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Catallaxy is influenced by Ludwig von Mises’s term Catallactics and was first used by the Austrian economist Friedrich Hayek. He was unhappy with the usage of the term Economy, feeling that the Greek root of the word, which could be translated as ‘household management’, implied that economic agents in a market economy possessed shared goals. Economy is used by Aristotle as ‘the art of household management’[1] and part of the virtue of wisdom. Keeping in mind that the ‘household’ at Aristotle is used in a broader sense either for a private household or for the household of a state[2] and even if the household at the times of Aristotle could have been a large business unit containing family and thousands of slaves, it was lead towards shared goals which differs from what a market economy is about. Catallaxy as a ‘Science of Exchange’[3] describes according to Hayek,[4]

‘the order brought about by the mutual adjustment of many individual economies in a market’.

Hayek derived the word Catallaxy from the Greek word ‘katallasso’ (καταλλάσσω)which meant not only ‘to exchange’ but also ‘to admit in the community’ and ‘to make friends’. Herbert Simon later stated[5]

‘No one has characterized market mechanism better than Friedrich von Hayek who, in decades after World War II, was their leading interpreter and defender’.

The importance of this shift of paradigm from economics to catallaxy expresses Christopher Holl[6]

‘…that the scientific economic mainstream of the 20th century has brought economics in a situation, in which scientist are producing more and more detailed data about problems that do have less and less relevance in peoples’ life. If relevance instead of preciseness were the criteria, the influence of Hayek would dominate that science’.

Christopher Frey considers Catallaxy being the key for a deeper understanding of knowledge economy and knowledge society but he doubts that it is price that rules the market.[7] Catallaxy also becomes a new dimension in software design and network architecture.[8]

External links

Notes

  1. ^ Aristotle, Nicomachean Ethics, 1141b-32
  2. ^ Aristotle, Nicomachean Ethics, 1140b-10
  3. ^ Boettke, P. in The Political Economy of the Austrian School, 2nd edition 1994, preface, proposition 2
  4. ^ Hayek, F.A. Law, Legislation, and Liberty, Vol. 2, pp. 108–9.
  5. ^ Simon, Herbert B. in The Science of the Artificial’, 1981, pp. 41
  6. ^ Holl, C. in Perception, Human Action and Institutions (translated from German: Wahrnehmung, Menschliches Handeln und Institutionen), 2004, pp. 234
  7. ^ Frey, C. in Just too Lazy too Lie, 2nd edition 2009, pp. 50, 61-64
  8. ^ Eymann, T., Padovan, B.and Schoder, D. in a Conference Paper at the 16th IFIP World Computer Congress, Conference on Intelligent Information Processing, Beijing/ PR China, August 21-25, 2000
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