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Top-bottom, bottom-up resources allocation

by on 01/04/2018

From the very down of human history, social communities, characterized by their political-economic management systems were created, to cope with problems of security and material prosperity, as main problems of human existence.

The economic-political management systems major point of interest is how, to what segment of the society, and from whom to allocate the limited resources, the concrete social grouping, with decision authority will do. The management-decision making tools used in these political-economic grouping can be differentiated between two kinds of systems, the top-bottom or bottom-top systems. These two economic-political management system were implemented intermittently in different communities and at different times. At the top-bottom economic-political systems, the authority to allocate resources, is centralized, while in the bottom-top economic-political systems, many individuals are involved in decision process, about resources allocation.

The hunter-gatherer societies the tribal system implemented most probably in its simplicity, used rather bottom-top management system. Then with growing population and its concentration adjacent to rivers, used for transportation, communication and irrigation in arid places, a centrally managed government, started to implement rather top-bottom management system. The top-bottom management systems, used in new kind of agricultural settlements, cities, was not based anymore on the need to communicate with every significant part of the society, considering their particular interests and opinions, when concluding a joint agreements with every part of the society but on representative social political system, where the top management was supposed to represent the bottom masses. The more complicatedly structured societies, that couldn’t be based any more on individuals acquainted to each other, needed universal laws issued by central authority. So were created the empires, like the Egyptian empire, and later the Roman empire, indirect descendant of the Egyptian empire, or the Summer culture, that was subsequently followed by the Parthian empire. In between the early Summer culture, emerged other empires, that eventually collapsed and were many times temporarily replaced by culturally less developed societies, mostly managed in bottom-top system. So it happened, when the Roman empire, that was very much centralized, and managed as top-bottom management political-economic system, was destroyed, and small barbarian kingdoms, managed rather as bottom top systems replaced them.

The same question of these two management systems on the scale of whole social grouping, modern states, is present also now in the modern economic systems. Until quite recently, a highly orthodox top-bottom political system was implemented in USSR and its satellite states, the so called “Socialist Countries”, while in the so called “”Western  Countries”, namely Western Europe, USA and other American continent countries, Japan and some Asian countries implemented the so called “Market Economy”, or alternatively some may call it “Capitalistic Economy”, management strategies. While “Socialist Countries”, tried to implement their top-bottom management economic system, in all levels of economic activity, with growing orthodoxy, the “Western Countries” implemented their bottom-top economic system with less rigidity, while according to the temporary public mood, fashion or political opportunism, they shifted from more orthodox bottom-top management economic system to the partial top-bottom system. The Socialist countries used the centrally managed top-bottom management system to concentrate political power in hands of the political leadership of few, while the more flexible market economic systems created a partnership between the political leaders and the economic leaders. Since the early nineties of twenty century the top-bottom economic system collapsed with the collapse of the “Socialist” economic system, and whole block of countries, with about five hundred million people joined the market economy. Adding to it China with the more gradual but with same aming process of decentralization of resources allocation management, and practically most of the world economy, in very short time period joined the market economy. It is not surprising that the capital based market economy thrived for almost twenty years since then.  

The market economic system adopted with warm welcome hug the newcomers in the global economic system, with all their huge resource allocation, these underdeveloped new markets needed. New opportunities for more efficient resource allocation gave new opportunities for capital to generate higher yield. This gave new opportunities for the capital, accumulated in the pre-collapse capital driven market economic entities to use their accumulated capital from the past,  management know-how, and consumers oriented technology to allocate production capacities to the new participants in the global market economy. The famished consumers in these new markets at beginning absorbed more and more from the production capacity of the Western economic entities. Together with it new production facilities were built in these new economic regions, utilizing the relatively low production costs, with technologically and intellectually relatively well educated population.

The huge global corporations, used skillfully their accumulated capital and know-how, to increase their wealth and with it their political influence, on the local, but mainly on the global scale. This partnership caused evergrowing concentration of capital and as well political power, process that stand in contradiction to one of the pillars of the market economic system, widely distributed entities with capital and resource allocation capacity, fiercely competing among each other. This process concentration of capital and political power, caused growing concentration of decision making processes about allocation of resources. Again a process heading toward  top-bottom management economic system seems as taking over the economic decision process.

To all the above, joined with ever growing economic influence, the new technologies, based on accumulated scientific findings generated and accumulated at accelerated rate. These technologies brought revolutionary communication systems like, personal computers, internet web communication, mobile phones. Soon new consumers markets were established on the internet, with major influence on the economy.

New technologies introduced to production processes, make the production cheap, almost with zero marginal costs in certain segments of the economy, while the major cost is connected to investments. The result is transfer from labor costs to capital costs.

As a byproduct of these process, in democratically elected political representation political entities, inequality in distribution of income and wealth grew to levels unprecedented in modern times.

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