I think you're missing something very important when you talk about the centralized planning in companies:
Failure.
A toaster company doesn't have to get it all right in order for toasters to be produced. It merely has to come close enough that someone else realizes that a toaster is a good idea, tweaks some features, and does it better. Eventually we end up with a working toaster, even if 99.9% of toaster companies didn't produce a working toaster.
It also helps that the toaster company can rely on the metal-casing company already have gotten most of that right, and the heating-element company having gotten most of that right, and the timer coming having gotten most of that right. It doesn't have to start from scratch for every component of the toaster, only the toaster-ish ones.
The difference between governments and corporations is that corporations can fail. When they can't (eg. Citigroup, GM, and AIG in the current financial crisis), central planning in a corporation is every bit as harmful as central planning in the government. But most of the time, when a corporation fails, other people pick up the pieces, tweak them a bit, and try again with a newer and better corporation. Hell, most of the time the newer and better corporation comes along first and makes the outdated one fail. (See: Toyota vs. GM, Google vs. Microsoft, Microsoft vs. IBM, etc.)
When a government fails, usually lots of people die. At the very minimum, there's lots of misery and uncertainty.
You could argue that one of the greatest things about the U.S. government is its ability to tolerate failure without bringing down the whole government. When a president royally screws things up, like the last one did, he's out in eight years, there's a peaceful transition, and someone new picks up the pieces. Could you imagine something like that happening in Castro's Cuba, Saddam's Iraq, or Communist Russia? For most of history, the modus operandi of governments has been to continue growing in power until they're so big they can't do anything but fail, then have a bloody revolution where the new radicals throw out everything the old guard did - even the parts that worked - and start from scratch. It's hard to make progres like that.
* The ideal size of corporations is an interesting subject. If central planning is so bad, why are some companies so huge? Why do companies get big if small is better? Why aren't we all just individual contractors, rather than employees?
* Free trade is generally seen as 'good' by economists, but a move in that direction may not be a Pareto improvement; i.e. while everyone is generally better off, there may be some people made (significantly) worse off. Technology improvements are the same way: people may be better off using computers than typewriters, but not typewriter repairmen. One strategy to mitigate the worst effects of this would be a bit of redistribution from all the winners, to the losers. Everyone is thus better off than before the move to free trade, or new tech, and the losers have some cushion to fall back on. Of course this presents problems of its own and is a long and complicated debate.
I agree. Though I doubt that the modus operandi you described was prevalent. For most of histories external power struggles (including war) served a check on inefficencies of governments.
For most of history, the modus operandi of governments has been to continue growing in power until they're so big they can't do anything but fail, then have a bloody revolution where the new radicals throw out everything the old guard did - even the parts that worked - and start from scratch.
To be fair, a lot of pre-democratic government structures weren't that bad at handling power transition. Either there was a generally-acknowledged official line of succession, or some kind of council of noblemen who were officially responsible for choosing the king's successor, or some combination of the two. Of course, kings back then also had more practical (if not constitutional) limitations on their power than Saddam had on his power.
Failure.
A toaster company doesn't have to get it all right in order for toasters to be produced. It merely has to come close enough that someone else realizes that a toaster is a good idea, tweaks some features, and does it better. Eventually we end up with a working toaster, even if 99.9% of toaster companies didn't produce a working toaster.
It also helps that the toaster company can rely on the metal-casing company already have gotten most of that right, and the heating-element company having gotten most of that right, and the timer coming having gotten most of that right. It doesn't have to start from scratch for every component of the toaster, only the toaster-ish ones.
The difference between governments and corporations is that corporations can fail. When they can't (eg. Citigroup, GM, and AIG in the current financial crisis), central planning in a corporation is every bit as harmful as central planning in the government. But most of the time, when a corporation fails, other people pick up the pieces, tweak them a bit, and try again with a newer and better corporation. Hell, most of the time the newer and better corporation comes along first and makes the outdated one fail. (See: Toyota vs. GM, Google vs. Microsoft, Microsoft vs. IBM, etc.)
When a government fails, usually lots of people die. At the very minimum, there's lots of misery and uncertainty.
You could argue that one of the greatest things about the U.S. government is its ability to tolerate failure without bringing down the whole government. When a president royally screws things up, like the last one did, he's out in eight years, there's a peaceful transition, and someone new picks up the pieces. Could you imagine something like that happening in Castro's Cuba, Saddam's Iraq, or Communist Russia? For most of history, the modus operandi of governments has been to continue growing in power until they're so big they can't do anything but fail, then have a bloody revolution where the new radicals throw out everything the old guard did - even the parts that worked - and start from scratch. It's hard to make progres like that.