The recent not-quite-Nobel prize in economics went to Elinor Ostrom and Oliver Williamson for their respective work in institutional economics. Ostrom studied how private individuals cooperate to avoid the tragedy of the commons, and Williamson studied the boundaries of the firm — which Arnold Kling sees through a Hayekian lens:
For example, in health care delivery, I think we need more central planning. Not by government, but by corporations competing to offer better quality and efficiency. The problem is that the corporate model threatens the status of doctors. However, as Michael Cannon and I argued here, when a patient has a complex set of problems, the model of doctor autonomy can work very poorly. In Williamson’s terms, the corporate model can resolve the conflicts that arise between different doctors more effectively than our existing model. For example, when my father was moved to eight different hospital units in fourteen days, a new doctor was in charge of him at each unit. The priorities and treatment plan changed each time. In my opinion, these autonomous hospital units should have been replaced by a hierarchy, in which care is directed by a project manager accountable to the patient.I prefer a more Hayekian take on industrial organization. That is, I think that industrial organization ought to be aligned with knowledge. Decentralization of power makes sense when information is decentralized. When information can be usefully concentrated, then concentration of power can be efficient. In my forthcoming Unchecked and Unbalanced, I argue that knowledge is becoming more specialized and decentralized, and that this conflicts with the trend for political power to become more concentrated.