Ramblings & ephemera

Professions and clubs

From Giampaolo Garzarelli’s Open Source Software and the Economics of Organization:

Deborah Savage, in an innovative piece, proposes the following economic definition of a profession: a ‘profession is a network of strategic alliances across ownership boundaries among practitioners who share a core competence’ [Savage, D. A. (1994) “The Professions in theory and history: the case of pharmacy”, Business and Economic History 23 (2): 129-60.] …

In sum, the general organizational implications of Savage’s theory of professions are considerable. The most germane implications for our purposes seem to be the following.

  • The theory allows to narrowly define the area of operation of a profession because of its emphasis on core competencies – for example, pharmaceuticals, software, semiconductors, etc. – around which other capabilities and routines evolve and revolve.
  • It allows to distinguish professions from other forms of organization, such as firms, because integration of ownership is not a condicio sine qua non.
  • Professionals are autonomous and authoritative in their fields for their competencies allow them, on the one hand, ‘to solve routine problems easily and non-routine problems routinely’ (Savage 1994: 140) and, on the other, enable them to evaluate, and only be challenged by, other professionals. More concretely, they are independent yet interact in a coordinated and fertile fashion.
  • Professions are decentralized networks in that there’s not a central authority in command. The ‘organization’ of a profession is guaranteed by the exchange of knowledge that reduces uncertainty and stimulates trust amongst members. Professions are thus self-organizing.
  • Relatedly, there’s the role played by reputation as a signalling of quality, viz., reputation is a positive externality. Thus, professions can be interpreted as self-regulating organizations …

In a seminal article published in 1965, ‘An economic theory of clubs’, Buchanan described and formalized the institutional properties of a new category of good (or product) lying between the public and private polar extremes, conventionally called shared good. The good is usually enjoyed only by members participating in a voluntary association – i.e., a club – whose membership may be regulated by some dues. The theory of clubs, in a nutshell, studies the different institutional arrangements governing the supply and demand of the shared good. [Buchanan, J. M. (1965) “An economic theory of clubs”, Economica, N.S., 32 (125): 1-14.] …

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