Ronald Coase had noticed something odd about capitalism. The received wisdom, among western economists, was that individuals should compete in a free market: planned economies, such as Stalin's, were doomed. But in that case, why did huge companies exist, with centralised operations and planning? The Ford Motor Company was hailed as a paragon of American business, but wasn't the Soviet Union just an attempt to run a country like a big company? If capitalist theory was correct, why didn't Americans, or British people, just do business with each other as individual buyers and sellers in the open market, instead of organising themselves into firms?
The answer - which won Coase a Nobel prize - is that making things requires collaboration, and finding and linking up all the people who need to collaborate costs money. Companies emerge when it becomes cheaper to gather people, tools and material under one roof, rather than to go out looking for the best deal every time you need a few hours' labour, or a part for a car. But the internet, Tapscott argues, is radically lowering the cost of collaborating. Companies - certainly big companies - are losing their raison d'etre. Individuals, and tiny companies, can collaborate without corporate behemoths to organise them. Considering how many of us spend our weekdays working for big companies, and then spend our weekends giving our money to them, this is a far-reaching thought.Tapscott cites a number of examples, from a struggling gold-mining concern which, facing bankruptcy, opened up its geological survey data and, with the help of experts across the web, made a recovery, to Chinese motorcycle manufacturing, which rather than being dominated by large companies as in Japan or America, consists of networks of small suppliers and assemblers who meet in tea shops to do deals. (Which sounds weird, but it is exactly how a big chunk of the PC industry has been operating for a while; non-brand-name PCs, assembled from separately-bought parts by end users or small businesses.) And, of course, the user-generated content phenomenon.
If anything, it is tempting to suggest that Tapscott is too kind to large companies. (His multimillion-dollar research was, after all, funded by a consortium of them.) Wikinomics is a book for existing corporations who want to learn how to survive: he suggests, for example, turning consumers into "prosumers", with an active role in product design, as with Lego Mindstorms, a range of construction toys with robotic bricks, aimed at adults. And he's scathing about record labels and others who don't see that the internet is a platform on which they can build new, profitable products, rather than something to be fought with lawsuits. But in the very long term, there's no particular reason why large corporations should survive at all. If Ronald Coase's 1937 insight remains valid, we could yet see the day when big companies such as Google begin to look rather prehistoric -because they are still, after all, big companies.
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