The Review of Austrian Economics

, Volume 18, Issue 1, pp 55–82 | Cite as

Knowledge and Power in the Mechanical Firm: Planning for Profit in Austrian Perpsective

  • Richard Adelstein


This essay draws on the transaction costs model of the firm and an Austrian perspective on the knowledge problem in centrally planned orders to propose an empirically useful Austrian theory of central planning. After an initial review of existing theories of the firm, part two develops insights from the calculation debate to sketch a theory of planning centered on the interrelated problems of purpose, information and control in both individual and central planning. Part three joins this theory to the basic framework of the transaction cost model to produce an Austrian theory of the private firm that addresses the relation between knowledge and power in planned orders, and illustrates its principal themes through a discussion of the historical development of American manufacturing in the fifty years prior to World War I.


theories of the firm production contracts central planning systems scientific management 


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Copyright information

© Springer Science + Business Media, Inc. 2005

Authors and Affiliations

  1. 1.Department of EconomicsWesleyan UniversityMiddletownUSA

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