Re-Opening the Coordination Problem: Beyond Neoliberal Organization Workshop Report

Coordination, or how we as a society organize the activities of people and institutions to produce and distribute things we need in the best way, comprises key activities of an interdependent, globalized economic system. However, we are now at an important juncture where conventional wisdom on political and economic coordination is woefully lacking. Since the 1970s, the dominant answer to the question of social coordination has been the neoliberal framework, which treats free markets as providing optimal social outcomes. Yet, the 2007-2008 financial collapse, the Great Recession, and the COVID-19 pandemic exposed profound social vulnerabilities that result from high level of inequality. These crises have laid bare the inadequacy of market coordination alone, bringing to the foreground the necessity of effective coordination and the legitimacy crisis facing free-market doctrine.

An obstacle to understanding the coordination problem has been the false dichotomy presented to us since the Cold War, which treats Soviet-style planning and American worship of the free market as mutually exclusive. At the height of the Cold War, observant thinkers on both sides of the Iron Curtain understood that planning and market-based economic relations were at best a continuum. Scholars of comparative political economy understood that coordination was historically contingent and embedded in various institutions.

After the Cold War’s end, history was assumed to be over. It was widely accepted that market prices were the best mechanism for coordination. At best, the efficiency of markets is understood to be limited by “incomplete information” requiring new forms of administration. However, the conditions of the 21st century are forcing us to wonder if market coordination is sufficient to solve inequality, global geopolitical conflict, and climate change problems. Starting from the position of markets, perfect or imperfect, as the de facto coordination mechanism blinds us to the many cross-cutting problems of socio-economic coordination. As a result, most institutions in the so-called “West” have emphasized “leanness” over resiliency. Firms have become capital-lite, optimizing for agile adaptation in the search for profits over the ability to sustain economic shocks. Governments have become dominated by a search for efficiency borrowed from the private sector. That means low costs and less dedicated personnel with specialist knowledge. Finally, democracy itself has become increasingly transactional and devoid of deep meaning. Important decisions over the direction of the economic system have left the public sphere in the realm of private decision-making.

We believe that systems of socio-economic coordination are the result of experimentation and are more coherent in hindsight than they are at their inception. The crisis of neoliberal economic governance is rooted in the system’s origins in a crisis of the Western, post-war, corporatist industrial state that reached its crest in the 1970s. This crisis resulted from crosscutting, political, economic, and social pressures. Experimentation with an increasingly deregulated market created a new system of coordination that at the time began to offer a way back toward dynamism.

This historical account places the dialectical relationship between socioeconomic conditions and contingent response as driving forces for building socio-economic systems. Ideas matter, but however internally coherent systems such as neoliberalism, social democracy, and state socialism might seem, they were not exclusively designed in meetings of intellectuals. These thought collectives played a role, but just as important was the process of improvisation where seemingly incongruent programs congealed together into coherent systems. Advocates for elements of new systems can work for decades until conditions for their ideas become ripe and abstract concepts are given concrete form through an often unplanned search for solutions.

The Berggruen Institute’s “Re-Opening the Coordination Problem: Beyond Neoliberal Organization” aims to facilitate the interplay of ideas that may form the basis for experimentation in socio-economic coordination and systems building. To achieve this synthesis, we are building a heuristic model that can promote the interplay of theories and methods of political and economic coordination and using this model to then scenario plan resilient systems which can solve specific problems.

To promote, present, and test this program, The Berggruen Institute’s Future of Capitalism Program organized the first of a series of coordination program workshops in May 2022 in Los Angeles. Bringing together important thought leaders, such as academics, think tank researchers, journalists and practitioners at the intersection of political and economic decision-making and organization under the Chatham House Rule, we explored some existing ideas for coordination to rethink traditional approaches to three critical areas: production and distribution, political decision-making, and finance and welfare, as well as to explore new ideas for institutions that coordinate at the intersection of these three spheres.