Philip Mirowski, Machine Dreams: Economics Becomes a Cyborg Science, Cambridge: Cambridge University Press, 2002. Chapter 1 available at: http://commons.somewhere.com/rre/2001/RRE.Machine.Dreams.html This is a tremendously interesting work of 20th century intellectual history, a thorough and robustly argued narrative of the tension within the field of economics over the nature and role of information. Neoclassical economics, as Mirowski argued in his book "More Heat Than Light", was invented through an analogy with early 19th century physics that assumes that perfect information is effectively available to everyone. Although the neoclassical school probably remains a majority of the profession, several information-centered schools have arisen. The central figure in Mirowski's book is John von Neumann, whose work in inventing the digital computer and game theory, among other things, seems even more important after reading Mirowski than we had already heard it was. Mirowski combines an extremely strong knowledge of the foundations of economics with a serious talent for institutional history, with the result that every page practically glows in the dark with remarkable ideas about the history of both economics and computing. Eric Brousseau, EDI and inter-firm relationships: Toward a standardization of coordination processes?, Information Economics and Policy 6, 1994, pages 319-347. This is a careful and thoroughly argued paper about the conditions under which companies can coordinate their activities with their suppliers in an automated fashion using electronic data interchange (EDI). EDI is B2B online commerce avant la lettre -- a type of business-to-business communications protocol that requires the businesses to invest considerable effort up-front to articulate a vocabulary of possible circumstances they might need to communicate about and a set of policies for acting automatically on any EDI message when it arrives. EDI has a reputation for being cumbersome, but in reality what is cumbersome is the intrinsic problem that EDI is supposed to solve. Brousseau's argument is that EDI is useless -- that is, not worth the considerable effort of setting it up -- in industries such as petroleum refining where operations change only infrequently and within a small and well-defined space of possibilities, and that it is also useless in industries such as construction in which projects differ immensely among themselves and often change in major ways when they are halfway along. This kind of article is immensely useful because it forestalls overgeneralization. Every industry needs to be analyzed on its own terms. In particular, an analysis like Brousseau's can be helpful in determining the best division of labor between automatic protocols like EDI and actual communication among human beings, whether in the customer-supplier relationship or elsewhere. Stephen S. Cohen and Gary Fields, Social capital and capital gains: An examination of social capital in Silicon Valley, in Martin Kenney, ed, Understanding Silicon Valley: The Anatomy of an Entrepreneurial Region, Stanford: Stanford University Press, 2000. This useful paper uses Silicon Valley as an example in proposing a new theory of social capital. Social capital has been understood in terms of social networks: the more people know one another, the more possibilities arise for entrepreneurship, whether civic or economic. Cohen and Fields build on this conventional theory by describing the unique ensemble of institutions that have made the social networks of Silicon Valley so productive. These institutions include the great research universities, government research and development policies, venture capital, stock options, and the specific nature of the computer industry. This theory is useful because it explains why the Silicon Valley model might not be applicable elsewhere. A different industry, with different kinds of products, may require a different ensemble of institutions. Thus even an industrial region such as the computer industry of suburban Boston might end up seeming very different from Silicon Valley once their respective institutions have been analyzed. The next step is to evolve a method for determining what industries might prosper in what kinds of regions, and what kinds of institutional innovations might be necessary in particular contexts. Bruno Latour, Social theory and the study of computerized work sites, in Wanda Orlikowski, Geoff Walsham, Matthew R. Jones, and Janice I. DeGross, eds, Information Technology and Changes in Organizational Work, London: Chapman and Hall, 1996. This short paper is an exercise in an important project: understanding computers as artefacts that are densely knitted into sprawling, diverse networks. The point is not that people, computers, and other artefacts interact a lot. Rather, every element of the network impresses some of its properties on the others. Human work skills, for example, are inscribed into computers, whether literally in the form of expert systems or in simpler and more various ways as human attributes are taken into account through the design process. Computers and other artefacts likewise become impressed on people through, inter alia, cognitive processes that routinely depend on the availability of computerized representations, for example when checking the status of one's train on the departure board upon walking into a train station. For this reason, Latour argues that we should think of people, computers, and other artefacts as being distributed, and their attributes as continuously circulating through the sociotechnical networks that generations of entrepreneurs have woven into our lives. Roy Rosenzweig, Wizards, bureaucrats, warriors, and hackers: Writing the history of the Internet, American Historical Review 103(5), 1998, pages 1530-1552. This is a useful review essay by a historian on several popular and scholarly books about the beginnings of the Internet, considered as historiography. Its central topic is the diverse contexts in which the Internet's rise needs to be analyzed, and particularly the dialectic of military-establishment and counter- cultural contributions to the Internet and earlier networks such as ARPANET and USENET. Some of these histories concentrate on individuals -- understandably so, given that some remarkable individuals were involved in the story. But remarkable individuals can be found in many places and times, and so an emphasis on individuals does not tell us the conditions under which any individuals at all could be capable of those particular feats. Those conditions include the R&D policies of the US military in a particular window of time during the Cold War. They also include the international politics by which the TCP/IP protocols, improbably in historical terms, rose to their current place as a generally accepted standard. USENET, by contrast, was the work of volunteers and hobbyists, many of them motivated by the democratic themes of the counterculture. Yet even that opposition between the military Internet and democratic USENET simplifies the history as well, for example in regard to the early Internet's self-consciously informal culture and the military funding of many of the sites that ran USENET. Rosenzweig thus calls for research into the cultural context of all of these networks, for example in the rise of a libertarianism that was surprisingly able to reconcile the counterculture with Reaganism. Mark Casson, An entrepreneurial theory of the firm, in Enterprise and Leadership: Studies on Firms, Markets and Networks, Cheltenham, UK: Elgar, 2000. Mark Casson is an economist who studies, among other things, the effect of information flows on firms and industries. In this particular paper he describes the role of the entrepreneur in identifying "missing markets", that is, opportunities to connect production factors such as skilled labor with consumers through a new intermediary, the entrepreneur's firm. This whole question has been more or less neglected in the mainstream of neoclassical economics, which emphasizes allocation over innovation and imagines markets to be already perfect or nearly so. In particular, Casson, in common with many other outstanding economists of information and institutions, understands the firm as an active market-maker rather than a passive taker of prices. He devotes several highly intelligent pages to what he calls "synthesis": the process by which competing entrepreneurs gather information in various places throughout the economy and attempt to identify the entrepreneurial opportunity that interrelates them. He notes, for example, that an entrepreneur must generally have two quite different talents: noticing new opportunities through networking and capitalizing on those opportunities by building a firm. This is because the information that a given opportunity exists cannot easily be bought and sold -- even a slight hint as to the location of the opportunity will be enough for many other skilled entrepreneurs to steal the idea. It is remarkable that economics has gone so long without a serious theory of entrepreneurship. Part of the problem is that economics has long emphasized physical goods over intangible ones. Information has quite different properties from most physical goods, and in work like Casson's we can start to appreciate just how much difference these differences make in our understanding of economic and other institutions.
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