by
Pascal Salin,
Professor, Université Paris-Dauphine
Frédéric Bastiat - of whom we have just celebrated the 200th birthday - has not devoted much attention to the problem of the firm and it could seem strange to devote attention to the thoughts of Frédéric Bastiat about such a topic [1]. Yet, there is at least one very path-breaking text - chapter XIV of Harmonies économiques - in which one may find anything he needs to lay the foundations for a realistic theory of the firm (and, more generally, of the distribution of human activities). And the way he does it is both original and profound. We first recall the approach presented by Frédéric Bastiat (section I), then develop it in section II and, finally, draw some practical and theoretical consequences, particularly about the nature of the firm, along these same lines (section III).
The wage-earning system has been particularly attacked by socialists. They have nearly denounced it as a slightly soft version of slavery or serfdom. In any case, they have considered it as an undue and dominating convention which does not rest on freedom except apparently, as the oppression of the strong over the weak, the tyranny of capital over work"(Frédéric Bastiat, "Des salaires", chapter XIV of Harmonies économiques [2]).
As so many statements by Frédéric Bastiat this sentence seems surprisingly modern and we may find in it a reminder of the marxist vision according to which wage-earners are sweat by capitalist entrepreneurs, and working relations are basically asymmetrical.
On the contrary, Bastiat's approach is based on a correct view of human nature and it consists into a dynamical analysis of the emergence of the wage-earning system. However, it could seem strange that the most part of the chapter about wages does not address precisely the problem of wages and, therefore, the problem of the firm. But much cleverly Frédéric Bastiat prefers to make a comparison between the specific role of wages and other human phenomena. So doing, he demonstrates that the existence and the role of wages cannot be understood but by refering to a more general theory of human action in society. The process by which there is a differentiation of roles inside the firm is exactly the same as the one which induces people to buy and sell insurance or to pay and receive interest payments.
Thus, Frédéric Bastiat is analyzing some of the reasons
why individuals cooperate not only by exchanging bilaterally
but by creating associations.
One important reason is the existence of risk.
Whenever risk is too high, individuals find
that it is profitable to create a mutual insurance organization
by which each member accepts by contract to bear
a given portion of the damages incured by other members.
In such an organization each member plays exactly the same role
(except that each share is different from the other
if the values of the insured properties are different).
Such an organization is created just because each member of the mutual fund
prefers a low risk with a high probability
to a very high risk with a lower probability.
As Frédéric Bastiat puts it:
Fixity is very attractive for people.
However, when considering the nature of men and of their activities,
it seems that fixity is not compatible with it.
Therefore they get more fixity by associating together.
Such a reasoning is straightforward.
Now, there is a very interesting point
in the explanation of Frédéric Bastiat
which is a real contribution
to the understanding of human activities in society.
He stresses that everyone - even socialists -
agree about the benefits of associations as a means to share risks.
But, he adds
It is only to such arrangements
that socialists give the name of association.
As soon as speculation appears, according to them, the association disappears.
According to me (Bastiat says), it is improving...
.
Thus, according to socialists, as soon as a speculator - a profit-seeker - is introduced in an association, its very spirit and its very justification vanish. According to Bastiat, on the contrary, the capacity of the association to complete its goals is enhanced. Taking a dynamic view of the development of human activities, Bastiat thus imagines that some entrepreneur - or some company - comes to the group of mutual insurance members and tells them the following:
By mutually insuring each other,
you have wanted to buy your quietness;
and the undetermined quota which you save each year
to cope with calamities is the price paid for such a valuable good.
But you can never know this price in advance;
therefore your quietness is not complete.
Now! I come to propose you a new process.
At the cost of a fixed annual insurance premium which you will pay to me,
I take all the risks of your possible damages;
I insure all of you and here is the capital which makes certain
that I will honor my promise.
Thus, Bastiat assumes that an entrepreneur comes to the mutual members and proposes to them this new arrangement. He could have assumed as well that the mutual members look for an entrepreneur and make this arrangement. From a practical point of view it is likely that it is easier for one person (or the representatives of a company) to decide to meet the numerous members of the mutual fund rather than the reverse: It is a logical implication of the theory of collective decision. However, from a theoretical point of view, it does not matter at all whether the negociation between the entrepreneur and the mutual fund member have been initiated by one or the others. This a way to underline that there is a fundamental symmetry in the arrangement, as in any contractual arrangement: The final arrangement ought to be the same whether an individual chooses to cooperate through contract with a group of individuals or whether several individuals decide in common to negociate with him and to sign such an agreement. In the real world, neither the first nor the second assumption prevail. Usually, the team of workers - the mutual organization - does not exist before the entrepreneur. Rather, a potential entrepreneur is constituting the team of workers according to his project, by "hiring" isolated workers who did not know each other. But, once more, this not a substantial aspect of the problem. In any case, the relations between all of them are exactly the same.
The members of the association agree to pay a little more than their normal share in order to get perfect safety and mind stillness. According to socialists, says Bastiat, there is no more association since an intermediary has introduced himself between the associates. But, he argues, there is no fundamental change, except that the associates have found a way to remain in the association without having to care about its management. As regards the entrepreneur he brings two sorts of services: He takes away from the associates any remaining element of risk and he takes care of the management of the association. As in any exchange, both parts to the exchange, given their differences in capacities and tastes, benefit from their specialization, which makes exchange possible. And Frédéric Bastiat stresses the voluntary - and therefore beneficial - character of this contractual arrangement. And he adds, "Thus transformed, the association is on the way of all sorts of new improvements".
Having explained, from the example of insurance,
how purely contractual arrangements made possible
for individuals to better organize social cooperation
and to better manage the inherent risks of life,
he is able to make a generalization of his approach
to all sorts of human activities.
Thus, it is possible to better understand
the specific role of each kind of income (wage, profit, interest)
and, therefore - even if Frédéric Bastiat does not say so explicitly -
the working of the firm.
According to Frédéric Bastiat
it is because of the same prejudices and the same ignorance
that (socialists) steadily claim against interest or against wages,
which are fixed and therefore very elaborate forms
of the returns obtained by capital and labor.
It is because of this fallacious approach of socialists
that wage-earners wanted to get rid of the wage system
and to replace it by some sort of association,
as if association and wage were incompatible
.
This mistrust in wages and in the wage system
may seem overcome in our time,
but, in fact, we just find it under other forms.
It certainly inspires marxists,
since they describe the entrepreneur
as someone who is in such a power position
that he can extract part of the return which ought to be obtained by workers
as a counterpart to their productive contribution to the firm output.
The idea according to which only workers (wage-earners) are productive,
whereas the entrepreneur is a sort of parasite
which extracts resources from the community of workers,
has more explicitly inspired
all experiments and proposals about worker management.
But this approach is also present nowadays
for instance whenever one disagrees with what is called
"the fair sharing of output" at the micro or macro level,
which implies that the wage-earners ought to receive a part of profits.
Following the example given by Frédéric Bastiat let us assume that a team of workers does exist. It can transform into a capitalist firm by two means:
In any case the firm newly created, through the transformation of the team of workers, is nothing else than a set of contracts. As such its creation is necessarily beneficial to all, as is any contract which has been freely agreed upon by contractors. By substituting a more complex set of contracts - the firm - to a simpler one - the team of workers - those who contract reveal that they consider the new set as beneficial for all of them. It is obvious that in some cases, they may have done the wrong choice and they may regret it, but this is not the problem: At the time they have accepted the new set of contracts, they have seen it as beneficial. However, the fact that, all over History, men have rather selected the set of contracts known as a firm, rather than any other one, may be a proof that they have learnt from experience that it was the most efficient set for all of them.
There are two justifications for this differentiation of roles, as Frédéric Bastiat had correctly seen it: A better organization of the productive process and a better distribution of risk-taking. Let us consider each of them successively.
In order to better analyze the improvements thus introduced by firms, let us first consider a purely imaginary situation by assuming that there is no uncertainty. Let us also assume that we are initially in a pure exchange economy, without any economic organization. Each individual is endowed with primary resources and his own productive capacities (his mind). He transforms the ressources he owns or the ones he got by exchange and he sells his output, if ever he does not want to consume it or to invest it by himself. His customer in turn transforms what he bought and, possibly, sells the output, etc. For instance, to build a car, in such a case a worker would build a chassis, would sell it to some other worker who would add a body, and sell the product to another one who would add an engine, etc.
But to increase productivity and therefore the income of each member of this productive chain, a team organization is probably desirable.
a) If the productive process is simple and the team is small, self-organization is possible. The members of the team organize themselves, allocating a specific task to each of them according to their respective abilities. However a problem will certainly appear as soon as the common product of the team has to be allocated. If the allocation is decided after the production has taken place, there is a great probability that producers will not agree unanimously about the share of each of them. One may assume that they will anyhow accept some distribution of the output, in spite of their initial disagreement, for instance by deciding some "democratic" process of decision: In order to maintain peaceful relations inside the team, all members accept it, although it may create an unfair distribution of wealth. But there is also a great risk that the decisions about the respective return obtained by each member of the team be the outcome of the use of constraint: The strong wins against the weak (which is the case of a socialist organization of production). The risk involved with such decision processes induces people to be more reluctant in engaging into team production.
The best way to obtain a peaceful and agreed-upon distribution of the over-all return implies that the members of the team agree on distribution rules before production takes place. They set a contractual order between them. Thus, economic calculation is possible and distributional risks are eliminated [3]. This solution is beneficial for people since, as Frédéric Bastiat wrote, men like fixity. In fact, they are certainly not ready to buy fixity at any price, but in the present case, the cost is probably very small and it is therefore worthwhile to accept it. In fact, the costs are mainly negotiation costs. The members of the team have to discover supplies and demands for the various possible qualifications of members. There is certainly no reason for all shares to be equal. The shares will finally depend on the contribution of each member of the team and on the relative scarcity of his precise ability.
Thus, a system of cooperation, based on a set of contracts, has replaced a series of bilateral contracts and exchanges. It makes possible for the members of the team to sell their services rather than their output. Each of them sells his labor services to a collective entity and receives a share of the common output which has been agreed upon in advance. It is clear that the improvement in productivity thus came from an institutional change allowing a more complex and more abstract set of contracts.
The share of the common production received by a producer can be called a wage, but saying he is now a wage-earner - instead of a productive team member - is only a - possibly unuseful - specification of his more general status: He is a producer, who acts and trades.
b) Now if producers are numerous and if the productive process is complex, self-organization is impossible and the members of the team - the wage-earners - will have interest in looking for an organizer, as was suggested by Frédéric Bastiat. We may call him a manager, but it would be premature to call him an entrepreneur, since we have assumed for the time being that there is certainty, so that no producer has to care about risk-taking. According to their comparative advantage, the producers of the firm specialize either in this general management task or in another more specific one. Thus, a differentiation of roles is introduced in the firm, but it would be wrong to interpret it as an asymmetry: The manager is not at the top of some hierarchical organization, giving orders to people with a lower status. All of them are different, but they are equal in the sense that they have equal rights. A contract cannot exist if the co-contractors are not different, but their differences do not and cannot imply any asymmetry. In the case of the firm the manager and the other workers sign contracts with the abstract entity called the firm - which, in fact, is the collectivity of members - nd they are both under the same type of relations. From this point of view we may as well say that the manager hires the other workers or say that the workers hire a manager. It is not substantial to the understanding of the working of the firm to decides who hires whom. Or it would be preferable not to use any term as "to hire" and to be satisfied with saying that the individuals are contractors, they are partners in exchange and they get part of the output. We may imagine that, historically, in one case, the manager looks for workers and "hires" them and that, in another case, the workers look for a manager and "hire" him, but the result is exactly the same: There is an agreement between all of them for a given specialization of each one.
We may also imagine two different practical arrangements:
Both arrangements are perfectly identical whenever there is no risk. But the important point is that such a set of contracts never constitutes a command system, even in the second case in which the workerssell their services to the manager. Thus, semantic confusions are introduced when one says that the manager (or, later on, the entrepreneur) "hires" the workers (he just buys their services); or when one says that there is a hierarchy in the firm, with the manager giving orders to the workers. A hierarchy would imply a command system, i.e. a system in which relations are unilateral. It is the case with relations between the men of the state and citizens: The former gives orders to the later ones and he has to be obeyed because he can use constraint. But it cannot ever be the case if relations are based on free contracts, which is the case of the firm. From this point of view, it is fallacious to describe a firm as an organization structured by a hierarchy. Thus, the managers are not at the top of some hierarchy. They just have a different and more complex role than other participants.
Now, in any contract, there is a necessity for each contractor to control others in order to make sure that everyone does fulfil his specific obligations. It is therefore necessarily true in a firm. As an example let us consider the case in which workers sell their services to a manager. Under this system the control is easy for the workers: They just have to make certain that the manager is paying the wages which had been agreed upon. But the control is far more difficult for the manager because of the great number and the high diversity of services he buys. Therefore, the manager must devote much more time and attention to control the other workers than these latter ones do. This differentiation of roles and monitoring tasks gives the impression that there is a hierarchy. But, let us repeat it, the manager is not a commander-in-chief of an army of workers. A well-functioning capitalist firm incorporates control procedures, but no hierarchical relations. And it could even be said that the capitalist firm has been invented because it is not a hierarchical system.
Let us leave now the purely hypothetical case of a firm without uncertainty. To quote Frédéric Bastiat again, men like "fixity" (or are risk-adverse). Therefore, they are ready to pay for the services consisting of suppressing uncertainty. As is well known, the entrepreneur is precisely the one who takes the risk: As the value of the firm production is uncertain, he promises a fixed wage in advance to the wage-earners and he gets the residual income, which is named profit. The wage-earners accept to get lower potential incomes, but they get certainty in exchange. They could have decided to determine in advance the share of the total output obtained by each worker, without knowing exactly the value of this output. But, as History has proved, they usually prefer to transfer the risk to someone who is specialized in this specific service: Providing certainty. In the same way as the insurer - analyzed by Frédéric Bastiat - is paid for providing a safety service, the workers accept to let an unknown part of the common output to the risk-taker. As any contractual arrangement, such an arrangement is beneficial for both parties, since the workers buy more safety at the expense of a possible lower gain (but also, possibly, a lower loss) and the risk-taker gets a more or less important return by selling safety services.
It could certainly be imagined that the manager and the risk-taker be two different persons. But there is an important reason for the same person to play both roles: No one would accept to take the risk of production without having the possibility to monitor the production process. Meanwhile there is thus more incentives for the manager to control the production process efficiently and to innovate, since his returns depend on his own decisions.
Since the entrepreneur plays both roles, what we said previously about the relations between the wage-earners and the manager still holds: The entrepreneur does not become a chief in a hierarchical structure just because he adds a role of risk-taker to his role of manager. In no case is a firm built along the lines of a command system. It remains a set of contracts under any circumstances.
The entrepreneur, who is both a manager and a sort of insurance company, is also a capital-owner, as had been well emphasized by Frédéric Bastiat who stressed that, in order to be acceptable as insurer, an entrepreneur must own a capital which makes possible for him to guarantee that he will honor his contracts and which attracts confidence from the other contractors.
Saying that the entrepreneur is the owner of the firm means that he owns part of the present means of production and rights on future profits. As an owner he can sell the firm, i.e. sell a complex set composed, for instance, of capital goods, the specific organization he has implemented, the specific contracts he has signed.
The traditional definition of the firm as a set of contracts is important and correct. Numerous consequences can be derived from this very definition.
As we already stressed, contracts exist because people are different and differentiation does not mean asymmetry, which can only exist in a command system, i.e. a system in which some people can impose their power to others by exercizing some constraint [4]. Relations are unilateral in a command system, they are bilateral in a contractual system.
Now, individual goals are all different and cannot be compared. This adds one reason for asymmetry not to exist in a free society: As there is no way to make comparisons between the different actions of free people, it is impossible to consider that any free relation be asymmetrical (i.e. that it benefits more to one than to the other). On the contrary, when people act under the power of constraint, it is quite clear that one looses and the other gains, which means that there is an asymmetry. As a consequence, there cannot be asymmetries in a capitalist firm [5]. In turn, this has various implications:
a) It is wrong to say that "profit is the goal of a firm", as is usually assumed in microeconomics textbooks, but, also, as it is stressed by socialists who use this traditional idea to attack the capitalist firm, under the pretext that the whole functioning of a firm tends to create beneficial results only for some individuals, namely the owners of the firm.
In fact, a contract or a set of contracts cannot have a goal, since only individuals have intentional activities. In reality, those who sign contracts have different and even diverging goals: certainly the entrepreneur looks for profit, but, may be, for other goals, such as prestige or curiosity. The wage-earners probably look for high wages, a pleasant working environment, etc. We do not know these various goals and we do not need to know them. Traditional microeconomics use a reducing approach with a single, arbitrary variable (the maximization of profit). But there is no other conceivable maximization than the maximization of individual utility [6].
There is a plurality of goals in a firm because there is a plurality of individuals. Their goals are diverging and even opposite. One fundamental role of the entrepreneur, as an organizer of social cooperation, is then to make these goals consistent one with the other. One may even consider as likely that a firm cannot work efficiently if this diversity of goals is not taken into consideration.
b) A hierarchy exists in the organizations of a communist society (for instance what is wrongly called a firm in such societies) or in a family-based society, it does not exist in a capitalist one. The boss and the managers are not giving orders to wage-earners; they play their role, as organizers, for the mutual benefit of all (wage-earners and entrepreneurs). But they play this role more or less efficiently and in many cases they may create the illusion of a command society: There are bad entrepreneurs as there are bad wage-earners. However, the existence of orders coming from the top and going to the lower levels is not a substantial characteristic of a firm. The fact is that there are firms in which orders are never given. In short, even if many managers behave as if they were in a command system, a capitalist firm cannot be defined or described by the existence of orders and hierarchy. Analyzing the nature of the firm implies not to consider accidental features and to look for its very substance.
c) The previous analysis of the firm constitutes an answer to the usual prejudices about the respective interests of wage-earners and share-holders. The leftists have a static and single-minded approach: They consider that what the entrepreneur gets is at the expense of the wage-earners, because they have not fully understood the wealth creating process and the coordination role of the firm. And when they object at considering profit maximization as the only target of the firm, they do it for bad reasons: They do not object at attributing a will to a collective entity - for instance a firm - but they consider that "the firm" has to take account not only of the interests of profit-earners, but also of wage-earners. From this wrong interpretation of the very nature of the firm, come all the fashionable ideas, for instance those opposing "social logics" to "financial logics", but also claims for a better firm governance. The idea according to which decisions in a firm must be taken not only by share-holders, but also by stake-holders is inspired exactly by the same fallacious ideas. It is quite true that the interests not only of different categories (for instance wage-earners and share-holders), but more fundamentally of all individuals in the firm are different. But the capitalist firm has precisely been selected as the only way to make all these interests and targets compatible. It is this important message which is completely ignored by all the fashionable streams of thought and political decisions [7].
d) Let us come back to the problem of differentiation and symmetry of rights, which we have already mentioned. In a contractual arrangement, individuals have the same rights, but they have different goals and capacities, which does not create an asymmetry: There are differences, but rights are the same for all, which mean that there is a symmetry. But, as regards the working of firms, language is quite often creating confusions. If there is a symmetry in a social reality - as is the case for contracts - then the same symmetry has to exist in language. It is not the case because the language to which we are used is more or less contaminated by Marxian-type concepts.
For instance, if one says that "an employer hires an employee", one ought also to say that "an employee hires an employer". If one says that "an employer fires an employee", one ought also to say that "an employee fires an employer" (when he leaves a firm). But the usual language impliictly suggests that the employer can decide unilaterally to hire or to fire.
And if labor laws do exist it is just because it is assumed that an inescapable asymmetry does exist between the employer and the employee. Thus, to compensate this supposed asymmetry, many labor laws make much more difficult for employers to fire wage-earners than for wage-earners to "fire" their employer (they are more or less free to leave the firm). Surely, different people have different capacities to act (For instance, it may be more or less easy to find a new job when being fired). But it does not imply that there much be an asymmetry in rights.
One may even argue that the entrepreneur has to bear some specific constraints, so that those we believe in the existence of asymmetry ought to consider that he ought to benefit from a better protection of his rights. In fact he is trapped into his firm: If the firm fails, he looses all his past investments in time and savings, whereas the wage-earners leave and take their human capital with them. If ever someone had to be protected - which, obviously, is not the case - why would it not be the entrepreneur? In reality the specific protection of wage-earners cannot meet any rational explanation. It is nothing but the result of the working of the democratic system: Wage-earners are more numerous than entrepreneurs and they create a legal system which - at least they believe - works in favor of their interests.
e) A correct understanding of the nature of the firm leads to the rejection of any proposal in favor of worker participation and/or profit-sharing. The participation of workers to strategic decisions is contrary to the distribution of roles according to comparative advantage which is one of the foundation of the capitalist firm. The participation of wage-earners to profits is also a contradiction since individuals are wage-earners just because "they like fixity". Sharing profits with them is as absurd as sharing profits with lenders would be (since they have decided to be lenders and not share-holders, because they do not want to take risks). And if ever the wage-earners want to be both wage-earners and share-holders, they are always free to buy shares on the market.
This certainly means that it is foolish to create a legal obligation in favor of participation. But contractors must always be free to decide any sort of contract and, for instance, entrepreneurs mays be free to give an employee both a fixed wage and some participation to profits. It is exactly what happens with stock-options. They exist because it creates incentives for those who participate into strategic decisions to take the good decisions. Thus, stock-options are sometimes considered by share-holders as the best way to monitor the managers. But it is obvious that holding a share would not modify the behavior of a low qualification worker in a big firm. This is the reason why stock-options are attributed to a limited number of wage-earners.
Explaining the limits between the firm and the outside market is a traditional problem (which could be called the "Coase problem"). In fact, if - as most economists believe - the market is "efficient", why does the firm exist? Thus, if a firm was to be ever-growing, it would embrace all the world activities so that planning would be substituted to market. And planning cannot work. But if planning cannot work at the worl level - or at any country level - why should it work at the firm level ?
In fact it is clear that, under this traditional statement, one finds the implicit assumption according to which the firm is a non-market organization. But, the traditional approach of the nature of the firm is not correct because a firm is not a planning system, i.e. a system in which those who have power give orders to others and in which there are no prices. A firm is a system of contracts and, as such, it is a market system.
To understand the working of various human systems the best is not to refer to the market, since the market always exists, as far as exchange exists. One ought rather to focus on the following questions: Are there free contracts (and not constraint); how are property rights defined, are they legitimate and accurate, etc.?
A free society is not a market economy, it is a society of legitimate rights and free contracts. As is well known, coordination between individuals is made through the price system, the use of traditions and general rules. In many cases - pure exchange economy - individuals do not need anything else. But in many other cases some process of organization has to be added and is considered as better. Then, coordination implies cooperation through some process of collective decision. This process is collective in that limited sense that the concerned individuals explicitly agree about some common rules or ways to behave and act. It does not mean that the organization by itself thinks and acts.
Such is the case with associations (mutual funds, condominiums, etc.). By entering freely into an association, a team, a firm, an individual agree not only to pay his fee or to sell his services, but also to cooperate with others according to some specific rules which exist or which are to be developed.
In a firm, as in an association, individuals thus share something in common, which may give the impression that the organization has its own life, its goals, its existence. As an example what is named a "firm culture" is not an objective reality, but it is the result of more or less common perceptions. In fact, it may even be more correct to say that there exists not only one single culture in a firm, but several ones. Whenever this feeling of sharing something in common fades away, individuals may end their agreement and "leave" or, let us say, "fire" the firm.
As was so well stressed by Frédéric Bastiat, socialists favor associations because they view them as collective entities. They celebrate associations as a superior alternative to capitalism (but they quite often use them, in fact, as unofficial parts of the state, getting subsidies and lobbying to get privileges).
Libertarians are certainly in favor of associations since they know human nature and know that individuals are social beings. But they also know - as has been so well emphasized by Frédéric Bastiat - that firms are the most perfect forms of associations.
Notes:
[1]
A previous version of this paper has been presented
at the Conference
"2001, Bastiat's Odyssey",
Cercle Frédéric Bastiat,
The International Society for Individual Liberty,
Libertarian International,
Dax, July 3rd 2001.
This paper has also been published in the
Journal of Libertarian Studies,
summer 2002 issue.
[<-]
[2]
All the quotations from Frédéric Bastiat in the present paper
are extracted from this chapter (our translation).
(Ed.: The chapter is available both
in French and
in English on the Internet
from bastiat.org and
econlib.org.)
[<-]
[3]
When assuming - as we did for the time being - that there is no risk,
we assumed that everyone does know the value of the final product.
But the absence of distribution rules in a process of collective production
introduces a distributional risk.
[<-]
[4]
"There are two different kinds of social cooperation:
cooperation by virtue of contract and coordination
and cooperation by virtue of command and subordination or hegemony"
(Ludwig von Mises, Human Action)
[<-]
[5]
Similarly it is debatable to say that information is asymmetrical.
Different individuals choose to get different informations.
[<-]
[6]
From this point of view,
economists such as Frédéric Bastiat or Ludwig von Mises
are far superior to sophisticated authors
of mathematical books of microeconomics.
[<-]
[7]
Thus cooperation
- which implies the explicit organization of inter-individual relations,
as is the case in the team organization to which we refered previously -
is only one possible form of coordination.
The other form could be named "spontaneous order",
as suggested by Friedrich Hayek.
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