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December 14, 2003
TT: In our hands
This is absolutely, positively not a political blog and never will be, but the most art-relevant story I read this weekend appeared in the Washington Post's "Outlook" section. It's a piece by Everett Ehrlich, Bill Clinton's undersecretary of commerce for economic affairs, on the economic reasons why the Internet is bringing about the decline of the two major political parties:To an economist, the "trick" of the Internet is that it drives the cost of information down to virtually zero. So...smaller information-gathering costs mean smaller organizations. And that's why the Internet has made it easier for small folks, whether small firms or dark-horse candidates such as Howard Dean, to take on the big ones....
Say you want to buy an appliance, or a vacation. You know there are bargains out there, but it takes time and energy to find them. That's what economists call the "transaction cost" of a purchase. This cost of acquiring information is everywhere: the time it takes to call a friend or to learn something in a newspaper. Or the time and resources it takes a company to find out where to find parts and to make sure they show up at an assembly line on time.
Back when it cost a great deal to learn and know things -- when transaction costs were very high -- big corporations had to solve the problem of coordinating information, such as what customers wanted to buy, what parts were being produced and shipped, how to make sure prices covered costs, and so on. The advent of mass production and similar "process" technologies let firms produce and sell things -- cars, steel, oil, chemicals, food -- on a much larger scale, so there was suddenly much more information to coordinate.
Companies solved this problem by creating massive bureaucratic pyramids... Now, however, with internal communications networks and the speed of the Internet, you don't need a horde of people in a big pyramid to handle all that information. Firms have become "flatter" and "faster," and the "networked" or "virtual" company has come into being -- groups of firms that use shared networks to behave as if they were part of the same company....
Now anyone with a Web site and a server, a satellite transponder and about $100 million can have -- in a matter of months -- much of what the political parties have taken generations to build. Technology, of course, has changed politics before. Television changed the two parties, for example, but it didn't make the parties obsolete. In fact, in the day of Richard M. Nixon and John F. Kennedy, television strengthened the two-party duopoly (the economist's term for a shared monopoly), as only those two parties had the resources to use it competitively.
But the Internet doesn't reinforce the parties -- instead, it questions their very rationale. You don't need a political party to keep the ball rolling -- you can have a virtual party do it just as easily.
Read the whole thing here. Then think about how it applies to the myriad ways in which the Internet has already transformed the world of art, from the decline of the classical recording industry to eBay's inadvertent creation of a worldwide "single market" for art auctions to the inauguration of artsjournal.com and its associated blogs.
I can't say it often enough: The Web changes everything. Any artist who doesn't understand that, and isn't acting on the knowledge, is going to get left behind. Likewise any arts journalist. Even if economicspeak makes your eyes glaze over, read Everett Ehrlich's piece (which is written in plain English, not jargon) and you'll see exactly what I'm talking about. Believe me, your time will be well spent.
Posted December 14, 2003 5:59 AM
