I don’t think that’s quite accurate. The semantic economy isn’t a product, but the result of greater connectivity throughout the economy which allows for greater flexibility. So, I would argue that the Semantic Economy is actually more stable as a whole, but less stable for incumbent enterprises.

Thanks for your comment. I’m glad you like the article.

- Greg

Greg

Very, very impressive post. Let me add a little bit.

1. Organizational, informational and operational (transactional) activities in a company can be simulated by the Network more effectively than by corporate information systems. The new phenomena (social substance) – the Network – can intellectually arrange the interrelations between companies on the seamless basis. And market can get additionally to the business intelligence the automatic realization of different business opportunities based on artificial intellect operating with the virtual business collaboration. In US and Europe it is called as cloud computing (apps.gov) and using the public data (data.gov).

2. Development of Internet is based on a huge humanitarian demand in society for global information activity and global information networking. Digital information and digital knowledge become the economical and humanitarian resources. On-line computer games are not only the products for entertainment (as they are off-line), but the digital assets and digital resource of profit. As a result, a new business model of the market is deployed today as a Single Digital Market (in Digital Agenda for Europe 2020) and as a Single Information and Marketing Network in CIS countries (former USSR).

3. When we operate with information and knowledge in humanitarian aspect one important principle appears. As great Ukrainian philosopher Grigory Skovoroda (1722-1794) said: “Ethics is before the knowledge”. So information network develops not only new entrepreneurships, new social and governmental institutions but the new ethics which is the basis for the new humanitarian networking.

4. The global digital information network is not only Semantic Web which effectively operates with Big Data. It should be the structured information space with clear data identification, data packing and unpacking accordingly to content and semantic senses, eliminating (or archiving) old data, filtering and avoiding useless data. It should provide On-line and Seamless data supply and data exchange for business networking.

Semantics is only a part of this self-organizing and self-developing space. Structure of the global information network additionally to semantics also supposes syntactics, pragmatics etc.

5. New Semantic Economy looks like the return to the Renaissance period (14th-16th centuries) and promises flourishing the arts, trade and democracy. Network can really socialize the energy of individual and energy of the mob. So, global networking soon will mean the total entrepreneurships on new humanitarian and business markets as well as a self-realization and economical sovereignty of new digitized Y-generation (young generation).

I think it is a construct more like the social contract. The central question he asked is why we have firms at all, instead of just all being private contractors (this was in the era before enormous capital costs). Outsourcing came much later, so the 1937 paper is a bit anachronistic.

I think outsourcing happens when informational costs become so negligible that functions can be moved to another company without having to worry about incurring them. Payroll is an obvious one, but these days, companies outsource manufacturing, design etc.

Greg

But I don’t buy it as the reason that firms exist – which is Coase’s argument. And I don’t buy it as the primary driver of decisions about how a firm is organised, which is what the modern TCE literature suggests. As you say, it’s too slow, and it’s also usually too ambiguous. And also, not everything is about cost reduction. I think that firms outsource to marketing agencies not to reduce transaction costs, but because they think they will get better results.

I’m not so sure about that. As I’ve built companies, I’ve definitely noticed an ability to reduce costs through negotiation as well as an increase in the amount of information available to me. So, while it moves too slow to be an active part of everyday decision making, it’s very real.

- Greg

This is a side note, but I’ve always had some problems with Transaction Cost Economics. It is very well thought-out intellectually, and a well-constructed economics theory. But for me, it doesn’t ring true with any of the decision-making processes that I’ve participated in within actual firms.

I like organising to maximize value creation a lot better as a concept…