The state illusion
This article has an important insight about government, but I think it misses the mark by a bit. Governments use more centralization and hierarchy than markets, but they are forced to adapt to the limitation on scaling the article describes, they just do it in a different way. When we think of government as purely top-down we are oversimplifying quite a lot. Does Trump control the deep state? Formally, congress and the president are in charge. In reality, no one is in control.
And the same criticism described in the article applies to corporations and other organizations that use explicit hierarchy as part of their structure. Yet they seem able to work around this limitation somehow, at least well enough to make a profit and keep the stakeholders mostly satisfied.
I've been trying to articulate a related insight. We think of government as distinct from other organizations, as deserving to be treated as an exception, but what essential difference can we point to that distinguishes them? If they are just organizations not so different from others, why do we treat them differently?
Weber and Hoppe offer flawed definitions of the state. Weber speaks of a legitimate monopoly on force, but the reality is closer to a cartel than a monopoly. Other organizations use force in various ways without becoming "the state". How many people must stop accepting the legitimacy of the state's violence before it transforms into a criminal gang? Does it experience a phase change like ice melting into water?
Hoppe says that the state "must be able to insist that all conflicts among the inhabitants [...] be subject to his final review. In particular, this agent must be able to insist that all conflicts involving [the state] be adjudicated by him or his agent. And implied in the power to exclude all others from acting as ultimate judge, as the second defining characteristic of a state, is the agent’s power to tax: to unilaterally determine the price that justice seekers must pay for his services." I can insist on this (though no one will pay much attention to it), am I a state? More charitably, Hoppe must mean that the state can actually accomplish this. How many conflicts adjudicated by other means will it take to transform the state into something else? When a mugger takes my wallet, does he become a state? When a club raises its dues, people can resign, but when a government raises taxes people can emigrate. There is no such thing as an ultimate judge. Participants in a dispute continue until they themselves consider their dispute to have been resolved. If some third party seeks to force a resolution, this merely imposes new constraints on their means of either engaging in or resolving their conflict.
Maybe territory and jurisdiction give us a clue? Can we observe a state without a territory? But does that mean that ordinary property owners, renters, or any other category of possessor that can legitimately exclude others from a specific location qualify as states?
Whatever activity or attitude you point to, if I start imitating government no one thinks I have become a government. When a random organization engages in evil or stupid behavior, it will not change their character if we start calling them governments. If I exaggerate a bit, this reveals the state as an illusion (or perhaps just a flawed abstraction). On a more practical level, this encourages us to use terminology that hinders our insight and understanding.
If we had a powerful general theory of social organization, then theories about states, firms, clubs and other variants of human organizations would fall out of it as corollaries, subsets or applications. Government provides a special case of a general phenomenon, and if we did not emphasize the difference so strongly we might find ways to transfer insights from one context to the other. The problems that can corrupt governments can corrupt other organizations, and vice versa.
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