Chuck:
> Well, the complex, technologically advanced economy known as the USA--or
> however broadly you want to define it these days--is unsustainable. All
> anarchists maintain that it is possible to organize a complex society
> based on anarchist ideas. I won't rehash all of those arguments here,
---- snip ------
Of course, the above argument is not that radical, and it is not that much different form the notion of self-organizing free markets led by the invisible hand to the nirvana of Pareto optimum.
The counterargument, perhaps most fully outlined by Oliver Williamson (_Markets and Hierarchies_ - warning, the writing style is atrociously boring), is that as the level of market complexity increases, so do the transaction costs. Hierarchies (i.e. vertically integrated organizations) reduce these transaction costs (e.g. by streamlining information flow, eliminating legal disputes among agents, etc.) and thus offer a more efficient and thus preferred solution to self-organizing free agents under that condition.
John Kenneth Galbraith proposed a somewhat similar argument suggesting that corporations are better equipped to produce public goods because they are shielded from market competition and instability.
Others (cf. Charles Perrow, _Complex organizations_) counter that these transaction cost savings are illusory for two reasons. First, hierarchies introduce transaction cost of their own (e.g. managerial incompetence or malevolence) or shifting avoidable losses through a shell game. Specifically, if an independent agency becomes economically inefficient, it simply goes out of business, but if that agency is a part of hierarchy - the hierarchy must absorb the cost of reassigning that agency to different tasks or departments (shell game) in addition to the loss produced by its inefficiency.
The bottom line is that these issues have been extensively discussed in organizational literature and there are compelling arguments both for and against complex organizations. These arguments are difficult to test empirically, however, because of the absence of the counterfactual i.e. an observable social condition with comparable level of complexity but without hierarchical organizations managing that complexity. So the point you are raising is really an act of faith, similar to a belief that when one dies one goes to heaven. That may or may not be true - provided we know what heaven or complex society without complex organizations is - but we cannot verify or falsify that empirically.
Wojtek