Coordination Failure in Market-Based Societies

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* Article: Breakdown of the capacity for collective agency: The leitmotif of our times. By Korkut Alp Ertürk. real-world economics review. Issue no. 62, 15 December 2012

URL = http://rwer.wordpress.com/2012/12/14/rwer-issue-62/

Abstract

"The essay argues that a crisis of collective agency is at the root of the global economic crisis we face today. The secret of prosperity during the so-called golden age, was the ability of the state to uniformly impose welfare enhancing restrictions on the market that made it possible to invest in common pool resources. As this ability has waned during the neoliberal era so did the ability to keep in check the externalities created by forces of competition, generating long term collective costs that have become increasingly harder to address. This is reminiscent of classical capitalism’s main weakness with respect to organizing collective action to correct for the negative externalities market competition creates. Marx’s view of competition as a war like process that militates against mutually beneficial coordination (not to mention cooperation) among individual capitalists especially resonates today. Because coordination failure is endemic in the absence of effective collective agency, what is profitable at the micro level ends up being at variance with human welfare as well as the long term collective interest of capitalists. The result is that the two different ways for accounting for economic performance, one, based on profits and the other on human welfare, become increasingly divergent."