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fiatjaf /
2024-01-14 14:55:28

Per Bylund's insight

Per Bylund’s insight

The firm doesn’t exist because, like Coase said, it is inefficient to operate in a fully open-market and production processes need some bubbles of central planning.

Instead, what happens is that a firm is created because an entrepreneur is doing a new thing (and here I imagine that doing an old thing in a new context also counts as doing a new thing, but I didn’t read his book), and for that new thing there is no market, there are no specialized workers offering the services needed, nor other businesses offering the higher-order goods that entrepreneur wants, so he must do all by himself.

So the entrepreneur goes and hires workers and buys materials more generic than he wanted and commands these to build what he wants exactly. It is less efficient than if he could buy the precise services and goods he wanted and combine those to yield the product he envisaged, but it accomplishes the goal.

Later, when that specific market evolves, it’s natural that specialized workers and producers of the specific factors begin to appear, and the market gets decentralized.

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