg_nomade is, from my point of view, picking up from where Aretae left off all those years ago, not in that he is the same: as their respective aliases suggest, Aretae rooted his arguments in Classical philosophy, while cyborg_nomade is more Continental. But cyborg_nomade, like Aretae before, is challenging details of neoreactionary theory from the left, and that's a more productive critique for defenders to concentrate on than the intra-far-right discussion that takes most of our time.

So, "neocameralism and constitutions" is quite a wide discussion, and I'm first going to pick off some low-hanging fruit concerning the role of stockholders in neocameralism.

I'm not going to talk about "conservation of sovereignty"--to me that is an unclear concept, so I'm going to try to be more concrete. I'm going to talk about the "corp", meaning both joint-stock corporations as we know them today, and sovcorps as envisaged by neocameralism.

Moldbug repeatedly denounced "separation of powers" as a principle. no sovereign can be subject to law . On the other hand, cyborg_nomade points out, is it not true that modelling a neocameralist government on a joint-stock company implies a separation of powers:

The controllers have one job: deciding whether or not Steve is managing responsibly. If not, they need to fire Steve and hire a new Steve.

That quote is from Open Letter VI, and cyborg_nomade quotes more, but it is actually necessary to read the whole thing.

In particular, the paragraph immediately following cyborg_nomade's selection:

What happens if the controllers disagree on what "responsible" government means? We are back to politics. Factions and interest groups form. Each has a different idea of how Steve should run California. A coalition of a majority can organize and threaten him: do this, do that, or it's out with Steve and in with Marc. Logrolling allows the coalition to micromanage: more funding for the threatened Mojave alligator mouse! And so on. That classic failure mode, parliamentary government, reappears.

The introduction of stockholders is not a matter of checks for checks' sake. Nowhere in OL-VI is there a suggestion that dividing power is a good thing in principle. The purpose of stockholders is a very narrow one: to fix the location of responsibility.

The corp exists for the benefit of the stockholders; if it is run well, they benefit, if it is run badly, they lose out, therefore, they should have the power. All of it. Choosing to exercise that power via at-will appointment of a Chief Executive is an implementation detail, but a well-tested one, and, other than for sovcorps, an almost universally accepted one.

Why multiple stockholders rather than one? Because with a single owner, the purpose of the corp becomes unclear: it is whatever that single owner chooses. However, if the corp has a large number of diverse stockholders, their idiosyncratic interests cancel out or become negligible, against their single shared interest in ROI.

Note that this is not a guaranteed state of affairs. A corp with a joint-stock structure can, as described by the quote above, decay into politics. For existing non-sovereign corporations, this is very unusual, but that is because many measures are taken to actively prevent it. In Anglosphere corporate law, it is not considered sufficient that stockholders can replace management by a majority vote of stock. It is in principle illegal for management to work for a goal other than return on stock, even if it has the support of holders of a majority of stock. There are also restrictions on how concentrated stock ownership can be, at least for corps for which stock is publicly traded.

So it turns out that the purpose of a joint-stock structure is not to distribute power across a larger number of humans, but to concentrate power on a single non-human "virtual" decision-maker, the shareholder-value maximiser. To the extent that a joint-stock structure does not do that, it is always considered defective, and frequently illegal.

(The parallel to bitcoin, converting individual miner decisions of transaction validity to a single non-human abstract "blockchain" decider, is obvious).

Compared to the essential feature of responsibility, the preference expressed by Moldbug for joint-stock versus monarchical sovcorp structure is marginal:
A family business is a great idea if your business is a corner store or an auto-body shop. If you have a continent to run, you want professionals.


The next question to answer is: why? Why is it good to have a corp run in the interests of this non-human abstract, "maximisation of shareholder value"?

The answer is that this is a clearly definable, constant goal that is usually consistent with the long-term continued existence of the corp. As Moldbug explains, if you want some other goal, then first maximise shareholder value, then spend the proceeds on whatever goal you want; that is a matter of consumption, not effective management.

As an aside, cyborg_nomade suggests that "customers" constitute another check on the power of management of a corp. I don't think that is a useful way of looking at things: we are talking about the management of a corporation, or a nation-state, and any such thing, unless it is the whole universe, exists alongside other things beyond its management, and has to interact with them. Good management means good management in connection with customers, suppliers, neighbours, and competitors, and no change to the organisational structure of the thing being managed makes any difference to that fact.

This whole defence of neocameralism leaves some obvious gaps. First, enforcing shareholder voting rights on a sovereign joint-stock company absolutely requires the cryptographic-weapon-lock scheme. Moldbug in OL-VI is explicit about that:
The neocameralist state never existed before the 21st century. It never could have existed. The technology wasn't there.
It is because I am sceptical of the practicality of that scheme that I tend to advocate for what I call "degenerat formalism", which is right back to that old family business. Nevertheless, my position is that assuming a working cryptographic decision and command chain, neocameralism is good.

Second, the CDCC provides for shareholder voting rights, but not for the extra minority-shareholder rights that are provided by modern corporate law. If those are actually necessary (and they may well be), then some other mechanism has to enforce them. Note that those rights in part predate the actual corporate law that now enforces them: they were provided in the rules of the company, because it was understood people wouldn't want to buy into corporations that did not have them. Moldbug's solution to these problems is Patchwork: Not only are sovcorps structured according to the neocameralist design, but they exist in a competitive marketplace, and the forces of competition apply the remaining necessary constraints on management.


As I said, this is only picking on one part of the argument in "neocameralism and constitutions", the part that is easiest to deal with because I think it is a clear-cut error. The more interesting part, about constitutions as spontaneous order, or products of selection, remains to be answered.

No comments: