“But the point, as I argued with Caplan, is not that managers are inherently less intelligent or capable as individuals. Rather, it’s that hierarchical organizations are—to borrow that wonderful phrase from Feldman and March—systematically stupid. For all the same Hayekian reasons that make a planned economy unsustainable, no individual is “smart” enough to manage a large, hierarchical organization. Nobody–not Einstein, not John Galt–possesses the qualities to make a bureaucratic hierarchy function rationally. Nobody’s that smart, any more than anybody’s smart enough to run Gosplan efficiently–that’s the whole point. No matter how insightful and resourceful they are, no matter how prudent, as human beings in dealing with actual reality, nevertheless by their very nature hierarchies insulate those at the top from the reality of what’s going on below, and force them to operate in imaginary worlds where all their intelligence becomes useless. No matter how intelligent managers are as individuals, a bureaucratic hierarchy makes their intelligence less usable.”

Homebrew Industrial Revolution (2010), Chapter 7.
Homebrew Industrial Revolution (2010)