Internal competition makes firms stronger.

Economists long have praised the "magic of the marketplace," but a marketplace hardly exists inside most businesses. Instead, each department--from accounting to shipping--enjoys a monopoly, and, if you don't like its service, you can't turn to a competitor.

Things would change under a new approach advocated by William E. Halal, a management professor at George Washington University. He and a small group of associates urge businesses to turn their organizations into marketplaces by making each department a semi-independent business.

"When a business firm becomes a corporate community of entrepreneurs who buy, sell, and launch new products and services internally as well as externally, it gains the same creative interplay that makes market economies so advantageous," he told the World Future society.

Markets are spreading around the globe because they clearly excel over central planning. In nations and organizations alike, planned economies have proved too cumbersome to cope with the upheavals in the new era. "Free enterprise--either internal or external--offers the only economic philosophy enabling organizations to adapt to...