Governments and the macro-organization of economic activity: an historical and spatial perspective

Abstract

This article has two main tasks. The first is to trace the lineage of academic writings since the time of Adam Smith, on the respective roles of markets, hierarchies, inter-firm alliances and governments as modes of organizing economic activity in a capitalist economy; and, also, to analyze why, and in what ways, economists, political scientists and organizational theorists have differed in their interpretation of the optimal role of governments. The second is to examine the implications of the internationalization, and more recently the globalization, of economic activity for the governance of resource creation and deployment, and the extent to which national administrations and supranational regimes need to modify their agendas and policy prescriptions in the light of the growing mobility of many tangible and intangible assets. The article will further argue that changing patterns of demand and technological advances - especially as they have impacted on the coordinating and transaction costs of value added activity, and on the institutions and cultural infrastructures underpinning such activity have critically affected the merits of alternative modes of economic organization; and that, over the years, the optimal combination of these modes has undergone a marked change.

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