ANNUAL REPORT 2008–2009
We find “islands of conscious power in this ocean of unconscious co-operation like lumps of butter coagula ng in a pail of buttermilk.” But in view of the fact th t is usually argued that co-ordination will be done by he price mechanism, why is such organization neces ary? Why are there these “islands of conscious power”? utside the firm, price movements direct production which is coordinated through a series of exchange tran ctions on the market. Within a firm, these markets ransactions are eliminated and in place of the complicated market structure with exchange transactions ubstituted the entrepreneur co-ordinator, who directs production. It is clear that these are alternative meth institute for f co-ordinating production. Yet, having regard to the & economics act that iflaw production is regulated by price movemen production could be carried on without any organizati t all, well might we ask, why is there any organization
A Joint Research Center of the Law School, the Wharton School, and the Department of Economics in the School of Arts and Sciences at the University of Pennsylvania