Capitalisn’t: The Workplace Is a Dictatorship?

Episode Transcript

Elizabeth Anderson: Work has to be a kind of drudgery because it's taking up virtually every moment of your life. You get to rest on Sunday, but only to recharge your batteries, not because leisure has any value at all.

Bethany McLean: Anderson calls the Modern Corporation a communist dictatorship with a small C. It owns the means of production, and management can issue orders to workers who have remarkably few constitutional rights against their employer. It's actually quite a reversal from how we've all been taught to think, which is that there's the government and there's the free market, or to put it differently, what if the supposedly free market governs us more than the government does?

Luigi Zingales: She knows that Walmart calls its employees associates. Even Amazon does that. Even Jeff Bezos is supposedly an associate. What about Lauren Sánchez? Is she an associate too? [laughs]

Bethany McLean: Anderson says that that's capitalism's version of calling everybody comrade. I guess, for the Jeff Bezos and Lauren Sánchez point, wasn't it Comrade Stalin and Comrade Lenin? The language pretends equality where the power structure plainly does not.

Luigi Zingales: The economist Tyler Cowen, who has been one of the harshest critics, thinks that the book provides a too bleak view of the world, that workers can leave, firms compete for them, and autonomy, flexibility, and higher wages involve real trade-offs. To paraphrase his words, most people would be happy to trade fewer perks for more pay.

Bethany McLean: Anderson's answer to that is that leaving one private dictatorship for another, assuming you can actually leave the first one, given issues like the transferability of healthcare, monopsony, non-competes, is not exactly freedom, and that maybe the perks don't cost anything and there doesn't have to be a perk-for-pay trade. Cowen's unusually privileged academic workplace may color some of his optimism.

Luigi Zingales: There is one line in Private Government book that I particularly love, and this line is, the fact that Italians could emigrate in the '30s does not make Mussolini not being a dictator, which I thought that was very apropos.

Bethany McLean: I understand why that jumped out at you.

Luigi Zingales: Her more recent book, Hijacked: How Neoliberalists Turned the Work Ethic against Workers and How Workers Can Take It Back, takes the argument deeper. She says that the work ethic itself was born out of religion, but always had two faces. To steal her words, the work ethics contained the seeds of its own corruption.

Bethany McLean: Let's talk about your first book before we get to Hijacked. That book is called Private Government: How Employers Rule Our Lives and Why We Don't Talk About It. How do they rule our lives, and why don't we talk about it?

Elizabeth Anderson: The typical form of the workplace in the United States, its constitution, is a dictatorship. That's what I worry about. Not that there's authority relations within the firm, but that the relations are unaccountable to the workers themselves. Unless they're unionized, they really don't have a voice. Really, the workers have no recourse other than quitting, but that doesn't necessarily mean that another job they take will get them in any better situation. There isn't really viable competition among employers with respect to the form of the government. It's dictatorship wherever you go, for the most part.

Luigi Zingales: The crucial element, if I understand correctly, is really the accountability because there are a lot of power relationships. My wife told me to empty the dishwasher, and if I don't do it, she doesn't cook dinner. By your definition, is she gives me orders, and there is a sanction. Is that right?

Elizabeth Anderson: Absolutely, that is correct. Yes. Look, you're in a relationship. You have your own sanctioning ability. The workers, they can't really sanction the employer. He'll just fire them. If your wife had the unilateral ability to expel you from the house and you had no recourse, that would be closer, but you have all kinds of recourse in a marriage relationship. You can have arguments, you can have discussions, you're entitled.

Luigi Zingales: What are your recipes to moderate these abuses of private government?

Elizabeth Anderson: I think, number one, workers need a voice. The model that I advance is most viable. It would take a lot of reforms to make it possible in the United States legal reforms, is co-determination on the European model. With co-determination, the government of the firm is jointly operated by workers and shareholders at the board level. Another important feature of co-determination is that the shop floor is also jointly managed. Workers are on works councils with managers, and they work out solutions together.

Luigi Zingales: Isn't it obvious that there is an alternative, or you need to give some authority to somebody? Then, of course, you can make it more accountable, but isn't that a necessary condition that when you have that scale of production, you need somebody to organize it?

Elizabeth Anderson: Oh, absolutely. There's no question that as an organization scales up, you can't run it by participatory democracy. That's true. You need a hierarchy of offices, but it doesn't mean that the people at the top are completely unaccountable. I mean, workers' cooperatives, like in Mondragon famously in Spain, the workers have a say in electing the managers, so there's accountability there. If they're really tyrannical bosses, they won't get re-elected. Their terms will expire, and they'll be kicked out. They'll get better bosses.

I mean, we run democracies this way. The president's accountable to the people ultimately through election and to a certain degree through the courts, although in America, maybe that's been suspended. [laughs] There's accountability in a democracy that's consistent with a hierarchy of offices.

Luigi Zingales: I've recently gone to Ireland for the first time, and I was shocked by how much the British are still hated in Ireland-

Elizabeth Anderson: Absolutely. [laughs] Yes.

Luigi Zingales: -so many years later. I think that your book, Hijacked, gave me a good explanation for why that's the case. Can you tell our listeners how horrendous they were and how that is an experiment of how many versions of austerities are really cruel?

Elizabeth Anderson: Yes. Yes, so in my book, Hijacked, I talk about the split in the work ethic between a pro-worker version of the work ethic and a conservative version that favored the rich and the property. Before the Industrial Revolution, there was a much narrower gap between property owners and manual workers. You had that union of manual labor and a proprietary interest in the enterprise. Those two functions were divided in the Industrial Revolution and created a radical difference of interest where manual workers just became wage workers, lost all voice in the work process, working conditions, and so they become precarious.

Then the owners, they might be completely passive, just like the landlords. They just own shares, and they're getting returns without much effort. Then you also had the managers, the industrialists of the Industrial Revolution, and they were the carriers of the business version, the conservative version of the work ethic. They credited themselves with all of the amazing productivity gains of the factory system, which were immense.

Now, I would argue that they're not entitled to all that credit. It's not as if the workers weren't working hard, but they're hardly rewarded for that. It's really the combined efforts of everybody in the division of labor within the firm and even outside the firm that accounts for the high productivity and profitability of the factories in the Industrial Revolution, and of course, the same is true today.

By the 19th century, Ireland was producing about 40% of all the stuff that the English were consuming, the food. They were immensely productive agriculturally, but the typical Irish peasant was living off potatoes. That was it. It's the most boring diet imaginable. [laughs] When the potato blight came, that's when you see, I think, the work ethic at its cruelest. They started getting very skeptical. "What are these lazy Irish? Why can't they get themselves out of their own problems?"

They become extremely skimpy with food relief. Famine relief was run out of the British treasury by somebody who just assumed that the Irish must be lazy, even though before the famine, they were producing massive agricultural surpluses that the English needed to survive. These negative stereotypes about lazy, improvident Irish just completely dominated their imagination. They thought that providing them with a little bit of gruel for free would make them lazy. Now, of course, if you don't get energy inputs, you cannot exert energy outputs. It makes you less capable of working. These people are being reduced to skeletons. They have no muscles left.

You would have the relief workers in Ireland talking about a man who can't lift any weight anymore, can't do manual labor because he's so lacking in energy and about to expire. A letter would be sent by a ship over to London from Ireland. It takes a long time. Then somebody in the British Treasury, who has no personal knowledge of these people saying, "Oh, you're being too generous. We don't believe this. Reject the application for relief for this individual." The letter slowly comes back, and this person now has lost more weight. Another letter said, "No, we really mean it." You just had massive starvation.

Bethany McLean: Malthus argued that relief for the poor encouraged dependency and providence, excessive fertility, while exposure to hunger would force better behavior. How much of modern welfare policy, work requirements, drug tests, endless demonstrations of deservingness is still Malthusian? Why are the poor required to prove virtue before receiving help? While owners and rentiers rarely face an equivalent moral test, we don't ask billionaires to justify their billions.

Elizabeth Anderson: Totally. I think that's right. I don't think there's a single new thought in conservative critiques of welfare since Malthus. He told the story, and it's just been repeated endlessly. Adam Smith was right here. He said, if you want the workers to work really hard and well and efficiently, pay them more. This is econ 101. You work better with higher wages, not with starvation wages. If you're kept in a state of precarity, why would you even invest in the firm?

Luigi Zingales: By the way, it's not just conservatives because there was the, I think, the Dutch Minister of Finance, Joseph Bohm, at some point said in the Social Democrat, he said, "Oh, we believe in solidarity, but we don't believe in solidarity with Southern Europeans who spend all their money drinking and having sex." From a page from Malthus, and he's a Social Democrat, so imagine the rest. Actually, I was fascinated by reading your book, Hijacked, and noticing how super smart people, because all the people you describe are super smart, they develop a very coherent body of work all based on some behavioral assumption that are completely untested.

Elizabeth Anderson: Correct.

Luigi Zingales: All the theory is about how the poor behave. At some point, one says, why don't we test what they do? Because one person goes off the deep end saying you should do X, Y, and Z because the poor are intrinsically lazy. The other says, no, the poor are intrinsically loving, and you have to do the opposite. Can't we test?

Elizabeth Anderson: Yes. Well, there are some very interesting basic income tests where you just give the poor a monthly or weekly cash input. A lot of the outcomes don't look great because I think they're looking at the wrong measures. The most important thing about knowing that you have a secure stream of income is that your time horizon for planning your life gets much longer because you're not worried about getting the next meal or making rent. You can have a longer timeframe. When we look at what people do with a more stable income is they go out, they get worker training. They go out and get a degree. The payoffs of that take much longer than the typical experiment lasts.

Bethany McLean: It's amazing that you quote Star Trek or you invoke Star Trek. [chuckles] In this post-scarcity world, people remain motivated by the work ethic because humans are innately driven to seek out meaningful challenges as part of the good life. As Captain Picard relates in the 24th century, the acquisition of wealth is no longer the driving force in our lives. We work to better ourselves and the rest of humanity.

I guess that leads to a question, and a slightly complicated one about UBI. Is UBI a good or a bad thing in the sense that perhaps it's a good thing? It can free people to seek out meaningful challenges that aren't just driven by the need to make money, or is it a terrible thing because it strips work of some degree of its moral importance?

Elizabeth Anderson: I see. Yes. I just defended UBI earlier. Actually, I don't think that's the best package. There's a lot of needs that a UBI would not be able to cover, like healthcare. You've got catastrophes that you would never be able to afford it just from your UBI payouts. There's lots of public goods that we need that wouldn't be helped. Anything that requires significant wealth, like housing. You need all kinds of policies to enable everybody to be housed. UBI is not going to be able to correct affordability problems if there's a shortage of housing.

UBI theoretically might be part of a useful solution. It's also the case that if you look at what happened in deindustrialized parts of America, they're staying in these places with very high unemployment rates and no decent jobs anymore with very high rates of unemployment. I think a big reason why is because they couldn't afford to move to the places that were growing jobs. Their house would sell for nothing. They just couldn't afford to move. They feel terrible. Unemployment in the United States is considered as bad as losing your spouse. People fall into depression if they can't find other work. It's not just for the money. They feel useless.

People hate-- The idea that you would have an existence in which nobody needed you, you just feel like you're disposable. Nobody would care if you just disappeared from the earth. That's a horrible thing. These poor bereft people. America made a very grave mistake in not having a much more active policy in helping these workers find better work, but just letting them stagnate and fall into depression.

Bethany McLean: I'm going to stretch for a connection that may not work, but let me try. One of the things that jumped out at me in Hijacked was this idea that Christianity had the promise, the meek shall inherit the earth, actually been the truth, then Christianity would never have been accepted by the Roman Empire. It had to become, yes, sometime in a future life, the meek shall inherit the earth, but don't worry. Right now, the power structure will remain intact.

Then, as you detail through your book, all these thinkers, from even Bentham to Adam Smith, of course, even Thomas Paine, whose beliefs got oversimplified. Why did we lose the nuance in Adam Smith's argument? Why did we lose some of the nuance in Thomas Paine's argument? Is it the power structures of the world take these things over, or is there something at the core of them that makes them malleable in a way that they shouldn't be?

Elizabeth Anderson: I see. My argument is that the Protestant work ethic at its origins in the 17th century, you have all these Puritans coming up with this doctrine, they themselves had very ambivalent attitudes towards work. I think that has carried through to the present. On the one hand, they did advocate a work ethic precisely in order to uplift the status of workers. They're doing the work, that's God's labor. It needs to be honored, even if it's just a servant or a lowly worker. You still have to honor that and treat people decently who are doing socially necessary labor.

At the same time, they are also constantly worried about sin. People falling into a sinful life, lazy. They accuse the landlords of being lazy, just like the beggars in the streets. What are they doing? They're just collecting rent. They're useless. They see relentless work, nose to the grindstone, as a way to keep people's minds focused on work rather than distracted by all kinds of temptations. Work has to be a kind of drudgery because it's taking up virtually every moment of your life. You get to rest on Sunday, but only to recharge your batteries. Not because leisure has any value at all, which they didn't think. Not intrinsic value. It's just--

Bethany McLean: This is maybe one way to think about this. We've taken religion and philosophy and economics and baked them all into a cake.

Elizabeth Anderson: Totally.

Bethany McLean: The cake has lots of layers.

Elizabeth Anderson: Yes.

Bethany McLean: Not every bite is very tasty because sometimes there's spinach going with the chocolate in ways that it really--

Elizabeth Anderson: Yes. The other thing, too, of course, is so many of these attitudes have become secularized. I don't think-- I guess, a couple of the tech bros fancy themselves Christians. Most of them are pretty secular, but they still have a very strong internalized work ethic. People like Elon, does he have any time to see his children? He's got a lot of them. How many minutes per day can he allocate?

Bethany McLean: Time per child might get very tricky.

Elizabeth Anderson: He can manage that. No, I mean, he's at work all the time. He had one child he was carrying on his shoulders in the White House when he was doing the DOGE stuff. Otherwise, and he insists on the same level of effort from his employees, many of whom actually dive in and give it to him.

Luigi Zingales: As a recovering Catholic, I have to say, first of all, I don't think that the same obsession with the work ethic is present in the Catholic religion, and so much so that contemplation is sometimes virtuous, but especially when it comes to manual work. Second, maybe it's my biased reading, but when I was reading your interpretation of when Martin Luther came up with the first version of the ethical work, it was very, very strategic, and if you want, Machiavellian, because once people understood that you cannot save yourself for your action, but there is predestination, they stopped working, and this was not very good for the princes that were defending militarily.

Martin Luther, because he would have been hanged, actually burned alive in Rome if he didn't have the German prince defending him. He wanted to defend the German prince that was defending him. As a result, he introduced this responsibility of work just to make things work well for the princes.

Elizabeth Anderson: [laughs] My picture, though, is that actually his version of work from faith is that you should work just out of pure brotherly love for your fellow human beings. What's so deeply ironic about this is that that's pretty much Marxist's picture. What do you need private incentives for? No, we're all solidaristic. All of humanity will be doing the work because it's just helping our fellow human beings. It's the same thing. It's like you transcend self-interest. Well, that didn't work out. As we know from the history of state communism, we need incentives. People need to be personally rewarded for their labor, but that was always part of the English view that you didn't have with Luther.

Bethany McLean: How does that work? I wanted to push on that because if you could write an ideal or put into all of our heads the ideal theory of work, what would it be? What is the relationship between the need to work in order to get money? You don't want it to just be that, because then people are working just to get money, and that feels ugly. You don't want people to work because they're terrified of the consequences from God if they don't work hard. That also feels ugly in a way.

You need people to have-- People aren't going to work just out of brotherly love, I don't think. Maybe they are. Maybe some people are. I don't think I would. How do you ideally motivate work? How do you create a structure, a philosophical framework that motivates work in an even-handed way?

Elizabeth Anderson: I think actually the Puritans have a pretty good idea about this. They invented an ideal of meaningful work that I think continues to motivate workers today. Number one, it has to be in service of the public interest or other people. You're helping other people's lives flourish. That's really meaningful. You should receive recognition in return for that. Also, the ideal of work in the 17th century was skilled work. If you looked at your typical peasants, they had millions of skills. They're running a whole farm.

The craftsmen were running whole enterprises. They're doing everything required, from actually making the stuff to managing the money and getting business and so forth. It's a deep feature of human beings that we like to exercise sophisticated skills and to also have autonomy in the way we deploy those skills. You also need to be paid because, hey, we're human beings. We have material needs. One way to show respect for people and to treat them with dignity is reciprocity. If you're doing something for them, you're entitled to some return for that.

Luigi Zingales: Of course, this year is 250th anniversary not only of the Declaration of Independence but also of the publication of The Wealth of Nations by Adam Smith. You portray a vision of Adam Smith as extremely progressive that is always on the side of the poor, of the workers, wants the government to have the rule of law to protect the artists and against the abuse of the rich. Even saying that basically we all have a too nicer view of the rich. We are distorting our view of the rich. How this Adam Smith became sort of the father of greed is good?

Elizabeth Anderson: [laughs] From very poor reading and highly selective. [laughs] Also, for failure to read the Theory of Moral Sentiments. Even in the famous passage which everyone cites that it's not from the benevolence of the butcher that you get your meat, but because of the customer's appeal to the butcher's interest. He's not saying that the butcher is selfish because the butcher also has to appeal to the tastes of the customer. That is successful business is based on sympathy, or what we would call empathy for the other side, a due recognition for their needs and interests and desires.

Venting over backwards to provide them with stuff that they want. You have to have insight into the other people's needs and offer them something. Then they will reciprocate in the same way that they have to offer you something. Each of us is thinking of the other's needs not out of sheer benevolence but out of a sense of reciprocity.

Bethany McLean: I wanted to ask the question we had to get to about AI. You knew it was coming. I was thinking, as I tried to think about it through the lens of your work, that there were probably three possibilities. You could put AI into your private government framework and have algorithmic management tracking keystrokes-

Elizabeth Anderson: It's already happening.

[laughter]

Bethany McLean: -and then turn these observations. This could make Bentham's panopticon economically scalable for the first time. There's also this emancipatory possibility that AI can eliminate drudgery and make society vastly more productive and then just deliver the leisure and independence that Keynes thought we would have gotten to by now. Then I guess there's a third possibility, which is that it just wipes out all of our jobs and the revolution is here. We suddenly have to reconfigure this whole work ethic because there's no more work anymore. If you had to vote for one of those three possibilities, which one would you-- Not necessarily vote for the one you'd prefer because I think that one's obvious, but which one you think is most likely?

Elizabeth Anderson: Look, I don't trust the tech bros. [laughs] Let me put it this way. AI is capable of being developed in many different directions, some of which are good for workers and some of them not. The incentive structure of our current system is to use AI in ways that really neglect the interests of workers. A lot of it, at any rate. Those are the kinds of versions of AI that the tech bros are hyping. We'll just eliminate everybody's job and so forth.

Now, in fact, I don't actually believe that that is a credible future. The reason for that is that human beings have demand for human interaction and service provision. There's a social aspect to this. Maybe tastes will change. Maybe if we get served by robots, people will get used to that. I find that a profoundly alienating vision. I can't rule it out. I do think people would rather go to a human yoga instructor than a robot. [laughs]

There's going to be a lot of jobs available in the services still because people want to connect to other human beings. On the other hand, making work more subject to micromanagement by AI, I think that is a serious danger. We already see some examples of that. Minute surveillance. They strip away all judgment and autonomy at the job. The consequence of that is that consumers would get worse services. The workers will also hate the work and be deeply alienated from the work. That is a very dysutopian vision.

Luigi Zingales: We recently had Daron Acemoglu on our show. He was talking, basically, your talk that we should make AI more pro-workers rather than substitutable. Then we asked him how to do it. I'm not sure he gave us a super compelling answer. Now, on X, I saw somebody say, "Oh, the answer is obvious. You should give power to the workers." Which workers? Because if you give the power to the workers in OpenAI or Anthropic, those are not really the subject of the situation.

Is it you need to give the power to the adopters of AI that should control? There is an inevitable, if you want, obsolescence of some of the workers as a result of AI, so they might resist. How do you see a solution here?

Elizabeth Anderson: If you look empirically at how workers' cooperatives operate--. Two general features of workers' cooperatives that differ from capitalist firms. In a recession, they don't fire a bunch of workers, which is typically what happens with a capitalist firm. No, what they do is they accept lower wages, and they share the work around. It's a better trade-off from their point of view. Now, from a capitalist firm point of view, the reason why they fire some workers and keep others pretty much at the same pay is because if they cut everybody's pay, that would be demoralizing to them and more talented workers might leave.

Whereas, a workers cooperative, they're not really going to leave because they have shares in the firm, but they can't leave with those shares. They're going to get profits eventually. The other feature of workers cooperatives that's interesting is that they divide the work differently. There's much more work rotation. Workers have a variety of skills. They learn skills along the way. They exercise managerial skills when they make decisions for the firm. In a democratic process, this would be at the board level. They like exercising those skills.

Workers' cooperatives, of course, will adopt AI in a way that would help them. They would generally favor AI that up-skills them because that makes their work more meaningful. They can do more stuff with it. They don't need to be hyper-surveilled because they have an inherent interest in the profitability of the firm as owners of shares. That kind of AI looks pretty good, and it's compatible. That would be the kind of AI that I recommend to capitalist firms too because we also know that when workers are treated well and enjoy the work and have autonomy and ability to exercise skills according to their own judgment at work, they're more motivated. It's a better system. I'm not denying they can get profits by reducing workers to drudges, but it's not the only way. I think we should be taking the high road on this.

Bethany McLean: I could swear I remember you saying that corporations actually were like little communist dictatorships. I think hearing about Coase's theory of the firm too was the first time I started to think about how odd it is that in this supposedly market-based economy, there's the very center of the market, a corporation that itself doesn't function in a market-like way. Did you invoke that before, or am I misremembering things?

Luigi Zingales: No. You're remembering correctly, except with a slight difference in the definition. I said they're a centrally planned economy, which are not necessarily communist. The Nazi regime was centrally planned, but was not communist. It's not, I wish was my idea. This is really Coase's idea. It's a fantastic question that I don't think he fully answered, but it's such a good question that we're still grappling with almost 100 years later. I think it's really very important.

The crucial element here is really competition because the extent to which that tower is really strong is because there are costs of transacting. I tell this story in my book, which is a true story, but I will not name the names, that many years ago, I was walking toward the Faculty Club with a senior colleague and a junior colleague. It was raining. This senior colleague, who was raised in Europe, said, "Oh, in Europe, junior faculty carry the umbrella for the senior faculty." The junior colleague said, "Why don't you go to Europe?" [laughs]

This guy was a star in the market. He could be anywhere. He couldn't care less about the senior colleague. I think that, to me, is the proof that markets work when you have this level of mobility. Now, unfortunately, this is true for superstars. It's not true for most of us, particularly when, in life, you have events that make your mobility more difficult. We both went through divorces, and we know that that creates a friction. Especially when you have custody of children, you cannot go wherever you want. That creates a limited mobility, and that limited mobility can be exploited by the other side.

This really emphasizes how important is competition to make markets work because otherwise, without competition, we have the negative of a centrally planned without the positive that at least there is more protection in the system, like in a communist regime.

Bethany McLean: I don't know that competition can ever exist perfectly because certainly, as we've discussed before in the podcast and at the Stigler Center Conference, healthcare is just such an issue in the United States that prevents competition from ever working perfectly. I also think the firm always has the weight on its side because there's just a stickiness to your employment. Maybe that's changing these days, but people want to be able to have predictability and sustainability in their work, and they develop loyalty to a workplace and a sense of belonging.

All of those things that don't exist in an economist's version of the world will always inhibit perfect competition. I'm not sure that even having more freedom to move, it's obviously better, but I don't know that it can get you all the way there.

Luigi Zingales: I agree completely, but in my own peril, I like to make the comparison with personal relationships and marriages. We both know that there are some frictions in leaving a person. Is it perfectly competitive? No, but ain't too bad. Let's put it this way. If you have some skills, this is an important thing that can be sold in the marketplace, you are not captive of your partner.

Bethany McLean: Oh, my goodness, an economist's view of marriage. Here we go. Okay, keep going.

Luigi Zingales: When you don't have those conditions, then you are very captive, and that's where the abuse situation comes in. Of course, I don't want to be too cavalier, there are some psychological situations in which, even under the best condition, people are captured, they're manipulated. I'm not trying to say that there are no tragedies. In the book that she writes, there is a comment by Tyler Cowen, who dismisses much of what you say because you said, oh, it's basically a competitive world, you can do whatever you want, et cetera.

I think what I like in the interview is that she came across as very nuanced and said, "Look, it's a continuum, basically." At some level, especially when there is some form of accountability or reciprocity, like in a relationship, you don't mind that somebody gives orders. When it becomes one way and becomes potentially at the level of abusive, then you need some form of protections that are more akin to constitutional protection. I think that this is an area we don't hear very much discussion about, but I think it's very important because I dislike absolute power, whether this is private or public power.

Actually, public power has at least some form of recourse, at least in democracy. Private power, unless there is competition, has none. One area that I don't feel I'm particularly competent to do, but I think it's an area that somebody should work on, is creating some constitutional element for private power because we have a constitution to protect us, individual against the sovereign. I think the blessing of liberal democracy and the success have been due to the fact that we have limited what used to be the sovereign, the king, now has become the parliament, whatever, but we limited the abuses in a very effective way. I don't think we've done the same with private power.

Bethany McLean: I think I was going to go to this idea of the work ethic. It's not exactly a conflict in her thinking, but it's something that I struggle with because I think she wants us to have a work ethic. She still wants us to have a work ethic, but she doesn't want it just to be measured by the profits we produce. I think one of the reasons that the work ethic has developed the way it has isn't just philosophical. It's that the human brain craves simplicity, and the profits or the pay that you get is a very simple and clear way of measuring the value of your work.

One of the things I struggle with in her thinking is how do we keep a work ethic when the system for measuring it or valuing it can't just be the profits we produce? I understand her philosophical arguments, but I get bogged down in the practicalities of that. Do you as well?

Luigi Zingales: Actually, I didn't necessarily get, and maybe my limitation, I didn't get that she wanted us to have a work ethic. Does she?

Bethany McLean: I think she does think that there's something quite beautiful about a work ethic properly applied. I don't think she wants to get rid of it entirely. I guess for me, I do want to keep a work ethic. I struggle to think maybe it's my simplistic brain, but if my work ethic is not just getting measured by the reward of what I'm being paid for it, what is my work ethic?

Luigi Zingales: When you say that you want to keep a work ethic, what do you mean exactly?

Bethany McLean: Well, I suppose this maybe gets to the way in which these deep-seated religious and philosophical traditions get embedded is that somehow I will not feel as good about myself if I'm not working. I feel better having a reward at the end of the day if I've done something productive during the day, and I struggle with how to define that if that productive activity has not resulted in payment.

Luigi Zingales: Really? Imagine that you have wonderful thoughts all day, but you cannot monetize those thoughts. You don't feel satisfied at the end of the day?

Bethany McLean: I don't think I've ever had a day like that, but okay. Theoretically, yes, if I really did spend the day having absolutely wonderful thoughts and they couldn't be monetized, I would feel great. I definitely feel really good if I've spent the day helping my kids or doing something that is in service to them, but I don't know. For me, leisure time does feel like it's earned as a result of work. Maybe this is just my limitation. Maybe all of this is just too deeply embedded in me for me to be able to move beyond it even as I hear and understand her arguments.

Maybe I'm hearing something in what she says that isn't really there. Maybe I am hearing some sort of defense or belief of the work ethic. That isn't actually what she said, maybe that's just my biases that I'm bringing that to her writing.

Luigi Zingales: It's difficult for me because I love my work. I don't need an ethic for that. I just enjoy doing it. Do I think you have to work for me to consider you in society? Absolutely not, because you can be a very interesting person having very deep thoughts precisely because you don't have to work. What I sense here is there is really a divide between the Catholic tradition and the Protestant tradition. I'm sorry to report the Protestant tradition is all a creation of people who want to manipulate you in a particular direction. I don't know why you want to keep that ethic in yourself.

Bethany McLean: Isn't that fascinating because maybe that is, and it just speaks to, which is her point, how deeply embedded in all of us these things are. Because you grew up in a different tradition, it's not deeply embedded in you. Even though I grew up in an extremely secular household, I think my father would be the first one to say that his views of the world are infused with religion. I grew up very much with that Protestant sense of work.

Luigi Zingales: A lot of the research of the past were people that were not really paid very much, and they were spending their family fortune to actually think beautiful thoughts, and science progressed very much. I'm sympathetic to the view that I feel good if what I do has an impact on others. It's not saying that I'm against that. When you say ethic, I think that is something that I also will hold other people accountable to. I am much more tolerant that people can have different views.

Bethany McLean: Yes, that's a really interesting way of thinking about things. My core realization on this, from my perspective, was when I made the transition from working at Goldman Sachs to going to work as a journalist. I initially thought, as I was making that transition, that I would work a lot less and have a lot more free time as a journalist. I ended up having no more free time because I worked really hard because I really liked what I was doing and was quite passionate about the stories that I was telling.

Luigi Zingales: Because of your ethics. [laughs]

Bethany McLean: No, but the difference for me between the two places was, at a very junior level at Goldman Sachs, was extremely top-down. I was always being told what to do. Whereas when I became a journalist, Fortune Magazine, where I worked, was very laissez-faire. You had to come up with your own work. The huge emotional difference for me was work because I was being told I had to do something by somebody else, and work because I was telling myself I wanted to do this and wanted to get it done. That, for me, was night and day in terms of my happiness and probably the quality of the work I did as well.

I understand that implicitly. I do like this idea of a constitution that deals with private power. I don't think, though, you could have one that could apply to every company. I almost think it should be a bill of rights that a company has, but then we get back to that whole idea of monopoly power and what the company is. Because the more powerful a company is, and the more in demand that place is, the less likely it is to have a bill of rights or a constitution to manage its private power.

You can see this through the lens of the investment banks that when competition for analysts for younger workers has been intense, and they've been going to Silicon Valley and other places, the banks have been much nicer to their junior workers and had ideas around how they can manage their workload. As soon as competition gets less intense and everybody wants to work at a place like Goldman Sachs, those rights go right out the window. I don't know how that works, practically speaking. I understand it theoretically and agree with you, but I think practically it would be the firms that are less in demand in not very good times that would provide that.

Luigi Zingales: I think that there is some difficulties for companies to be time consistent in providing this. A lot of companies make pronouncements about how they're going to treat their workers. Some companies succeed doing that long term. I was listening to a podcast about Costco. Costco seems to have done that very well over such a long period of time that you now start to believe it. A lot of companies are poor workers or want to treat the workers in a particular way, et cetera, until there is a recession, and then they start to get rid of everything and treat them differently and so on and so forth.

At some level, I think a company might need some help in holding up to this because it's the cheap thing to do when you are under pressure, but it's not necessarily very long-term oriented. A lot of executives, when they don't know any better, say, "Oh, we cut workforce," that puff. This is a Pavlovian reaction to a crisis, and a constitution might make it a little bit more difficult. I am with you. I think that it should be company-specific. Constitution should also be country-specific. Not every country has the same constitution. Not every company should have the same constitution, but I think it would be useful to have one.

Bethany McLean: I'm laughing as we're talking because this is making me remember that one of the first-- it's in the Enron, had this wonderful code of ethics. It was even printed on a thing that was flowery. It had flowers on the background. One of the lines in the Enron code of ethics was how people should be treated. It was that we believe in treating people well and abuse and callousness, and disrespect don't belong in our company. Just get to the other problem with any kind of printed code of ethics or printed constitution about how a workplace will treat its employees is what the words say and what the reality is are often wildly different.

Luigi Zingales: Maybe they weren't treating them nicely. They were just defrauding investors, but that's a different story.

Bethany McLean: No, it wasn't very nice as an internal culture either. Anyway, the words gets to a different issue. In some of the other podcasts we've been doing, we've explored why words might be meaningless, and the words, if there were to be a constitution, might be meaningless in this case.