For more than two decades, Disco Corp., a Japanese company with an annual turnover of $ 25 billion, is trying to operate as if the 7,000 employees were independent contractors on the open market. The 87-year-old company now produces three-quarters of all machines to cut, sharpen and dice half-conductors. An interesting story in the Financial times (Harry Dempsey and David Keohane, “Can you run a company as a perfect free market? Inside Disco Corp” Financial timesMay 1, 2025) Reports:
Since 2011, [Disco] has carried out a radical experiment to operate a blue chip company on pure free market principles. Nobody has a boss. Superiors cannot tell juniors what to do. Every day, employees choose all the tasks they want. They can stop or become a member of another team.
Within this state of perfect freedom, most of their decisions will be led by Will, because the internal currency of disco is known. Employees earn Will by performing tasks. They exchange and compete at an auction with their colleagues to perform those tasks. They are fined for actions that the company can cost, or can jeopardize their productivity. Their will balance determines the size of their bonus that is paid every three months. …
His door, [the CEO] Says, even the most junior disco employees, as long as they are willing to pay 165,000 will for 30 minutes of face time with the top boss.
The amount of money is generated by sales and filters the company through trade fairs and auctions where people who need tasks (demand) and those who register to make them (deliver) determine their prices. Everyone can offer to pay for a task he needs. If a sales team wants a new machine to be produced or adjusted, it only needs to offer the production team sufficiently to make the project profitable for the latter. An IT system (operating software) manages the auctions and transfers.
However, not everything within disco is pure market. Only 40% of employees’ bonuses depend on their will balance. The Human Resources department has a monopoly on recruitment. The CEO can, just like a central bank, create as desired (if you allow me the easy pun for special projects. “He casts himself out like a benevolent autocrat,” says the Financial times. There is no currency market for the will, which is not real money. The company is more like a “village community” than a free and often impersonal market. In many ways, the alleged market participants are only employees. More surprising, Disco’s website Gives the impression of a very ordinary enterprise, with a social mission, CSR, stakeholders and so …
The distinction between the company and the market is easy to understand for someone who has read Ronald Coase‘s Leminal article “The Nature of the Firm” (Economica1937). It is difficult to become very enthusiastic about the idea of ’running’ a company like a market. Why does the hierarchical company exist within the free market? Early Coase. He argued that the Raison d’être The company is to avoid the transaction costs of using the market, that is, the costs of finding subcontractors (instead of hiring employees), discovering relevant prices, the negotiation and signing of multiple contracts for each project and trying to predict all related market conditions. If the circumstances are such that these transaction costs are or become higher than the costs for organizing and managing a company, the entrepreneur or his investors will choose the last.
Charles Koch and his deceased brother David have been a similar inspired for several decades, but less all -embracing system called “Market Based Management” (MBM). Their company, Koch Industries, is the largest non-listed company in America. It grew quickly. More everyday many companies use market -like stimuli, including some internal competition, in their management or structure. Disco Corp. Has gone much further in the experiment.
Whether a company is a hierarchical-authoritarian organization or a free market microket is a matter of degree. On the one hand, every company in a free society contains market characteristics, even if it was the freedom of employees to leave and the absence of physical coercion. On the other hand, a single company often establishes long -term relationships with some contractors or suppliers. Diversity, entrepreneurship and innovation – all characteristics of free markets – generate information about the best business formulas in different circumstances. But Coase’s insight still seems inescapable, and Disco Corp. Must be an experiment on the limit of the possible. The dream of literally transforming a company into a market looks just as unrealistic (albeit not dangerous) as the collectivist utopia to replace the market with an organization.
An irreplaceable advantage of a free market economy is free company and experiments at the micro level. The free market is the abstract locus under which Voluntary organizations work.
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Disco Corp. and Ronald Coase, an exaggerated view, by Chat GPT (and Pierre Lemieux)