Organizations and Markets

Of Categories and Killers

19 September 2011 at 11:34 am Peter Lewin 1 comment

| Peter Lewin |

A recent issue of the Review of Austrian Economics (edited by Virgil Storr) honors the contributions of Don Lavoie who died at a very young age in 2001. It contains contributions by Storr, Boettke and Prychitko, Klamer, Chamlee-Wright, Horwitz, Lewis, and High. In addition, published for the first time is a seminal article by Lavoie on the interpretive turn in economics.

Lavoie was an audacious pioneer. Like many such pioneers he was ahead of his time. The newly re-emergent Austrian school was not ready for him — did not understand what he was about. Most of them either ignored Lavoie’s products (and those of his collaborators at the Program on Social and Organizational Learning — a center he co-founded with Jack High), or else marginalized him. To the latter his preoccupation with late Continental Philosophy and hermeneutics was seen as a real threat to doing social science. His young, loyal and creative collaborators were caught in the crossfire. After his death the furor simply died down.

With the publication of this issue it is possible to gain a fresh perspective (something Lavoie’s hermeneutics might have predicted). For me it is a case of “distance lends enchantment to the view.” I confess I was in the group who neglected his work for lack of sufficient understanding of its significance.

For management and industrial organization types Lavoie’s work is highly relevant. There is a growing appreciation of the connection between language, communication, meaning, action, purpose and organization — about which Lavoie’s approach has much to say, not to mention his prescient contributions on culture, modularity, and computer science. For those wishing to benefit from his work, unless you have an interest in the epistemology of Continental philosophers, I would suggest concentrating on the contributions that have to do with information, knowledge, computing, and organization.

I guess I owe my own awaking to Bill Tulloh (onetime Lavoie student). Probably the first (and for a long time the only) time I heard the phrase “category killer” was when I was still working in CompUSA and our new CEO proclaimed in war-cry like fashion that CompUSA was going to be a “category killer” for the industry. I had no idea what this meant, but it stuck in my mind and when a few years later I finished my book on capital I incorporated the phrase in a passage.

We cope with the complexity in the world by converging on institutions. Thus once the arrival of new products, made possible by the development of a new technology, has been digested, new categories of classifications tend to be developed, into which these products are grouped. These categories emerge spontaneously out of individual attempts to communicate the attributes of the new products. A good example is the products of the computer industry. A whole range of products exist, whose workings remain a mystery to the vast majority of people, but whose purposes needed to be explained. … shorthands provide the increasingly informed public with a way to tailor their expectations when choosing between products. They enhance predictability by enhancing the interpretability of information. But these relatively predictable elements change with time and it is no accident that conscious innovation involving product differentiation is often referred to using the phrase “category killer.”

So I had begun to understand the important way in which we use language to establish modular categories in order to organize and coordinate our lives. My appreciation was further enhanced when this paragraph was quoted by Bill Tulloh in  an article of his (co-authored with Mark Miller) on the question of “abstraction” — which is the essential element behind the benefits of successful modularization, closely related to the benefits of institutions. I have since communicated with him and gained greater insight.

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