David Strom

Koch synthesizes his insights into an intellectual structure he calls Market Based Management™. And while Koch delineates a coherent set of principles and benchmarks to aid the aspiring manager along the path to success, the basic principle is one that ought to be familiar to anyone who has lived through the triumph of market-based societies over socialist and fascist regimes: markets are a very powerful force, and when unleashed are unmatched at productivity and the improvement of the human lot.

Charles Koch’s great insight—the foundation of the amazing success of Koch Industries—is that this fact is as true within firms as it is in the economy as a whole. Using a competitive market model as a management structure unleashes the same forces as you see when market economies compete against planned economies.

And most large corporations are planned economies. Autocratic, intolerant of creativity and dissent, and run largely for the benefit of an elite few.

Looked at in this way, is it any wonder that a student of Austrian economists could run circles around the largest publicly-traded companies in the world? Matching Koch Industries up against a large publicly-traded company in today’s world is like matching up the Free World against the Socialist World. He couldn’t help out competing them, because his company was managed using Market Based Management™ (MBM).

My one quibble with the book, if you can call it that, is not so much with the substance of what Koch so generously teaches, but with his unspoken assumption that the tools he is giving us will be enough to vault us to success.

In other words, he takes too little credit for the success of Koch Industries. While it is true that his insights—if understood and acted upon by corporations—will revolutionize how business is done, it is also true that many of his readers will not be up to the task of implementing MBM. It would require the elites who benefit from the nearly socialist structure of today’s large corporations to yield power, and I fear that many will never do so.

It will be left to the disciples of Koch and Market Based Management™ to consign them to the dustbin of history through their superior productivity and success.


David Strom

David Strom is the President of the Minnesota Free Market Institute. He hosts a weekly radio show on AM-1280 "The Patriot" in Minneapolis-St. Paul, available on podcast at Townhall.com.

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