Economic Organization in the Knowledge Economy: Some Austrian Insights

I critically discuss recent claims about economic organization in the emerging
“knowledge economy,” specifically that authority relations will tend to disappear
(or at least become radically transformed), the boundaries of the firm will blur,
and coordination mechanisms will be much more malleable than assumed in
organizational economics, resulting in various “new organizational forms.” In
particular, the price mechanism will be used inside hierarchies to a much greater
extent. In order to obtain an analytical focus on the knowledge economy, I
assume that it may be approximated by “Hayekian settings” (after Hayek 1945),
that is, settings in which knowledge is distributed and where knowledge inputs
are relatively more important in production than physical capital inputs. I then
argue, drawing on organizational economics as well as Mises’ insights in
property rights and comparative systems, that the presence of Hayekian settings
does not mean that authority will disappear, etc., although economic
organization will in fact be affected by the emergence of the knowledge
economy. This suggests that Austrian economics has an important contribution
to make to the study of economic organization