Organizations in Networks Flashcards
Public Administration in Today's World of Organizations and Markets Herbert Simon (2000)
Why, in a modern society, do we have markets, and why do we have organizations, and what determines the boundary between these two mechanisms for social organization? Markets and organization allow humans to do together, through interchange of information and the ensuing coordination of activity, things they could not do independently. The most peculiar characteristics of markets, Adam Smith’s invisible hand, is their ability to secure coordination without obvious central planning, and without a common interest among their members, for each buyer and seller is supposed to be pursuing independently his/her own private interest. Organizational design focuses on balancing the gains from coordination against its costs, and this design includes the special contracts between the organization and its participants. In an environment of evolutionary change and natural selection, nearly decomposable systems will adapt to the changing environment and gain in fitness more rapidly than systems without this property. If complex systems must operate in a constantly changing environment, or in competition with other systems that are changing, they must modify their structures at a corresponding pace.
Public Administration in Today's World of Organizations and Markets Herbert Simon (2000)
The most important role markets play in modern society is to diffuse power by holding organizations, through competition, to the tasks of providing efficiently the things demanded in the markets, thus preventing them from using their resources as power bases for extending their social influence and control by direct influence upon government. Maintaining economic equilibrium cannot be left to the invisible hand, it requires governmental attention. The introduction of markets without the coincident introduction of socially enforced rules of the game for the operation and the simultaneous creation of viable and effectively managed organizations cannot create a productive economic system. Public attitudes about the fair allocation of income are necessarily and justifiably a major factor in determining the scope and nature of public organizations in society.
