Cooperation and the Organisation of Production and Markets: A Critical Survey

Abstract This critical survey examines the role of cooperation in production and exchange, the relationship between the organisation of production and markets, and, more generally, the nature and functioning of productive systems. It traces ideas about the relationship between markets, industrial organisation, and power, from Adam Smith and Karl Marx to the early neo-classical economists, before turning to the evolution of liberal economic thinking that accompanied the emergence and growth of large organisations with market power. This is then confronted with Alfred Marshall’s methodological and theoretical contributions to both economics and industrial organisation and development, and his attempt to reconcile the neo-classical economic dilemma of increasing returns in production and competition in markets. During the inter-war years, and especially after his death in 1924, Marshall’s ideas were strongly challenged—and ultimately abandoned—by neo-classical economists. However, this debate re-emerged nearly a half century later, when the Fordist mass production model faced growing competition from more cooperative forms of industrial organisation. Based on solid empirical research into contemporary industrial districts and localised productive systems, there was a re-discovery of the importance of cooperation in production, and an acknowledgement of the significance of Marshall’s earlier contributions. Inspired by these developments, Frank Wilkinson’s ‘productive systems’ approach brings together the threads running through Smith’s, Marx’s, and Marshall’s analysis of the dynamics of cooperation in production and exchange, to explore the implications of the mutual and conflicting interests inherent to production, industrial organisation, and economic development.