As is well known, the state and the corporation are remarkably similar. Both are a kind of abstraction, a piece of paper with a seal, which nevertheless lives its own life, sometimes quite autonomously. However, the main similarity between a corporation and a state lies in their organizational structure, which is hierarchical in form. For states, this rule is always observed; for corporations, in the overwhelming majority of cases, setting aside attempts at innovation in this area.
So, a hierarchical organization generates the well-known bureaucracy, equally inherent in both the state and corporations. The reason is that all these departments, divisions, ministries, committees, and other units that make up the hierarchy have no direct interest in the final product. They are interested only and exclusively in their own reporting. These people work to satisfy their bosses, not to sell more goods of better quality. If you, moreover, live in a country like Ukraine, where the state has long and effectively crushed competition, then you will hardly feel the difference between “Vola-Kabel,” “Kyivstar,” a housing authority, or some other state enterprise. You will be just as unable to reach these organizations, and when you do reach them (your call is very important to us, please, hold), they will work equally hard to do nothing in response to your requests. The reason is obvious—the people you deal with there don’t care about you at all; they care exclusively about their bosses and reporting. You will be lucky only if the interests of reporting or the current “quirks” of the boss happen to coincide with your wishes.
All this gives many people reason to attribute the negative properties of the state to “eternal bureaucracy,” which is inherent in all hierarchies, even quite private corporations, and on this basis treat the state as an inevitable evil like bad weather.
However, there are at least three, to put it mildly, major differences that make any comparison between the state and a corporation fundamentally flawed.
First, the state, unlike a corporation, cannot legally go bankrupt. That is, actual bankruptcies, when investors try to get their money back, happen often, but the consequences only result in a change of state leadership. A real bankruptcy with the sale of assets and liquidation of the office or its purchase in parts by other market entities is out of the question here. There is no external boss over the state, there are no procedures for recognizing bankruptcy and formalizing its results. Worse yet, since reality doesn’t go away, and the inability to meet obligations always has some consequences, even if there are no “legal” procedures, in the case of states, bankruptcy results in various behind-the-scenes deals, for which taxpayers still end up paying.
Second, for a state, the concept of profit remains unclear. For a corporation, this is (for example) the profit of the shareholders, but what is it for the state? What are the criteria for the success of the state’s activities? They simply do not exist. GDP growth may indicate the growth of national wealth, or it may reflect price increases or changes in state expenditures. For example, large military orders will be reflected in GDP growth, but what real benefit do they provide? That is, in the case of the state, the vicious principle of working for the sake of reporting is amplified many times over.
Well, and finally, third, most importantly. A corporation’s consumer can choose the products of another corporation. An investor can sell shares if the prospects don’t suit them. Nothing like this can be done with the state. A bad corporation is “punished by the market,” simply put—people who stop buying its products. This inevitably happens to all “bad” corporations. It is for this reason that corporations are so concerned about the problems created by their own hierarchical nature, and it is for this reason that they constantly invent various ways to minimize its consequences. The state, however, acts simply. You are obliged to consume what it produces. It punishes you if you act otherwise.
In general, one can say that states and corporations are similar to each other and suffer from bureaucracy. However, the consequences of this suffering are completely different. In the case of a corporation, the suffering of customers inevitably leads to the suffering of corporations. In the case of the state, the suffering of customers remains the suffering of customers. It will be possible to compare states and corporations when the costs of changing the state are comparable to the costs of changing an internet provider. Until then, there is nothing to talk about.