The limits of the organization

Author: Kenneth Arrow (USA), translated by Wan Qian
Publisher:
Publish Date: 2006-03-01
Features: Even from a purely personal perspective, there is tension and contradiction between what we hope to achieve and what we ultimately can obtain, in terms of value and opportunity. A hermit on a high mountain might value warm clothing and, as if being urged, use leaves, bark, or animal hides to make clothes. However, when many people compete to meet their needs, it becomes increasingly difficult to learn how to utilize existing available resources. In this book, Nobel laureate Kenneth Arrow analyzes why and how humans organize their ordinary lives to overcome this fundamental economic problem: the allocation of scarce resources. The price system is a means to regulate competition and organize society. Professor Arrow further analyzes its successes and failures. The book explores other models used to achieve efficient resource allocation: government, internal company organization, and ethical morality as an "invisible institution." Professor Arrow demonstrates how these systems generate decision-making channels and also discusses the costs of information acquisition and recovery. He examines factors that determine which potential influencing variables will be recognized as actual influencing variables. Finally, he argues that organizations must strike a balance between the power of decision-makers and the obligations decision-makers have toward those who execute their decisions, i.e., a balance between authority and obligation.