November 10, 2003

Territories of Profit

My student Gary Fields's book Territories of Profit is about to emerge from Stanford University Press. It's a very nice book indeed--although, as you can tell from the preface, I never convinced him that he ought to think like a neoclassical economist :-):

this study began as an effort to uncover historical analogies to Internet commerce. In the course of its development, it established two parallel worlds, one occurring in the late nineteenth century, marked by the railroad and telegraph revolution, the other occurring during the final years of the twentieth century, marked by the ascendancy of the Internet. Two business firms,G. F. Swift and Dell Computer, eventually emerged as the protagonists of these dual universes and became the focus of the research for this study.

One of the primary aims in setting up this comparison and examining the impacts of a previous communication revolution was to temper some of the exaggerated claims, rampant when research for this book was undertaken, about the uniqueness of the Internet and the so-called information age. There is no denying this uniqueness, but in the absence of a serious look back in time, such claims are historically static with little insight into what is actually new. Perhaps more importantly, however, this study set out to challenge a far more dubious set of principles being formulated in academic, policy, and business circles on the convergence of Internet communication, perfect markets, nonhierarchical organizations, and innovation. By supposedly equalizing access to information, Internet technology, we were told,was not only converging with more perfectly efficient markets. The Internet was promoting a more innovative economy, less hierarchical business organizations contracting as equals through the price system, and a recession- resistant pattern of capitalist development different from the past. Challenges to these conceits form the threads of this study.

The lessons to be learned from Territories of Profit are threefold: first, while the Internet is unique, its impacts on innovation and profit making of business users are intelligible only as part of a much broader historical revolution in communications; second, innovation driving capitalist development is not something that occurs through established markets and the price system but is instead the outcome of firms creating organizations and using mechanisms of power strategically in pursuit of profit; and third, in pursuing this mission of crafting more innovative routes to accumulation, firms use power and organization to reconfigure territory such that the continental economic empire building of the vertically integrated firm and the global market development of the network firm share similar histories.

Posted by DeLong at November 10, 2003 07:48 PM | TrackBack

Comments

Brad,
Is this book going on sale, or is it just having an academic distribution to the libraries of the world? It sounds interesting and I want to get my hands on it.

Thanks,
Fester

Posted by: fester on November 11, 2003 05:06 AM

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I always saw the bulk of internet commerce as barely more than a hopped up version of the mail order catalogue business.

Then again, with the mail order catalogues you couldn't access pictures of two chicks making out.

Posted by: avedis on November 11, 2003 05:10 AM

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Avedis: you just need to find the right mail-order catalogue.

Posted by: Cosma on November 11, 2003 05:45 AM

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It is more than just the Internet. It is the digitization of many different products. If you want to watch something interesting unfold, keep an eye on Kodak and the digital photo revolution. The Internet is one component, in that pictures don't need to be printed, but can be posted to a website. The other two legs of this digital stool are the digital camera, and photo management/editing software. A book will be written about Kodak's success or failure (unfortunately - I think they will fail to adapt).

Posted by: Mcwop on November 11, 2003 06:55 AM

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It is more than just the Internet. It is the digitization of many different products. If you want to watch something interesting unfold, keep an eye on Kodak and the digital photo revolution. The Internet is one component, in that pictures don't need to be printed, but can be posted to a website. The other two legs of this digital stool are the digital camera, and photo management/editing software. A book will be written about Kodak's success or failure (unfortunately - I think they will fail to adapt).

Posted by: Mcwop on November 11, 2003 06:58 AM

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Interesting premise - sadly, not very well written.

Posted by: Geoff on November 11, 2003 08:21 AM

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two questions:
I thought the comparison of the internet and earlier communication breakthroughs should look at the impact on production costs. In earlier communication-transportation revolution the ability to create production facilities at optimal (?) productionscale was biggest impact. Does this research look at that.

Second impact of internet was to move real world closer to economsts perfect competition world and thus reduce or eliminate economic rents?

by looking at these two factors am I on track,
or completely missing the boat?


Posted by: spencer on November 11, 2003 10:49 AM

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"Second impact of internet was to move real world closer to economsts perfect competition world and thus reduce or eliminate economic rents?"

Nah, just eliminates some amount of retail costs and, thus, increases consumer surplus a little.

Posted by: avedis on November 11, 2003 07:46 PM

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