The Uses of Diversity. David Ellerman
with a new idea. An example would be a purchasing agent for a restaurant chain who becomes dissatisfied with the scales he buys, has a better idea for their design and teams up with a machinist from a tool-and-die company and a designer of microprocessor controls to start a new enterprise manufacturing food wholesalers’ scales. The new enterprise would be not a reproduction of the parent enterprise, but a mutant” (Jacobs 1980, 68).
6. See Arthur (2009) and Koppl et al. (2018).
7. See Peters and Waterman (1982) as well as Collins and Porras (1994) to update the story of 3M as the “Mutation Machine from Minnesota.”
8. See Chapter 10 “Why Backward Cities Need One Another” in Jacobs (1984).
9. Even imported “factories” such as the BMW and Mercedes assembly plants in South Africa will largely serve only the purpose of gratifying the elites. Moreover, by soaking up much of the local demand for cars by those who can afford them, such plants will crowd out and foreclose on the possibility of there being a genuinely African car with all the technological ramifications that would follow from it.
10. Like Darwin, Wright thought it relevant to carefully observe artificial selection. Wright found that breeders do not keep all their animals together in one large interbreeding herd. They deliberately break the herd up into subherds, subpopulations, “races,” or “demes” (as in demography). It is a question of balance. The subherds should be small enough so that the variety found in the subherd (through sampling error) or created through mutation, sexual reproduction, and genetic drift will be emphasized through inbreeding. But the subherd should not be so small that inbreeding leads to the quick fixation of ill-adapted genes and the deterioration or demise of the subherd. When a clearly superior example is produced in a subherd, then the seed is crossbred into the other subherds to give them the benefit of the innovation. But seeds could not be constantly crossbred between the subherds as that would defeat the benefits of their semi-isolation. Shifting balances were involved.
11. See Provine (1986) for more on Wright’s work. On parallel experimentation schemes, see the chapter in this volume and the work of Charles Sabel and colleagues (such as, William H. Simon and Michael Dorf), for example, Dorf and Sabel (1998), in what might be called the Columbia school of legal pragmatism—itself the fruit of the joining across sectors of a politico-economic sociologist (Sabel) and legal scholars.
12. The problem of using new knowledge (either an innovation or new imported knowledge) to produce other products off the main line of business is related to what Norbert Wiener called the “inverse process of invention.” Ordinarily we think of starting with a problem and then making an innovation or invention to solve the problem. But with the new “solution” in hand, we might then search for what other problems it might be able to solve. “It is just as truly a work of invention or discovery to find out what we are able to accomplish by the use of these new tools as it is to search for the tools which will make possible a specific new device or method” (Wiener 1993, 91).
13. Or as Marx would put it, the mode of production puts fetters on the forces of production. And as recent history has confirmed, real-existing socialism put even greater fetters on the forces of production.
14. Jacobs gives an example from a service sector. “For one thing, restaurant chains keep splitting off new restaurants. Indeed, that is how they become chains in the first place—not by merely trying to add more tables, customers, cooks and cashiers into an ever bigger and bigger restaurant, but by multiplying into more restaurants. Besides that, restaurants give birth to independent progeny which are not branches or subsidiaries, but genuinely new enterprises” (Jacobs 1980, 67).
15. See http://www.thermo.com/; Peters (1992), and Bailey and Syre (1996).
16. There is no intrinsic reason why spin-offs should be restricted to new products. Even routine parts of the operation, such as copying (and printing), trucking, food preparation, secretarial services, cleaning services, and the like, could be spun out with long-term contracts to keep the original business with the mother firm (so the jobs are not “put to competition” for the old business). Then the spin-outs could fill many niches for similar work in the business environment which would expand the old work and perhaps diversify into new work—all of which would not happen while it remained a sterile captive of the internal division of labor in the mother firm.
17. In Taiwan, the spin-off entrepreneurs are said to prefer being the “head of a chicken than the tail of a horse.” See Jacobs (1984, 99–102) on the Taiwanese experience.
18. Jacobs has noted the connection between top-down power and empire-building: “The biggest and most thoroughly centralized governments have always, finally, required the special environment of oppression to continue to maintain themselves. And some could never have attained their great size at all had they not grown in that environment” (Jacobs 1980, 77).
19. The virtues of small countries are more fully developed in the work of Leopold Kohr (1978).
20. In biological terms, the more that power is bottom-up in a firm, the more it is like an organism with reproductive cells under decentralized control throughout the organism rather than under central control in one specialized part.
21. For details, see the account by a preeminent American organizational theorist and his wife, Whyte and Whyte (1991).
22. In a democratic firm, where “corporate governance” is more than an oxymoronic phrase, the quality of the self-governance deteriorates as the firm gets larger so firms will tend to naturally subdivide anyway to keep the membership at workable levels. The upper limit might be between several hundred and a thousand members depending on the technologies involved.
23. See Ellerman (2003a) for more on this remarkable theory about migration. By this theory, just as a suburban bedroom community would not be considered “undeveloped” because the jobs were in a nearby city, so in today’s globalized world, a country that accepted the “international division of labor” as a supplier of transnational labor would not be “undeveloped”—it is only a “bedroom community” vis-à-vis the developed world.
24. “Possibly because so many ambitious and expensive attempts to force or coax economic expansion have failed during the second half of the twentieth century, it has finally become permissible to say that the emperor has no clothes—that economic theory can’t explain economic expansion” (Jacobs 2000, 158).
25. “A system—any system, economic or other—that at every point of time fully utilizes its possibilities to the best advantage may yet in the long run be inferior to a system that does so at no given point of time, because the latter’s failure to do so may be a condition for the level or speed of long-run performance” (Schumpeter 1962, 83).
26. See Lovejoy (1960, 293–94) on “diversity itself as the essence of excellence” (quoted in Jacobs 1980, 114) and Kanigel (1997) on the “One Best Way.”
Exit versus Voice and Commitment
Introduction: The Two Logics
There are two logics, dual to one another, that run throughout mathematics and the sciences as well as throughout questions of institutional design. The underlying duality is series-parallel duality that is best known from electrical circuit theory.1 The underlying model is the basic choice between multiple components connected in parallel or connected in series as in the two-terminal circuits in figure 2.1).
Figure 2.1 Parallel and Series Connections of Components.
In