Valve Software: free marketeer's dream, or nightmare?

The first anti-cap software company.

Valve Software's chief economist, Yanis Varoufakis, has a post up detailing the strange corporate structure of the company, famous for its string of hits from the Half Life and Portal series to Counterstrike and Team Fortress, as well as its mammoth digital distribution network Steam.

The whole post is fascinating as an introduction to the area of economics known as theory of the firm, but the really interesting part is his description of how the famously hierarchy-free company is actually practicing the free market even within the workplace.

If you work in Valve, you are given a desk with wheels, and told to spend all of your time on projects of your own choice. Obviously at the extremes, there is still control – if "projects of your own choice" means spending every working hour laying down slap bass grooves for your funk garage bank, you'll probably be asked to find employment elsewhere – but the company is serious about what it says. If an engineer on Steam wants to contribute to a marketing piece about Portal 2, they can. The company is fastidious about hiring all-rounders, and an earlier profile of the "Valve method" contains the killer explanation

The first thing you should know here is that Gabe [Newell] is on top, and there are 249 people below him. That’s the whole hierarchy

That number has gone up now – to around 400 people – but the pattern remains the same.

Some might be tempted to describe this collective model of the company as the ultimate example of anarchist organisation in action, but Varoufakis sees it as the exact opposite: a rare entry of free market ideals inside the corporation, which is normally – indeed, according to the arguments of Roland Coase, definitionally – an area characterised by the absence of market principles. 

Varoufakis writes:

Each employee chooses (a) her partners (or team with which she wants to work) and (b) how much time she wants to devote to various competing projects. In making this decision, each Valve employee takes into account not only the attractiveness of projects and teams competing for their time but, also, the decisions of others. The reason is that, especially when insufficiently informed about projects and teams (e.g. when an employee has recently joined Valve), an employee can gather much useful information about projects and teams simple by observing how popular different projects and teams are (a) with others in general, (b) with others whose interests/talents are closer to their own.

Just like in a marketplace, everything in Valve is in flux. People move about (making use of their desk’s wheels), new teams are formed, new projects are concocted. All this information is observable by the naked eye (one notices an empty spot where David’s desk used to be, and then finds out that David moved to the 4th floor to work with Tom, Dick and Harriet), on the company’s intranet, in cross-team meetings where teams inform each other on what they are working on). People learn constantly, both by observing and by doing, the value to them of different projects and teams. These subjective values keep changing, as the time and team formation signals that are emitted by everyone else are updated.

So the perfect anarchist collective is actually the perfect capitalist corporation? Maybe, maybe not. The crucial thing about Valve's "market" is that it doesn't actually use money. Although much of the advantages of a real market can be analogised over to this system, it loses some pretty crucial aspects. If you are bidding with your time and attention, although others may try to win you round, you can't horde your time; can't distort the market; can't turn your holdings into power. Can't, really, do anything except use that time throughout the working day as you see fit. 

Analogising the company to a market economy may show where the efficiency actually stems from, but it doesn't make the methods involved capitalist - they are anything but.

The logo of Valve software.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Would you jump off a cliff if someone told you to? One time, I did

I was walking across the bridge in Matlock park, which is about 12 feet high, with a large group of other kids from my year, in the pouring rain.

Ever heard the phrase, “Would you jump off a cliff if they told you to?” It was the perpetual motif of my young teenage years: my daily escapades, all of which sprang from a need to impress a peer, were distressing and disgusting my parents.

At 13, this tomboyish streak developed further. I wrote urgent, angry poems containing lines like: “Who has desire for something higher than jumping for joy and smashing a light?” I wanted to push everything to its limits, to burst up through the ceiling of the small town I lived in and land in America, or London, or at least Derby. This was coupled with a potent and thumping appetite for attention.

At the height of these feelings, I was walking across the bridge in Matlock park, which is about 12 feet high, with a large group of other kids from my year, in the pouring rain. One of the cool girls started saying that her cousin had jumped off the bridge into the river and had just swum away – and that one of us should do it.

Then someone said that I should do it, because I always did that stuff. More people started saying I should. The group drew to a halt. Someone offered me a pound, which was the clincher. “I’m going to jump!” I yelled, and clambered on to the railing.

There wasn’t a complete hush, which annoyed me. I looked down. It was raining very hard and I couldn’t see the bottom of the riverbed. “It looks really deep because of the rain,” someone said. I told myself it would just be like jumping into a swimming pool. It would be over in a few minutes, and then everyone would know I’d done it. No one could ever take it away from me. Also, somebody would probably buy me some Embassy Filter, and maybe a Chomp.

So, surprising even myself, I jumped.

I was about three seconds in the air. I kept my eyes wide open, and saw the blur of trees, the white sky and my dyed red hair. I landed with my left foot at a 90-degree angle to my left ankle, and all I could see was red. “I’ve gone blind!” I thought, then realised it was my hair, which was plastered on to my eyes with rain.

When I pushed it out of the way and looked around, there was no one to be seen. They must have started running as I jumped. Then I heard a voice from the riverbank – a girl called Erin Condron, who I didn’t know very well. She pushed me home on someone’s skateboard, because my ankle was broken.

When we got to my house, I waited for Mum to say, “Would you jump off another cliff if they told you to?” but she was ashen. I had to lie that Dave McDonald’s brother had pushed me in the duck pond. And that’s when my ankle started to throb. I never got the pound, but I will always be grateful to Erin Condron. 

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser