Cognitive foundations of economic institutions: Markets, organizations and networks revisited

Jannis Kallinikos

Scandinavian Journal of Management, 1995, vol. 11, issue 2, 119-137

Abstract: The present article discusses the trade-offs between markets, organizations and networks in terms of the cognitive means and the values underlying them. It is claimed that the regulative ability of the market is inextricably bound up with the numerical codification of economic activity supported by the utilitarian world view. Numerical objectification and utility constitute the ontological prerequisites for the creation of marketable objects. Modernity coincides with the transformation of markets from places to set of functions or mechanisms. It is this way that the market overcomes the limitations of context-embedded exchange and becomes a major form of regional, national and global socio-economic coordination. Organizational relationships on the other hand are heavily dependent upon the medium of natural language, escaping thorough numericalization and retaining a plurality of values. Formal organization can and needs to act on the world on the basis of ambiguous signals that resist quantification whereas the market collapses without quantifying techniques that assign numerical values, i.e. prices, to objects and activities. Networks reclaim the regulative power of communal dialogue freed from the cognitive closure of the market and the social rigidity of authority mediated relationships.

Keywords: Codification; exchange; epistemology; values; networks; markets; organizations; cognition (search for similar items in EconPapers)
Date: 1995
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