[katelynsills]

This is really interesting. I've lately become more curious about theories of transaction costs - how traditional firms might have an advantage because they don't have to bargain over every decision and have understood lines of decision-making. I'm wondering if decentralized organizations might have a transaction cost problem.

[flunhat]

Your comment reminded me of this quotation (it's from Lord Bryce's "The American Commonwealth", describing urban political machines in the 19th century):

> An army led by a council seldom conquers: It must have a commander-in-chief, who settles disputes, decides in emergencies, inspires fear or attachment. The head of the Ring is such a commander. He dispenses places, rewards the loyal, punishes the mutinous, concocts schemes, negotiates treaties. He generally avoids publicity, preferring the substance to the pomp of power, and is all the more dangerous because he sits, like a spider, hidden in the midst of his web. He is a Boss.

You're probably right that voting on everything is not the best way to go, but this is the first Ethereum project that doesn't seem useless or some kind of money grab.

[octaveguin]

I've thought a lot about this too recently while working as a contract software dev versus a regular employee.

There's quite a bit of overhead in specifications planning and negotiation.

There is, as well, a lot of overhead in committees and "no hierarchy" ways of working.

A great amount of efficiency is gained when someone - almost anyone - is The Boss.

[beachy]

In Fred Brookes' classic "The Mythical Man-Month", he extols the virtue of having a single architect:

"Conceptual integrity in turn dictates that the design must proceed from one mind, or from a very small number of agreeing resonant minds."

[lazyasciiart]

I can't quite tell from your comment whether you are familiar with this as an existing topic in economics - if you're not, you might find this an interesting intro to the area of study http://www.sjsu.edu/faculty/watkins/coase.htm

[katelynsills]

I wasn't until this week, so apparently I'm projecting just the right amount of knowledge :D Thanks for the link! I've been looking for opportunities to learn more.

[conatus]

See above ^ - I work for one so can say with some truth here.

Yes they do have this problem but it confers several advantages: people are more bought into the work they are doing, they are happier, they understand decisions made about them, they work with more passion. Not all communicational efficiency makes people happier or more productive. Though it does take discernment and judgement when to not bother have a meeting and make a decision about something. You want to try and lower the problem you identify.

[collinvine]

Great question. This is the biggest opportunity for software, in my opinion. The boundaries between the firm and the market are, in part, governed by transaction costs. (There are more reasons. You mentioned you're interested in reading more, so I'd recommend this: https://www.amazon.com/Economic-Nature-Firm-Reader/dp/052114...)

Technology has the opportunity to decrease transaction costs amongst a group of participants. Consequently, this could then lead to lower trust amongst participants—one of blockchain's leading selling points.

It's all theory, so we'll see how this plays out, but it's the one thing I think is most exciting: can technology lower transaction costs and thus blur the lines between firm and market.

[katelynsills]

Thanks for the book recommendation! Just bought it. Agreed that smart contracts and technology in general could be used to reduce transaction costs.