From: pcw@access.digex.net (Peter Wayner)
Date: Tue, 5 Apr 94 10:23:43 PDT
To: Duncan Frissell <frissell@panix.com>
Subject: Re: Economic assumptions
Message-ID: <199404051723.AA09478@access1.digex.net>
MIME-Version: 1.0
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>F >There's a piece by Kevin Kelly called "Network Economics" in the 
>F >latestWhole Earth Review, about how better communications tech and 
>F >changed business practices lower transaction costs and (along with
>F >competition and the pace of things these days) are pushing down the
>F >optimum size of businesses.
>F >
>F >-fnerd
>F >quote me
>
>Likewise "The Incredible Shrinking Company" from THE ECONOMIST of DECEMBER 
>15, 1990.  
>
>"Computers were supposed to centralise decision-making and produce
>ever, bigger firms. They seem to have done just the opposite
>
>Peering into its crystal ball in 1958, the Harvard Business
>Review said that computers would revolutionise American business.
>By the end of the 1980s they would ensure that American business
>would be concentrated as never before. The economy would be
>dominated by a few giant firms. Within each firm important
>decisions would be made by a handful of executives with access to
>the firm's single, big computer.
>
>The exact opposite has occurred. In America the average number of
>employees per firm has been falling since the late 1960s; but
>more and more of those employees have a computer on their desk."
>
>DCF
>
>
>
>--- WinQwk 2.0b#1165
>                                                                              
>            

I think we should be careful here. Yes, the big companies are getting
smaller, but that doesn't mean that we're not seeing centralization.
You might argue the exact opposite: The economy is becoming _increasingly_
centralized and the computers and automation are allowing the large
companies to cut out even more people. 

Consider some facts. Microsoft and Intel dominate the microcomputer market.
The auto market in the US expanded over the last several years because
more imports started arriving, but now the global auto capacity is
really much too large. That's why Jaguar, Lotus and many of the other
brands are now just divisions of the large companies. This will continue
to happen as the auto companies merge and cross purchase shares. 
In the airplane market, Boeing is considering pooling resources with
one of its two major competitors, Airbus, so the two can design the
next big plane. 

Yes, there are many small, new companies, but I think this is largely
because of other considerations. It is much cheaper for companies to hire
contractors than employees. The high cost of benefits makes it easier
to shed the people and make them fend for themselves. Plus, the affirmative
action and other discrimination laws makes it difficult if not impossible
to fire anyone but a young, straight, white man without worrying about
a discrimination suit. These are the principle reasons why the corporations
don't have many employees.