Coordination of Economic Actors and Social Systems of Production

Abstract

This volume addresses several distinctive but interrelated problems. First, it is very much concerned with identifying the various institutional mechanisms by which economic activity is coordinated, with understanding the circumstances under which these various mechanisms are chosen, and with comprehending the logic inherent in different coordinating mechanisms. Throughout Eastern and Western Europe as well as in North America during the 1980s, there was a dramatic shift toward a popular belief in the efficacy of self-adjusting market mechanisms. Indeed, the apparent failure of Keynesian economic policies, the strains faced by the Swedish social democratic model, and the collapse of Eastern block economies led many journalistic observers to argue that capitalism is a system of free markets that has finally triumphed. Some added that the more pervasive the market could become, the more impressively national economies would perform. Paradoxically, during the same period, there was a rapidly accumulating theoretical literature that demonstrated that markets were not ideal mechanisms for coordinating transactions among actors when either the quality of products is uncertain, increasing returns to scale prevail, most future contingencies are uncertain, or there is a multitude of repetitive transactions within a truly decentralized monetary economy. Moreover, there has been increasing evidence that the market as a coordinating mechanism does not lead to the best economic performances in industries whose products have technologies that are very complex and change very rapidly (Campbell, Hollingsworth, and Lindberg, 1991; Chandler, 1977; Hollingsworth, 1991a; Hollingsworth, Schmitter, and Streeck, 1994; Piore and Sabel, 1984; Sabel and Zeitlin, 1985, 1996; Williamson, 1975, 1985). In short, the basic features of most modern economic activity point to the importance of coordinating mechanisms alternative to markets.

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