What Does Wolf Mean by Nonmarket Failure?

Dang's original question, to which he really wanted an answer (part of good faith listening and part of showing leadership by asking well thought out questions to which yuu really want answers. (Balels, Interaction Process Analysis):

"I wanted to ask you summarize Charles Woft on the Nonmarket Theory in text on page 22.  How can the nonmarket fail and what does he means by it?"

jeanne's response:

"Good question, Dang. Markets fail when someone buys up all the supplies very cheaply, and therefore there is no real competition because that person can produce more cheaply than others. Or they fail when people do not respond as predicted, do not buy, but somehow the market is insulated from feeling the effects of this.

Nonmarkets, on the other hand, fail just as frequently, but in ways that are harder to see. Suppose, for example, that you get your degree at CSUDH, but that the school just ignores your need to learn. You still get the degree; the public still thinks you have learned; you may not know that you haven't because you have nothing to compare it to, just the degree. So corrections are made much more slowly and not as directly in the markets because there is no bottom line.

If, for example, a corporation fires 20% of its workers, but hires 10% more supervisors to make the remaining workers work harder, you, the consumer, may not be able to tell, because the production remains the same. Eventually, as the workers are overworked the quality of the production will go down, but that takes time, and is much harder to trace than in the immediacy of the market.

In agencies, there may be a proliferation of senior workers and supervisors who do less work, while overworking other workers. This will be hard to catch. Agencies may respond to special interest groups by providing special services to some, and by denying those services to others, on the grounds of overwork or underbudget.

Missions and goals, and how well we are meeting them are much harder to measure than costs and profits in the $ sense. And the more we try to measure such non-tangibles in $ terms, the more inflexible and non-responsive we tend to make the system that relies upon them." Does this help? I would like to go over Wolf's explanation item by item. I'll do it if I can get to it, or you might want to move ahead and pull out the headings of the sections we need to discuss. jeanne

Dang's response: Specific types are:

• Budget Growth
• Technological Advance
• Information acquisition and control
• Redundant and rising cost
• Derived externalities.

  Hopefully you will go over with the class these terms. (Note that Dang is politely helping to shape the lectures to meet the needs he is expressing. This is a good example of interactive planning of the curriculum.)

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  jeanne's response:

  • "Budget Growth:

    Wolf's discussion of budget growth discusses a curious phenomenon in bureaucratic operations. Since in the nonmarket world, the primary focus is and cannot be the bottom line, distortions occur over our fascination with numbers. The bottom line, or balancing costs and profits, is seductive. There is less closure and definitional specificiity if we say that our goal is to guarantee that our children learn, are well fed, and learn cooperation and achievement. There is less closure and definitional specificity if we say that we want to guarantee that enterprises, businesses that produce much needed jobs for our workers, remain productively healthy, with economic support provided when necessary to shore up temporary inconsistencies and failures. There is less closure and definitional specificity if we say that we want our institutions to operate efficiently and effectively.

    Because most of us have learned to prefer certaint over ambiguity (Freire, amongst others) there is a tendency to for us to try to quantify all these goals. To measure them in some simplistic way that we can make as neat as the bottom line of corporate profits. Budget growth is one way to do that. Agencies and institutions come to define success as the largest budget possible. So that budgets tend to grow not in proportion to our most pressing needs, but in proportion to the prestige of a large budget.

    Similarly, staffs in agencies and institutions, particularly supervisorial staffs (Administered Society tend to expand just like budgets, as a form of prestige. The larger the staff you supervise, the more successful your agency is. This process grows quickly out of hand, until spervision becomes more important than the goals we set ourselves to critically review the insufficiencies that accumulate naturally in systems and which need serious measurement and feedback in order to aid those who fall through the cracks.

    Habermas would speak of good faith hearing of every validity claim in order to provide the feedback that will establish legitimacy and social justice. Bigger budgets and bigger staffs are status criteria. We need more serious attention to self-reflexive critical considerations and the growth on an autopoietci learning system, that is a system that questions itself about those who have fallen between the cracks.

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    More to come . . . October 7, 1999. jeanne

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