> All that said, the fact that most companies have a corporate hierarchy and they largely outcompete employee-owned or founder-owned cooperatives in the marketplace tends to suggest that even with the pitfalls, this is a more efficient system.
This conclusion seems nonsensical. The assumption that what's popular in thearket is popular because it's effective has only limited basis in reality. Heirarchical structures appear because power is naturally consolidating and most people have an extreme unwillingness to release power even when presented with evidence that it would improve their quality of life. It is true that employee owned companies are less effective at extracting wealth from the economy, but in my experience working for both traditional and employee owned companies, the reason is employees care more deeply about the cause. They tend to be much more efficient at providing value to the customer and paying employees better. The only people who lose out are the executives themselves which is why employee owned companies only exist when run by leaders with passion for creating value over collecting money. And that's just a rare breed.
You've touched on the reason why hierarchical corporations outcompete employee-owned-cooperatives:
> Hierarchical structures appear because power is naturally consolidating and most people have an extreme unwillingness to release power even when presented with evidence that it would improve their quality of life.
Yes, and that is a fact of human nature. Moreover, many people are happy to work in a power structure if it means that they get more money to have more power over their own life than they otherwise would. The employees are all consenting actors here too: they have the option of quitting and going to an employee-owned cooperative, but most do not, because they make a lot more money in the corporate giant. (If they did all go to the employee-owned cooperative, it would drive down wages even further, since there is a finite amount of dollars coming into their market but that would be split across more employees.)
Remember the yardstick here. Capitalism optimizes for quantity of dollars transacted. The only quality that counts is the baseline quality needed to make the transaction happen. It's probably true that people who care about the cause deliver better service - but most customers don't care enough about the service or the cause for this to translate into more dollars.
As an employee and customer, you're also free to set your own value system. And most people are happier in work that is mission- & values-aligned; my wife has certainly made that tradeoff, and at various times in my life, I have too. But there's a financial penalty for it, because lots of people want to work in places that are mission-aligned but there's only a limited amount of dollars flowing into that work, so competition for those positions drives down wages.
> most customers don't care enough about the service or the cause for this to translate into more dollars.
This is an important point as it reinforces the hierarchical structure. In an economy composed of these hierarchies, a customer is often themselves buying in service of another hierarchy and will not themselves be the end user. This reduces the demand for mission-focused work in the economy, instead reinforcing the predominance of profit-focused hierarchies.
This conclusion seems nonsensical. The assumption that what's popular in thearket is popular because it's effective has only limited basis in reality. Heirarchical structures appear because power is naturally consolidating and most people have an extreme unwillingness to release power even when presented with evidence that it would improve their quality of life. It is true that employee owned companies are less effective at extracting wealth from the economy, but in my experience working for both traditional and employee owned companies, the reason is employees care more deeply about the cause. They tend to be much more efficient at providing value to the customer and paying employees better. The only people who lose out are the executives themselves which is why employee owned companies only exist when run by leaders with passion for creating value over collecting money. And that's just a rare breed.