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.

Photo: Getty Images/Carl Court
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Nigel Farage: welcoming refugees will lead to "migrant tide" of jihadists

Ukip's leader Nigel Farage claims that housing refugees will allow Isis to smuggle in "jihadists".

Nigel Farage has warned that granting sanctuary to refugees could result in Britain being influenced by Isis. 

In remarks that were immediately condemned online, the Ukip leader said "When ISIS say they will flood the migrant tide with 500,000 of their own jihadists, we'd better listen", before saying that Angela Merkel, the German Chancellor, had done something "very dangerous" in attempting to host refugees, saying that she was "compounding the pull factors" that lead migrants to attempt the treacherous Mediterranean crossing.

Farage, who has four children, said that as a father, he was "horrified" by the photographs of small children drowned on a European beach, but said housing more refugees would simply make the problem worse. 

The Ukip leader, who failed for the fifth successive occassion to be elected as an MP in May, said he welcomed the prospect of a Jeremy Corbyn victory, describing it as a "good result". Corbyn is more sceptical about the European Union than his rivals for the Labour leadership, which Farage believes will provide the nascent Out campaign with a boost. 

 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.