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Deferment and Normative CoordinationFiled Under: General

In this section we elaborate upon coordination that appears necessarily between producers. The context of production is a sequential competition that is production of future products through innovations and based upon increasing returns and along dynamic equilibrium. Successions of short-lived products from several producers must entangle them in a web of expectations on successions. Another aspect of a product is that a product in the future must remain interoperable with a set of other products emergent from complementors lying in the scope direction. Richardson (1997, 1998) did not elaborate upon inter-operability. There are two possible courses, in the first interoperability can be considered as non-sequential that is when inter-operable elements are pre-reconciled and they reflect a situation of timeless equilibrium. In the second aspect, it may refer to an input-output system—an interdependent succession of events through which intermediate products get apportioned to the final consumable products. Inputoutput systems allow for technological changes because consequent to technological changes or changes in tastes, etc., the successions or the relative apportionments might change. This second mode, even if not immediately and directly as in a Leontieff system, conceals the element of time and therefore does not depend on pre-reconciliation and on equilibrium conditions. Richardson seems to have preferred the first mode. We argue instead that the second mode alone can explain time-based, technological and unforeseen changes that remain operative over any inter-operable system.

This second mode is close to the Austrian understanding of time-dependence of capital and yet it is different in significant manners from it, based as this proposal is on Shackle’s (1972) argument. In fact, we begin from Shackle’s argument and develop this idea a bit more. Normative coordination is this additional element that Shackle did not explain. Normative coordination we wish to argue is an outcome of the “capital as time” thesis of Shackle. We do so more because strategy apprehends and orients this dimension of time. Criticality of time in orienting one’s product-lines or technology constitutes a strategic move, and such a move must be able to influence and orient the moves of other firms. This capability to be able to orient the orientations of other firms, dependent on the expectation of expectations, can be achieved by strategic knowledge. Two corollaries follow. First, we have now a new definition of capability that is the capability to leverage strategic knowledge about others. Second, a strategic knowledge is about the processes in other firms and is about the possibilities of their orientations towards their own strategic advantages. This dimension of orientation is captured by the second mode of inter-operability. Time enters here because orientations appear in possible cascades. A particular ex-post orientation tells us about the choices committed and acts executed. Success in orienting processes of other firms by leveraging strategic knowledge toward one’s own advantage becomes strategic only when this resultant orientation accrues a
Cantillon profit or only when this ex-post inter-operation appears as “capital as time.” An orientation through normative coordination of several intermediate products is an act of deferment of the consumption. A deferment of consumption achieved through elongation of the period of production or through elongation of the divisions of labor constitutes capital. It follows then that strategic acts are undertaken to increase capital. Such strategic acts become possible through normative coordination.

Taken From : Digital Economy – Impacts, Influences and Challenges