Economic Coordination Across Divergent Institutional Frameworks: Dissolving a Theoretical Antinomy

Abstract

Economic theory contains a significant theoretical antinomy. Markets are thought to secure coordination in self-organized fashion. In contrast, polities are portrayed as securing coordination through planning and administration. Doing this is to commit what Mitchel Resnick (1994) calls the “centralized mindset,” which is to attribute an observed order to some ordering agent. This paper seeks to dissolve this theoretical antinomy by explaining how the same coordinative principles are at work throughout a society. All societies operate in generally coordinated fashion, due to the operation of transactional processes within societies. Markets and polities both operate through transactional relationships, though political transactions are constructed somewhat differently than market transactions. This paper sets forth an approach to explaining coordination throughout a societal ecology where that coordination is achieved through different forms of transaction.

Keywords: economic coordination; self-organized systems; entangled political economy; invisible hands and fingers

JEL Classification: D23, D73, H44, L32