I grant your point re incompetence.
As for insanity, though; what if the majority shareholder is himself insane? Yes, there's a mechanism to replace him (someone buys his shares), which doesn't exist with hereditary monarchy, but if he's insane (which almost by definition means uninterested in maximizing revenue), he may well refuse: in which case the only option is a coup d'etat, as with an insane monarch.
Here are the drawbacks to the SovCorp, as I see it:
1. The very existence of multiple rulers (shareholders) creates a possibility for civil war which doesn't exist in a monarchy (the king can't fight a civil war with himself).
2. There are opportunities for cost externalization amongst the shareholders, and therefore skewed incentives. For example, suppose the majority shareholders, in addition to owning their shares in the SovCorp, also own BuildCo (a construction firm within the patch). When the SovCorp takes bids from contractors to build some new building, BuildCo isn't the low bid, but the majority shareholders accept it anyway. Why? The majority shareholders capture all of the benefits (all the additional profits to BuildCo), but bear only a
fraction of the costs (losses to the SovCorp), the rest of which are borne involuntary by the other SovCorp shareholders. This is, albeit on a much smaller scale, the problem with democracy - incentives are skewed such that it becomes rational for the rulers to govern badly.
I agree that it may not be possible to solve this problem a priori.
Devil's Advocate Says: "Isn't that the same argument the ancaps use to explain why PDAs wouldn't fight with one another?"
I tend to think that war would grow the state more than the absence of inter-state competition.
Not to mention the pure destructive potential of war, esp with modern weaponry.
True, though the problem is greatly reduced in a non-democratic system where the people aren't drawn into a public brawl every 4 years.
For the lifespan of that king, anyway.
...one of the nice features of monarchy in general; if things go south, just wait a while.
I don't see a technological problem, but there is an economic problem.
When the state is beyond a size that can be directly managed by the king, he has no choice but to delegate authority; but these appointed managers don't have the same good incentives that he does, and so they themselves require management: and eventually it's impossible for the king to manage even his appointee managers, and he loses effective control (with the quality of governance suffering as a result). Ordinary corporations face the same diseconomies of scale.
But there's a solution to the problem.
Instead of delegating authority to salaried officials (who don't have proprietary incentives to govern well), divide the kingdom into parcels and auction off the governorships thereof to the highest bidder. The governors would essentially be petty kings, managing local affairs on their own with all the proprietary incentives of the king himself: whose only task now would be to collect taxes from the governors, keep the peace between them, and make sure none of them get powerful enough to challenge him. The governoships would not be hereditary, they would be alienable like any other property, to encourage competition and higher quality governance. Further stimulate competition by using the Georgist land value tax as the method of taxing the governorships. This means they self-asses the value of their governorships, but are legally required to sell at that self-assessed price should anyone offer to buy at that price (ensures a fair assessment and provides a method of removing bad and stubborn governors who might not otherwise sell).
This looks like a form of feudalism or federalism, but it's crucially different in one respect. The governors have no formal rights whatsoever, no independent political power. The division of power here is only apparent. It's not that the governors are checking each other's power or that of the king (as per the classic understanding of feudalism or federalism), it is that the absolute king is
choosing to employ this pseudo-federal system as an
administrative technique in order to overcome the diseconomies of scale mentioned above. Why would he choose to do this? Precisely to increase his revenues: the same reason the king of a small state governing directly would govern well. Why do I want the king to have absolute power, in the hopes he chooses this system, rather than binding him to it through genuine federalism (where the constituent parts have formal and real power to resist him)? Because federalism is unstable (tends to either break apart in civil war or evolve into centralized government anyway - often as a result of civil war) , and skews incentives like every other political order in which power is divided (cost externalization etc).
Final thought - essentially, what I want is an absolute monarch, who is a revenue maximizer, and who understands economics, because he will
create a system like this, which ends up looking pretty much like
patchwork + an overlord whose job is to prevent wars between the patches (not because he "has to," says some constitution, but because he recognizes that it is in his own selfish interest to do so).
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