The Digital Hand: Planning Beyond the Firm via the Advancement of In-Kind Formal Rationality

• In Event: Economic Sociology Section Roundtables
  In Refereed Roundtable (60 minute): Roundtable 10: Theorizing Organizations

Abstract

What is the relationship between digital information and planning? Contemporary theories of economic organization posit a negative relationship: by increasing the efficiency of market transactions, computers have obviated the role of planning, and the “visible hand” of management has begun to vanish. Against this “vanishing hand” thesis, I argue the relationship between digital information and planning is positive. Drawing on archival data, interviews, and participant observation, this article finds that Material Requirements Planning (MRP) software extended planning beyond bureaucratic boundaries by advancing in-kind rationality. MRP continuously generates “dependent demand” information that specifies how changes in forecasted demand translate into changes in required inventory. Rather than relying exclusively on price signals, managers learned how to use dependent demand to align inter-firm production schedules. The result is a new form of planning: the “digital hand.” Understanding the contemporary political economy requires us to look beyond the visible hand of management and grasp this new, digital infrastructure of coordination.

Author

• Autumn Mitchell, University of California-Berkeley