Idle Queries: Exit and Voice in Economic and Political Life

In his classic Exit, Voice, and Loyalty Albert Hirshmann suggested that “voice” and “exit” are the two basic responses to organizational problems. When someone is dissatisfied with an organization, they can either express their dissatisfaction (voice) or try to leave (exit). Whether one takes one or the other course of action depends both on the relative costs of voice and exit (sometimes voice is punished, or exit is difficult) and on the strength of “loyalty.” (More loyal people may forgive faults in the organization more easily, though they may also prefer complaining to leaving). But these responses are not independent of one another: if lots of people “exit” an organization, the efficacy of voice is typically reduced, partly because the possibilities for coordinating are also reduced (though under some conditions, exit can serve as a “signal” that temporarily enhances “voice”: for a modern example taken from the dissolution of the GDR, see this earlier post). By contrast, a lack of exit options seems to boost voice; in more economic terminology, when the cost of exit relative to voice is low, exit will be the predominant response to dissatisfaction with an organization and vice-versa.

Now, democracy can be roughly conceptualized as a form of voice in organizations. Democracy is, to be sure, more than voice; for one thing, democratic voice is always at the very least formally equal (one person one vote, for example), and those with voice in a democratic organization are supposed to include the vast majority of its members. But for most of the history of the state, political voice of any kind did not really exist (at least not much – there are always exceptions); the usual response to oppression appears to have been “exit,” as James C. Scott documents in his The Art of Not Being Governed. Yet this was only possible because the pre-modern state had a limited reach: one could always take to the hills if one did not like the current ruler.

First query. Could one then argue that modern political democracy was made possible by the greater difficulty of exit in the modern state system? There does seem to be a correlation between the development of the modern state system and the emergence of institutions of voice, though this correlation is typically explained in terms of the “taxation bargains” that monarchs had to strike with their subjects; but what if the key parameter here is the increasing cost of exit from the state system? (The increasing wealth of state spaces relative to nonstate spaces may also play a role here.) And could democracy become less common if exit from the state system became more easily available? (This could take many forms: the emergence of more “ungoverned spaces” like the hills of Yemen, or the success of projects like “seasteading”). Does anybody know of work in this vein?

Second query. I did some reading on the Yugoslav workers’ councils for the post below, and it struck me as odd that similar organizational forms are not more popular in market economies. (The councils appear to have been quite popular while they lasted, despite their limited autonomy). Sure, “voice” exists in firms as labor unions, “codetermination” arrangements, “company unions,” and other such things; and I’m sure there’s a ton of literature on this problem, but I was idly wondering if the structure of a competitive capitalist economy hinders the development of voice within organizations because it lowers the cost of exit for the worker. In a well-functioning market economy, the dissatisfied worker can often go to another job, so voice might seem less important (though perhaps where workers have scarce skills, the costs of both voice and exit are lowered; the total effect might be indeterminate). Conversely, should we expect that in economies where unemployment is high or in firms where workers do not have scarce skills, exit costs would be higher, thus boosting the prospects for voice? (But perhaps the weaker bargaining position of workers there would increase the costs of both exit and voice, so that the overall effect would depend). Any pointers here? 

Third query. Is there a "moral reason" for preferring voice to exit? That is, should one work for voice even where exit is easily available? Or are voice and exit perfect "moral substitutes"?