Abstract
Since all the social sciences deal with human organizations, (families, bureaucracies, tribes, corporations, armies), the term ‘organization theory’ appears in all of them. What has distinguished the economists’ pursuit of organization theory from that of sociologists, of political scientists and of psychologists (say those psychologists working in the field called ‘organizational behaviour’)? First, the real organizations that have inspired the theorizing of economists are the economy, the market and the firm. Second, economists, with their customary taste for rigour, have sought to define formally and precisely the vague terms used in informal discourse about organizations, in such a way as to capture the users’ intent. They have sought to test plausible propositions about organizations — either by proving that they follow from simple, reasonable and precisely stated assumptions, or (rarely) by formulating the propositions as statements about observable variables on which systematic rather than anecdotal data can be collected, and then applying the normal statistical procedures of empirical economics. (Here we shall only consider testing of the first type.) Third, much of the economists’ organization theory is not descriptive but normative; it concerns not what is, but what could be. It takes the viewpoint of an organization designer. The organization is to respond to a changing and uncertain environment. The designer has to balance the ‘benefits’ of these responses against the organization’s informational costs; good responses may be costly to obtain. In addition, the designer may require the responses to be incentive-compatible: each member of the organization must want to carry out his/her part of the total organizational response in just the way the designer intends.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Bibliography
Barone, E. 1908. The Ministry of Production in the collectivist state. In Collectivist Economic Planning, ed. F.A. von Hayek, London: Routledge, 1935, 245–90.
Dobb, M.H. 1940. Political Economy and Capitalism. New York: Macmillan.
Hayek, F. von. (ed.) 1935. Collectivist Economic Planning. London: Routledge.
Heal, G. 1986. Planning. In Handbook of Mathematical Economics, Vol. III, ed. K.J. Arrow and M.D. Intriligator, Amsterdam: North-Holland.
Hurwicz, L. 1960. Optimality and informational efficiency in resource allocation processes. In Mathematical Methods in the Social Sciences, ed. K.J. Arrow, S. Karlin and P. Suppes, Stanford: Stanford University Press.
Hurwicz, L. 1971. Centralization and decentralization in economic processes. In Comparison of Economic Systems, ed. A. Eckstein, Berkeley: University of California Press.
Hurwicz, L. 1972. On informationally decentralized systems. In Decision and Organization, ed. C.B. McGuire and R. Radner, Amsterdam: North-Holland.
Hurwicz, L. 1972. On the dimensional requirements of informationally decentralized Pareto-satisfactory processes. In Studies in Resource Allocation Processes, ed. K.J. Arrow and L. Hurwicz, Cambridge: Cambridge University Press, 1977.
Hurwicz, L. 1986. Incentive aspects of decentralization. In Handbook of Mathematical Economics, Vol. III, ed. K.J. Arrow and M.D. Intriligator, Amsterdam: North-Holland.
Hurwicz, L. and Marschak, T. 1985. Discrete allocation mechanisms: dimensional requirements for resource-allocation mechanisms when desired outcomes are unbounded. Journal of Complexity, December.
Jordan, S.J. 1982. The competitive allocation process is informationally efficient uniquely. Journal of Economic Theory 28, January, 1–18.
Lange, O. 1936–7. On the economic theory of socialism. In On the Economic Theory of Socialism, ed. B. Lipincott, Minneapolis: University of Minnesota Press, 1938.
Lerner, A.P. 1944. The Economics of Control. New York: Macmillan.
Lindahl, E. 1919. Just taxation: a positive solution. In Classics in the Theory of Public Finance, ed. R. Musgrave and A. Peacock, London: Macmillan, 1958.
Marschak, T. 1986. Organization design. In Handbook of Mathematical Economics, Vol. III, ed. K.J. Arrow and M.D. Intriligator, Amsterdam: North-Holland.
Mount, K. and Reiter, S. 1974. The informational size of message spaces. Journal of Economic Theory 8(2), 161–92.
Samuelson, P.A. 1954. The pure theory of public expenditure. Review of Economics and Statistics 36, November, 387–9.
Walker, M. 1977. On the informational size of message spaces. Journal of Economic Theory 15(2), August, 366–75.
Williamson, O.E. 1975. Markets and Hierar chicies, Analysis and Antitrust Implications: a Study in the Economics of Internal Organizations. New York: Free Press.
Editor information
Copyright information
© 1989 Palgrave Macmillan, a division of Macmillan Publishers Limited
About this chapter
Cite this chapter
Marschak, T. (1989). Organization Theory. In: Eatwell, J., Milgate, M., Newman, P. (eds) Allocation, Information and Markets. The New Palgrave. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20215-7_23
Download citation
DOI: https://doi.org/10.1007/978-1-349-20215-7_23
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-49539-1
Online ISBN: 978-1-349-20215-7
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)