Abstract
The Austrian conception of coordination can be detached from the market context through which it is developed and used to understand governance and policy processes beyond the market. Hence, this chapter explores the potential for non-market, including political, processes to foster coordination. Firstly, with a focus on Amartya Sen’s contribution, establishing the normative grounds for governance evaluation, it is argued, can be viewed as a process of discovery analogous to the Austrian understanding of how coordination challenges are addressed. Then, drawing from a range of authors, the potential is explored for fostering coordination through various processes of democratic politics, policy delivery and organisation beyond the market. Austrian understandings of innovation, entrepreneurship and the significance of tacit knowledge in the face of uncertainty and complexity, it is suggested, are pivotal to fostering such various different kinds of non-market coordination.
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Notes
- 1.
- 2.
In a study of EU security policy, Faleg (2012) identifies cleavages between particular epistemic communities which disrupt policy coherence. The analysis by Adams et al. (2014) of spatial planning in the Baltic region finds that some professional communities are disconnected from the governance process that has consequently become fragmented, undermining policy coordination.
- 3.
Such partial agreements can, Sen suggests, be defined in terms of a ‘dominance partial ordering’ of alternatives, a concept that Sen illustrates by means of the following example: “if there are four conflicting views claiming respectively that the relative weight to be attached to x vis-à-vis y should be 1/2, 1/3, 1/4, and 1/5 there is, then an implicit agreement that the relative weight on x should not exceed 1/2, nor fall below 1/5” (Sen, 1992, p. 46).
- 4.
Nussbaum supports Rawls who argues that such an overlapping consensus need not actually exist at present but there must at least be a “plausible path” towards this (Nussbaum, 2011, p. 91).
- 5.
Note that it is beyond the scope here to seek to resolve this debate.
- 6.
Responding to Hayek’s critique of social justice, Raymond Plant had previously suggested a similar approach, asking: “Is it really the case in the UK that there is no agreement that income, health, nourishment and housing are not part of basic needs, or the generic conditions of action? If this is claimed it would be interesting to see the empirical evidence on which such a claim is based” (Plant, 1991, p. 82).
- 7.
- 8.
This is made clear in Wainwright’s reference to the socialist calculation debate (Wainwright, 1994, pp. 52–3) and her expression of sympathy with the departure from positivism evident in 1960s radical movements (Wainwright, 1994, p. 268). O’Neill’s more philosophically orientated work provides a detailed elaboration of this common conceptual ground that critics of the market might share with Hayek in departing from positivism (O’Neill, 2004). This was evident, for example, in the early models of central planning developed by socialist economists such as Oscar Lange and Abba Lerner, towards whom Hayek directed his critique in the socialist calculation debate. This was also evident in the tendency for Fabian and Bolshevik writings and practices to assume a central state as holding the knowledge required for achieving social goals.
- 9.
- 10.
This is typified in Hayek’s famous article ‘The Use of Knowledge in Society’ where, as discussed in Chapter 3, he uses examples of various forms of entrepreneurship to highlight that economic knowledge is often tacit in character such as the shipper and the arbitrageur.
- 11.
Langlois (1992), whose work is situated within the Austrian tradition, had earlier highlighted the potential for an Austrian analysis of social and governmental organisations. This potential seems to have since remained largely untapped.
- 12.
Note that Hayek’s understanding of coordination through markets is not as reductionist as suggested by Wainwright in particular. Wainwright overlooks how Hayek’s conception of market coordination does at least allow a place for the communication and discovery of knowledge by economic actors within the firm, even though, as she points out, his work lacks discussion of this important social dimension of coordination. Hayek does tend to emphasise that it is the plans of the many individuals across society that are coordinated through markets (e.g. Hayek, 1945, pp. 83–89). However, this clearly does allow for the possibility of multiple individuals formulating and delivering plans together through direct communication and cooperation. Hence, in Law, Legislation and Liberty, Hayek (1973, p. 46) states that “(t)he family, the farm, the firm, the corporation and the various associations, and all the public institutions including government, are organizations which in turn are integrated into a more comprehensive spontaneous order.”.
- 13.
Ober’s discussions draw particularly from a case study of participatory democracy in Ancient Athens. While recognising the significance differences between democracy and markets, he comments that participatory democracy behaves more like a market than a planning board (Ober, 2008, p. 18).
- 14.
A similar point is made, though more implicitly, by Samuel De Canio (2014). He points out that elections and markets share some analogous features, involving competition for profits and votes respectively, while emphasising the epistemic problems faced by electoral processes in particular as a way of determining resource allocation. More recently, Aligica et al. (2019) refer to the potential for Hayekian concepts to be applied to understanding the non-market sphere, though their primary focus is upon the Ostroms, as discussed in Chapter 6.
- 15.
In contrast with his view of entrepreneurial expertise in the economic sphere, Hayek sees the role of the politician as being to reflect established opinion rather than to engage in the development of innovative ideas (Hayek, 1960). Indeed, Hayek tended to view politicians as an impediment to, rather than a facilitator of, coordination. For example, he writes: “The successful politician owes his power to the fact that he moves within the accepted framework of thought, that he thinks and talks conventionally. It would be almost a contradiction in terms for a politician to be a leader in the field of ideas” (Hayek, 1960).
- 16.
Schumpeter’s The Theory of Economic Development, published in German in 1911 and English in 1934, included a chapter devoted to social change. Schumpeter (1934, p. 86) understood the entrepreneur as engaging in creative construction, a generative activity focused on new combinations, in both social and economic realms.
- 17.
Schumpeter views most citizens as “infantile,” “primitive” and “irrational” (Schumpeter, 1954, p. 262). He comments that the public are capable of exercising rational judgement in their own private affairs such as their business dealings and personal lives. Indeed, voters can display a certain ‘definiteness of volition and rationality’ even in relation to some political matters, such as certain issues in local or even national politics that have a particular impact upon their own self-interest (Schumpeter, 1954, p. 260). However, in relation to most issues that arise in national and international politics, Schumpeter writes, the public’s “sense of reality is completely lost,” resulting in a “reduced sense of responsibility” and “the absence of effective volition” (Schumpeter, 1954, p. 261). Hence, Schumpeter’s proposed model of the political process is one largely driven by political leaders, upon whom any form of collective action is dependent. He argues that we should drop the idea of ‘government by the people’ and ‘substitute for it government approved by the people’ (Schumpeter, 1954, p. 246). Numerous critics have since strongly objected to this (Held, 1996, pp. 193–5).
- 18.
In articulating this line of thinking, Schumpeter (Schumpeter, 1954) emphasises that the “competitive struggle for the people’s vote” (Schumpeter, 1954) can serve as an important mechanism for achieving this reconciliation. Just as businessmen deal in oil, he remarks, politicians deal in votes (Schumpeter, 1954).
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Greenwood, D. (2023). Coordination Beyond the Market. In: Effective Governance and the Political Economy of Coordination. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-30383-8_5
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