Organizations and economics

Richard Adelstein

Journal of Institutional Economics, 2010, vol. 6, issue 1, 39-45

Abstract: Judge Posner (2010) identifies organizational economics with the principal-agent problem and offers no definition of the crucial term organization, which leads him to force the principal-agent template on social formations that are not organizations and to neglect aspects of their operation that might be illuminated by alternative conceptions of organizational economics. This response offers an explicit characterization of organizations as central planning agencies, considers Posner's examples in light of the problems of purpose, information, and control faced by all central planners, and draws upon an emerging capabilities theory of organizations to extend the scope of Posner's analysis and suggest insights beyond those that flow from the principal-agent approach.

Date: 2010
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