Wednesday, 1 May 2013

The Austrian economics of organisations

Theories of the firm and other organisations found in modern economies are not the strong point of Austrian economics. The Austrian have a much better developed theory of markets which focuses on production, exchange and consumption by individuals interacting in commercial markets. It is only in recent times that Austrian economists have attempted to open the "black box" that is organisations.

Nicolai J. Foss, Peter G. Klein and Stefan Linder offer us a survey of the Austrian appracoh to organisations in their new working paper Organizations and Markets. The abstract reads,
Austrian economics focuses on markets, but has much to say about organizations. In particular, Austrian insights on the structure of production, the heterogeneity and subjectivity of resources, the nature of uncertainty, the role of monetary calculation, and the function of the entrepreneur provide solid foundations for a distinctly Austrian theory of organizations. We review these insights, discuss recent literature on Austrian economics and the theory of the firm, and suggest new directions for developing and extending an Austrian approach to organizations.

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