Oliver Williamson is one of the greatest economic thinkers of the past century. However, I've only learned about him thanks to another Oliver, namely Oliver Beige, one of the brilliant minds who, for unfathomable reasons, graces us with the fruit of his spirit on this most frustrating social media platform, Twitter. And on Medium, but alas, again for unfathomable reasons, not on Hive.
Oliver Beige recently tweeted on the topic of "firm versus market" (see image above). R. Coase and O. Williamson are the most important thinkers at this particular organisational frontier.
In Oliver Beige's tweet, one particular aspect which helps define this frontier is brought in the spotlight: conflict / dispute resolution. If markets are more efficient than firms at allocating capital, they are also relatively helpless when disputes arise, and need an external arbitrator, which usually carries a high cost. It can be said that one of the main benefits of the judicial framework and the "rule of law" is offering a relatively controllable and relatively low cost avenue for dispute resolution (when compared with a lawless equivalent environment). In so doing, the legal framework allows the market to expand to more domains and thus increase economic efficiency.
In a firm on the other hand, not unlike in an absolute monarchy or an authoritarian regime, dispute resolution is entrusted to arbiters which often are not upheld to impartiality and regularly cumulate the power to make forward-looking decisions (alongside the power to resolve disputes) - what Williamson presumably means by "manager" in the excerpt illustrated above.
This is where blockchain technology can improve our organizational abilities, fostering the apparition of systems supporting a separation of these powers.
One model, but perhaps not the only one, is the separation of powers in modern states, with the executive being "the manager" and making forward looking decisions while the judiciary is the designated "impartial arbitrator" Williamson refers to.
At the moment, such an "internal wall" is too costly to set up inside all but the largest organisations. Open-source blockchain systems such as Hive might offer the necessary "bricks" to build IT systems able to bring down to an acceptable level the cost of creating and maintaining the fine distinction between "managers" and "arbiters".
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