The Organization of foreign trade under capitalism and socialism

We study the effectiveness of various ways of organizing foreign-trade activities utilized under capitalism and socialism. A normative theory of organization is developed based on the costs and benefits of processing and acting on information by the organization. We survey the forms of organization employed by large American firms, Japanese trading companies, and the socialist countries of Eastern Europe and evaluate their development on the basis of our normative theory. In all systems, there is a steady approach toward organizational forms that produce direct links between producers and international markets. Such ties, however, appear to create greater difficulties for socialist countries than for capitalist firms.