It can, I think, be assumed that the distinguishing mark
of the firm is the supersessiorr of the price mechanism.
It is, of course, as Professor Robbins points out, “ related
to an outside network of relative prices and costs,”‘ but
it is important to discover the exact nature oi this relation-
ship. This distinction between the allocation oi resources
in a firm and the allocation in the economic system has
been very vividly described by Mr. Maurice Dobb when
discussing Adam Srnith’s conception of the capitalist:
“ It began to be seen that there was something more
important than the relations inside each factory or unit
captained by an undertaker; there were the relations of
the undertaker with the rest of the economic world outside
his immediate sphere _ _ . _ the undertaker busies himself
with the division oi labour inside each firm and he plans
and organises consciously,” but “ he is related to the much
larger economic specialisation, oi which he himself is merely
one specialised unit. Here, he plays his part as a single cell in a
larger organism, mainly unconscious of the wider role he fills?“