[sophrosyne42]

Before even railroads, the original manufactory boom that is commonly associated with the industrial revolution is the exact kind of case the other poster is alluding to when thinking of large economies of scale. I think Kolko is great to demonstrate that economies of scale aren't infinite, and in the absense of government intervention, market forces actively conspire to ensure firms shrink to their optimal size. But that also proves the flip side: firms will grow to their optimal size too. There is no economic reason to be suspicious of large firm sizes, and the political reasons inevitably hinge on some sort of mistaken assumption of the economics of the matter; anti-trust regulations advocacy is a perfect example of this.

[Animats]

Kolko talks about that in the context of scaling social/charitable solutions.[1] There's a cite to Marshall, who talks about it in an industrial context.[2] But Marshall wrote in the days before computers and the Internet. There was a time when big companies had enormous clerical plants and corporate headquarters operations. Some paperwork and management operations scale O(N log N) or even O(N^2). At some point, corporate overhead became too large.

But we got past that. Walmart, Amazon, Samsung, McDonalds, Starbucks, Foxconn, and BYD all have hundreds of thousands, or even millions, of employees, but don't seem to be hitting scaling limits. There may be an optimal size limit, but it's above planetary scale now. Computers have made this possible.

This leads to monopoly or oligopoly being reached before any natural limit to growth appears.

[1] https://www.jonkolko.com/writing/notes/13

[2] https://www.ebsco.com/research-starters/economics/economies-...

[sophrosyne42]

I am not convinced it is above planetary scale, nor that these are monopolies. For one thing, all the companies you named have competitors, and no company has a distribution center or restaurant in the arctic. There are plenty of other more populated areas that those companies do not serve. Administrative work still requires overhead, and the internet does not remove that burden, otherwise companies wouldn't be scrambling to invest in AI which they expect to reduce this overhead. AI wont entirely remove the administrative overhead either; there are hard economic limits to the efficiency of a bureaucracy.

But more to the point, consider what you're saying. Is the world, viz-a-viz these companies/services that you refer to, worse off than before the internet? Obviously not. In fact, it is substantially better, because higher economies of scale mean mass production for mass consumption. There would be no way you and I could converse this way on our phones without the hyper extensive scaling of production caused by capitalism. This calls into question the concern over scaling. Large scaling and less firms is preferable when they perform a social function.

If co-ops were replaced by big business, this is something everyone should be grateful for. To go back to the industrial revolution example, there were a form of early mutualist co-op that dominated the non-farm market in the pre-capitalist era: the guilds. And the guilds had a stranglehold on handicrafts, apprenticeships, and all manner of specialized production. In order to increase guild profits, the guilds, through their noble patrons, regulated and limited production of all kinds, who was allowed to sell their craft, and all while being worker-owned. And yet these guilds were the true monopoly: they used legal privileges granted through lobbying to the kings to limit production and raise prices. Their products were exclusively for the wealthy and privileged. On the other hand, it was the capitalists that found a loophole in this system that condemned people to poverty and starvation: the mass production with unskilled labor by manufactories. And, through the manufactory system, they smashed the guilds, producing tons of goods for the everyday man, contributing greatly to the prosperity over and above the medieval system that we see today.