ABSTRACT
Richard Cornuelle has forcefully raised an issue that has been rather neglected in libertarian, Austrian, or market-process economics, namely that lacking any analytical device but the market-based approach has trouble giving a satisfactory account of social associative action. This chapter shows that both neoclassical theory and Austrian economics focus on markets, and even when they try to analyze the firm, the primary effort is to find Markets in the Firm. It explains how engineering market-based incentives falls far short of developing the more subtle organizational virtues of loyalty, commitment, and identification. The chapter summarizes and compares in some of the ways that the two logics essentially Gesellschaft and Gemeinschaft affect firm structure. It explains that the social-organizational arrangement of the employment firm directly violates the principles of the classical liberal democratic order. The employment contract is a contract of alienation, not delegation.
