Book contents
- Frontmatter
- Contents
- List of tables and figures
- Series editors' preface
- Acknowledgments
- Introduction
- PART I WHY HAVE HIERARCHY?
- 1 Market failures and hierarchical solutions: The tension between individual and social rationality
- 2 Bargaining failure: Coordination, bargaining, and contracts
- 3 Voting failure: Social choice in a dictatorial hierarchy
- PART II MANAGERIAL DILEMMAS
- PART III COOPERATION AND LEADERSHIP
- Epilogue: Politics, rationality, and efficiency
- References
- Name Index
- Subject Index
1 - Market failures and hierarchical solutions: The tension between individual and social rationality
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- List of tables and figures
- Series editors' preface
- Acknowledgments
- Introduction
- PART I WHY HAVE HIERARCHY?
- 1 Market failures and hierarchical solutions: The tension between individual and social rationality
- 2 Bargaining failure: Coordination, bargaining, and contracts
- 3 Voting failure: Social choice in a dictatorial hierarchy
- PART II MANAGERIAL DILEMMAS
- PART III COOPERATION AND LEADERSHIP
- Epilogue: Politics, rationality, and efficiency
- References
- Name Index
- Subject Index
Summary
Every team member would prefer a team in which no one, not even himself, shirked.
Alchian and Demsetz (1972: 790)Virtually everyone agrees that working in hierarchies is at times unpleasant. Yet most people in the twentieth century spend most of their time in hierarchical organizations – supervising subordinates or being supervised by their own superiors.
This was not always the case. In the early nineteenth century, most economic activity was carried out in small cottage industries consisting of individual tradesmen and a small number of apprentices. Even our largest federal bureaucracies were only loosely hierarchical, with most postmasters and land agents working as individuals miles from the nearest “supervisor” and showing a marked tendency to set their own policies (Crenson 1975). Most economic activity took place among individual farmers, buyers, wholesalers, importers, and exporters (Chandler 1977).
Today, most of our goods are produced by large corporations instead of individual wheelwrights or weavers, and even our food is produced in large part by agribusiness. Law enforcement is provided by a large hierarchy instead of the night watchman, and education is provided by another bureaucracy instead of the individual in a one-room schoolhouse (Knott and Miller 1987). Yet there is a good deal of unhappiness with hierarchy, centering around doubts concerning both its efficiency and its effect on individual autonomy or liberty. While concerns about government efficiency and intrusions on individual liberty are an ongoing theme in U.S. society, similar doubts have begun to be voiced about corporate bureaucracies.
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- Chapter
- Information
- Managerial DilemmasThe Political Economy of Hierarchy, pp. 19 - 35Publisher: Cambridge University PressPrint publication year: 1992