The Emergent Firm : Knowledge, Ignorance and Surprise in Economic Organisation

## Preface I have a genuine affection for prefaces. In many cases they are the most interesting part of a book, often cloaking miniature dramas of frustration, tedium and disappointment. After months or years of toil the writer has to set the context to his or her work in a tone which custom dictates must be, at worst, one of graciousness and humility and, at best, one of such gratuitous servility as would shame Uriah Heep. The preface world is an idyll peopled by super-intelligent conscientious colleagues, sweet-natured understanding families, and hyper-efficient telepathic typists.\* They all have a sense of humour which is 'unfailing' in the case of secretaries, and only the author ever makes mistakes. It is curious that the standards of verisimilitude expected of scholarly analysis in general can be suspended by tacit agreement in the case of the preface. In fact, the convention defends both public and writer; raw honesty in prefaces could shatter reputations and careers, unleash a storm of literary litigation and divorce petitions, and drag academics up into the same insurance risk bracket as North Sea oil divers. Coyness and restraint in prefaces is a professional defence mechanism whose advantageous natural selection properties have helped species academia go forth and procreate throughout the known world. At their best, prefaces are constructively disingenuous providing harmless entertainment that may be spiced by personal knowledge of authors and their true circumstances. The problem with economics is that creating unreal worlds can be infectious and economists have been notoriously reluctant to stop at the preface, frequently pursuing the theme into the body of the text. However, in this context, unreality has the air of tragicomedy. Humour may be found in a situation in which phalanges of economists have spent man-years running into manmillenia building economic worlds which do not, will not, and cannot exist. The tragedy is that much of this is bad science; technique has overrun the discipline and become an end in itself rather than a simple \* Heriot-Watt University and the University of California are the only institutions known to employ telepathic secretaries. IX Preface XI represented by Milton Friedman, that the price mechanism provides sufficient information for markets to deal adequately with economic problems. As a consequence, considerable attention is given to Friedman's work later in this book as the embodiment of neoclassical theory. Most neoclassical theorists qualify their analysis by recognition of various real worlds contained, usually, in footnotes. Milton Friedman is neoclassical theory unadulterated by footnotes. His approach is consistent and unambiguous, and the clarity of his vision makes it a useful reference point. It is the logical, reasoned purity of his framework which has resulted in its being cited as the antithesis to the approach developed here, not any desire to argue ad hominem against Friedman himself. Such a comment may be necessary given the emphasis on his work later. In fact, I use Friedman's Capitalism and Freedom and Free to Choose regularly for personal use and teaching purposes whenever I wish to find out how markets could deal with a particular issue in the absence of any extraneous information problems. It is the ambivalence of other neoclassical theorists that makes Friedman an ideal representative of the neoclassical position. This book continues the theme of The Innovating Firm and The Evolving Firm in being concerned with bounded rationality and non-decomposability in economic organisation. Frank Stephen of Strathclyde University pointed out to me the strong affinities between some aspects of the approach in The Evolving Firm and G .L.S. Shackle's view of the world. This is not surprising since Shackle's philosophy heavily influenced the courses given by Brian Loasby on my undergraduate degree at Stirling University. The links with Shackle should have been more clearly spelt out in The Evolving Firm, and I am pleased to be able to rectify this in the present work. Front Matter....Pages i-xi Introduction....Pages 1-8 The Problem....Pages 9-31 Entrepreneurial Salome....Pages 32-42 More Salome....Pages 43-55 Risk, Uncertainty and Chance....Pages 56-83 Industrial Organisation and Bounded Rationality....Pages 84-110 Multinational Enterprise....Pages 111-127 Public Policy and Bounded Rationality....Pages 128-143 Synthesis and Antithesis....Pages 144-159 Ingredients and Recipes....Pages 160-189 Back Matter....Pages 190-226