A look at a set of theoretical frameworks that attempt to go beyond the production function approach that dominates textbook discussions of economic organization, with a focus on the capability approach, drawing heavily on the work of Frank Knight and Hendrik Houthakker. (Knight identified the fundamental problem of economic organization as the search for and coordination of different capabilities that are dispersed throughout the larger social and economic system. Houthakker helps us to see more clearly that the benefits of specialization are not obtained at zero cost; whatever is the governance structure employed, there will inevitably be coordination costs due to differences in capabilities.)
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