Why Cisco Isn’t Socialist & Who Really Is

by on December 4, 2008 · 6 comments

Ellen McGirt is undoubtedly a good business reporter.  Her recent cover story for Fast CompanyHow Cisco’s CEO John Chambers is Turning the Tech Giant Socialist,” is a great piece that shows the many interesting and truly innovative reforms that Chambers has instituted at Cisco.

However, I think McGirt is trying too hard to be clever or just doesn’t understand what socialism really means.  Socialism is a political system that uses the force of government to take money from some and give it to others.  Cisco is a private enterprise that’s only asking for you to buy their products.

McGirt’s confusion seems to arise from the socialist-sounding rhetoric of CEO John Chambers.  He uses what McGirt calls “Collectivist Catchphrases” like “Co-Labor” to describe Cisco’s approach to management.  He’s replaced managers (what many consider the avatars of capitalism) with councils and boards; emphasizes information sharing, rather than hoarding; rewards cooperation, rather than back-stabbing ladder-climbing.

But Chambers is no socialist, he’s a capitalist responding to a problem as old as business itself: How do you give those with good information and good ideas, the power to get things done?

Nobel Laureate Ronald Coase discussed this power/information theme in many of his works, such as “The Nature of the Firm” which he wrote in 1937.

Coase also recognized that while a business is a collectivist enterprise, it must be disciplined by existing with a larger competitive system.

Essentially, every business is a small experiment in social organization.  Some take a hierarchical approach, where information is passed up the chain of command, and orders are passed back down.  Others, like Cisco, attempt to create a more varied and sophisticated system of dealing with information and the power to execute business plans.

Thankfully, the meta-system of capitalism allows all of these approaches to exist side-by-side and compete with one another.  This allows us to see which system really works, and which was just a Utopian pipe dream.

If I was to point to a socialist company, I wouldn’t be looking anywhere near Silicon Valley.

No, the real socialists are on Capitol Hill today, asking for our tax dollars.  But, that’s where the socialists always are.

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