The wealth of networks

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…). [CrossRef] * 11. A. Ely, Information Week, 20 December 2008; www.informationweek.com/news/infrastructure/ipv6/showArticle.jhtml?articleID=212501014. * 12. Y. Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom (Yale Univ. Press, New Haven, CT, 2006). * 13. J. Lerner, J. Tirole, J. Ind. Econ. 50, 197 (2002). [Web of Science] * 14. K. R. Lakhani, E. von Hippel, Res. Policy 32, 923 (2003). [CrossRef] * 15. Steven Weber, The Success of Open Source (Harvard Univ. Press, Cambridge, MA, 2004). * 16. R. Burt, Brokerage and Closure (Oxford Univ. Press, New York, 2005). * 17. R. Burt, Structural Holes: The Social Structure of Competition (Harvard Univ. Press, Cambridge, MA, 1992). * 18. S. E. Page, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies (Princeton Univ. Pr…

Yochai Benkler's book The Wealth of Networks talks about this at length. The whole text is available online but don't let that stop you from running out right now and buying a seminal work of our time. Here's a passage you may find interesting: "For a wide range of reasons - institutional, cultural, and possibly technological - some resources are more readily capable of being mobilized by social relations than by money. If you want to get your nephew a job at a law firm in the United States today, a friendly relationship with the firm's hiring partner is more likely to help than passing on an envelope full of cash. If this theory of social capital is correct, then sometimes you should be willing to trade off financial rewards for social capital. Critically, the two are not fungible or cumulative." Benkler's argument is rather complex, so …

True, I forgot about that. I'm assuming you're familiar with Toffler and Drucker, but recently Yochai Benkler has added a lot to this theory. In the intro to The Wealth of Networks, he says that the declining cost of capital has three effects: 1) People can do more by themselves. 2) People can do more in loose association with others. 3) People can do more in informal organizations that operate outside the market sphere. The idea being that if you get 100m in investment to start a steel mill, you need to earn 100m back just to break even so you need these very rigid systems in place to maximize profit. However, when you're business only costs 10,000 to start you can harness the power of informal systems and volunteers and crowd wisdom, etc. The perfect example of this would be Wikipedia. Because it costs so little to run, it can be run by…