LW - Why Large Bureaucratic Organizations? by johnswentworth

The Nonlinear Library

Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Why Large Bureaucratic Organizations?, published by johnswentworth on August 27, 2024 on LessWrong. Large bureaucratic organizations have long seemed… strange to me, on an intuitive level. Why do they exist? Like, in a world where the median person is John Wentworth ("Wentworld"), I'm pretty sure there just aren't large organizations of the sort our world has. Nobody would ever build such an organization, because they're so obviously wildly inefficient and misaligned. And even if somebody tried, everyone would demand prohibitively high prices to work either for the large organization or with it, since it's just so deeply unpleasant to interface with. Nobody would buy anything sold by such an organization, or vote for such an organization to continue to exist, because the organization as an entity is so obviously both incompetent and untrustworthy. So how on Earth (as opposed to Wentworld) are large organizations stable? The economists have some theorizing on the topic (google "theory of the firm"), but none of it makes me feel much less confused about the sort of large organizations I actually see in our world. The large organizations we see are clearly not even remotely economically efficient; for instance, they're notoriously full of "bullshit jobs" which do not add to the bottom line, and it's not like it's particularly difficult to identify the bullshit jobs either. How is that a stable economic equilibrium?!? In this post I'll present a model which attempts to answer that ball of confusion. The summary is: "Status", in the sense of a one-dimensional dominance hierarchy, is A Thing. We'll call it dominance-status to make it clear that we're not talking about some other kind of status. The way dominance-status normally works in higher animals, newcomers to a group generally enter near the bottom of the hierarchy (even if they were previously high-status in some other group). Within a group, dominance-status is mostly reasonably stable. So, one of the main ways group members can move "up" in dominance-status (i.e. get more members "below" them) without a risky fight, is simply to add more members to the group. Managers at large organizations are mostly motivated by dominance-status. So, the main thing for which managers get de-facto social/cognitive positive reinforcement is increasing their dominance-status and/or avoiding decreases in their dominance-status. Then, the natural prediction is that those managers (at all levels) will tend to add as many people as possible to the hierarchy under them, and minimize firing people, since that's what maximizes their dominance-status. … buuuut the drive to expand the hierarchy is limited by the organization's budget. So in practice, organizations will tend to expand until all the profit is eaten up (in the case of for-profit organizations) or until all the allocated budget is eaten up. And then the hungry managers will fight for more budget. Much of what looks like organizational "inefficiency" and "misalignment" from an standard economic efficiency perspective looks like well-aligned dominance-maximization. … so e.g. large companies or government agencies are basically runaway human monuments of dominance and submission, limited mainly by their budget. There's a lot of steps here, and I'm not super-confident in this model. But when I step into the model, large organizations no longer look strange and confusing; the model seems to generate a remarkably good description of most real large organizations, both private and public. Now let's walk through the model in more detail, starting with relevant background studies. Background: Dominance-Status Empirical Ontology Justification: Dominance-Status Is A Thing "Status" typically connotes a mental model in which we could assign everyone a number/rank, and then some kind of beha...