Organizing

Note: Edited for clarity.

John D Cook quotes Hayek in this post.

Man in a complex society can have no choice but between adjusting himself to what to him must seem the blind forces of the social process and obeying the orders of a superior.

I guess this is Hayek's answer to the question of just how many ways there are in which we can organize production. Coase assumes the same options in his writings about the nature of the firm, when he contrasts hierarchies and markets.

"Complex" is the key word. "Simpler" societies did have other ways of organizing these matters. For much of human history, we lived in a world without markets, where economic life was organized by means of convention and tradition. It is markets which are the real innovation, and as the work of Elinor Ostrom has shown, convention and tradition play a role even in wealthy societies today.

I certainly do not romanticize traditional societies, and I do think markets are preferable to bosses. Even if you are working for a boss, you are infinitely better off when there is a market for your work. However, reading that passage from Hayek could leave you with the impression that there are only two ways to organize economic life. There used to be more, and we may yet come up with others.

After all, it was Hayek who said that "the mind cannot foresee its own advance."