Organizations People have organized themselves in various ways through times to survive and prosper. The picture of the lone individual on an island in Robinson Crusoe style appeals to the imagination, but is not a long term viable social construction. Division of labor in organizations has existed from early times on. Organization appears when several people assemble and live by certain rules. States and corporations are cases in point. Family and tribe constitute old organization forms. Membership of these organizations was determined at birth. This differs from organizations that people enter out of free will. People can join firms, clubs and unions and agree to accept their rules. This does not apply to political organizations like nation states and empires whose membership is usually not chosen. Organizations like business firms need permission from political authority to be founded. Human history records several periods wherein business organizations could operate within empires and states. However, periods of freedom of organization were alternated by periods wherein the state increased its economic authority. State enterprise has been the norm in many times and places. A central role of the state fits in with ideas that there is only one best way to organize economic life. However, state organizations possessing monopoly power led to stagnation in many parts of the world. Human political organization has taken many forms: from tribes to kingdoms and empires; from city states to nation states and international alliances. Many empires and nation states wanted to appropriate surpluses from subjugated people in imperial fashion. The concept of empire is defined as the permanent rule and exploitation of defeated people by a conquering power (Parsons 2010, 4). Empire wherein one group’s military power allows it to exploit others creates an insurmountable gap between conquerors and subjects. Empire means control of (foreign) people. It differs from colonization that refers to the permanent settlement of people in foreign lands. The two concepts merged when empires founded colonies on conquered lands. But Parsons argues that colonies that did not want to exploit indigenous people were not imperial (Parsons 2010, 10). Ancient Greek city states founded colonies along the Mediterranean. The same applies to Italian city states like Venice and Genoa. The colonies of these

maritime city states were used as trading posts. They became imperial when they started to exploit inhabitants. Many empires were stagnant organizations that wanted to preserve the past and closed themselves off from the outer world. Business organizations prosper in political environments that allow them some autonomy to set their own rules. All organizations set rules that regulate human behavior. But freedom of organization allows people to found their own organization or choose an organization of their liking. Market economies that feature freedom of organization allow firms to appropriate surpluses. This differs from surplus appropriation by a state bureaucracy. Markets work well if competition among firms limits profits below monopoly levels. Profits would just suffice to pay ‘normal’ rates of return on investment in market equilibrium.