How many times have you heard politicians and others saying that we need more funding going toward public infrastructure, education, housing, or other common goods? We take it for granted that the problem is merely not enough funding, but rarely do we think any deeper than that.
If more funding for these is valuable to society, why don’t we have structures that effectively capture that value? And if we have things that are clearly harmful to society why don’t we have effective structures to disincentivize that?
We don’t hear car manufacturers saying “we need more funding for seatbelts” and we don’t hear Big Tech leaders saying “we need more funding for ergonomic seats for our employees.”
That’s because in the private sector we have structures that sustainably fund the common goods that benefit consumers and workers – these structures are called companies. If a company needs to buy equipment to manufacture a new product it acquires that equipment, and the value generated from the product can then cover the cost of funding the equipment.
Can you imagine companies asking for donations to buy manufacturing equipment because it would benefit people? Can you imagine them selling cookies for the funding, or doing raffles or lotteries? Of course not, because none of these are nearly as effective as having feedback loops that capture the value of the goods produced and having those cover the production cost.
Companies can also effectively take care of things that are harmful to the business internally; if an employee tries to undermine other workers or departments within the business to get ahead, that employee will quickly be disciplined or fired (assuming the company is well-managed).
But what if we didn’t have the structure of a company? Then we’d likely have people going around saying that we need funding to produce cars, electronic equipment, and all the other things that we rely on companies to produce. And since we wouldn’t be capturing the value of the things we’re funding, there would also never be enough funding, and nothing would be produced at scale.
Just like companies are structures that effectively capture value in the private sector, we need structures that capture value at the scale of the economy. Then we would be able to fund education, infrastructure, and all the other things that contribute to human thriving, and do it effectively and sustainably.
