Private Government

Private Government Plot Summary

Introduction

Most modern workplaces function as private governments where employers exercise arbitrary and unaccountable power over their employees. This authoritarian control extends far beyond the workplace, affecting workers' off-duty speech, political activities, and even personal choices. Despite this reality, our public discourse rarely acknowledges this form of governance. Instead, we speak as if the only threat to individual freedom comes from the state, while markets and private employment relationships are depicted as realms of perfect liberty and voluntary exchange. Elizabeth Anderson challenges this conceptual blindness by excavating its historical roots and offering a new framework for understanding workplace relations. She traces how early pro-market thinkers like the Levellers and Adam Smith envisioned markets as liberating forces that would free people from domination, but shows how the Industrial Revolution transformed economic relations in ways that undermined this vision. The result is a profound contradiction: we continue to deploy pre-industrial ideals about market freedom in a world where most workers labor under conditions that more closely resemble dictatorships than free associations. By recovering the concept of "private government," Anderson helps us see these power dynamics clearly and opens space to reimagine workplace governance in ways that could better secure freedom and dignity for all.

Chapter 1: The Market Was Once a Progressive Force

The ideal of a free market society used to be a cause championed by egalitarians and progressives. From the Levellers in mid-seventeenth century England through the American Revolution, market relations were seen as vehicles for liberation and equality, not exploitation. The market represented a way to break down traditional hierarchies of domination and subordination that characterized feudal society. In contrast to today's association of free markets with conservative politics, early market advocates saw economic freedom as part of a broader agenda of dismantling various forms of tyranny and arbitrary authority. This perspective is illustrated by Adam Smith's famous passage contrasting market exchange with begging. Smith depicted market transactions as interactions between equals, where each party must address the interests of the other rather than demanding submission. The butcher, brewer, and baker provide goods not from benevolence but through mutually beneficial exchanges that recognize each person's standing. This contrasted sharply with the hierarchical dependencies of feudalism, where lords commanded the deference and service of their subordinates in exchange for protection and sustenance. The Levellers exemplified this early egalitarian vision of markets. Active during the English Civil War, they advocated for constitutional reforms including broad male suffrage and religious toleration, while also defending private property and free trade. Their support for markets formed part of a larger program challenging multiple interlocking hierarchies of power. They opposed not only monarchical and aristocratic authority but also guild monopolies, which they saw as arbitrary private governments restricting the economic independence of ordinary people. Free markets promised to expand opportunities for self-employment, allowing more people to become "masterless" individuals rather than servants dependent on the good will of masters. This tradition continued through figures like Thomas Paine and Abraham Lincoln, who saw open markets as essential to a society of equals. Paine, despite his revolutionary politics, advocated positions on commerce and taxation that sound libertarian to modern ears. Lincoln articulated the Republican vision of a society where workers might temporarily labor for wages but would eventually save enough to establish their own independent enterprises. The central promise was that market society would enable nearly universal self-employment, with wage labor being merely a temporary stage in most workers' lives. The early pro-market egalitarians did not advocate completely unfettered markets without any social protections. Adam Smith supported public education, while Paine proposed comprehensive social insurance including old-age pensions and stakeholder grants for young adults. Their vision was not today's minimal state libertarianism, but rather a society where economic freedom would lead to widely shared prosperity and independence. The goal was to create a world where most people would be neither masters nor servants, but free and equal citizens engaged in voluntary cooperation.

Chapter 2: Workplace as Communist Dictatorship in Our Midst

Most workers in the United States labor under communist dictatorships, though this reality remains largely unacknowledged in public discourse. This provocative claim refers not to state communism, but to the governance structure of modern workplaces. In the typical American firm, managers exercise nearly unlimited authority over workers: they can dictate not only how tasks are performed but also speech, attire, bathroom breaks, and even off-duty behavior. Workers have no constitutional rights within this regime. They cannot vote for their bosses, have no meaningful right to free speech, and can be fired for almost any reason or no reason at all. The dictatorial nature of workplace governance becomes clear when we examine its features systematically. A business owner or CEO functions as the dictator, with managers serving as the oligarchy that implements and enforces commands. The economic system is communist in the sense that the firm owns all non-labor assets and organizes production through central planning rather than internal markets. Workers who disobey face sanctions including exile (termination), which carries severe consequences including potential poverty. While workers technically have exit rights—they can quit—this freedom provides little protection when unemployment would mean destitution and when most alternative employers operate under similar authoritarian structures. This reality contradicts our dominant political discourse, which portrays the state as the only threat to liberty and markets as the realm of freedom. This blind spot stems from using pre-industrial ideals to understand post-industrial realities. Before the Industrial Revolution, pro-market thinkers reasonably hoped that free markets would lead to widespread self-employment, making wage labor merely a temporary condition. But industrialization brought economies of scale that made self-employment impossible for most workers. Large enterprises employing many workers became the norm, yet our ideological framework failed to adapt to this fundamental change. The theory of the firm helps explain why hierarchical organizations dominate production. Efficiently coordinating complex activities requires incomplete contracts that give managers discretionary authority. However, the theory fails to explain the breadth of employer power that extends far beyond production needs. It cannot justify why employers can fire workers for their political speech, social media posts, or personal relationships outside work. Worse, some theorists deny that employment involves authority at all, despite obvious evidence to the contrary. This denial reflects a profound ideological distortion that renders invisible the government-like power employers wield over workers' lives. By focusing only on the moment of contract formation and ignoring what happens after workers enter employment, mainstream discourse presents a fundamentally misleading picture of workplace relations. The result is what Anderson calls "political hemiagnosia"—like patients who cannot perceive one-half of their bodies, libertarian-leaning thinkers cannot perceive the half of the economy that operates through authoritarian control rather than free exchange.

Chapter 3: The Scope and Limits of Employer Authority

Employment relations today give employers extraordinarily broad authority over workers, extending far beyond what could be justified by economic efficiency. In the United States, the default employment contract is employment-at-will, meaning employers can fire workers for any reason not specifically prohibited by law. This legal baseline effectively grants employers sweeping powers over employees' lives both at work and beyond. Workers can be fired for their political activities, social media posts, sexual orientation, or even for being too attractive—as courts have repeatedly affirmed. This scope of control would be considered unconstitutional if exercised by democratic governments over citizens. The economic theory of the firm does provide some justification for managerial authority. Complex production processes involving many workers require coordination that markets alone cannot provide. When many individuals must work together using shared capital equipment and following interdependent processes, some central direction becomes necessary. Contracts between employers and employees are necessarily incomplete—they cannot specify in advance every possible contingency or detail of work. This incompleteness gives rise to managerial discretion. However, the actual authority employers exercise vastly exceeds what production requirements could justify. Nothing about efficient production requires employers to control workers' off-duty political speech or personal relationships. Even within the workplace, employers often exercise arbitrary power that has little connection to legitimate coordination needs. The scope of employer authority is determined not by the inherent requirements of production or by meaningful negotiation between parties, but by state policy that establishes employment-at-will as the default rule. The ideology that renders this power invisible relies on a false analogy between employment and market exchange. Theorists like Armen Alchian and Harold Demsetz claim that employers have "no power of fiat, no authority, no disciplinary action" beyond what any market participant has. They compare firing an employee to a consumer choosing a different grocery store. This comparison fundamentally misrepresents the employment relationship by ignoring the ongoing nature of authority within firms. When workers sell their labor, they don't simply exchange a product and walk away; they place themselves under another's command. This mischaracterization persists partly because high-skilled workers and professionals often enjoy considerable autonomy and good working conditions. Academic theorists, whose experience is unrepresentative of most workers, may not recognize how extensively employers govern ordinary workers' lives. The 25 percent of American workers who explicitly describe their workplace as a "dictatorship" understand this reality, as do the additional 55 percent who lack managerial authority or special protections and remain vulnerable to arbitrary treatment.

Chapter 4: Private Government: Arbitrary Rule Without Accountability

Private government exists when people are subject to arbitrary, unaccountable authority in some domain of their lives. This occurs when individuals face authorities who can issue orders backed by sanctions, yet treat their power as "none of your business" – denying subjects any right to information, participation, or accountability. In the workplace, private government means that employers exercise power over workers without meaningful constraints or obligations to justify their decisions. This arrangement fundamentally contradicts our democratic values but remains largely invisible in public discourse. To understand private government, we must first recognize that government is not synonymous with the state. Government exists wherever some have the authority to issue orders to others, backed by sanctions. Throughout history, governance has occurred in many domains: parents governed children, masters governed servants, husbands governed wives, and guilds governed members. John Adams acknowledged this reality when he wrote that government was "everywhere" in social life. The modern conflation of government with the state obscures these other forms of rule and their importance in people's daily experiences. Similarly, we must clarify the public/private distinction. Something is private from you when it's none of your business – when you have no right to know about it, participate in decisions regarding it, or hold decision-makers accountable. By contrast, something is public when members of a defined group have standing to make it their business. Privacy is relative to persons; what's private to some may be public to others. Private government, then, is government that keeps its subjects in the dark, denies them participation, and resists accountability to them. The freedom of workers under private government cannot be secured merely through exit rights. While libertarians emphasize the right to quit as sufficient protection for workers, this argument resembles claiming that Mussolini wasn't a dictator because Italians could emigrate. Exit is often prohibitively costly for workers who depend on their jobs for survival. Moreover, if all available employers operate as private governments, exit provides no escape from subjection to arbitrary authority. The cost of quitting is typically greater for workers than the cost of firing is for employers, creating a fundamental power imbalance. Private government in the workplace became entrenched during the Industrial Revolution, which destroyed the early egalitarian hope for universal self-employment. As economies of scale made large enterprises necessary, workers became dependent on employers rather than achieving the economic independence that earlier market advocates had envisioned. Nineteenth-century laissez-faire liberals responded by focusing narrowly on freedom of entry and exit while ignoring the authoritarian nature of the workplace itself. They improved workers' mobility between jobs but left workplace despotism intact. This historical process explains why our political discourse contains a blindspot regarding workplace governance. We inherited a way of thinking about markets and freedom that made sense before the Industrial Revolution but became radically disconnected from reality afterward. The result is that most workers spend their days subject to governance that would be considered tyrannical if imposed by the state, yet this fact remains largely invisible in our public conversations about freedom and democracy.

Chapter 5: Constitutional Options for Workplace Governance

The constitution of workplace governance is not dictated by economic necessity but represents a political choice about how power should be organized and constrained. While hierarchical organization may be necessary for efficient production, the sweeping, arbitrary authority that characterizes most American workplaces is not. Alternative arrangements could preserve the coordination benefits of hierarchy while better protecting workers' freedom and dignity. Just as liberal democracies limit state power through constitutional constraints, workplaces could be governed through more balanced constitutional structures. There are four general strategies for protecting the interests and liberties of the governed under any form of government: exit, rule of law, substantive constitutional rights, and voice. Each has applications to workplace governance. Exit rights—the ability to quit—do provide some check on employer power, but they are insufficient when unemployment carries severe costs and when workers have firm-specific investments that would be lost upon leaving. Barriers to exit like non-compete clauses, which have spread even to low-wage service jobs, further diminish this protection. California's prohibition of such clauses demonstrates that these restrictions are not economically necessary. The rule of law could constrain arbitrary authority in workplaces by requiring that power be exercised through general rules rather than ad hoc commands, with due process before sanctions. While the complexity of production means that managers need some discretionary authority, this doesn't justify the completely unconstrained power many employers exercise. Many larger firms already implement rule-of-law principles internally through employee handbooks and grievance procedures, showing that such constraints are compatible with efficient operation. A workers' bill of rights could establish substantive protections against the most egregious abuses, similar to how constitutional rights limit state power. Some such protections already exist through laws prohibiting discrimination and guaranteeing family leave. These could be expanded to protect workers' off-duty speech and political activities, personal privacy, and dignity in the workplace. The fact that European workers enjoy stronger protections against harassment and degrading treatment demonstrates that such rights are economically viable. Finally, voice—the ability to participate in governance—is essential for ensuring that rules reflect workers' interests. In the United States, collective bargaining has been the primary mechanism for worker voice, but it now covers only a small percentage of workers. Alternative models like Germany's works councils and codetermination system demonstrate that worker participation can be structured in ways that avoid the adversarial aspects of American labor relations while still giving workers meaningful input into decisions that affect them. The specific combination of these strategies that would best serve workers remains open for debate and experimentation. The fundamental point is that private government is not inevitable. Just as democracies evolved through centuries of institutional innovation to make state power accountable to citizens, workplaces could be redesigned to make employer power more accountable to workers. The first step is recognizing that the problem exists—that most workers labor under arbitrary, unaccountable authority that contradicts our democratic values.

Chapter 6: Beyond Exit: Voice and Rights for Workers

The dominant view that worker freedoms are adequately protected by market competition and the right to quit fails to address the reality of workplace domination. While exit rights provide some constraint on employer power, they are insufficient to secure workers' freedom and dignity in practice. The costs of exit are often prohibitively high, especially for vulnerable workers with limited alternatives. Moreover, when abusive practices are industry-wide, quitting offers no escape from mistreatment. A more comprehensive approach must combine exit rights with additional protections: meaningful constitutional rights for workers and mechanisms for voice within workplace governance. Constitutional rights for workers would establish boundaries that employer authority cannot cross, just as constitutional rights limit state power. Some such rights already exist through anti-discrimination laws, but these could be expanded to protect workers' off-duty speech, political activities, and personal privacy. The fact that workers can be fired for their social media posts, political affiliations, or sexual orientation represents an unjustified intrusion into their private lives that bears no relationship to legitimate business needs. Just as citizens would reject such control by the state, workers should not have to surrender basic liberties as a condition of employment. Voice—the ability to participate in workplace governance—provides another essential protection. When workers have no say in the rules that govern them, those rules inevitably reflect employer interests at the expense of worker welfare. Various institutional forms can provide voice, from traditional labor unions to works councils and board representation. Germany's system of codetermination, which gives workers seats on corporate boards and establishes works councils with rights to information and consultation, offers one successful model. While not transferable wholesale to other contexts, it demonstrates that worker participation is compatible with economic efficiency. The appropriate mix of exit, rights, and voice will vary across different industries and workplaces. Some degree of hierarchy remains necessary for coordination in complex production processes, and giving employers certain powers makes economic sense. But this pragmatic recognition of hierarchy's benefits should not preclude critical examination of its excesses. The current constitution of workplace governance in the United States grants employers far more power than efficiency requires, at substantial cost to workers' freedom and dignity. Progress requires first acknowledging the reality of private government in the workplace. Our dominant political discourse pretends that markets secure freedom through voluntary exchange, while ignoring the authoritarian governance that exists within firms. This conceptual blindspot prevents us from even discussing, let alone addressing, the subjection of workers to arbitrary power. By recovering the concept of private government, we can begin to see workplace relations clearly and imagine alternatives that better realize the promise of a free society of equals.

Summary

The central insight of this examination is that most employees work under systems of private government—arbitrary, unaccountable authority structures that control their working lives and often extend beyond the workplace. This governance structure remains largely invisible in contemporary political discourse because we continue to deploy pre-industrial ideals about markets and freedom in a post-industrial world. The Industrial Revolution fundamentally transformed economic relations, rendering impossible the earlier vision of universal self-employment, yet our conceptual frameworks failed to adapt to this reality. The result is a profound disconnect between our celebration of freedom in theory and the authoritarian governance most workers experience in practice. This analysis challenges us to reimagine workplace governance for the twenty-first century. Rather than accepting the false choice between state control and unfettered employer authority, we can explore constitutional arrangements that preserve the coordination benefits of hierarchy while better protecting workers' freedom and dignity. Just as democracies evolved to make state power accountable to citizens, workplaces could be reformed to make employer power more accountable to workers—through meaningful exit rights, constitutional protections, and mechanisms for voice. The first step toward this transformation is simply acknowledging what has been hidden in plain sight: that private government exists, that it matters deeply for human freedom, and that alternatives are both necessary and possible.

About Author

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Elizabeth S. Anderson

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