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Monday, July 7, 2008

Here Comes the Economists

I just starting reading Clay Shirky's Here Comes Everybody - I happened to pick it up when browsing the New Books shelf at the library and had no idea it was the current 'it' book among techies. Of course, since then, I've seen a dozen references to it on as many blogs so now I'm feeling very cliché. But in this particular case, I think I'm OK with that, since I want to comment on a somewhat different aspect of the book than most of the ed and/or tech bloggers I've been reading.

I'm only about forty pages into it but I was so struck by Shirky's use of economic concepts that I had to go look up whether he is an economist (he isn't but he clearly learned it somewhere). One of the book's basic premises is that the internet has reduced the transaction costs of organizing large groups of people - on page 30 he evens quotes Coase's original 1937 article on transaction costs. In one early passage where he talks about the implications for businesses, he refers to music distribution, pointing out that record companies might still have an absolute advantage at distributing music but the power of the internet has made file-sharing so easy that they have lost their comparative advantage (he uses 'relative advantage' but it's the same thing). I don't read many business management-type books so maybe a lot of them are like this but I'm looking forward to finishing the book and hopefully find more examples I can use with my intro micro class, which tends to be full of business-major wannabes.

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