A reader of The Economist responds to a piece from a couple weeks ago weighing the efficiencies of intra-firm transactions vs. arm's length business in the market. Corporations really exist, the writer says, because society needs the equivalents of barons and margraves from 1,000 years ago to offer protection and dole out resources to the overseers and peasants. Interesting analogy. Know any CEOs who comport themselves like dukes or duchesses?

You could argue that at least in feudalism the loyalty worked both ways. But that probably wasn't as much the case as Hollywood would have us believe. The barons had their versions of downsizing and layoffs. Ever heard of enclosures?

SIR – There is a simple answer to the question “why do companies exist at all?” (Economics focus, October 17th). Corporations are organised and run in the same hierarchical, non-democratic manner that feudal societies were. The lord provides protection and defence so the workers can produce without fear of raiders taking their life’s bread. In exchange, the lord gets a percentage of the production. Today’s companies provide that same trade-off, giving their workers job security in exchange for the profit from their productivity. When there is a good balance of productivity and services between the lords and the workers, the system is mutually beneficial.

One could argue that we still live in feudal societies as the dominant organisation in most people’s lives is the company they work for.

Dennis Merritt
Asheville, North Carolina