THE LIMITS OF ORGANIZATION

A theoretical tract on organization, information and authority by the winner of the 1972 Nobel Prize in Economics. Arrow's argument, meticulous and abstract, utilizes recondite information theory. The limit to society's economic resources produces competition for materials, necessitating a mediator between competitors -- the price system. But ""a means of achieving the benefits of collective action in situations in which the price system falls"" is called for -- an organization. The organization must then deal with the uncertainty of the price system; it must process as much information at as little cost as possible. The value of an organization's pyramidic decision-making structure -- of authority -- lies in its ability to minimize the costs of information. But authority needs to be monitored in order to insure responsibility. Arrow's consideration of material needs and ethical beliefs -- how they conflict and balance -- is brief but astute, worthy of a Nobel Laureate.