Pryor, Frederic L.

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Swarthmore College Works Economics Faculty Works Economics 3-1-1998 Review Of "Worlds of Production: The Action Frameworks Of The Economy" By M. Storper And R. Salais Frederic L. Pryor Swarthmore College, fpryor1@swarthmore.edu This work is brought to you for free and open access by . It has been accepted for inclusion in Economics Faculty Works by an authorized administrator of Works. For more information, please contact myworks@swarthmore.edu. Follow this and additional works at: https://works.swarthmore.edu/fac-economics  Part of the Economics Commons Let us know how access to these works benefits you  Recommended Citation Frederic L. Pryor. (1998). "Review Of "Worlds of Production: The Action Frameworks Of The Economy" By M. Storper And R. Salais". Journal Of Economic Literature. Volume 36, Issue 1. 238-239. https://works.swarthmore.edu/fac-economics/183 American Economic Association  ReviewReviewed Work(s): Worlds of Production: The Action Frameworks of the Economy. byMichael Storper and  Robert SalaisReview by: Frederic L. PryorSource: Journal of Economic Literature, Vol. 36, No. 1 (Mar., 1998), pp. 238-239Published by: American Economic AssociationStable URL: http://www.jstor.org/stable/2564963Accessed: 21-09-2017 15:50 UTC JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a widerange of content in a trusted digital archive. We use information technology and tools to increase productivity andfacilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available athttp://about.jstor.org/termsAmerican Economic Association is collaborating with JSTOR to digitize, preserve and extendaccess to Journal of Economic LiteratureThis content downloaded from 130.58.65.13 on Thu, 21 Sep 2017 15:50:42 UTCAll use subject to http://about.jstor.org/terms 238 Journal of Economic Literature, Vol. XXXVI (March 1998) action cost-politics approach deepens our un- derstanding of the forces that produce the ob- served outcomes. However, Professor Dixit does not tackle the difficult problem of using the theory to develop refutable predictions of how specific changes in policy or political processes may arise. Indeed, his explanation both for the change from balanced to unbal- anced budgets and for the changing congres- sional committee structure which accompa- nied these outcomes borders on a "tastes for government spending" argument. The job of developing and testing refutable hypotheses is left for future research which will undoubt- edly be stimulated by the approach he has outlined. Professor Dixit's concluding chapter (Ch. 4), particularly his discussion of economists' role in the policy process, contains much wisdom and is highly recommended to economists and political scientists who study policy mak- ing and to those who practice it. The transaction-cost approach is a rela- tively new and promising mode of intellectual inquiry into the policy making process. Pro- fessor Dixit presents the approach and his contributions to it in a clear and concise man- ner. His monograph is both a valuable peda- gogical tool and a stimulating essay. It is well worth the price of the reader's time. JOHN F. COGAN Hoover Institution, Stanford University tinctions: market risks versus market uncer- tainty in a standard Knightian fashion; ancd productive specialization versus standard- ization. The "industrial world" faces predict. able risk and produces in long production runs of standardized products so as to achievE economies of scale. The "market world" faces market uncertainty and produces stan- dardized products in short production runs, relying on flexibility to change production when the market changes. The "interpersonal world" faces market uncertainty and produces specialized products for individual demands The "world of intellectual resources" faces predictable risks and produces specializecd products and services for particular needs Each one of these worlds (systems) of pro- duction has particular conventions (norms, that govern labor relations, membership intc the group of producers; each coordinates people mobilized to make and utilize a prod- uct differently, each features a different pro- cess of innovation, and, in trying to earn a profit, each focuses on different variables. The initial arguments to set up the analysis are carried out at a high level of abstraction with no concrete examples so that some may find it difficult to determine exactly what the) are talking about. In a case study of 224 French firms, they divide them into the foui groups, discuss relative profitability and othei variables, and then show how the firms are changing from one production world to an- other. Unfortunately, they never tell us how they operationalized the various criteria anc how they placed a particular firm in one box or the other of the typology, a problem thai runs through the book. Why, for instance, dc they place the Silicon Valley firms in thE "world of intellectual resources" (p. 191) wher these firms face enormous uncertainties ancd not predictable risks? Why, for instance, dc they place firms in the non-metallic mineral industry (p. 100) in the "interpersonal" worlk when they are producing a standardized prod- uct using large-scale production methods? The data problem, however, goes deepei than this because many of the tables are diffi- cult to understand. For instance, Table 11.1 has a list of characteristics of 38 French in- dustries. Unfortunately, they do not give us the units or the definition of some of the Worlds of production: The action frameworks of the economy. By MICHAEL STORPER AND ROBERT SALAIS. Cambridge, Mass.: Harvard University Press, 1997. Pp. iv, 384. $45.00. ISBN 0-674-96203-6. JEL 97-1194 The authors have written an ambitious book. It starts with a new way of analyzing the operation of firms and markets, in the tra- dition of Piore and Sable (1984); uses the ty- pology developed in this analysis to explore the quite different organization of industry in the U.S., France, and Italy; criticizes govern- ment economic policy from the standpoint of their new approach; delivers a devastating cri- tique of the New Institutional Economics; and then shows how all social science analysis of the industrial sector must be changed and broadened to follow their ideas. The authors start by making two sets of dis-This content downloaded from 130.58.65.13 on Thu, 21 Sep 2017 15:50:42 UTCAll use subject to http://about.jstor.org/terms Book Reviews 239 terms (e.g., "efficiency of capital"). Further- more, they use the table to argue that large, multi-divisional industrial corporations have certain characteristics, except that the charac- teristics of the groups are never presented in any table, so we don't know in what industries they are located. Table 5.1 presents the com- position of trade according to a typology of industrial sectors. In the rows presenting the trade ratios (exports divided by imports), some of the ratios are negative, which is diffi- cult to understand because both exports and imports are defined as positive numbers. Fur- ther, the data show that the U.S. has a com- parative disadvantage in scale-intensive goods, which is different from what they ar- gue in the rest of the book. On page 198 they argue convincingly that evolution of firms is impossible between the "interpersonal world" and the "industrial world," or between the "market world" and the "intellectual world," and yet their data in Figure 4-1 and Tables 4-1 through 4-3 show that this is happening in their sample of French firms. Other tables and figures seem carelessly put together so that the numbers do not add up to the totals or, as in Figure 3.2, the formulae are marred by a serious sign error. Finally, in most data tables the sources are given simply in terms of the collection agency, for instance, OECD, which means that it is impossible to go back to the original source and reconstruct their calculations. The qualitative evidence used by the authors to support their ideas also raises dif- ficulties. For the most part they use wide- ranging generalizations and stylized descrip- tions of what is happening in particular industries in different countries, rather than concrete facts. In the discussions of Italy and America, for instance, they seldom discuss the experience of real firms. By way of con- trast, the discussion of the French fashion in- dustry is very concrete and, as a result, much more interesting. The high level of abstraction on which they are operating has other disadvantages. In dis- cussing the failures of governmental policies in the U.S., France, and Italy, they make a number of proposals. Unfortunately, these are at such a general level that it is difficult to know exactly what they are proposing. This book represents an expansion of a volume originally published in France and the translation leaves much to be desired. Some French phrases (e.g., "in the sentier") are simply left untranslated, when appropri- ate English phrases are at hand. In other cases the meaning is totally unclear (e.g., "A convention of identity is somewhat like sedimented significations regarding the compe- tences and characteristics of groups p. 23), and in still other cases irksome ne ologisms are employed (e.g., "Francilien" by which, I think, they mean "French"). The authors have many interesting and use- ful points to make about the ways in which firms and markets operate differently in the U.S., France, and Italy. Their criticisms of the New Institutional Economics are insight- ful. But they believe they have some broader and more important lessons to impart to the profession. Unfortunately, for this reader, the major message got lost. FREDERIC L. PRYOR Swarthmore College REFERENCE PIORE, MICHAEL J. AND SABEL, CHARLES F. The second industrial divide. New York: Basic Books, 1984. E Macroeconomics and Monetary Economics New approaches to macroeconomic modeling: Evolutionary stochastic dynamics, multiple equilibria, and externalities asfield effects. By MASANAO AOKI. Cambridge; New York and Melbourne: Cambridge University Press, 1996. Pp. xv, 288. $49.95. ISBN 0-521- 48207-0. JEL 97-0494 The prototypical macroeconomic model in Aoki's book is dynamic and stochastic with ex- ternalities and a limited array of interactions. The static counterpart to such a model has multiple equilibria, which may emerge be- cause of the presence of externalities. Aoki correctly notes that the "analysis of externali- ties in a dynamic context . . . apparently has been nonexistent or rare until recently in the economics literature" (p. 134). In his dynamic analog to a model with multiple equilibria, weThis content downloaded from 130.58.65.13 on Thu, 21 Sep 2017 15:50:42 UTCAll use subject to http://about.jstor.org/terms

Review Of  Worlds of Production: The Action Frameworks Of The Economy  By M. Storper And R. Salais

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Review Of Worlds of Production: The Action Frameworks Of The Economy By M. Storper And R. Salais

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