"Market Leninism" within companies

Ross Mayfield, CEO of the corporate wiki company SocialText, has a deeply insightful post on how web and open source technologies create more choice inside companies, and how that leads to better decisions. This is the best sentence in the piece, and you could build a PhD on quantifying and understanding the implications in it:

I often think of institutions as making the transition from Marxist Leninism to Market Leninism, although they at least believe in internal markets to drive down transaction costs, and external markets as the reality that keeps them in check.

It helps to have a little background in Coase's theory of the firm (about minimizing transaction costs) and that old business school quiz about why it is that democracy and capitalism can be the best systems for countries, while most companies operate on an internal system of Soviet-style command-and-control totalitarianism (short answer: countries exist for the good of their people while companies exist to achieve a shared purpose, which is determined by their leaders).

Ross's point is that social software is a way to bring more market-driven (which is not to say necessarily democratic) efficiencies inside companies. It doesn't happen overnight, however:
But that control instinct is deeply rooted, perhaps all the way to the psychological insecurities we all have as individuals. It is hard to trust that more democratic decision making processes can result in better outcomes.

Originally posted by Chris Anderson here