“The mark of a capitalistic society is that resources are owned and allocated by such nongovernmental organizations as firms, households, and markets. Resource owners increase productivity through cooperative specialization and this leads to the demand for economic organizations which facilitate cooperation. When a lumber mill employs a cabinetmaker, cooperation between specialists is achieved within a firm, and when a cabinetmaker purchases wood from a lumberman, the cooperation takes place across markets (or between firms). Two important problems face a theory of economic organization—to explain the conditions that determine whether the gains from specialization and cooperative production can better be obtained within an organization like the firm, or across markets, and to explain the structure of the organization.”

—  Harold Demsetz

Source: Production, information costs, and economic organization. 1972, p. 777, Lead paragraph

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Harold Demsetz7
American economist 1930–2019

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“The mark of a capitalistic society is that resources are owned and allocated by such nongovernmental organizations as firms, households, and markets. Resource owners increase productivity through cooperative specialization and this leads to the demand for economic organizations which facilitate cooperation. When a lumber mill employs a cabinetmaker, cooperation between specialists is achieved within a firm, and when a cabinetmaker purchases wood from a lumberman, the cooperation takes place across markets (or between firms). Two important problems face a theory of economic organization—to explain the conditions that determine whether the gains from specialization and cooperative production can better be obtained within an organization like the firm, or across markets, and to explain the structure of the organization.”

Armen Alchian (1914–2013) American economist

Source: Production, information costs, and economic organization. 1972, p. 777, Lead paragraph

N. Gregory Mankiw photo

“Economics is the study of how society manages its scarce resources. In most societies, resources are allocated not by an all-powerful dictator but through the combined actions of millions of households and firms.”

N. Gregory Mankiw (1958) American economist

Source: Principles of Economics (1998-), Ch. 1. Ten Principles of Economics; p. 4

“Management as an activity has always existed to make people’s desires through organized effort. Management facilitates the efforts of people in organized groups and arises when people seek to cooperate to achieve goals.”

Daniel A. Wren (1932) American business theorist

Source: The evolution of management thought, 1972, p. 11-12 (in 1972 edition)

“Management as an activity has always existed to make people’s desires through organized effort. Management facilitates the efforts of people in organized groups and arises when people seek to cooperate to achieve goals.”

Arthur G. Bedeian (1946) American business theorist

Daniel A. Wren & Arthur G. Bedeian (1972: 11-12); as cited in: Le Texier, Thibault. "The first systematized uses of the term “management” in the eighteenth and nineteenth centuries." Journal of Management History 19.2 (2013): 189-224.

Harold Demsetz photo

“Business firms, in which controlled cooperation takes place, are the first important implication of costly transactions. The laissez-faire filtering process, using the profit test, selects some of these business organizations for survival and rejects others.”

Harold Demsetz (1930–2019) American economist

Source: Economic, Political, and Legal Dimensions of Competition. 1980, p. 25

Herbert A. Simon photo

“Organizations are systems of coordinated action among individuals and groups whose preferences, information, interests, or knowledge differ. Organization theories describe the delicate conversion of conflict into cooperation, the mobilization of resources, and the coordination of effort that facilitate the joint survival of an organization and its members.”

Herbert A. Simon (1916–2001) American political scientist, economist, sociologist, and psychologist

Simon (1993. p. 2); Cited in Mario Catalani, ‎Giuseppe F. Clerico (1996) Decision making structures. p. 1.
1980s and later

F. E. Smith, 1st Earl of Birkenhead photo

“I have read the Liberal programme. They talk of cooperation between employer and employed. That is not the problem. There is no use in cooperating when there is no work to be done. There is no use in imposing capital levies upon a capital which every year dwindles and disappears. … The problem that awaits the people of this country is to increase the markets within which their goods can find employment, and you will never increase those markets until you have enabled our working people on equal terms and our manufacturers on equal terms to deal with the working people and manufacturers of the world.”

F. E. Smith, 1st Earl of Birkenhead (1872–1930) British politician

Speech to the Constitutional Club (20 November 1923), quoted in The Times (21 November 1923), p. 17

“When a firm chooses to allocate its most valuable resources away from clients and to young stars, the economic consequences are real and visible.”

Jay W. Lorsch (1932) American organizational theorist

Lorsch & Thomas J. Tierney (2002), Aligning stars, p. 73

N. Gregory Mankiw photo

“The circular-flow diagram offers a simple way of organizing the economic transactions that occur between households and firms in the economy. The two loops of the circular-flow diagram are distinct but related. The inner loop represents the flows of inputs and outputs. The households sell the use of their labor, land, and capital to the firms in the markets for the factors of production. The firms then use these factors to produce goods and services, which in turn are sold to households in the markets for goods…”

N. Gregory Mankiw (1958) American economist

N. Gregory Mankiw, Brief Principles of Macroeconomics. 2011, p. 24-25
2000s -

“Property rights, governance structures and rules of exchange are arenas in which modern states establish rules for economic actors. States provide stable and reliable conditions under which firms organize, compete, cooperate and exchange. The enforcement of the laws affects what conceptions of control can produce stable markets. There are political contests over the content of laws, their applicability to given firms and markets, and the extent and direction of state intervention into economy. Such laws are never neutral. They favor certain groups of firms.”

Neil Fligstein (1951) American sociologist

Source: Markets as politics: A political-cultural approach to market institutions, 1996, p. 657

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