Around the Web

  1. Beyond Authenticity: ISIS and the Islamic Legal Tradition
  2. Le Corbusier’s Visions for Fascist Addis Ababa
  3. What can the Left learn from Friedrich Hayek?
  4. Assassins of the Mind
  5. How Argentina ‘Suicides’ the Truth

14 thoughts on “Around the Web

  1. “…largely accepts Hayek’s claims that knowledge is dispersed and cannot be centralised, but she argues that Hayek mistakenly treats knowledge as ‘an individual attribute, rather than as a social product’. Understood socially, knowledge can be shared by people taking action to overcome the limits of their individual perspectives. Wainwright’s work is full of examples of organisations – trade unions, women’s groups and co-ops – that have come together to pool knowledge in order to solve collective problems that cannot be solved by the market or by remote bureaucrats.”

    I would catalog this under “What libertarians can learn from sociologists” 😉

    • Ha!

      I think sociologists and libertarians are largely talking past each other. I think the Left, collectively, is unwilling to delve into the implications of understanding libertarianism because it’s afraid it might turn into libertarianism. For example, Wainwright’s critique, while better than most from the Left, of Hayek’s “knowledge” argument doesn’t actually grapple with Hayek’s knowledge argument. Even in Hayek’s polemical, mass-produced work The Road to Serfdom there is an explicit acknowledgement that non-market organizations are necessary for a free and open society (same goes for Milton Friedman and Ludwig von Mises and Rick here at NOL).

      The difference between the two is that libertarians don’t view these non-market organizations as result of market failure (which the Left does). Libertarians view these non-market organizations as brilliant, spontaneous reactions to institutional snags that prohibit markets from functioning in these non-market areas. (So trade unions, for example, are formed in response to both uncompetitive labor markets [largely the result of protectionism or state-sponsored discrimination a la Jim Crow] and monopolies or oligopolies [largely the result of rent seeking].)

      Once Leftists come to terms with this, they have no choice but to become libertarians. Hence its collective intransigence.

    • “The difference between the two is that libertarians don’t view these non-market organizations as result of market failure (which the Left does).”

      Transactions cost economists certainly view organizations as the result of market failure; Oliver Williamson won a Nobel prize for his work on so-called ‘Markets & Hierarchies’. They have a more robust model of market failure than ‘institutional snags’. If “The Left” has a coherent theory of market failure I’m not sure what it is. Can you give me an example?

    • Transactions cost economists certainly view organizations as the result of market failure;

      Hmm.

      It was my understanding that Williamson and Co. view ‘market failure’ in a much different way than other social scientists and activists. Williamson & Co. argue that ‘market failure’ is something that occurs within organizations, such as when incentives fail to make employees at a firm more productive. (For anyone still following along: Here is a nice pdf of Williamson’s famous paper. Pages 114-122 and especially Part E ‘Institutional Adaptations’ are what I focused on.) As one of the founders of Institutional Economics, Williamson was aware of the “institutional snags” I mentioned, so his work focused on sections of the firm where markets purportedly failed.

      Williamson’s work has absolutely nothing to do with understanding Wainwright’s co-ops, trade unions, and other organizations created to counter so-called market failures. At least that was my understanding of Williamson’s argument. You’re the biz school professor so hopefully you can add to my thoughts.

      If “The Left” has a coherent theory of market failure I’m not sure what it is. Can you give me an example?

      Of a coherent theory? No. But if you want examples of incoherent theories just open up an Econ 101 textbook and you’ll find what you’re looking for. (Tyler Cowen’s textbook is a notable exception, from what I’ve heard.)

  2. In general Williamson, Teece etc talk about both market failure and organizational failure. Transactions tend to be organized in the way that minimise transaction costs. Sometimes markets are better, some times organizations [hierarchies] are. It’s interesting when the factors change dynamically. There are intermediate forms [eg relational contracting] that I find fascinating and that’s where my academic work has been the last 15 years or so.

    “Williamson’s work has absolutely nothing to do with understanding Wainwright’s co-ops, trade unions, and other organizations created to counter so-called market failures.”

    Heh. My TCE colleagues at the University of Toronto would certainly argue with you about trade unions, they consider the exchange of labor for money and other incentives as an economic transaction. I’m inclined to agree with you about co-ops since they violate the boundary condition of ‘atmosphere’.

    • Oh I see where I went wrong. Thanks Dr A.

      I was reading a paper on organizational failure (even though the term “Market Failure” is in the title). Your response also forced me to read some more Williamson, so I checked out a pdf of his Nobel speech (which gives a nice overview his work).

      After reading both those papers (or at least browsing through them carefully), I still don’t think Williamson & Co. are making a case against market failure, or even acknowledging that it exists. I think their definition of “market failure” (which I could not find in either of those papers, btw) is very different from the one used by textbook-writing economists (whose arguments for “market failure” I was initially lampooning, and rightly so!).

      TCE’s seem to take a ‘markets and hierarchies’ view of the world rather than a ‘markets or hierarchies’ view (I am basing this off of the two papers I just read). The former is quite in line with libertarian thought while the latter is Leftist. It seems to me that a ‘markets and orgs’ approach by definition debunks “market failure” as an explanation for the world. If it’s and rather than or then both these polarities (to use Williamson’s description of markets and hierarchies) are part of something broader, which makes them less polar than we’d like to think. Right?

      It is this ‘something broader’ that I am tempted to label as ‘the market’.

    • “TCE’s seem to take a ‘markets and hierarchies’ view of the world rather than a ‘markets or hierarchies’ view…”

      Yes. Not to mention the intermediate forms of governance I find so interesting. As for the definition of ‘failure’ [both organizations and markets] it’s simply not being the form of governance that optimizes transactions costs. Organizational sociologists like me see lots of other stuff going on but the TCE framework is pretty much taken for granted.

    • Fascinating.

      Can you provide a good intro paper to “the intermediate forms of governance”?

Please keep it civil

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s