In Die Wirtschaft der Gesellschaft, Niklas Luhmann explores the economy not as a subsystem of society, but as an autonomous, functionally differentiated, and autopoietic system—one that reproduces itself through monetary communication. Payments form the fundamental elements of this system. Prices, within this framework, do not primarily convey information about scarcity or demand. Instead, they function as mechanisms of self-reference that enable economic communication and contribute to system stability by reducing complexity. The economy communicates with itself through prices, allowing it to process operations without needing comprehensive environmental data.

 

The market, in Luhmann’s view, is not a separate system but serves as the economic system’s internal environment. It functions as an observational medium, allowing companies to orient themselves by interpreting needs, competition, and feedback loops within the economic structure.

Luhmann introduces the concept of a "double circulation" within the economic system—one of solvency and another of insolvency. The internal circulation keeps money flowing, while the external circulation processes defaults and non-payments. This dual mechanism underscores how the system maintains autopoiesis while remaining structurally open to external disturbances.

The classical dichotomy between capital and labor is, for Luhmann, analytically outdated. It fails to reflect contemporary social dynamics and excludes key elements like consumption. As such, it no longer serves as a useful distinction for understanding the economy.

Scarcity, rather than being an objective condition, is constructed through communication. It is operationalized via prices but does not represent any direct or objective environmental state. Instead, scarcity serves as a functional form within the system to generate and stabilize decision-making constraints.

Money, as a symbolically generalized medium of communication, enables complex and far-reaching exchanges. However, its very abstraction also introduces opacity and paradoxes into economic communication—what Luhmann refers to as the “diabolical” side of money. This ambivalence is a systemic feature, not a flaw.

 

Decision-making within the economic system is not classically rational. Rather, it is contingent and based on system-internal operational premises. Decisions reduce uncertainty in one context only to generate new uncertainties in others, thereby driving the system’s complexity forward.

Organizations play a critical role in structuring economic communication by stabilizing these decision-making processes. Luhmann contrasts media like money, which are open and non-specific, with organizations, which are closed and highly specific. While they differ in function and structure, both are essential and interdependent.

Ultimately, Luhmann argues that neither political intervention nor central planning can override the autopoietic logic of the economic system. Control efforts remain confined to the level of structural coupling—the interface through which different systems, such as politics and economy, influence one another. Comprehensive control of the economy is structurally impossible.

 

Source:

Luhmann, N. (1988), Die Wirtschaft der Gesellschaft, Frankfurt am Main: Suhrkamp Verlag.