How NOT to Marketise

If we think about why markets are more efficient than control heirarchies then we can begin to discriminate between different ways of effecting a transition toward market solutions and see that some of them are likely to be limited in the benefits they deliver.

PRIVATISE, SPIN OFF, OUTSOURCE
- Selling public megaliths to create private monopolies
  Big industry can be as bureaucratic as government, and if competitive forces are not brought to bear privatisation is not bound to lead to significant efficiency gains.
- Outsource Facilities Management
  Outsourcing on a large scale may result in locking together to large corporations in ways which decrease rather than increase efficiency.
Use CONTRACTORS
- Simple change of employment terms without any change of organisation or methods
  If the metric concerned is number of employees, a transition from a large corporate solution to a small company network might technically be accomplished just by firing all staff, taking them all back as contractors, and then proceding with exactly the same methods and organisation as before. The gains from this will naturally be limited. There probably will be some benefit in increased flexibilty, but many important factors will remain untouched. One defect is that the contractual relationships are completely orthogonal to the control heirarchy.
Contractual Control Heirarchy
- Establish a contractual network which replicates previous control heirarchy
  One step closer to a market solution would be to seek to establish a contractual network which replicated not the previous employment relationships (i.e. the previous employer now contracts to all those people he previously employed) but the previous control heirarchy. Under this scheme each line manager would take contracts covering the areas of work for which he was previously employed, and would place subcontracts with each of the former employees who reported directly to him.

created 97/9/18 modified 97/9/18