Brian Holmes on Thu, 13 Apr 2006 22:48:07 +0200 (CEST)

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<nettime> Markets, Hierarchies, Networks: 2 questions

In the previous thread on "Organized Networks," Felix 
Stalder wrote:

--I always thought that networks are a basic type of 
organization (as are hierachies, markets, and communes, in 
fact, standard theory assumes that there are only these four 
basic forms)...

Shannon Clark replied:

--what "standard theory" are you talking about (more 
specifically - what field's standard theory). In terms of 
the study of organizational structures - or social network 
analysis which I am very familiar with all groups and 
organizations can be represented by networks...

I have two questions about all this (which might also help 
with the discussion of Ned Rossiter's original text). Number 
one, how many organizational forms are there in today's 
"standard theory"? And number two, what's the difference 
between being in a network, and being represented as one?

First let's try to figure out what's really being talked 
about. Felix seems to be referring to the theory of economic 
organization, and probably to three landmark papers:

-Ronald Coase, "The Nature of the Firm" (1937)
-Walter J. Powell, "Neither Market Nor Hierarchy" (1990)
-Yochai Benkler, "Coase's Penguin" (2002)

Coase was the first one to establish the distinction between 
markets and hierarchies, showing that in some cases, people 
organized their economic relations primarily according to 
property rights and price signals (the market), and that in 
others, where organization via the market was too loose and 
too open to problems of opportunism, they resorted to 
longer-term employment contracts binding them into a 
pyramidal structure of command and routine (hierarchy). The 
distinction of markets and hierarchies really became 
"standard theory" in organizational studies, especially 
because of the books by a guy named Oliver Williamson. In 
1990 Powell then introduced the idea that in certain 
branches of production involving a multiplicity of formally 
independent actors, like publishing or movie-making, what 
you had was neither markets nor hierarchies, but networks, 
based on cooperation, reciprocity and mutual benefit.

Obviously the software boom of the 90s, and the general 
structure of freelancing and outsourcing in the neoliberal 
economy around the same time, gave a big boost to the idea 
of the network. Then Benkler came in with his theory of 
commons-based peer production, exemplified by open-source 
coding, and proposed to add THAT to the standard theory - 
but without even mentioning Powell, or the concept of the 
network organization. Benkler's paper, and others similar to 
it, have been particularly interesting because they point to 
forms of production and exchange which are no longer 
specifically economic, or which extend the domain of 
economics to the very production of social relations (and 
thereby alter the whole notion of economics quite 

A more recent essay, by two French guys named Demil and 
Lecocq, puts it all together under the title "Neither Market 
nor Hierarchy nor Network: The Emergence of Bazar 
Governance" (where "bazar" is a reference to the famous 
"Cathedral and the Bazar" idea - in other words, we're still 
talking about Linux).

So my first question is this: How justified is it to think 
of FOUR different forms of productive organization - market, 
hierarchy, network and commons? Aren't the last two just 
variations on each other? If the aim is to examine 
large-scale organizations in the real world, isn't it best 
to establish the distinctions and hybridizations between 
THREE broad sets of rules or structures of governance - 
based on competition, subservience and reciprocity, or on 
market, hierarchy and network? And finally, is "network" 
really the best possible name for the last form of 
structuring and governance, or does it just lead to 
confusion because of the connection to ICT hardware and the 
associated diagrams? Why not talk about market, hierarchy 
and cooperation?

The second question springs from that last point, and has to 
do with social network analysis. As far as I can tell, this 
is a science - or branch of inquiry, anyway - that's mainly 
driven by innovations in graphic representation, 
particularly the Pajek software developed by a couple of 
Slovenian researchers, but also the stuff by Valdis Krebs, 
etc. The question is, does social network analysis have a 
theory? Because in effect, you can REPRESENT anything as a 
network, once you have defined nodes (and categories of 
nodes) plus connections (and quantities or qualities of 
connections). Those analytic representations take the form 
of fascinating pictures. But what kinds of theoretical 
synthesis come after the analysis? Does social network 
analysis make specific contributions to our understandings 
of the ways people structure and govern their relations to 
each other? Or does it just subsume every kind of relation 
under the picture of a network?

curiously, Brian

--Demil and Lecocq:
--Pretty pictures with Pajek:
--Valdis Krebs:

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