Private Government

Modern democratic societies pride themselves on limiting arbitrary power and protecting individual freedom, yet millions of workers spend the majority of their waking hours under forms of governance that would be considered tyrannical if exercised by the state. The workplace has become a blind spot in our thinking about freedom and equality, hidden behind the language of free markets and voluntary contracts that obscures the reality of hierarchical control and unaccountable authority.

This analysis reveals how historical shifts in economic thinking have created an ideological framework that systematically misrepresents the nature of employment relationships. By tracing the evolution from pre-industrial visions of market society as liberating to contemporary realities of workplace subordination, we can understand why current debates about economic freedom fail to address the daily experiences of most workers. The examination challenges us to reconsider fundamental assumptions about the relationship between markets, government, and individual autonomy in ways that could reshape how we think about organizing economic life.

The association of free markets with individual liberty emerged from specific historical circumstances that no longer exist. Early advocates like the English Levellers and Adam Smith envisioned market society as a means of dismantling hierarchical relationships and enabling widespread self-employment. Their support for free trade and property rights was fundamentally egalitarian, aimed at breaking up monopolies and creating opportunities for personal independence from the arbitrary authority of lords, guilds, and established institutions.

This vision made sense in a world where most production occurred on a small scale, where economies of scale were negligible, and where the typical enterprise employed only a handful of workers. Smith's famous pin factory, illustrating the division of labor, had merely ten employees. The expectation was that freed markets would expand the ranks of independent artisans, farmers, and merchants rather than create large-scale employment relationships characterized by subordination.

The philosophical foundation of early market advocacy rested on the belief that market transactions preserved human dignity in ways that gift relationships and feudal obligations did not. Unlike the "servile and fawning attention" required of those dependent on others' benevolence, market exchange allowed individuals to meet as equals, each addressing the other's interests rather than deferring to superior authority. This represented a profound shift from societies organized around personal dependence and hierarchical deference.

Even figures like Thomas Paine, often cited as early libertarian thinkers, combined their support for markets with proposals that would be considered radically redistributive today. Paine advocated universal social insurance, stakeholder grants for young adults, and inheritance taxation to fund these programs. Their market advocacy was embedded within broader programs of social reform designed to ensure that economic freedom translated into genuine personal independence for all citizens.

The tragedy lies not in the original vision but in its mechanical application to radically different circumstances. When the Industrial Revolution transformed production through massive economies of scale, the background conditions that made the early market vision plausible simply vanished, yet the intellectual framework persisted as if nothing fundamental had changed.

Contemporary workplaces embody a form of governance that exercises sweeping control over workers' lives while remaining largely unaccountable to those it governs. This system of private government operates through hierarchical authority structures where superiors issue orders to subordinates backed by the ultimate sanction of dismissal. Unlike democratic states, which must justify their authority through constitutional processes and public accountability, workplace governments derive their power from property ownership and legal frameworks that grant employers extraordinary discretion.

The scope of employer authority extends far beyond what most workers realize or what efficiency considerations could justify. Under employment-at-will arrangements, workers effectively surrender most of their rights upon accepting employment, retaining only those specifically protected by law. Employers routinely monitor communications, control bathroom breaks, dictate dress codes, restrict political activities, and make decisions about workers' schedules with no input from those affected. This authority often extends to off-duty conduct, with workers facing dismissal for social media posts, romantic relationships, or recreational activities that have no bearing on job performance.

The legal structure of employment creates what amounts to a constitutional dictatorship within the firm. While markets exist between firms, they disappear within them, replaced by centralized planning and authoritarian command structures. Workers become subjects of an organizational hierarchy that can reassign their duties, alter their working conditions, and terminate their employment at any time without notice or appeal processes. The comparison to communist economic organization is not hyperbolic but descriptively accurate.

The theory of the firm, developed by economists to explain why hierarchical organizations exist alongside markets, justifies some degree of managerial authority as necessary for coordinating complex production processes. However, these theories cannot account for the arbitrary and unaccountable nature of most workplace authority or its extension into workers' personal lives. The breadth of employer power reflects legal and political choices about how to structure workplace relationships rather than economic necessity.

Recognition of workplaces as systems of private government challenges the conventional distinction between the public sphere of politics and the private sphere of markets. Workers spend most of their adult lives subject to forms of authority that would be considered illegitimate if exercised by democratic governments, yet this reality remains largely invisible in political discourse that treats employment as a purely voluntary arrangement between equal contracting parties.

Subordination to arbitrary authority inflicts specific harms that go beyond material deprivation or poor working conditions. When individuals must follow orders without having any say in their formulation, when they can be sanctioned without due process, and when their interests count for nothing in decisions that profoundly affect their lives, they experience a form of domination that undermines human dignity regardless of how benevolently it might be exercised.

The exercise of autonomy represents a basic human need, not merely a preference that can be traded off against other goods. This becomes clear when we observe how even highly skilled workers in demanding environments react to micromanagement versus collaborative decision-making. The difference between enduring hardship as a result of circumstances versus enduring it as a result of another person's arbitrary will represents a qualitatively different experience that affects both immediate well-being and longer-term human development.

Workplace authority structures embed and reinforce broader patterns of social inequality. The amount of respect, autonomy, and consideration workers receive correlates closely with their market value and hierarchical position. Those with scarce skills or favorable labor market positions enjoy treatment that approximates what we might expect between equals, while those in vulnerable positions face routine disregard for their basic interests and dignity. This creates a system where fundamental human goods become luxury items available only to the economically privileged.

The problem extends beyond individual workplaces because most workers cannot opt out of employment relationships entirely. While they may be able to change employers, they cannot escape employer authority as such. The costs of job search, the risks of unemployment, and the concentration of employment opportunities in similar organizational forms mean that workers face what amounts to a choice between different forms of private government rather than a choice between subordination and freedom.

The republican tradition in political thought identifies such circumstances as incompatible with genuine freedom, regardless of the material benefits they might provide. When individuals must submit to the arbitrary will of others in order to earn their livelihood, they experience a form of systematic dependence that compromises their capacity to participate as equals in social and political life.

Market mechanisms provide some constraints on workplace authority through competition for workers and the costs of excessive turnover, but these protections prove inadequate and highly uneven in their application. Employers must indeed compete for workers with valuable and scarce skills, leading to better treatment for those in strong labor market positions. However, this same logic means that workers with common skills, those in areas with limited employment options, or those facing various forms of labor market discrimination receive minimal protection from market forces.

The efficiency benefits of employer discretion in hiring and firing decisions create systematic biases against worker protection. Procedural safeguards that might limit arbitrary authority also impose costs on employers and can make them reluctant to hire in the first place. The resulting equilibrium provides extensive authority to employers while offering workers primarily the right to exit unsatisfactory employment relationships, often at considerable personal cost.

Exit rights, while valuable, cannot substitute for voice within existing relationships. The costs of changing jobs include not only the direct expenses of job search but also the loss of firm-specific knowledge, workplace relationships, and seniority-based benefits. Many workers develop attachments to their colleagues and take satisfaction from their work that make exit emotionally costly even when economically feasible. These attachment effects can be exploited by employers who recognize that workers will tolerate significant degradation in working conditions rather than abandon these investments.

The apparent voluntariness of employment relationships obscures the coercive background conditions that shape workers' choices. When unemployment insurance provides only temporary and limited income replacement, when healthcare coverage depends on employment status, and when alternative employment opportunities offer similar subordination under different management, the choice to accept employer authority becomes constrained in ways that compromise its moral significance.

Regulatory approaches that establish minimum standards for workplace treatment provide essential protections but cannot address the fundamental issue of worker voice in workplace governance. Rules imposed from outside the employment relationship necessarily apply uniform standards across diverse workplace contexts and cannot respond to the particular concerns and preferences of specific groups of workers. Moreover, such regulations often remain underenforced, particularly for workers in vulnerable positions who fear retaliation for asserting their rights.

The recognition of workplaces as systems of private government opens space for considering how they might be restructured to be more responsive to worker interests and more consistent with democratic values. This does not require the elimination of hierarchy or the application of political democracy directly to workplace contexts, but rather the development of institutional arrangements that give workers meaningful voice in decisions that affect their working lives.

Various models of worker participation already exist and demonstrate the feasibility of alternatives to pure employer autocracy. European systems of codetermination require worker representation on corporate boards and establish works councils that provide input on workplace policies. These arrangements have proven compatible with high levels of economic performance while giving workers considerably more influence over their working conditions than exists in most American workplaces.

The challenge lies in adapting such approaches to different economic and legal contexts while preserving the efficiency benefits of hierarchical organization where they genuinely exist. Some degree of managerial authority appears necessary for coordinating complex production processes, but this does not justify the arbitrary and unaccountable power that characterizes most current employment relationships. The goal should be to establish forms of workplace governance that are accountable to all affected parties rather than only to capital owners.

Worker voice can take many forms beyond formal representation in governance structures. Collective bargaining, while covering only a small fraction of American workers, demonstrates how organized workers can negotiate not only over wages and benefits but also over working conditions, scheduling, and disciplinary procedures. However, the adversarial model of American labor relations creates costs for both workers and employers that may limit its broader application.

Less confrontational approaches might include worker participation in workplace design, scheduling decisions, and evaluation of supervisory performance. These could operate within existing organizational structures while giving workers more influence over the immediate conditions of their working lives. The key insight is that some form of democratic input appears necessary to prevent the systematic abuse of managerial authority and to ensure that workplace organization serves human flourishing rather than merely economic efficiency.

The fundamental insight here concerns how ideological frameworks developed for one set of historical circumstances can become obstacles to understanding radically different conditions. The transformation of workplaces from sites of independent production to hierarchical organizations exercising comprehensive authority over workers' lives represents one of the most significant changes in human social organization, yet it remains largely invisible in political discourse that treats employment as a market transaction between equals.

Democratic societies have developed sophisticated institutions for limiting arbitrary authority in political contexts while remaining largely blind to similar problems in economic contexts where most people spend the majority of their adult lives. The path forward requires neither the abandonment of market mechanisms nor the direct application of political democracy to workplace governance, but rather the development of new institutional arrangements that can preserve the benefits of both while protecting human dignity and autonomy in the places where people work.