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The Economy

Abstract

While the application of microbinics technology to production will result in a gradual displacement of people from the production of goods and services, the types of economic decisions which people must make will remain much the same. Households will have to decide how to spend their budgets. Investors must evaluate alternative assets. Managers, whether through computer analysis or intuition, must decide what products to produce. While the types of economic decisions to be made will remain unchanged, the process of making these decisions will be altered by technology which makes possible computer-supported decision making. The advances in the social sciences, the business disciplines and artificial intelligence are creating tools for analytical decisions and these tools are being programmed as software packages for use in decision making. Furthermore as hardware and software advance the cost of using these tools is rapidly falling. While at present they are used primarily in making business decisions, their use will gradually diffuse to many other types of decision making as well.

Keywords

Large Firm Information Service Evaluation Service Producer Service Price Adjustment 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes and References 6

  1. 2.
    Crowe, Michael, 1988, A General Study of Corporate Flexibility, Senior thesis, Department of Economics, The University of Texas at AustinGoogle Scholar
  2. 3.
    One of the early contributions to whether an activity would be performed inside a firm or through a market is Coase, R.H., 1937, The nature of the firm, Economic N. S., Vol 4, pp 386–405. Coase’s ideas have been amplified by Williamson in his development of transaction-cost economics. For example, see Williamson, O. E., Vertical Integration and Related Variations on a Transaction-Cost Economics Theme, 1985, in Stiglitz, J.E. and G. F. Mathewson (eds), New Developments in the Analysis of Market Structure, (The MIT press, Cambridge). For Williamson and others an important explanation for the existence of the firm is asset specificity. In informational society asset specificity decreases for two reasons. First, more economic activities take place through the social nervous system independent of location and second, soft automation makes fixed assets more flexible. This means that more activities will take place through markets.Google Scholar
  3. 4.
    Staff, 1986, The Hollow Corporation, Business Week, Mar 3, pp57–85Google Scholar
  4. 5.
    For a discussion of the intricacies of internal resource allocation within institutions see: Hoenack, S. A., 1983, Economic Behavior within Organizations, (Cambridge University Press: Cambridge) The technological advances of informational society reduce the information costs of the participants in organizations.Google Scholar
  5. 6.
    The problem of deciding exactly what data should be released is a problem in information policy, which will be discussed in the next chapter. As Stigler points out required disclosure by the SEC has had a questionable impact on investor performance. See: Stigler, G.J., 1964, Public Regulation of the Securities Market, Journal of Business, 37, pp 117–142. In view of the subsequent development of efficient market theory, this finding is not surprising. Subsequent research indicates that SEC required disclosures are more successful at reducing risk. See discussion in Posner, R.A. and K.E. Scott, 1980, Economics of Corporation Law and Securities Regulation, (Little, Brown and Company: Boston). In informational society the cost of providing data by machine talking to machine will fall greatly. The objectives of information policy to investors are first, to reduce volatility by increasing the accuracy of analysts short term earnings forecasts. And second, to reduce the bias for short term performance by providing analysts with better information to judge long term performance.CrossRefGoogle Scholar
  6. 7.
    Their views plus many others are contained in: Subcommittee on Securities, 1992, Shareholder rights: hearing before the Subcommittee on Securities of the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Second Congress, first session, on the responsibilities of the board of directors in protecting the rights of shareholders, the proper role for shareholders in corporate decisionmaking, the best corporate governance structure to endure long-term growth, and the disclosure of executive pay, October 17, 1991, (U.S. G.P.O.: Washington)Google Scholar
  7. 8.
    A complete list of improvements is to be found in Dertouzos, M. L., R.K. Lester and R.M. Solow, 1989, Made in America: Regaining the Productive Edge, (The MIT Press: Cambridge)Google Scholar
  8. 9.
    The assumption is the continuation of current trends. For example, see Birch, David L., 1987, Job Creation in America: How Our Smallest Companies Put the Most People to Work, (Free Press: New York)Google Scholar

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© Kluwer Academic Publishers 1993

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