Alien Visualization QOTD: Herbert Simon on Organizations and Markets

Cosma Shalizi has a breathtaking analysis of the computational impossibility of a perfectly planned central economy, inspired in part by Crooked Timber’s forum on the novel Red Plenty, a work of historical (science) fiction about central planning. In the essay, which I cannot recommend highly enough, Shalizi cites a 1991 Herbert Simon article to make a point about the central place of large organizations in actually existing socialist and capitalist economies. Here’s the delightful quote:

Suppose that [“a mythical visitor from Mars”] approaches the Earth from space, equipped with a telescope that revels social structures. The firms reveal themselves, say, as solid green areas with faint interior contours marking out divisions and departments. Market transactions show as red lines connecting firms, forming a network in the spaces between them. Within firms (and perhaps even between them) the approaching visitor also sees pale blue lines, the lines of authority connecting bosses with various levels of workers. As our visitors looked more carefully at the scene beneath, it might see one of the green masses divide, as a firm divested itself of one of its divisions. Or it might see one green object gobble up another. At this distance, the departing golden parachutes would probably not be visible.
No matter whether our visitor approached the United States or the Soviet Union, urban China or the European Community, the greater part of the space below it would be within green areas, for almost all of the inhabitants would be employees, hence inside the firm boundaries. Organizations would be the dominant feature of the landscape. A message sent back home, describing the scene, would speak of “large green areas interconnected by red lines.” It would not likely speak of “a network of red lines connecting green spots.”

How brilliant? As an extended metaphor, it makes much the same point as Perrow’s phrase “society of organizations”, but nicely contrasts that society with the image we have of living in a market society. Also, according to Shalizi, Simon was color-blind, which makes the quote even more impressive!

Comments are closed.
%d bloggers like this: