The Theory of the Firm can be explained from one perspective with the erroneous theory that knowledge creation can be duplicated and redundant thus managers play an important role of making sure there are backup employees in case one gets sick, leaves, or otherwise fails.
We've needed corporations to aggregate work, because for example you don't build Mozilla Firefox with one programmer. You need a large team.
This is why I was working so hard on solving the Expression Problem for computer programming language (which I think I've solved and will be working on after I finish the crypto work), because with true modularity (no need to refactor), then programmers can work on their own smaller modules and then other programmers can combine modules into large programs. This is the Holy Grail of programming yet to be achieved.
In any case, the point is knowledge creation is becoming more autonomous, e.g. the 3D printer and 3D printer designs for download. You used to need a corporation to accomplish what you can now do individually.
Whereas if you review my essay linked from the opening post of this thread, I argue that knowledge creation is accretive, spontaneous, and the property of the creator, thus it can't be tied to money or physical value. Knowledge creation is like an end-to-end principled network in that middle men (Theory of the Firm) can only obstruct it.
More generally and abstractly what is happening is that we are becoming more specialized and thus the trend to maximum division-of-labor is intact. The problem with the maximum division-of-labor is that in the Theory of the Firm, this gives the corporation all the control and profits because the various specialists can't sell their skills independently into the final market and have to be bundled by the corporation into a final product.
rpietila, I moved our discussion about theory of change activism in money systems, and username18333 on the applicability of his
Great Empire of Hyperaccelerated Redistribution Theft anti-money altcoin, to
the Economic Devastation thread which is more apropos.
Even
Karl Marx understood that the system of social structure was a result of (and not the cause of) the mode of production driven by technology (a.k.a. "natural science"). He eloquently stated that the mode of production shifted over time due to changes in the underlying technological "forces of" production. He explained that what he meant by capitalism is the "modern bourgeois society" which he certainly meant those who could aggregate more capital in the power-law distribution simply because they had more capital.
Karl Marx did not state that the reason for this rise of monetary capitalists is because the Industrial Age can be financed with usury because industry (e.g. factories) require high fixed capital investments, with amortized rates of return. And thus industrial society can not produce without concentration of monetary capital. And thus capitalists are then able to capture the government and write off usury defaults to the public backstop, because in an industrial society production is too big to fail because it does not incorporate Taleb's anti-fragility thus investments in production overcommit to egregious estimation errors because there is a contagion effect of increasing debt to stimulate demand and production. In short,
the entire industrial system is doomed to corruption by its very technological nature regardless what social structure is attempted to build on top of it.
Whereas, in the
opening post of the Economic Devastation thread, CoinCube has cited my writings on the theory that the Knowledge Age inverts the control over capital, because knowledge creation (not preexisting knowledge consumption per se, although learning is diversified especially if autodidactic undirected and thus a form of innovative knowledge creation) spawns chaotically and unpredictably, thus can not be control by monetary capital. It is the changes in technology which have enabled individuals to directly "sell" (trade) their knowledge creation into the market of demand for knowledge creation, and stepping out from under the control and reason for existance of the corporation in the Theory of the Firm, that is destroying the utility of excessive quantities of stored monetary capital, because it is implausible to convert these large stores of capital to efficient production of knowledge. This is the why the old world industrial capitalists are creating a new world order of totalitarian control in order to try to hang on to their power which is being fundamentally eroded by technological shift to the Knowledge Age.
I believe I am the progenitor of the concept and term Knowledge Age in this context.
I have argued to rpietila that the technological struts (e.g. anonymous internet and anonymous money for trading and including micropayments scaling which Monero can't do) have to be in place before the change will occur and that
his religious activism is counter-productive.
I have argued that username18333 makes the same mistake that all communists and socialists do, in that they can think by force of destroying freedom by stealing from some to give to others that they can change the underlying forces of production. One day I will need to take the time to read all of Marx to understand how he ostensibly transitioned from a correct statement of reality in the Preface to such a
horrific killing field of Communism.
P.S. I am the former AnonyMint, the creator of this Dark Enlightenment thread.
We humans can work on technology that alters those implicit constraints. That is about all we can do to effect change. Education is a total waste of time, because people will naturally anneal to the implicit constraints (humans are very adaptable).
In the Industrial Age, the most economic meant aggregation of capital (factories and labor) because production required large economies-of-scale. Thus the Theory of the Firm (top-down management) applied. As well, capture of the State by the capitalists applied, because these were all the most economic outcomes. The people were fed the delusion of democracy because this was the most economic (for them and for the capitalists). But I tell you even the capitalists know they are trapped by the one-world NWO and they don't like it. Their ROI is diminishing and they know it.
My point all along has been the Knowledge Age alters the implicit economic constraints, because it removes those requirements (benefits) for economy-of-scale beyond the groupsize of the individual. The larger entities will be less agile and thus a liability in the Knowledge Age.
The monetary system we got was the one that fit the implicit economic constraints.
What will get in the Knowledge Age is what is most economic in the new paradigm of implicit economic constraints.
It would be much more productive use of your time to analyze what the implicit constraints are and model the free market outcome, than waste your time being repulsed by your ingrained preferences (which frankly I think are just FUD any way). And yes your beloved Statism was a free market outcome of the Industrial Age (and prior). And that is why socialism thrives at this end game, because people correctly blame the free market, but without realizing that it all is changing in the Knowledge Age if they would only adapt (but their ears and eyes are covered).
The Knowledge Age threatens to alter the implicit economic constraints radically.
It has nothing to do with their understanding of money.
Micropayments are the only way certain business models could function. There is a huge economy that doesn't happen without micropayments. We will never remove the Sybil attacks on Tor without micropayments.
The generative essence is that the maximization of the division-of-labor trend requires increasing granularity of transactions.
This is an inexorable trend. For example, 1000s of years ago one had to carry around a slap of Iron to make a payment. This required payments to be coalesced supporting the
Transaction Cost Theory of the Firm (which is antithetical to the maximum division-of-labor and its End-to-end Principle implication).
The argument against micropayments was the cognitive cost places a lower bound on the transaction size, but this cognitive decision process can be automated for the user. For example, I join a dating site and agree to pay 1 cent per message I send, thus I only make this cognitive decision once for all micropayments I do and this eliminates the need for a CAPTCHA or some other intrusive means of preventing spam (a form of Sybil attack).
It is precisely because of this cognitive load that non-micropayments can't scale to maximum division-of-labor. How many experts can you reason about to pay $100-$1000 each for some service? But let's say you can automate by agreeing to pay 1 cent per research paper accessed then you can preview unlimited experts without cognitive load on each transaction.
Micropayments monetize the
Gift Economy of the Knowledge Age. This is what Reddit and Doggie Coin were all about. Without that monetization, the Gift Economy devolves into corporate sponsorship of those with reputation which all that centralized evil of the Transaction Cost Theory of the Corporation.
Financeability of Knowledge
As explained in the Economy of Knowledge and Energy of Knowledge sections, knowledge doesn't exist now if it isn't dynamically adaptable in the future. The only systems in nature which can do this, are those that are composed of autonomous agents without top-down control, e.g. ant colonies, the neurons and synapses of the human brain, free markets, and unregulated social networks.
Due to aggregating and concentrating capital via an interest rate, as opposed to dispersing and scattering capital, finance mathematically must over time reduce the quantity of autonomous decisions (at least decisions about who receives funding to produce). Thus if financing were the predominant long-term trend, knowledge could not be.
The more potential energy in the knowledge capital, the more priceless it is sell its future. There are knowledge producers such as the creator of the open-source software movement, who absolutely refuse to work at any price where they don't have sufficient ownership of their knowledge, so as to prevent limitations of its potential future use. Due to the transactional cost Theory of the Firm which provides for the economic existence of the corporation, corporate capital accumulates by defending or increasing the transactional cost between otherwise autonomous knowledge producing actors. Thus increasing corporate control of knowledge is the antithesis of increasing knowledge. Knowledge can only increase by increasing the autonomy of the knowledge producing actors. This tension is depicted graphically.
Thus, finance and corporations are inherently ownership centralization paradigms. Whereas, knowledge ownership can not be centralized without destroying it.
For example, if a corporation purchased a huge library of software modules or books, written by different authors, the managers could create nothing with this without the authors (or others) who are knowledgeable of these modules or books. If these authors were not already organically interacting, then they would not be able to at any price, unless there was interoperability knowledge potential enumerated by some knowledgeable person(s). Thus always the knowledge is owned by the knowledge producers. When a knowledge producer is gone, the knowledge previously produced is destroyed, if it was not adopted by another sufficiently knowledgeable producer.
The Inverse Commons explains that unlike sharing of hard resources, the sharing of knowledge increases the value of the shared knowledge. Current knowledge becomes more valuable as it gains more future potential uses, and only autonomous knowledge actors can maximize diverse use cases of interoperability.
Software has minimal financing requirements, e.g. one or two humans with computers can write software that launches a $millions start-up. I did this once or twice by myself with no employees (e.g. CoolPage.com by 2001 if in Shadowstats inflation-adjusted dollars).
Citing special cases of localized efficiency doesn't vacate my assertion (and informal proof) that generalized, global efficiency is the maximization of entropy. Over the long-term systems self-organize (anneal) to prioritize global efficiency by eliminating Coasian barriers.
So sorry your view is too simpleton.
The generalized definition of efficiency does incorporate any domain (including capital formation) that is relevant to maximizing global entropy.
I was working on trying to
solve the problem of not having to commit so tightly coupled to a platform, because I know how important this could be for scaling in the Knowledge Age. In that linked thread, I was getting deeper into the concept of the
Theory of the Firm, why corporations exist and why the Knowledge Age eliminates them. Unfortunately I've had to put that on the back burner and it is very ambitious.
Ah I just bumped into
my 2011 prediction on Google, which seems to be coming true. Yet another in my long list of correct conceptualizations that come to fruition.
Capital and knowledge age
If we think capital as the means of production, then in the knowledge age, knowledge and knowledge workers is the capital, essentialy threatening "capitalism", because the means of production are now free to walk off the factory! So capitalism will be reinvented in less centralized and more distributed fashion.
Bravo! You got that aspect of the concept.
