Coordination Problem

Definition

Ian Wright:

The coordination problem : "the problem of producing just the right amount of different goods and services. An economy needs to mix together different activities together in the right proportions, otherwise it might produce too much of some things, and not enough of other things. A capitalist, or socialist, or some future kind of economy, all face the problem of coordinating the scale of production of different activities across the entire economy." (https://ianwrightsite.wordpress.com/2017/02/22/a-coordination-problem/)

Contextual Citation

Ian Wright:

"To solve the coordination problem we need to operate the economy at the correct activity levels such that final demand is satisfied without over or under production. A fully coordinated economy produces the population’s consumption bundle without wasteful accumulation, or unsustainable depletion, of stocks. Of course, final demand continually changes, and so do the techniques of production. So a complete solution of the coordination problem requires discovering, and re-discovering, the correct activity levels, and ensuring that the economy conforms to those levels." (https://ianwrightsite.wordpress.com/2017/03/12/a-theoretical-solution-to-the-coordination-problem/)