J. Michael Montias' The Structure of Economic Systems

Abstract

* J. Michael Montias' book Structure of Economic Systems is an ambitious and important contribution to the literature on comparative economic systems. It also has ramifications for the study of industrial organization and, for that matter, of complex economic organizations quite generally. Inasmuch as the distinctive approach which Montias takes involves a study of the interface between organization theory and (p. 5), one might anticipate that this book would elicit wide interdisciplinary interest. It draws, however, very selectively from the economics and organization theory literatures. Unsurprisingly, the book relies extensively on Montias' earlier work (including his collaboration with Tjalling Koopmans). Other scholars upon whose work he greatly relies are Jacob Marschak and Roy Radner, Martin Weitzman, and Janos Kornai. It is not accidental that these authors are all associated with mathematical modeling approaches to the study of organizations. Montias observes that when faced with a choice between a clear articulation of a simple relationship and a realistic description of a complex process, I have generally opted for the former (p. 6). This is consonant with prevailing preferences among economists for hard analysis over what is sometimes referred to as story telling. This preference for mathematical modeling is traceable to what is often a justifiable sense that propositions which are derived less rigorously are inherently suspect. Such a position on verbal versus mathematical argument has been expressed by Herbert Simon (1957) as follows: The of mathematics is an that does not parade imaginary riches before the world. . . . When we cannot solve the system, we can at least be sure which questions we can answer and which we cannot and we are protected from reaching invalid conclusions whose error is concealed by the vagueness of a verbal formulation. statement was written in 1957, when Simon still entertained hopes that much of social science could be reworked to advantage in the language of nonlinear differential equations. Simon's interests have since gone off in different directions, however, and Simon's disciples and fellow travelers have failed to deliver on these aspirations. Possibly the only alternative to honest poverty is disreputable (inflated, pretentious, or otherwise suspect) verbal analysis. But inasmuch as the twenty years which have expired since Simon's pronouncement have brought only meager progress towards a full blown mathematical social science (by which I mean one that is not preoccupied with toy problems),' and since marking time until new