Coordination Styles and Economic Growth

Traditionally the problem of macroeconomic coordination has been discussed as being best done by either free-market competition or controlled planning. Such a formulation ignores several alternatives that societies can employ to encourage growth. Usually the argument for or against free-market competition has been fought on ideological grounds rather than by ascertaining whether it is most appropriate in some sectors of the economy rather than in others. To do this requires some way of conceptualizing economic sectors that breaks away from traditional thinking. This article suggests a four-sector model and then argues that there are four styles of coordination, each of which is most appropriate in a particular sector. It is argued that there is no single way to maximize growth in an economy and that different coordination mechanisms should be employed in different market contexts.