The analysis of the contemporary ‘direct economy’ by Las Indias’ David de Ugarte:
“This common pattern is an across-the-board reduction in the scale of productive units and the growing centrality of economies of scope. What are economies of scope? The disproportionate improvement of productivity obtained from two things:
* The capacity obtained through the intensive use of multi-purpose machines and systems–3D printers in prototyping, “recyclable” production chains in manufacturing, systems integrated into logistics–of multiplying the diversity of low-cost supply, marking a tendency towards low-cost customization.
* The capacity for reaching, at a low cost, across greater distances by using networks and identifying concrete identarian networks, to make them customized offers.
The result of the balance between large scales that are suffering more and more inefficiencies and a new productive “SME” community that is producing a greater diversity of things, in smaller runs, and selling them globally by differentiating more kinds of customers, is clear: the whole sector of the new “small and global” produces at a lower cost and is simply more efficient.
So the slogan of the change, in any setting, could well be less scale, more scope.
The Internet of the giants of scale, the world of finance, and the industrial sector that is still dominant today, are the results of the connection of a series of centralized and centralizing systems. Twitter, Facebook, and Google are such centralized networks that they show the user a single entry page. Volskwagen, Endesa or any other industrial giant are such centralized transnational systems that they can plan not only their margins but updates to their equipment from their providers with their corresponding financial costs. These providers, who live in a true monopsony (a market with a single buyer) have no margin for any other technological innovation than that dictated and funded by the buyer.
But starting at certain scale, decentralized systems not only accumulate more inefficiencies, but turn them into costs that are higher than those of their distributed alternatives. These alternatives are not just more and more competitive in industry and even in the credit market. They are, by definition, more robust and resilient, and with a minimal regulation, as we saw in finance, they have systemic effects that underpin the main path of socio-economic and technological progress in our era: the dissipation of rents.
Additionally, when we joined the logic of distribution to that of free software, the free [of charge] nature of the underlying infrastructure appears easily, and the result is the appearance of resilient and accessible markets, and above all of a social fabric that gives a leading role to the community in the city and in conversation.”