vertical integration

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The AI-First Company by Ash Fontana

23andMe, Amazon Mechanical Turk, Amazon Web Services, autonomous vehicles, barriers to entry, blockchain, business intelligence, business process, business process outsourcing, call centre, Charles Babbage, chief data officer, Clayton Christensen, cloud computing, combinatorial explosion, computer vision, crowdsourcing, data acquisition, data science, deep learning, DevOps, en.wikipedia.org, Geoffrey Hinton, independent contractor, industrial robot, inventory management, John Conway, knowledge economy, Kubernetes, Lean Startup, machine readable, minimum viable product, natural language processing, Network effects, optical character recognition, Pareto efficiency, performance metric, price discrimination, recommendation engine, Ronald Coase, Salesforce, single source of truth, software as a service, source of truth, speech recognition, the scientific method, transaction costs, vertical integration, yield management

Otherwise, AI-First companies might aggregate government-granted advantages such as exclusive licenses to work with government data, patents on their models, or subsidies for providing predictions that allow society to plan well and function better. VERTICAL INTEGRATION The best products in the world are made by vertically integrated businesses: Apple’s hardware to software; Amazon’s warehouses to websites; and, back in the nineteenth century, industrialist Andrew Carnegie’s mines to mills. Famous economists such as Ronald Coase and entrepreneurs like Michael Dell, founder of Dell Technologies, espoused the benefits of vertical integration. Providing everything a customer needs in one package allows for quality control, deep relationships, and better pricing.

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Scale isn’t enough. Combining scale of data, processing capabilities, and network effects to build a DLE is the way forward, and building all three may involve vertical integration. What You Do Vertical integration entails taking on and solving the business problem for a customer rather than just the technical problem—delivering not just a product but a complete solution; doing the whole job to be done. Here are some examples of what a vertically integrated company might provide: answer emails from customers instead of offering up suggested responses to agents tasked with responding to emails (We’ll use this example throughout this section); serve up text in multiple languages on websites and marketing platforms instead of giving tools to language translators; and run an insurance company instead of helping an insurance company process claims more efficiently.

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Keep prices the same: take the difference as profits; reinvest the profits in the technology behind DLEs, automating more and further reducing costs; and reinvest the profits in the business to vertically integrate or re-position it to get more data. Lower prices, leveraging the gains from automation to pursue the following and thus be in a favorable position to beat competitors in existing markets or enter new markets: price discrimination; disruption; and aggregation. AGGREGATING ADVANTAGES This chapter walks through the five strategies at the top of the diagram above—vertical integration, positioning through standardization, data aggregation, disruptive market entry, or price discrimination based on data contribution—that generate more data to feed models, grow the DLE, and attract more customers.

The Meat Racket: The Secret Takeover of America's Food Business by Christopher Leonard

agricultural Revolution, barriers to entry, commoditize, estate planning, facts on the ground, invisible hand, longitudinal study, mortgage debt, payday loans, price discovery process, price stability, Ralph Nader, vertical integration, women in the workforce, zero-sum game

It also spelled an end to the notion that states could fight the rise of vertical integration. Rather than argue against Iowa’s ban on packer ownership, Smithfield sued Tom Miller in federal court, arguing that Iowa had no right to ban vertical integration. Smithfield sued Iowa under Article 1, Section 8 of the U.S. Constitution, commonly known as the Commerce Clause. The Commerce Clause basically prohibits states from setting up their own trade barriers. It says that only Congress can pass laws that affect interstate commerce. Smithfield argued that Iowa’s packer ban was hindering interstate commerce. Vertical integration was embedded in the agricultural economies of the southern states.

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The company helped redraw the new system that emerged. By doing so, it wrote the blueprint for modern meat production. At the core of Tyson’s strategy is an economic principle called vertical integration. In a nutshell, this refers to the way companies buy up the outside firms that supply them (picture what would happen if Apple Inc. bought the company that sold it microchips). When a company becomes vertically integrated, it takes under its control and ownership all the independent businesses that once supported it. In Tyson’s case, the company has swallowed up all the businesses that used to make up a small-town economy.

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Tyson first pioneered this model in the poultry business. Then the company expanded into raising hogs. Within two short decades America’s independent hog industry was wiped out and replaced with a vertically integrated, corporate-controlled model. Ninety percent of all hog farms disappeared. The amount of money spent at grocery stores went up, but the amount of money farmers received went down. Companies like Tyson keep much of the difference. The cattle industry is the last holdout against vertical integration, but even the cowboys are starting to buckle under the pressure to surrender their independence. Tyson and three other companies so dominate the beef industry that they have been able to short-circuit the once vibrant cash market for buying cattle in the United States, giving them power to control the nation’s ranches and feedlots even if they can’t own them outright.

Shorting the Grid: The Hidden Fragility of Our Electric Grid by Meredith. Angwin

airline deregulation, California energy crisis, carbon credits, carbon footprint, congestion pricing, corporate governance, Credit Default Swap, crony capitalism, David Brooks, decarbonisation, demand response, distributed generation, electricity market, en.wikipedia.org, energy security, green new deal, Hans Rosling, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jones Act, Just-in-time delivery, load shedding, market clearing, Michael Shellenberger, Negawatt, off-the-grid, performance metric, plutocrats, renewable energy credits, rolling blackouts, Silicon Valley, smart grid, smart meter, the map is not the territory, Tragedy of the Commons, uranium enrichment, vertical integration, washing machines reduced drudgery, zero-sum game

Wheeling power has been facilitated by several later decisions. Most of this book will be highly critical of RTO governance, but I wanted to write a little about Otter Tail. I needed to show that vertically integrated utilities were not a perfect situation. No, everyone did not just get along wonderfully back in the old days. However, vertically integrated utilities did have some important advantages over the RTO system. The main advantage of the vertically integrated systems is that those systems had clear lines of responsibility. Now that we are talking about transmission … In general, transmission systems follow the power plants, and so the closing of power plants and the building of “distributed generation” (smaller power plants, such as solar arrays) increases the cost of transmission.

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In this book, we will refer to all such organizations as RTOs, though, of course, when a specific name contains “ISO,” we will use that name. Before the RTOs LET’S START BACK IN THE days before there were any RTO areas. Before 1999, all utilities were “vertically integrated.” In much of the country, this is still the case, as we can see by the non-shaded sections in the map above. Before 1999, there were only vertically integrated, utility-owned power plants and distribution equipment (local wires and substations). The utility usually either owned or had cooperative agreements about transmission lines. The utility had requirements to keep the lights on: it reported to a local board of some kind, and it would be judged and possibly fined if there were too many outages.

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It all went into the “rate base,” and the “rate of return” percentage calculation was based on the rate base. Someone noticed (many people noticed) that this was basically a perverse system. The way for a vertically integrated utility to make more money was … to spend more money. Unlike Joe’s deli down the street, which was always trying to be more efficient with money, in order to have larger profits, a vertically integrated utility wanted to be less efficient with money, so they could have a bigger rate base and larger profits. One of the ways that utilities made more money was to overbuild power plants, that is, build too many power plants.

The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism by Jeremy Rifkin

3D printing, active measures, additive manufacturing, Airbnb, autonomous vehicles, back-to-the-land, benefit corporation, big-box store, bike sharing, bioinformatics, bitcoin, business logic, business process, Chris Urmson, circular economy, clean tech, clean water, cloud computing, collaborative consumption, collaborative economy, commons-based peer production, Community Supported Agriculture, Computer Numeric Control, computer vision, crowdsourcing, demographic transition, distributed generation, DIY culture, driverless car, Eben Moglen, electricity market, en.wikipedia.org, Frederick Winslow Taylor, Free Software Foundation, Garrett Hardin, general purpose technology, global supply chain, global village, Hacker Conference 1984, Hacker Ethic, industrial robot, informal economy, information security, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John Elkington, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Julian Assange, Kickstarter, knowledge worker, longitudinal study, low interest rates, machine translation, Mahatma Gandhi, manufacturing employment, Mark Zuckerberg, market design, mass immigration, means of production, meta-analysis, Michael Milken, mirror neurons, natural language processing, new economy, New Urbanism, nuclear winter, Occupy movement, off grid, off-the-grid, oil shale / tar sands, pattern recognition, peer-to-peer, peer-to-peer lending, personalized medicine, phenotype, planetary scale, price discrimination, profit motive, QR code, RAND corporation, randomized controlled trial, Ray Kurzweil, rewilding, RFID, Richard Stallman, risk/return, Robert Solow, Rochdale Principles, Ronald Coase, scientific management, search inside the book, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, smart cities, smart grid, smart meter, social web, software as a service, spectrum auction, Steve Jobs, Stewart Brand, the built environment, the Cathedral and the Bazaar, the long tail, The Nature of the Firm, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, Tragedy of the Commons, transaction costs, urban planning, vertical integration, warehouse automation, Watson beat the top human players on Jeopardy!, web application, Whole Earth Catalog, Whole Earth Review, WikiLeaks, working poor, Yochai Benkler, zero-sum game, Zipcar

The solution was to bring production and distribution all together, in house, under centralized management. The vertically integrated business enterprise took off in the last quarter of the nineteenth century and became the dominant business model during the whole of the twentieth century. The great value of vertically integrated companies is that by eliminating many of the middle men across the value chain, these new mega-enterprises were able to significantly reduce their transaction costs while dramatically increasing productivity. In a nutshell, vertically integrated companies introduced vast new efficiencies whose economies of scale lowered their marginal costs, enabling them to sell ever larger volumes of cheap mass-produced goods to an eager public.

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Spencer viewed competition among firms in the marketplace as the expression of society’s natural evolutionary development and believed that competition should be allowed to play out without government interference—assuring that only the most complex and vertically integrated companies would survive and flourish. Spencer’s views helped legitimize the business interests of the day. By finding a rationale in nature for companies’ pursuing ever larger, vertically integrated enterprises, controlled by even more rationalized, centralized management, Spencer and the free-market economists who followed him successfully tempered any serious public opposition to the existing economic arrangements. Where Spencer and his compatriots erred was in believing that the increasing complexity of society invariably required vertically integrated businesses and more centralized command and control in the hands of fewer institutions and individuals.

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That’s because fossil fuels are only found in certain places and require centralized management to move them from underground to the final end users. The centralized energies, in turn, require centralized, vertically integrated forms of communication in order to manage the momentous speed-up in commercial transactions made possible by the new sources of power. The enormous capital cost in establishing centralized communication/energy matrices meant that the new industrial and commercial enterprises embedded in and dependent on these technology platforms had to create their own giant, vertically integrated operations across the value chain. This was the only way to ensure sufficient economies of scale to guarantee a return on the investment.

Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs by Andy Kessler

23andMe, Abraham Maslow, Alan Greenspan, Andy Kessler, bank run, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bob Noyce, bread and circuses, British Empire, business cycle, business process, California gold rush, carbon credits, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, commoditize, computer age, Cornelius Vanderbilt, creative destruction, disintermediation, Douglas Engelbart, Dutch auction, Eugene Fama: efficient market hypothesis, fiat currency, Firefox, Fractional reserve banking, George Gilder, Gordon Gekko, greed is good, income inequality, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, junk bonds, Kickstarter, knowledge economy, knowledge worker, Larry Ellison, libertarian paternalism, low skilled workers, Mark Zuckerberg, McMansion, Michael Milken, Money creation, Netflix Prize, packet switching, personalized medicine, pets.com, prediction markets, pre–internet, profit motive, race to the bottom, Richard Thaler, risk tolerance, risk-adjusted returns, Silicon Valley, six sigma, Skype, social graph, Steve Jobs, The Wealth of Nations by Adam Smith, transcontinental railway, transfer pricing, vertical integration, wealth creators, Yogi Berra

One of the uncles had been working the mining business for a bunch of years when he realized that if the family owned both the company that drilled the stuff out of the mines as well as the company that transported the coal or ore or whatever out of the mines, then maybe they could make more money. One of the young Pritzkers put it quite simply: they made a fortune. All I could think about for the next few weeks was how could I find things to vertically integrate, because, heck, if the Pritzkers could make a fortune, or yet another fortune, maybe I had a shot at it. It took another few weeks to realize that the only reason their vertical integration deal worked is that mining is a no-innovation, no-excitement, no-Scale, not-much-growth kind of business. No one is writing code to improve mining. There is nothing to scale by a factor of ten, let alone thousands.

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INDEX Abundance and scarcity abundance, recognizing cheap versus expensive and cost cutting economic principles main scarcities tech examples of waste, benefits of and wealth creation Activision Advertising Google sales and scarcity Airports, global comparisons Ajax Alinsky, Saul Amazon, recommendations to customers America Online (AOL), instant messaging virtual pipe Anderson, Chris Apache Apple and cloud computing Stores and vertical integration virtual pipe of See also specific products Application, versus features, businesses Applied Semantics Arkwright, Richard Artificial intelligence AT&T Bell Labs vertical integration Wireless Baby boomers Bach, David Back to basics Banking FDIC Federal Reserve, roles of fractional reserve banking money supply as Thieves Behavioral economics Bell Labs Bennett Mechanical Comprehension Test Bernanke, Ben Bessemer, Henry Bezos, Jeff Bionetworks Biotech industry, personalized medicine Birdseye, Clarence BitTorrent Blink (Gladwell) Books, digital Boulton, Matthew Brain and original thought Stroud number Brenner, Reuven Brin, Sergey Broadcasters, as Thieves Brotherhood Brown, Charles Buffett, Warren Burger, Warren Businesses FAB (Feature, Application, Business) with highest returns profitability.

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I had an old college roommate named Franz who, after taking business classes, would come back to our house, pound a few beers, and proclaim, “Dude, when in doubt, get horizontal!” Then he’d pass out in front of the TV. Sometimes life lessons come from the strangest places. Franz had revealed the secret of how to really Scale. Getting horizontal is how a Free Radical takes those entrenched, vertically integrated giants out at the knees. Horizontal really means doing something better than anyone else and inserting yourself into a product or process by having someone else do everything else. SINCE, I DON’T know, Caesar, Alexander, Nebuchadnezzar, we have lived in a world of command and control.

The Content Trap: A Strategist's Guide to Digital Change by Bharat Anand

Airbnb, Alan Greenspan, An Inconvenient Truth, AOL-Time Warner, Benjamin Mako Hill, Bernie Sanders, Clayton Christensen, cloud computing, commoditize, correlation does not imply causation, creative destruction, crowdsourcing, death of newspapers, disruptive innovation, Donald Trump, driverless car, electricity market, Eyjafjallajökull, fulfillment center, gamification, Google Glasses, Google X / Alphabet X, information asymmetry, Internet of things, inventory management, Jean Tirole, Jeff Bezos, John Markoff, Just-in-time delivery, Kaizen: continuous improvement, Khan Academy, Kickstarter, late fees, managed futures, Mark Zuckerberg, market design, Minecraft, multi-sided market, Network effects, post-work, price discrimination, publish or perish, QR code, recommendation engine, ride hailing / ride sharing, Salesforce, selection bias, self-driving car, shareholder value, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, social graph, social web, special economic zone, Stephen Hawking, Steve Jobs, Steven Levy, Stuart Kauffman, the long tail, Thomas L Friedman, transaction costs, two-sided market, ubercab, vertical integration, WikiLeaks, winner-take-all economy, zero-sum game

Control the price of content by fiat once the distributor purchases the content producer, and the distributor’s gains come directly at the expense of the producer’s profits, which suffer. It’s another zero-sum transfer. The flaw in the logic of vertical integration is simple: Transferring money from one pocket to another doesn’t increase your cash. Yet it’s an argument that most proponents of vertical integration repeatedly miss. The logic of zero-sum transfers implies that the value of content in a vertically integrated entity should be no different than that in a nonintegrated one. However the relationship is structured—whether producer and distributor are merged into a single entity or contract at arm’s length—the content decisions should be the same: Hit programs should always be kept on the air, duds always taken off.

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April 2, 1993). A recent study of vertical integration Gregory Crawford et al., “The Welfare Effects of Vertical Integration in Multichannel Television Markets,” National Bureau of Economic Research, Working Paper No. w21832, December 2015. They examine not just the benefits that come from avoiding the double markup but also the foreclosure effects that come from limiting content access to rival distributors, and find that “program access rules” allow markets to reap the benefits of integration without its associated cost. See also Tasneem Chipty, “Vertical Integration, Market Foreclosure, and Consumer Welfare in the Cable Television Industry,” American Economic Review 91, no. 3 (June 2001): 428–53.

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Book sales went from several thousand e-copies to ninety million print copies in a year—making it the bestselling paperback of all time, and dramatically increasing e-sales too. The content hadn’t changed. The format had. And in this case, spillovers ran from print to digital rather than the other way round. THE PUZZLE OF VERTICAL INTEGRATION Vertical integration refers to the combination of content and distribution. The idea has long been a lightning rod in the entertainment industry. The recent rush was triggered by vertical combinations between TV studios and broadcast networks—20th Century Fox and Fox Broadcasting Corporation in 1986, ABC and Disney in 1996—and continued with megamergers since: AOL–Time Warner in 2000, Comcast–NBC Universal in 2009.

The Four: How Amazon, Apple, Facebook, and Google Divided and Conquered the World by Scott Galloway

"Susan Fowler" uber, activist fund / activist shareholder / activist investor, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Amazon Robotics, Amazon Web Services, Apple II, autonomous vehicles, barriers to entry, Ben Horowitz, Bernie Sanders, Big Tech, big-box store, Bob Noyce, Brewster Kahle, business intelligence, California gold rush, Cambridge Analytica, cloud computing, Comet Ping Pong, commoditize, cuban missile crisis, David Brooks, Didi Chuxing, digital divide, disintermediation, don't be evil, Donald Trump, Elon Musk, fake news, follow your passion, fulfillment center, future of journalism, future of work, global supply chain, Google Earth, Google Glasses, Google X / Alphabet X, Hacker Conference 1984, Internet Archive, invisible hand, Jeff Bezos, Jony Ive, Khan Academy, Kiva Systems, longitudinal study, Lyft, Mark Zuckerberg, meta-analysis, Network effects, new economy, obamacare, Oculus Rift, offshore financial centre, passive income, Peter Thiel, profit motive, race to the bottom, RAND corporation, ride hailing / ride sharing, risk tolerance, Robert Mercer, Robert Shiller, Search for Extraterrestrial Intelligence, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, Silicon Valley, Snapchat, software is eating the world, speech recognition, Stephen Hawking, Steve Ballmer, Steve Bannon, Steve Jobs, Steve Wozniak, Stewart Brand, supercomputer in your pocket, Tesla Model S, the long tail, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, undersea cable, vertical integration, warehouse automation, warehouse robotics, Wayback Machine, Whole Earth Catalog, winner-take-all economy, working poor, you are the product, young professional

Most recently, Facebook has attempted to skirt responsibility for fake news, claiming it’s “not a media company, but a platform.” Hiding behind freedom of speech and a word, Facebook may have committed involuntary manslaughter of the truth on an unprecedented scale. It’s good to be prom queen. 5. Vertical Integration The fifth factor in the T Algorithm is the ability to control the consumer experience, at purchase, through vertical integration. All of the Four control their distribution. If they don’t produce the product, they source it, they merchandise it, they retail it, and they support it. Levi’s went from $7 billion to $4 billion from 1995 to 2005 because it didn’t have control of its distribution.

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The iPhone is the clearest signal that you are closer to perfection and have more opportunities to mate. More writers have written more good articles on Apple than any other company, yet most fail to see it as a luxury brand. I’ve been advising luxury brands for twenty-five years and believe these firms, from Porsche to Prada, share five key attributes: an iconic founder, artisanship, vertical integration, global reach, and a premium price. Let’s dig into each of these more deeply. 1. An Iconic Founder Nothing builds a self-expressive benefit brand more effectively than the constant personification of the brand in the form of one person, especially the founder. CEOs come and go, but founders are forever.

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As an old iMac ad put it, Apple technology is “Simply amazing, and amazingly simple.”21 It’s how Apple makes products that repeatedly become icons—“objects that appear effortless . . . so simple, coherent and inevitable that there could be no rational alternative.”22 Cognitive psychology shows that attractive objects make us feel good, which in turn makes us more resilient in creative challenges.23 “Attractive things work better,” says Don Norman, vice president of advanced technology at Apple from 1993 to 1998. “When you wash and wax a car, it drives better, doesn’t it? Or at least it feels like it does.”24 3. Vertical Integration In the early 1980s, The Gap was a chain of pedestrian clothing stores stocked with records, as well as Levi’s and other casual clothes, some mixed in with The Gap’s own brand. Then, in 1983, the new CEO, Mickey Drexler, remade the company. He softened the lights, bleached the wood, piped in music, expanded the dressing rooms, and decorated the walls with large black-and-white photographs by famous photographers.

On the Wrong Line: How Ideology and Incompetence Wrecked Britain's Railways by Christian Wolmar

accounting loophole / creative accounting, Beeching cuts, Boeing 747, book value, congestion charging, Crossrail, joint-stock company, profit motive, railway mania, the built environment, vertical integration, yield management, zero-sum game

Although Major’s Cabinet agreed the principles of the report, the secretary of state for transport, Malcolm Rifkind (the transport portfolio is a revolving door for politicians on the way up or down), began to have doubts about the model that had been suggested. He started to think that InterCity should also be a vertically integrated railway, which effectively meant that the track authority would be a hodgepodge of little-used lines that would be difficult to manage. According to one of the Treasury’s privatisation team, ‘Rifkind made heavy weather of whether InterCity should be vertically integrated. He was sulking in his tent and his officials hadn’t been able to develop the idea [of how to privatise the railways].’¹⁴. Downing Street then further muddied the waters by flying the kite of the regional model, which Major seemed to favour, once again.

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For a time during the review process, it seemed the government was genuinely interested in looking at the possible alternatives for a new structure and was even considering a complete overhaul of the shape of the industry leading, in particular, to the vertical integration - bringing track and services back together - that many experienced railway managers see as the only effective and efficient way of running a railway. However, such a major change was quickly consigned to the ‘too hard’ box despite the fact that Graham Eccles, a leading Stagecoach rail executive, had gone on a road tour with ministers promoting the idea of vertical integration. Instead, the results of the review published in July 2004 were an all-too-familiar fudge with little real change.

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The logic, therefore, seemed to be to merge these two entities, to recreate the vertically integrated railway that is the best way to run a railway. However, this was ruled out on the basis that there was a considerable amount of track-sharing which could cause ‘conflicts of interest between the dominant company in a region and the other passenger and freight users’.²⁷ Moreover competition ‘for the right to operate services can be advantageous in terms of delivering improved value for money’ and having a vertically integrated railway would mean that no such competition was possible. Given the increase in franchise costs and the success at the time of the one franchise during its temporary stay in public hands, South Eastern, this was hardly a convincing argument (see Chapter 13).

Chokepoint Capitalism by Rebecca Giblin, Cory Doctorow

Aaron Swartz, AltaVista, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, Black Lives Matter, book value, collective bargaining, commoditize, coronavirus, corporate personhood, corporate raider, COVID-19, disintermediation, distributed generation, Fairchild Semiconductor, fake news, Filter Bubble, financial engineering, Firefox, forensic accounting, full employment, gender pay gap, George Akerlof, George Floyd, gig economy, Golden age of television, Google bus, greed is good, green new deal, high-speed rail, Hush-A-Phone, independent contractor, index fund, information asymmetry, Jeff Bezos, John Gruber, Kickstarter, laissez-faire capitalism, low interest rates, Lyft, Mark Zuckerberg, means of production, microplastics / micro fibres, Modern Monetary Theory, moral hazard, multi-sided market, Naomi Klein, Network effects, New Journalism, passive income, peak TV, Peter Thiel, precision agriculture, regulatory arbitrage, remote working, rent-seeking, ride hailing / ride sharing, Robert Bork, Saturday Night Live, shareholder value, sharing economy, Silicon Valley, SoftBank, sovereign wealth fund, Steve Jobs, Steven Levy, stock buybacks, surveillance capitalism, Susan Wojcicki, tech bro, tech worker, The Chicago School, The Wealth of Nations by Adam Smith, TikTok, time value of money, transaction costs, trickle-down economics, Turing complete, Uber and Lyft, uber lyft, union organizing, Vanguard fund, vertical integration, WeWork

, but that doesn’t mean we shouldn’t intervene against other pathologies that lead to concentration. After all, the law should further the public interest—not be used to subvert it. And, critically, even when the chokepoint’s origin looks like something that falls squarely in antitrust’s realm—like the kind of horizontal and vertical integration that has allowed corporations like Google, Facebook, and Live Nation to take so much power—there’s still scope for remedies outside of antitrust’s limited toolkit to address it. Chokepoints are by no means unique to the culture industries. Everywhere you look, corporations are trying to create the conditions that will secure them a disproportionate share of the value of other people’s labor—Uber, Facebook, Monsanto, Google, Perdue Farms, and John Deere among them.

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We focus on the most successful value extractors—Amazon for books, Google and Facebook for news, YouTube for online video, iHeartMedia for radio, Live Nation for ticketing and live events, the Big Three record labels and Spotify for streaming, the Big Three Hollywood talent agencies for screenwriting and Apple and Google for everything mobile. Each of these corporations has its own anticompetitive flywheel, designed to create chokepoints enabling them to capture an undue share of value. Their tools differ—with a reliance on combinations of network effects, licensing mazes, regulatory capture, horizontal and vertical integration, high switching costs, self-preferencing, and the industrial aggregation of copyrights—but they all seek to achieve the same things: to lock in users, lock in suppliers, make markets hostile to new entrants, and, ultimately, use the resulting lack of choice to force workers and suppliers to accept unsustainably low prices.

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Right from the beginning it planned to use books we searched for and bought to gather data on us in order to sell us more stuff and, ideally, take over the world.48 Ebooks were a perfect fit for Amazon’s extractive mindset, because they cost us more in terms of privacy than physical titles ever could. Amazon knows what we search for, what we read, and what we listen to—when and for how long. This “actionable market intelligence” allows it to poach authors, market its own titles to readers, and cross-sell non-book items to readers. The combination of surveillance and vertical integration means that Amazon vastly outpowers both publishers and other retailers, cementing its dominance, and giving it more opportunities to spy on readers. This is the true heart of “surveillance capitalism”—not the idea that Big Tech uses data-mining and machine learning to create mind-control systems that bypass our critical faculties and trick us into buying whatever they want to sell us.

Chicken: The Dangerous Transformation of America's Favorite Food by Steve Striffler

clean water, collective bargaining, company town, corporate raider, illegal immigration, immigration reform, independent contractor, longitudinal study, market design, place-making, Ronald Reagan, Upton Sinclair, upwardly mobile, vertical integration

Later that year, Holly bought its first hatchery, and in  the company added two processing plants.8 Fred Lovette was, in short, helping his company become vertically integrated. By incorporating previously independent facets of the industry (such as hatching, feed delivery, and processing) into a single business enterprise, Holly Farms was able to standardize and guarantee that chicks, feed, medicine, and advice were received by Holly Farms growers in time to ensure that full-grown broilers were consistently delivered to Holly Farms processing plants. A certain amount of horizontal integration—“getting bigger”—not only was an inherent part of this vertical integration, but also was necessary to survive the periodic price fluctuations that characterized the industry.

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John Tyson was not a farmer; he was a middleman, and hauling birds gave him an intimate understanding of all segments of the emerging industry. When he lacked chicks to deliver to his growers, Tyson bought a small hatchery. When he had problems accessing feed, he became a feed dealer for Ralston Purina and eventually built his own commercial mill. In this sense, the process of vertical integration, whereby previously independent facets of the emerging industry were brought under the control of a single entity, initially occurred as a response to problems encountered along the chain of production. In fact, most chicken industry pioneers owe their early success to roles in transportation.

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In , to capture economies of scale in chick hatching, he built a hatchery that turned out , . . . chicks per week. Jewell was constructing an integrated broiler system, and the northern Georgia hill-country An American Industry 41 bounded by Gainesville, Cumming, and Canton was coming to be known as the ‘Chicken Triangle.’”13 By World War II, then, Jewell had one of the first vertically integrated poultry companies in the country. He controlled the grow-out phase through contracts with farmers, and was establishing control or ownership over baby chicks, processing, transportation, and marketing. A decade later, in , the company could boast that “with the completion of their new feed mill, J.

Commodore: A Company on the Edge by Brian Bagnall

Apple II, belly landing, Bill Gates: Altair 8800, Byte Shop, Claude Shannon: information theory, computer age, Computer Lib, Dennis Ritchie, Douglas Engelbart, Douglas Engelbart, Firefox, Ford Model T, game design, Gary Kildall, Great Leap Forward, index card, inventory management, Isaac Newton, Ken Thompson, low skilled workers, Menlo Park, packet switching, pink-collar, popular electronics, prediction markets, pre–internet, QWERTY keyboard, Robert Metcalfe, Robert X Cringely, Silicon Valley, special economic zone, Steve Jobs, Steve Wozniak, systems thinking, Ted Nelson, vertical integration

“Over the years, there’s been a lot of people who say, ‘That was my first computer and I really learned a lot.’ I meet people that are presidents of high-tech companies and they say, ‘The reason I got into computers was because I got a Commodore 64.’ I find that very satisfying.” Michael Tomczyk puts much of the success of Commodore on vertical integration. “Number one, Commodore vertically integrated the company almost by accident,” he says. “They needed to vertically integrate to stay in the digital calculator business. As part of this strategy, Jack bought MOS Technology. And when he bought MOS Technology, he accidently inherited the first self-contained desktop computer developed by Chuck Peddle, which set the company on a course to become a home computer pioneer.”

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“So here we are dependent on one of our major competitors for a critical component.” Commodore regained control over their chip supply by using MOS Technology to clone their competitor’s chip. Commodore could now manufacture a computer better than Apple or Atari at a cheaper price. “The reason we could is because of vertical integration,” says Winterble. “We put so much in just a couple of chips.” Without vertical integration, the custom SID and VIC-II chips would account for a much more significant portion of the costs. Atari and Apple lacked the in-house expertise to manufacture their own custom chips, which meant they had to hire costly outside companies (often MOS Technology) to come up with designs.

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Jack Tramiel knew that to eliminate the competition, he would have to take Commodore places others could not survive. With his lean company and vertical integration, Commodore could decrease the price of their computers to a point where others would not be able to follow. On Friday, October 28, 1983, Texas Instruments publicly announced it was pulling out of the computer market and selling off its remaining inventory at bargain prices. Tramiel had defeated his former nemesis from the calculator wars. Within two days of announcing its withdrawal, Texas Instruments stock surged 30 percent. Atari had no vertical integration to compete with Commodore and even bought its ROM components and microprocessors from Commodore.

The Master Switch: The Rise and Fall of Information Empires by Tim Wu

accounting loophole / creative accounting, Alfred Russel Wallace, Andy Rubin, AOL-Time Warner, Apple II, barriers to entry, British Empire, Burning Man, business cycle, Cass Sunstein, Clayton Christensen, commoditize, corporate raider, creative destruction, disinformation, disruptive innovation, don't be evil, Douglas Engelbart, Douglas Engelbart, Eben Moglen, Ford Model T, Howard Rheingold, Hush-A-Phone, informal economy, intermodal, Internet Archive, invention of movable type, invention of the telephone, invisible hand, Jane Jacobs, John Markoff, Joseph Schumpeter, Menlo Park, open economy, packet switching, PageRank, profit motive, radical decentralization, road to serfdom, Robert Bork, Robert Metcalfe, Ronald Coase, scientific management, search costs, seminal paper, sexual politics, shareholder value, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Telecommunications Act of 1996, The Chicago School, The Death and Life of Great American Cities, the long tail, the market place, The Wisdom of Crowds, too big to fail, Upton Sinclair, urban planning, vertical integration, Yochai Benkler, zero-sum game

Having started as a member of the Trust, Hodkinson, with an ornery streak, came to believe strongly that every “layer” of the film industry should remain separate—in other words, that producers should focus exclusively on making films, exhibitors on running theaters, and distributors on bringing the two together. Otherwise, he concluded, the quality of film would suffer: “The history of the business has shown that the most successful pictures have been developed by individual efforts rather than by mass production.”6 What Hodkinson opposed is what economists call vertical integration—the stacking, as it were, of the parts of an industry that perform different functions (here, production, distribution, and exhibition) to create a consolidated single entity. (The phenomenon is distinguished from horizontal integration, the more common effort to dominate a single function, in the way that Bell progressively took over nearly every telephone company, different firms that were doing the same thing but in different markets.)

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.…”38 Again we must confront the reality that cultural and information industries pose special problems for standard industrial analysis, complicating the rules of supply and demand by virtue of the product’s less tangible forms of value. We might understand perfectly well how block booking and vertical integration reduced the costs of industrial production, while understanding nothing of what these innovations meant for film as a form of expression. Interestingly, when it comes to products like film, such inefficiencies as “higher search costs” might be a good thing, if the result is greater variety in what gets seen and heard.

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Radio’s business model, as we’ve seen, was essentially “entertainment that sells”—shows produced by advertisers, with revenues dependent on maximizing one’s share of the listenership. Hence, the fewer options the better. Even the preeminent radio manufacturer RCA was not immune to this logic. More stations might mean more radios sold, but as owner of NBC, RCA now viewed the network’s interests as synonymous with its own. And so we see another instance of how vertical integration of an industry creates a vested interest in limiting free expression. Profit is tied not to the proliferation of many voices but to the propagation of a few—to the mass production of speech, as it were. The campaign against FM radio in the 1930s and 1940s is a study in rhetoric as a weapon of industrial warfare.

The Long Twentieth Century: Money, Power, and the Origins of Our Times by Giovanni Arrighi

anti-communist, Asian financial crisis, barriers to entry, Bretton Woods, British Empire, business climate, business logic, business process, classic study, colonial rule, commoditize, Corn Laws, creative destruction, cuban missile crisis, David Ricardo: comparative advantage, declining real wages, deindustrialization, double entry bookkeeping, European colonialism, Fairchild Semiconductor, financial independence, financial intermediation, floating exchange rates, gentrification, Glass-Steagall Act, Great Leap Forward, income inequality, informal economy, invisible hand, joint-stock company, Joseph Schumpeter, Kōnosuke Matsushita, late capitalism, London Interbank Offered Rate, means of production, Meghnad Desai, military-industrial complex, Money creation, money: store of value / unit of account / medium of exchange, new economy, offshore financial centre, oil shock, Peace of Westphalia, post-Fordism, profit maximization, Project for a New American Century, RAND corporation, reserve currency, scientific management, spice trade, Strategic Defense Initiative, Suez canal 1869, the market place, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, trade route, transaction costs, transatlantic slave trade, transcontinental railway, upwardly mobile, vertical integration, Yom Kippur War

The notion of an internalization of transaction costs as the distinguishing feature 0F the F0urth (US) systemic cycle 0F accumulation is derived from Richard Coase’s (1937) pioneering theoretical study 0F the competitive advantages of vertically integrated business organizations, from Oliver Williamson’s (1970) expansion 0F C0ase’s analysis, and from Alfred Chandler’s historical study 0F the emergence and swift expansion 0F modern US corporations in the late nineteenth and early twentieth centuries. As Chandler (1977; 1978) has shown, the internalization within a single organizational domain 0F activities and transactions previously carried out by separate business units enabled vertically integrated, multiunit enterprises to reduce and make more calculable transaction costs — costs, that is, associated with the transfer of intermediate inputs through a long chain of separate organizational domains connecting primary production to final consumption.

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Then, in the 1880s and 1890s, the changing structures of German and US business began to diverge radically. In both countries the centralization of capital gained momentum. In Germany opportunities to pursue vertical integration — integration, that is, of a firm’s operations with those of its suppliers and customers — were rapidly exhausted and the main thrust of the centralization of capital became horizontal integration (Landes 1966: 109-10) — integration, that is, of competing firms. In the United States, in contrast, the main thrust of the centralization of capital became vertical integration. As underscored by Chandler (1977; 1978; 1990), ineffectual, unpopular, and eventually illegal horizontal 296 THE LONG TWENTIETH CENTURY combinations were abandoned, and in branch after branch of the US domestic economy, ranging from cigarettes and canned meat to office and agricultural machinery, select business enterprises moved towards integrating within their organizational domains the sequential subprocesses of production and exchange that linked the procurement of primary inputs to the disposal of final outputs.

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As underscored by Alfred Chandler in the passages quoted at the beginning of this chapter, this internalization within a single organizational domain ofthe sequential sub-processes of production that linked specific primary inputs to specific final outputs generated considerable “economies of speed,” which in turn endowed the pioneering vertically integrated, multiunit enterprises with abundant and steady cash flows. As these cash flows were plowed back in the formation of specialized hierarchies of top and middle managers, imposing organizational barriers to the entry of new competitors were erected in branch after branch of the US domestic economy. As a result, the enterprises that had pioneered the supersession of the market through vertical integration also acquired the power to control or suspend competition in the procurement of primary inputs and in the disposal of final outputs, that is, in markets that were unprofitable or altogether impossible to internalize.

Why Startups Fail: A New Roadmap for Entrepreneurial Success by Tom Eisenmann

Airbnb, Atul Gawande, autonomous vehicles, Ben Horowitz, Big Tech, bitcoin, Blitzscaling, blockchain, call centre, carbon footprint, Checklist Manifesto, clean tech, conceptual framework, coronavirus, corporate governance, correlation does not imply causation, COVID-19, crowdsourcing, Daniel Kahneman / Amos Tversky, data science, Dean Kamen, drop ship, Elon Musk, fail fast, fundamental attribution error, gig economy, growth hacking, Hyperloop, income inequality, initial coin offering, inventory management, Iridium satellite, Jeff Bezos, Jeff Hawkins, Larry Ellison, Lean Startup, Lyft, Marc Andreessen, margin call, Mark Zuckerberg, minimum viable product, Network effects, nuclear winter, Oculus Rift, PalmPilot, Paul Graham, performance metric, Peter Pan Syndrome, Peter Thiel, reality distortion field, Richard Thaler, ride hailing / ride sharing, risk/return, Salesforce, Sam Altman, Sand Hill Road, side project, Silicon Valley, Silicon Valley startup, Skype, social graph, software as a service, Solyndra, speech recognition, stealth mode startup, Steve Jobs, TED Talk, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, We wanted flying cars, instead we got 140 characters, WeWork, Y Combinator, young professional, Zenefits

And if a startup team tries incorporating too much innovation into their next-generation product, they will need to invest heavily in engineering and run the risk of development delays. Vertical Integration. Once a startup gains scale, it can consider bringing in-house some activities that previously were outsourced to third parties. An early-stage startup typically lacks the capital, know-how, and sales volume to do this. For example, Quincy, having only raised seed capital, could never have afforded its own apparel factory. But if the company had eventually reached, say, $50 million in annual sales, it might have built one. By its nature, vertical integration doesn’t directly expand a startup’s market. Rather, the motivations for vertical integration usually include 1) increasing profit margins by capturing the markup otherwise charged by third parties, and/or 2) ensuring higher and more consistent quality in “mission critical” functions, when the startup’s partners might have reliability and commitment issues.

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Some startups make bold business model innovations; that’s what Stitch Fix did when it offered a new subscription styling service. Others innovate by exploiting new technology, as Solidia Technologies did with advances in chemical engineering that enabled the venture to cut the carbon footprint of cement production by 70 percent. Vertical integration. Vertical integration enlarges the scope of activities that a company performs by bringing functions in-house that formerly were outsourced to third parties. “Upstream” (or “backward”) integration involves product development and manufacturing activities, while “downstream” (or “forward”) integration encompasses marketing, sales, and the physical distribution of products.

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Rather, the motivations for vertical integration usually include 1) increasing profit margins by capturing the markup otherwise charged by third parties, and/or 2) ensuring higher and more consistent quality in “mission critical” functions, when the startup’s partners might have reliability and commitment issues. Vertical integration can be risky because it typically requires significant investment and the development of new skills and capabilities, both of which increase a startup’s fixed costs—a problem if revenue growth ever reverses. That said, vertical integration is normally less perilous than other ways to expand scope. The exception occurs when the founder of a “big bang” venture, who has grand ambitions and exacting demands, wants to do everything in-house, right from the start.

Thieves of State: Why Corruption Threatens Global Security by Sarah Chayes

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Celtic Tiger, colonial rule, crony capitalism, drone strike, failed state, high-speed rail, income inequality, microcredit, offshore financial centre, plutocrats, structural adjustment programs, trade route, ultimatum game, vertical integration, WikiLeaks, winner-take-all economy, young professional

NORTON & COMPANY New York • London For my Sainted Mother Antonia Handler Chayes CONTENTS CHAPTER ONE “If I See Somebody Planting an IED . . .” Afghanistan, 2009 CHAPTER TWO “Lord King, How I Wish That You Were Wise” Mirrors for Princes, ca. 700–1516 CHAPTER THREE Hearing the People’s Complaints Kandahar to Kabul, 2001–2009 CHAPTER FOUR Nonkinetic Targeting Kabul, 2009 CHAPTER FIVE Vertically Integrated Criminal Syndicates Kabul, Garmisch, 2009–2010 CHAPTER SIX Revolt Against Kleptocracy The Arab Spring: Morocco, Algeria, Tunisia, 2011 CHAPTER SEVEN Variation 1: The (Overlooked) Military-Kleptocratic Complex Egypt, ca. 2010 CHAPTER EIGHT Variation 2: The Bureaucratic Kleptocracy Tunisia, ca. 201091 CHAPTER NINE Variation 3: The Post-Soviet Kleptocratic Autocracy Uzbekistan, ca. 2013 CHAPTER TEN Variation 4: The Resource Kleptocracy Nigeria, ca. 2014 CHAPTER ELEVEN Up a Level Afghanistan and Washington, June 2010–January 2011 CHAPTER TWELVE Forging an Appeal on Earth The Netherlands, England, America, ca. 1560–1787 CHAPTER THIRTEEN Violent Extremists CHAPTER FOURTEEN Remedies EPILOGUE Self-Reflection Appendix Acknowledgments Notes Index THIEVES OF STATE CHAPTER ONE “If I See Somebody Planting an IED . . .”

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Why would Interior Minister Hanif Atmar, a man who basked in considerable international credibility, risk his luster by throwing himself across the tracks for some two-bit border police boffo like Sayfullah? Why not sacrifice a Sayfullah and retrench around people who mattered? It did not add up. CHAPTER FIVE Vertically Integrated Criminal Syndicates Kabul, Garmisch, 2009–2010 “Sarah, do you have a minute?” It was Colonel Chris Kolenda aiming toward me on a gravel path that simmered in the reflected heat from the prefab metal buildings around it. A former reconstruction team commander tangentially interested in corruption, Kolenda was one of McChrystal’s phalanx of colonels.

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But what if the Afghan government wasn’t really trying to govern? What if it was focused on another objective altogether? What if corruption was central to that objective and therefore to the government’s mode of operation? Perhaps GIRoA could best be understood not as a government at all but as a vertically integrated criminal organization—or a few such loosely structured organizations, allies but rivals, coexisting uneasily—whose core activity was not in fact exercising the functions of a state but rather extracting resources for personal gain. If GIRoA’s main objective was siphoning riches, then why should it waste manpower on the impoverished east?

Six Degrees: The Science of a Connected Age by Duncan J. Watts

AOL-Time Warner, Berlin Wall, Bretton Woods, business process, corporate governance, Drosophila, Erdős number, experimental subject, fixed income, Frank Gehry, Geoffrey West, Santa Fe Institute, independent contractor, industrial cluster, invisible hand, it's over 9,000, Long Term Capital Management, market bubble, Milgram experiment, MITM: man-in-the-middle, Murray Gell-Mann, Network effects, new economy, Norbert Wiener, PalmPilot, Paul Erdős, peer-to-peer, power law, public intellectual, rolodex, Ronald Coase, Savings and loan crisis, scientific worldview, Silicon Valley, social contagion, social distancing, Stuart Kauffman, supply-chain management, The Nature of the Firm, the strength of weak ties, The Wealth of Nations by Adam Smith, Toyota Production System, Tragedy of the Commons, transaction costs, transcontinental railway, vertical integration, Vilfredo Pareto, Y2K

Markets, meanwhile, continue to operate between firms, where the boundary between firm and market is a trade-off between the coordination cost of conducting a particular function within the firm and the transaction cost of striking an external contract. If the relationship between two firms ever becomes so specialized that one is effectively in a position to manipulate the other, the problem is assumed to be resolved by a merger or an acquisition. Hence, firms grow by the process of vertical integration: one hierarchy effectively gets absorbed into another, generating a larger, vertically integrated hierarchy. Conversely, when a firm decides that some internal function is too expensive, it either spins off that branch of the hierarchy to form a specialized subsidiary, or eliminates it altogether, outsourcing the function to another firm.

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INDUSTRIAL DIVIDES FROM AN ECONOMIST’S PERSPECTIVE, PERHAPS THE MOST polemical (if not the most significant) point that Chuck and his coauthor, Michael Piore, made is that the theory of the firm came about essentially after the fact. Only after large-scale industrialization had effectively settled on the model of vertical integration and its associated economies of scale did economists start to develop a theory of the firm. And as a consequence, it was only a particular type of firm—the large, vertically integrated hierarchy—that they tried to explain, as if no other theory of industrial organization could even make sense. But looking back at the late nineteenth century, when the modern image of the industrial firm first emerged, Piore and Sabel showed that the hierarchy was not the only successful form of industrial organization, nor was its eventual preeminence necessarily based on universal economic principles.

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Industry after industry was swept by Japanese-inspired trends, with reengineering, total quality management, and just-in-time inventory systems all taking their turn as flavor of the month. The end result of this upheaval was that American companies in the late 1990s looked very little like the vertically integrated hierarchies that had built cars for the likes of Henry Ford and Alfred Sloan in the 1920s and that had been the paradigmatic form of corporate order ever since. As hard as they have tried to change, however, the American auto giants have never quite been able to match the performance of their Japanese counterparts.

Culture works: the political economy of culture by Richard Maxwell

1960s counterculture, accelerated depreciation, American ideology, AOL-Time Warner, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, big-box store, business process, commoditize, corporate governance, cuban missile crisis, deindustrialization, digital capitalism, digital divide, Fall of the Berlin Wall, Ford Model T, Francis Fukuyama: the end of history, global village, Howard Rheingold, income inequality, informal economy, intermodal, late capitalism, Marshall McLuhan, medical malpractice, Neil Armstrong, Network effects, post-Fordism, profit maximization, Ralph Nader, refrigerator car, Ronald Reagan, Silicon Valley, streetcar suburb, structural adjustment programs, talking drums, telemarketer, the built environment, the Cathedral and the Bazaar, Thorstein Veblen, Unsafe at Any Speed, urban renewal, vertical integration, Victor Gruen, Whole Earth Catalog, women in the workforce, work culture

Indeed, such is its vigorous good health that one commentator referred to the “8,000-pound gorilla that Fox Sports Net has become.”66 Television coverage rights and networks are but two aspects of Murdoch’s broader vision of creating a vertically integrated and globally encompassing sport-media delivery system. Countering the broader trend toward corporate outsourcing and institutional disaggregation (horizontal integration), News Corporation has sought to secure central ownership and control over the various revenue-generating nodes of the sport entertainment industry (vertical integration).67 For this reason, the late 1990s saw News Corporation engage in a global quest focused on the acquisition of entire sport leagues, individual teams, and even stadia.

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Economic Interests1 Anheuser-Busch Companies is not simply a brewer. It is a parent company that presides over thirteen subsidiaries that handle everything from agriculture, brewing, and packaging to marketing, investing, and entertainment (the technical term for such a structure of holdings is vertical integration). Anheuser-Busch, Inc., the company’s largest division as well as the world’s largest brewer, owns and operates a dozen breweries inside the United States. It produces approximately thirty beers, including the Natural, Busch, Budweiser, and Michelob families, which span the product line from subpremium to superpremium.

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Additionally, it sells malt liquors, nonalcoholic brews, and a number of specialty beers that vary by season and region, including an equity investment with Redhook Ale Brewery in Seattle. Business is booming. In the first quarter of 1999, Anheuser-Busch experienced a record 22 percent increase in earnings per share, even as its domestic market share rose to 48.1 percent.2 The company’s success results in no small part from the degree of vertical integration it enjoys in the brewing process, allowing it to self-monitor operations from start to finish. A typical 62 Beer brew actually starts with raw materials produced through Busch Agricultural Resources. It is then canned, bottled, packaged, and labeled by AnheuserBusch divisions that handle metal containers, packaging, printing, and labeling.

Trust: The Social Virtue and the Creation of Prosperity by Francis Fukuyama

Alvin Toffler, barriers to entry, Berlin Wall, blue-collar work, business climate, business cycle, capital controls, classic study, collective bargaining, corporate governance, corporate raider, creative destruction, deindustrialization, Deng Xiaoping, deskilling, double entry bookkeeping, equal pay for equal work, European colonialism, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, Glass-Steagall Act, global village, Gunnar Myrdal, hiring and firing, industrial robot, Jane Jacobs, job satisfaction, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kanban, Kenneth Arrow, land reform, liberal capitalism, liberation theology, low skilled workers, manufacturing employment, mittelstand, price mechanism, profit maximization, RAND corporation, rent-seeking, Ronald Coase, scientific management, Silicon Valley, Steve Jobs, Steve Wozniak, The Death and Life of Great American Cities, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, transfer pricing, traveling salesman, union organizing, vertical integration, W. E. B. Du Bois

The economic historian Alexander Gerschenkron, for example, noted that late modernizers like Germany and Japan did things rather differently from early modernizers like England and the United States, with the government playing a much more active role in promoting development.12 In terms of the evolution of corporate organization, the large, vertically integrated firm described by Chandler is not the only way to deal with problems of scale. The Japanese keiretsu system constitutes an alternative form of corporate organization based on networks rather than hierarchy and in effect achieves the scale economies of vertical integration with a much more flexible form of organization. An advanced industrialized country’s economy can, moreover, remain dominated by modern family businesses, as we will see in the cases of Taiwan and Italy.

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It is understandable that the keiretsu relationship emerged in a Japanese cultural setting: because of the relative ease with which two parties can enter into a durable relationship of mutual obligation, transaction costs are lower across the board in Japan.18 Transactions that would be expensive to conduct across firm boundaries in a low-trust society like Hong Kong or southern Italy (in effect, between firms without kinship ties) cost much less in Japan, because the contracting parties have a higher level of confidence that the contract will be fulfilled. At the same time, members of a Japanese keiretsu do not incur the extra costs of centralized administration that exist within vertically integrated firms. The transaction cost approach is useful for understanding the economic efficiencies of vertical keiretsu like that of Toyota, which are the functional equivalents of vertically integrated Western companies. But what about the horizontal or intermarket keiretsu, whose different members have no necessary economic connection with one another? What economic motives, for example, made it important that each of the major intermarket keiretsu include a brewery in its group, such that members of the Sumitomo group drink Asahi beer, while those of Mitsubishi prefer Kirin?

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The Korean version of the network organization is known as the chaebol, among which are such wellknown names as Samsung and Hyundai. These network organizations achieve economies of scale and scope on the level of leading Western firms but within a looser organizational form that permits a greater degree of flexibility than the equivalent vertically integrated American firm. Taiwan also has network organizations, but of a very different nature. In the first place, they are much smaller than their Japanese or Korean counterparts: the six largest Japanese keiretsu average thirty-one firms per group,17 the Korean chaebol have eleven, and the Taiwanese network organizations average only seven firms each.

The Future of Ideas: The Fate of the Commons in a Connected World by Lawrence Lessig

AltaVista, Andy Kessler, AOL-Time Warner, barriers to entry, Bill Atkinson, business process, Cass Sunstein, commoditize, computer age, creative destruction, dark matter, decentralized internet, Dennis Ritchie, disintermediation, disruptive innovation, Donald Davies, Erik Brynjolfsson, Free Software Foundation, Garrett Hardin, George Gilder, Hacker Ethic, Hedy Lamarr / George Antheil, history of Unix, Howard Rheingold, Hush-A-Phone, HyperCard, hypertext link, Innovator's Dilemma, invention of hypertext, inventory management, invisible hand, Jean Tirole, Jeff Bezos, John Gilmore, John Perry Barlow, Joseph Schumpeter, Ken Thompson, Kenneth Arrow, Larry Wall, Leonard Kleinrock, linked data, Marc Andreessen, Menlo Park, Mitch Kapor, Network effects, new economy, OSI model, packet switching, peer-to-peer, peer-to-peer model, price mechanism, profit maximization, RAND corporation, rent control, rent-seeking, RFC: Request For Comment, Richard Stallman, Richard Thaler, Robert Bork, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, smart grid, software patent, spectrum auction, Steve Crocker, Steven Levy, Stewart Brand, systematic bias, Ted Nelson, Telecommunications Act of 1996, the Cathedral and the Bazaar, The Chicago School, tragedy of the anticommons, Tragedy of the Commons, transaction costs, vertical integration, Yochai Benkler, zero-sum game

The question is what shape that building will take. THE DANGER IS what economists would call the problems of vertical integration—where one provider controls the full range of services across the layers I described—content, logical, and physical.39 Outside the Internet, the danger of vertical integration is less. 40 But within a network, the danger grows. Such integration, a report by the National Research Council has concluded, “could, if successful, cause a change in the Internet market, with innovation and creativity becoming more the province of vertically integrated corporations.”41 It would, Web founder Tim Berners-Lee worries, be dangerous for innovation generally.

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As noted above, these carriers have the ability to exercise market power by controlling access to bottleneck facilities required by other service providers. It would appear, therefore, that if these services were deregulated at this time, it would likely impair the development of competition in this market as well as in upstream markets for which such services are essential inputs.36 Vertically integrated cable and telephone facility owners, AT&T had argued, possessed market power and had to be prevented from engaging in anticompetitive practices.37 But when AT&T bought its own cable lines, its story changed. No longer did it believe that cable should be regulated. Instead, AT&T began to argue that the market should regulate cable, and the government should stand aside.

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When I turn on the television, I don't expect it to deliberately jump to a particular channel, or to give a better picture when I choose a channel that has the 'right' commercials. I expect my television to be an impartial box. I also expect the same neutrality of software.” 42 The danger with the AOL-Time Warner merger is the danger that this vertical integration will induce AOL/TW to engage in discrimination—both discrimination in conduits (favoring their own lines over others) and discrimination in content (favoring their own content over others). This danger is real. As economists Daniel Rubinfeld and Hal Singer have concluded, given the existing concentration in cable broadband, AOL/TW will have a significant incentive to engage in both forms of discrimination.43 And by mid-2001, AOL Time Warner had begun to prohibit advertisements on their sites for competing Internet access providers.44 Discrimination was threatened; discrimination is being realized.

How Capitalism Saved America: The Untold History of Our Country, From the Pilgrims to the Present by Thomas J. Dilorenzo

air traffic controllers' union, Alan Greenspan, banking crisis, British Empire, business cycle, California energy crisis, collective bargaining, Cornelius Vanderbilt, corporate governance, corporate social responsibility, electricity market, financial deregulation, Fractional reserve banking, Hernando de Soto, Ida Tarbell, income inequality, invisible hand, Joseph Schumpeter, laissez-faire capitalism, McDonald's hot coffee lawsuit, means of production, medical malpractice, Menlo Park, minimum wage unemployment, Money creation, Norman Mailer, plutocrats, price stability, profit maximization, profit motive, Ralph Nader, rent control, rent-seeking, Robert Bork, rolling blackouts, Ronald Coase, Ronald Reagan, scientific management, Silicon Valley, statistical model, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transcontinental railway, union organizing, Upton Sinclair, vertical integration, W. E. B. Du Bois, wealth creators, working poor, Works Progress Administration, zero-sum game

In addition, the Rockefeller firm put out the cleanest burning kerosene and managed to profitably dispose of most of the residues, in the form of lubricating oil, paraffin wax, and Vaseline.24 Rockefeller pioneered the practice known as “vertical integration,” or in-house provision of various inputs into the production process; that is, he made his own barrels, wagons, and so on. This is not always advantageous—sometimes it pays to purchase certain items from specialists who can produce those items at very low cost. But vertical integration has the advantage of allowing one to monitor the quality of one’s own inputs. It has the further advantage of avoiding what modern economists call the “hold-up problem.”

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In such instances the power plant has the choice of paying up, engaging in costly litigation, or going without the coal and closing down. None of these options is attractive. But if the power plant simply buys the coal mine, all of these problems disappear. That is what Rockefeller, the compulsive micromanager, did with many aspects of the oil-refining business. He reduced his costs and avoided hold-up problems through vertical integration. Rockefeller also devised means of eliminating much of the incredible waste that had plagued the oil industry. His chemists figured out how to produce such oil byproducts as lubricating oil, gasoline, paraffin wax, Vaseline, paint, varnish, and about three hundred other substances. In each instance he profited by eliminating waste.

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She published a series of hypercritical articles in McClure’s magazine in 1902 and 1903, which were turned into a book entitled The History of the Standard Oil Company, a classic of antibusiness propaganda.25 Tarbell’s writings are emotional, often illogical, and lacking in any serious attempt at economic analysis. But even she was compelled to praise what she called the “marvelous” economy of the entire Standard Oil operation. In a passage describing one aspect of Standard Oil’s vertical integration she wrote: Not far away from the canning works, on Newtown Creek, is an oil refinery. This oil runs to the canning works, and, as the newmade cans come down by a chute from the works above, where they have just been finished, they are filled, twelve at a time, with the oil made a few miles away.

The Fair Trade Scandal: Marketing Poverty to Benefit the Rich by Ndongo Sylla

"there is no alternative" (TINA), British Empire, carbon footprint, corporate social responsibility, David Ricardo: comparative advantage, deglobalization, degrowth, Doha Development Round, Food sovereignty, global value chain, illegal immigration, income inequality, income per capita, invisible hand, Joseph Schumpeter, labour mobility, land reform, market fundamentalism, mass immigration, means of production, Mont Pelerin Society, Naomi Klein, non-tariff barriers, offshore financial centre, open economy, Philip Mirowski, plutocrats, price mechanism, purchasing power parity, Ronald Reagan, Scientific racism, selection bias, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, transatlantic slave trade, trickle-down economics, vertical integration, Washington Consensus, zero-sum game

139 Conclusion146 Annexes153 Notes155 Bibliography164 Index172 viii Sylla T02779 00 pre 8 28/11/2013 13:04 List of Illustrations Figures 1.1 Evolution of world merchandise trade 1.2 Evolution of world merchandise exports according to development status 1.3 Evolution of the share of developing regions in world merchandise exports 1.4 Evolution of the share of selected groupings in world merchandise exports 1.5 Evolution of the share of developing countries in world GDP 1.6 Evolution of the trade/GDP ratio 1.7 Ecological footprint and biocapacity in 2006 1.8 Changes in ecological footprint and biocapacity 1961–2006 12 13 13 14 14 15 24 24 Tables 1.1 Developing countries 4.1 Type of costs entering into the calculation of the FT minimum price 4.2 Distribution of FT groups in 2009 5.1 Gross FT revenue received in the South in 2008 5.2 Budget of selected labelling initiatives 5.3 Number of FT certifications according to the degree of commodity dependency 5.4 Distribution of LDCs according to their trade structure A1 Productivity statistics according to development level A2 Transfair USA’s revenue compared to additional FT income transferred from USA (in thousand $) A3 Transfair USA’s revenues compared to additional FT income transferred from USA (in %) A4 International merchandise trade – structure by region in 2008 9 92 109 124 127 134 135 153 153 153 154 ix Sylla T02779 00 pre 9 28/11/2013 13:04 the fair trade scandal Boxes 1.1 Developing countries 10 1.2 Vertical integration and horizontal concentration in the cocoa value chain 20 1.3 ‘The hamburger connection’ 23 1.4 Definition of the Producer Support Estimate (PSE) 29 2.1 Neoliberalism 42 2.2 The cost of initial certification 48 2.3 The standards for small producers 51 3.1 Arguments in favour of free trade and their limits in the context of developing countries 66 3.2 Paradoxes of neoliberal orthodoxy 74 3.3 Wal-Mart: a controversial giant in the small world of Fair Trade 79 4.1 Method for calculating the cost of sustainable production and the FT minimum price 92 4.2 Major approaches in terms of impact studies 114 5.1 The dilemma of a Rwandan cooperative: excluding the poorest of the poor or leaving the FT system 138 5.2 Millennium Development Goal 8: a global partnership for development144 x Sylla T02779 00 pre 10 28/11/2013 13:04 Acknowledgements I would like to express my gratitude to three of my former professors who instilled in me the passion for research, supervised much of my work, and always encouraged me to explore unusual perspectives.

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This is what is called ‘horizontal concentration’. Second, actors that have specialised in specific steps of the chain tend to broaden their activities in other steps of the chain. Firms, for instance, tend to work more and more with producers in the framework of long-term relationships. This is what is called ‘vertical integration’. With the help of trade liberalisation, oligopolies and oligopsonies therefore tend to become standard elements in value chains (see Box 1.2). For these intermediaries, more particularly distribution channels and large agrifood multinationals, the strategy is twofold: on the one hand reducing costs upstream as much as possible and on the other creating value added downstream.

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In 19 Sylla T02779 01 text 19 28/11/2013 13:04 the fair trade scandal contrast, ‘customised’ attributes refer to the interpersonal component (consumption in a café, in a restaurant, etc.) which occurs during the sale of the product (Daviron and Ponte, 2005). This strategy thus makes it possible for a price decline in the South to occur simultaneously with a boost in sales in the North. Box 1.2 Vertical integration and horizontal concentration in the cocoa value chain In 2008, world cocoa imports were estimated at $13 billion against $15 billion for exports (according to UN Comtrade). Côte d’Ivoire (20.3 per cent), the Netherlands (18.5 per cent) and Indonesia (9.6 per cent) are the world’s three largest exporters.

Exponential: How Accelerating Technology Is Leaving Us Behind and What to Do About It by Azeem Azhar

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 23andMe, 3D printing, A Declaration of the Independence of Cyberspace, Ada Lovelace, additive manufacturing, air traffic controllers' union, Airbnb, algorithmic management, algorithmic trading, Amazon Mechanical Turk, autonomous vehicles, basic income, Berlin Wall, Bernie Sanders, Big Tech, Bletchley Park, Blitzscaling, Boeing 737 MAX, book value, Boris Johnson, Bretton Woods, carbon footprint, Chris Urmson, Citizen Lab, Clayton Christensen, cloud computing, collective bargaining, computer age, computer vision, contact tracing, contact tracing app, coronavirus, COVID-19, creative destruction, crowdsourcing, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, data science, David Graeber, David Ricardo: comparative advantage, decarbonisation, deep learning, deglobalization, deindustrialization, dematerialisation, Demis Hassabis, Diane Coyle, digital map, digital rights, disinformation, Dissolution of the Soviet Union, Donald Trump, Double Irish / Dutch Sandwich, drone strike, Elon Musk, emotional labour, energy security, Fairchild Semiconductor, fake news, Fall of the Berlin Wall, Firefox, Frederick Winslow Taylor, fulfillment center, future of work, Garrett Hardin, gender pay gap, general purpose technology, Geoffrey Hinton, gig economy, global macro, global pandemic, global supply chain, global value chain, global village, GPT-3, Hans Moravec, happiness index / gross national happiness, hiring and firing, hockey-stick growth, ImageNet competition, income inequality, independent contractor, industrial robot, intangible asset, Jane Jacobs, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Perry Barlow, Just-in-time delivery, Kickstarter, Kiva Systems, knowledge worker, Kodak vs Instagram, Law of Accelerating Returns, lockdown, low skilled workers, lump of labour, Lyft, manufacturing employment, Marc Benioff, Mark Zuckerberg, megacity, Mitch Kapor, Mustafa Suleyman, Network effects, new economy, NSO Group, Ocado, offshore financial centre, OpenAI, PalmPilot, Panopticon Jeremy Bentham, Peter Thiel, Planet Labs, price anchoring, RAND corporation, ransomware, Ray Kurzweil, remote working, RFC: Request For Comment, Richard Florida, ride hailing / ride sharing, Robert Bork, Ronald Coase, Ronald Reagan, Salesforce, Sam Altman, scientific management, Second Machine Age, self-driving car, Shoshana Zuboff, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, software as a service, Steve Ballmer, Steve Jobs, Stuxnet, subscription business, synthetic biology, tacit knowledge, TaskRabbit, tech worker, The Death and Life of Great American Cities, The Future of Employment, The Nature of the Firm, Thomas Malthus, TikTok, Tragedy of the Commons, Turing machine, Uber and Lyft, Uber for X, uber lyft, universal basic income, uranium enrichment, vertical integration, warehouse automation, winner-take-all economy, workplace surveillance , Yom Kippur War

However, by the late twentieth century, vertical expansion had gone out of fashion. Instead, management orthodoxy was that companies should stick to their ‘core competencies’.36 But not any more. As we marched into the Exponential Age, the spirit of vertical integration returned. Google’s advertising business, responsible for virtually all the firm’s revenue and profits, is a vertically integrated system. Several different mechanisms make online advertising possible: targeting, auctioning the ad space, placing the ad, tracking the engagement. Once upon a time, different companies looked after each of these processes. By 2020, an advertiser wanting to buy an ad to show to a particular group of users can do so entirely with Google’s products.

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Google’s acquisition of YouTube in 2006 helped, vastly increasing its dominance in the advertising ecosystem; so too did the launch of Maps, which helped advertisers understand even more about where their consumers were going about their business. And this vertical integration shows no signs of slowing down. In 2010, Google acquired 40 companies – a diverse portfolio of firms that specialised in social gaming, photo editing, computer processors, touch typing, voice recognition, travel and music streaming. All of these acquisitions allowed Google ever-greater control of its own supply chain. Such vertical integration can even involve expanding from the massless, digital world into creating physical hardware. Take chip making. For most of the history of the personal computer, chips were made by one specialist firm, the computer by another and its operating system by yet another.

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It has a logistics wing, the world’s largest cloud computing business, and – like Apple – a media business. But nor does exponential logic lead solely to horizontal expansion into new markets. The second form of superstar growth is vertical expansion. This is where a firm looks at the activities of part of their own supply chain and decides to bring them in-house. Vertical integration is not unique to the Exponential Age, of course. Andrew Carnegie became the second-wealthiest man in the United States in the 1800s when he expanded his steel company so it took over every stage of the supply chain – taking control of iron mines, coal mines, railroads and steel mills, all to achieve enormous efficiency in the steel industry.

The Fissured Workplace by David Weil

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, banking crisis, barriers to entry, behavioural economics, business cycle, business process, buy and hold, call centre, Carmen Reinhart, Cass Sunstein, Clayton Christensen, clean water, collective bargaining, commoditize, company town, corporate governance, corporate raider, Corrections Corporation of America, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, declining real wages, employer provided health coverage, Frank Levy and Richard Murnane: The New Division of Labor, George Akerlof, global supply chain, global value chain, hiring and firing, income inequality, independent contractor, information asymmetry, intermodal, inventory management, Jane Jacobs, Kenneth Rogoff, law of one price, long term incentive plan, loss aversion, low skilled workers, minimum wage unemployment, moral hazard, Network effects, new economy, occupational segregation, Paul Samuelson, performance metric, pre–internet, price discrimination, principal–agent problem, Rana Plaza, Richard Florida, Richard Thaler, Ronald Coase, seminal paper, shareholder value, Silicon Valley, statistical model, Steve Jobs, supply-chain management, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs, Triangle Shirtwaist Factory, ultimatum game, union organizing, vertical integration, women in the workforce, yield management

I am grateful to Doug Parker for conversations sharing material on subcontracting from this period as well as to Marric Buessing for discussions of the incentives for vertical integration between different stages of mining production. 5. Although I focus here on underground coal mining, which is concentrated primarily in the eastern half of the United States, a large percentage of coal is mined through open mining operations (strip mining) in parts of the East Coast as well as predominantly in the western half of the country. 6. See Buessing (2013) for a detailed empirical analysis of the recent trend to vertical integration. 7. This is the same company that in a later incarnation as Massey Energy Company was responsible for the death of twenty-nine miners in April 2010.

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Budd, John, and Brian McCall. 1997. “The Effect of Unions on the Receipt of Unemployment Insurance Benefits.” Industrial and Labor Relations Review 50, no. 3: 478–492. Buessing, Marric. 2013. “Vertical Integration in the Mining Industry: An Incomplete Contracts Approach.” Working paper, Boston University Department of Economics. Buessing, Marric, and David Weil. 2013. “Health and Safety Consequences of Mine-Level Contracting and Vertical Integration.” Working paper, Boston University School of Management / Department of Economics. Butler, Richard, and John Worrall. 1983. “Workers’ Compensation: Benefit and Injury Claims Rates in the Seventies.”

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Born out of core strategies focusing on building brands, franchising represents a distinctive form of fissuring that allows the franchisor to focus on core competency while ensuring that the businesses that provide the products and services keep up with standards. Franchising has now spread far beyond the fast-food industry commonly associated with it. Chapter 7 looks at supply chains in the context of fissuring. Whereas companies like Ford and IBM once built internal empires of suppliers through expansion and vertical integration, modern supply chains achieve even more complicated coordination of hundreds and often thousands of suppliers. But they do so by carefully steering that network from the center, establishing detailed, demanding, and high-stakes requirements and thereby satisfying the core requirements of the lead businesses at their center. 5 The Subcontracted Workplace There is nothing new about subcontracting as a form of organizing business, production, and the workplace.

Zucked: Waking Up to the Facebook Catastrophe by Roger McNamee

"Susan Fowler" uber, "World Economic Forum" Davos, 4chan, Albert Einstein, algorithmic trading, AltaVista, Amazon Web Services, Andy Rubin, barriers to entry, Bernie Sanders, Big Tech, Bill Atkinson, Black Lives Matter, Boycotts of Israel, Brexit referendum, Cambridge Analytica, carbon credits, Cass Sunstein, cloud computing, computer age, cross-subsidies, dark pattern, data is the new oil, data science, disinformation, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Electric Kool-Aid Acid Test, Elon Musk, fake news, false flag, Filter Bubble, game design, growth hacking, Ian Bogost, income inequality, information security, Internet of things, It's morning again in America, Jaron Lanier, Jeff Bezos, John Markoff, laissez-faire capitalism, Lean Startup, light touch regulation, Lyft, machine readable, Marc Andreessen, Marc Benioff, Mark Zuckerberg, market bubble, Max Levchin, Menlo Park, messenger bag, Metcalfe’s law, minimum viable product, Mother of all demos, move fast and break things, Network effects, One Laptop per Child (OLPC), PalmPilot, paypal mafia, Peter Thiel, pets.com, post-work, profit maximization, profit motive, race to the bottom, recommendation engine, Robert Mercer, Ronald Reagan, Russian election interference, Sand Hill Road, self-driving car, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, software is eating the world, Stephen Hawking, Steve Bannon, Steve Jobs, Steven Levy, Stewart Brand, subscription business, TED Talk, The Chicago School, The future is already here, Tim Cook: Apple, two-sided market, Uber and Lyft, Uber for X, uber lyft, Upton Sinclair, vertical integration, WikiLeaks, Yom Kippur War

Spreadsheets on Apple IIs transformed the productivity of bankers, accountants, and financial analysts. Unlike the vertical integration of mainframes and minicomputers, which limited product improvement to the rate of change of the slowest evolving part in the system, the horizontal integration of PCs allowed innovation at the pace of the most rapidly improving parts in the system. Because there were multiple, competing vendors for each component, systems could evolve far more rapidly than equivalent products subject to vertical integration. The downside was that PCs assembled this way lacked the tight integration of mainframes and minicomputers.

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From its original base in retail for nonperishable goods, Amazon has expanded horizontally into perishables, with Whole Foods, and into cloud services, with Amazon Web Services. Amazon’s vertical integration has included Marketplace, which incorporates third-party sellers; Basics, where Amazon private-labels bestselling commodity products; and hardware, such as Alexa voice-controlled devices and the Fire home video server. In a traditional antitrust regime, Amazon’s vertical-integration strategy would not be allowed. The use of proprietary consumer data to identify, develop, and sell products in direct competition with bestsellers on the site represents an abuse of power that would have appalled regulators prior to 1981.

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Any customer who wanted to use a computer in that era had to accept a product designed to meet the needs of government, which invested billions to solve complex problems like moon trajectories for NASA and missile targeting for the Department of Defense. IBM was the dominant player in the mainframe era and made all the components for the machines it sold, as well as most of the software. That business model was called vertical integration. The era of government lasted about thirty years. Data networks as we think of them today did not yet exist. Even so, brilliant people imagined a world where small computers optimized for productivity would be connected on powerful networks. In the sixties, J. C. R. Licklider conceived the network that would become the internet, and he persuaded the government to finance its development.

The Wide Lens: What Successful Innovators See That Others Miss by Ron Adner

ASML, barriers to entry, Bear Stearns, Blue Ocean Strategy, book value, call centre, Clayton Christensen, Ford Model T, inventory management, iterative process, Jeff Bezos, Lean Startup, M-Pesa, minimum viable product, mobile money, new economy, RAND corporation, RFID, smart grid, smart meter, SoftBank, spectrum auction, Steve Ballmer, Steve Jobs, Steven Levy, supply-chain management, Tim Cook: Apple, transaction costs, vertical integration

The shift toward innovation ecosystems follows a historical trend toward greater complexity and interaction that has characterized the rise of the modern economy. In the beginning, the dominant approach was to house all this complexity within a single firm—the vertically integrated organization. In the early days of the twentieth century, vertically integrated companies like Ford, GE, BASF, and IBM showed that large size, reduced variable cost, and dedicated research could produce outstanding change. But while vertical integration offered control, it required massive investments and led to huge, unwieldy organizations. At the close of the twentieth century, firms like Toyota, Dell, and Nestlé led their industries by learning how to leverage external supply chains to outsource activities, reduce fixed costs, and increase operational flexibility, setting a new benchmark for competitiveness that their rivals struggled to meet.

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The Five Levers of Ecosystem Reconfiguration Solving ecosystem problems requires an ecosystem approach: taking the existing pieces and finding a way to reconfigure the puzzle. We saw this approach used in chapter 3, as the Hollywood studios reconfigured the digital cinema blueprint, and again in chapter 4, as Amazon reconfigured the e-book blueprint. In both cases, success did not come from discrete technology improvements. And it did not come from vertical integration—bringing external activities inside the firm. Neither better technologies nor increased control were sufficient to unblock the bottlenecks to value creation. Instead, success came from accepting the limitations of the existing elements and then finding a new way to bring them together. Reconfiguring an ecosystem entails changing the pattern of interaction among the elements in the system.

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Food and Drug Administration (FDA), Exubera approval, 103–4, 108–9 V Value blueprints, 84–114 for Amazon Kindle, 96–99 basic requirements, 84–85 communication aspects, 113 constructing, steps in, 85–87 for electric vehicles (EVs), 168, 181 for Exubera inhalable insulin, 105–8 functions of, 85, 87, 112–13 for inhalable insulin, 101–12 for iPad, 220 for iPhone, 217 for iPod, 210 map, example of, 87 for M-PESA, 197, 198, 200 necessity of, 84–85, 100, 112–14, 226–27 for Sony Reader, 91–95 as team-based effort, 113–14 updating, 87 Value chains, focus of, 84 Value proposition defined, 85 elements needed for. See Value blueprints for leadership prism, 118 and minimum viable ecosystem (MVE) approach, 203–4 Vertical integration, pros/cons of, 8, 177 Veterans Health Administration (VHA), electronic health records (EHRs), 131 Virtual print fee (VPF), 72–73, 76 Vision and co-innovation, 50–51 value proposition as, 85 VISTA electronic record system, 131 Vodafone, mobile banking joint venture. See M-PESA W Wachter, Dr.

The Wisdom of Finance: Discovering Humanity in the World of Risk and Return by Mihir Desai

activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, AOL-Time Warner, assortative mating, Benoit Mandelbrot, book value, Brownian motion, capital asset pricing model, Carl Icahn, carried interest, Charles Lindbergh, collective bargaining, corporate governance, corporate raider, discounted cash flows, diversified portfolio, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, follow your passion, George Akerlof, Gordon Gekko, greed is good, housing crisis, income inequality, information asymmetry, Isaac Newton, Jony Ive, Kenneth Rogoff, longitudinal study, Louis Bachelier, low interest rates, Monty Hall problem, moral hazard, Myron Scholes, new economy, out of africa, Paul Samuelson, Pierre-Simon Laplace, principal–agent problem, Ralph Waldo Emerson, random walk, risk/return, Robert Shiller, Ronald Coase, short squeeze, Silicon Valley, Steve Jobs, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, tontine, transaction costs, vertical integration, zero-sum game

The account of the relationship between GM and Fisher Body draws on Klein, Benjamin, Robert Crawford, and Armen Alchian. “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process.” Journal of Law and Economics 21, no. 2 (1978): 297–326; Klein, Benjamin. “Vertical Integration as Organizational Ownership: The Fisher Body–General Motors Relationship Revisited.” Journal of Law, Economics and Organization 4, no. 1 (March/April 1998): 199–213; Klein, Benjamin. “Fisher–General Motors and the Nature of the Firm.” Journal of Law and Economics 43, no. 1 (2000): 105–42; Freeland, Robert F. “Creating Holdup Through Vertical Integration: Fisher Body Revisited.” Journal of Law and Economics 43, no. 1 (2000): 33–66; Coase, R.

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When asked about the merger, he said: We need to marry up with all of that kind of content that exists in the Time Warner space and then we need to create a unified platform and we need to sort of drive convergence. It’s not like convergence is anything more than the ultimate expression of vertical integration. It’s just that instead now we have this big stack, we smoosh it all into one thing. The merger is about these larger notions of creating a truly vertically integrated company that is built offensively and defensively powerful in terms of protecting itself not only today in terms of the way the business is prosecuted and the way content is delivered, but going forward in the converging world.

Digital Wars: Apple, Google, Microsoft and the Battle for the Internet by Charles Arthur

activist fund / activist shareholder / activist investor, AltaVista, Andy Rubin, Build a better mousetrap, Burning Man, cloud computing, commoditize, credit crunch, crowdsourcing, disintermediation, don't be evil, en.wikipedia.org, Firefox, gravity well, Jeff Bezos, John Gruber, Mark Zuckerberg, Menlo Park, Network effects, PageRank, PalmPilot, pre–internet, Robert X Cringely, Silicon Valley, Silicon Valley startup, skunkworks, Skype, slashdot, Snapchat, software patent, speech recognition, stealth mode startup, Steve Ballmer, Steve Jobs, Susan Wojcicki, the long tail, the new new thing, the scientific method, Tim Cook: Apple, Tony Fadell, turn-by-turn navigation, upwardly mobile, vertical integration

The desktop market has entered the dark ages, and it’s going to be in the dark ages for the next 10 years, or certainly for the rest of this decade.’12 Why had Apple lost? Serried ranks of economists and management theorists were sure why: its model of ‘vertical integration’ – designing both the machines and the software – couldn’t work in the computer industry. ‘Vertically integrated companies can’t compete! The oxymoron of “internal customers” is poison to a competitive culture. That is the lesson of the computer industry,’ wrote Tom Evslin, an experienced tech entrepreneur.13 Management and economic theory said that horizontal integration – PC makers building PCs, Microsoft writing the software – meant that the market optimum, of the maximum possible production volume and the lowest possible prices for consumers, would be reached much more quickly.14 While that’s true, it overlooks other elements that are harder to quantify: user experience and collateral costs.

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‘And to be able to say that there’s some challenge for us in the phone market when it’s becoming software intensive – I don’t see that.’ In other words, Microsoft was fine: Windows Mobile was going to be able to cope with whatever came along. Yet even then there were huge debates, Knook says, about whether Microsoft should pursue a vertical integration strategy, as it had with the Zune and Xbox, and try to own (in Jobs’s words) the whole widget. ‘Robbie [Bach], J Allard [who had pushed the Zune through to fruition] and Steve [Ballmer] really favoured that route. Bill did not, but by that stage Bill really was already checking out.’ There was also a growing problem with Windows Mobile: if a handset maker wanted to add an extra button or an extra feature, Knook was happy to get the Windows Mobile team to comply and customize their baby.

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Richard Windsor, then the sector analyst at Nomura Research, saw the MMI deal as the outbreak of peace: ‘The patent situation is clear. The have-nots in the world of [Android] handset intellectual property will now enjoy the benefit of Motorola’s portfolio of 17,000 patents.’ He saw no chance that Google would become vertically integrated like Apple or RIM; it was much better to help Samsung and HTC, far bigger in the Android business, to compete against the predations of Apple and Microsoft. ‘Now that everyone is fairly well armed when it comes to patents, we expect amicable arrangements to be reached with less recourse being made to contentious litigation.’51 That analysis, though, overlooked the fact that many Motorola patents were ‘standards-essential’ – that is, they underpinned standards such as the wireless broadband Wi-Fi or the video encoding system H.264.

Prediction Machines: The Simple Economics of Artificial Intelligence by Ajay Agrawal, Joshua Gans, Avi Goldfarb

Abraham Wald, Ada Lovelace, AI winter, Air France Flight 447, Airbus A320, algorithmic bias, AlphaGo, Amazon Picking Challenge, artificial general intelligence, autonomous vehicles, backpropagation, basic income, Bayesian statistics, Black Swan, blockchain, call centre, Capital in the Twenty-First Century by Thomas Piketty, Captain Sullenberger Hudson, carbon tax, Charles Babbage, classic study, collateralized debt obligation, computer age, creative destruction, Daniel Kahneman / Amos Tversky, data acquisition, data is the new oil, data science, deep learning, DeepMind, deskilling, disruptive innovation, driverless car, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, financial engineering, fulfillment center, general purpose technology, Geoffrey Hinton, Google Glasses, high net worth, ImageNet competition, income inequality, information retrieval, inventory management, invisible hand, Jeff Hawkins, job automation, John Markoff, Joseph Schumpeter, Kevin Kelly, Lyft, Minecraft, Mitch Kapor, Moneyball by Michael Lewis explains big data, Nate Silver, new economy, Nick Bostrom, On the Economy of Machinery and Manufactures, OpenAI, paperclip maximiser, pattern recognition, performance metric, profit maximization, QWERTY keyboard, race to the bottom, randomized controlled trial, Ray Kurzweil, ride hailing / ride sharing, Robert Solow, Salesforce, Second Machine Age, self-driving car, shareholder value, Silicon Valley, statistical model, Stephen Hawking, Steve Jobs, Steve Jurvetson, Steven Levy, strong AI, The Future of Employment, the long tail, The Signal and the Noise by Nate Silver, Tim Cook: Apple, trolley problem, Turing test, Uber and Lyft, uber lyft, US Airways Flight 1549, Vernor Vinge, vertical integration, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, William Langewiesche, Y Combinator, zero-sum game

Adopting too early could be costly, but adopting too late could be fatal.9 Our point is not that Amazon will or should do this, although skeptical readers may be surprised to learn that Amazon obtained a US patent for “anticipatory shipping” in 2013.10 Instead, the salient insight is that turning the prediction dial has a significant impact on strategy. In this example, it shifts Amazon’s business model from shopping-then-shipping to shipping-then-shopping, generates the incentive to vertically integrate into operating a service for product returns (including a fleet of trucks), and accelerates the timing of investment. All this is due simply to turning up the dial on the prediction machine. What does this mean for strategy? First, you must invest in gathering intelligence on how fast and how far the dial on the prediction machines will turn for your sector and applications.

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These would include, for example, investments to reduce the cost of securing packages left for pickup and transportation services to handle returns. Although the customer-friendly delivery market is competitive, product return services are a much less-well-developed market. Amazon itself might establish an infrastructure of trucks that visit neighborhoods daily for deliveries and returns, thus vertically integrating into the daily product return business. Effectively, Amazon could move the boundary of its business right up to your front porch. This boundary shifting is already occurring. One example is the German e-commerce venture, Otto.1 A major barrier to consumer purchases over the internet rather than in a store is uncertain delivery times.

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., an AI that reduces uncertainty by predicting what a customer will buy tips the scale such that the returns from a ship-then-shop model outweigh those from the traditional model). Another reason C-suite leadership is required for AI strategy is that the implementation of AI tools in one part of the business may also affect other parts. In the Amazon thought experiment, a side effect of transitioning to a ship-then-shop model was vertical integration into the returned items collection business, perhaps with a fleet of trucks that did weekly pickups throughout the neighborhood. In other words, powerful AI tools may result in significant redesign of work flows and the boundary of the firm. Prediction machines will increase the value of complements, including judgment, actions, and data.

The Myth of Capitalism: Monopolies and the Death of Competition by Jonathan Tepper

"Friedman doctrine" OR "shareholder theory", Affordable Care Act / Obamacare, air freight, Airbnb, airline deregulation, Alan Greenspan, bank run, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, Bob Noyce, Boston Dynamics, business cycle, Capital in the Twenty-First Century by Thomas Piketty, citizen journalism, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, compensation consultant, computer age, Cornelius Vanderbilt, corporate raider, creative destruction, Credit Default Swap, crony capitalism, diversification, don't be evil, Donald Trump, Double Irish / Dutch Sandwich, Dunbar number, Edward Snowden, Elon Musk, en.wikipedia.org, eurozone crisis, Fairchild Semiconductor, Fall of the Berlin Wall, family office, financial innovation, full employment, gentrification, German hyperinflation, gig economy, Gini coefficient, Goldman Sachs: Vampire Squid, Google bus, Google Chrome, Gordon Gekko, Herbert Marcuse, income inequality, independent contractor, index fund, Innovator's Dilemma, intangible asset, invisible hand, Jeff Bezos, Jeremy Corbyn, Jevons paradox, John Nash: game theory, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Rogoff, late capitalism, London Interbank Offered Rate, low skilled workers, Mark Zuckerberg, Martin Wolf, Maslow's hierarchy, means of production, merger arbitrage, Metcalfe's law, multi-sided market, mutually assured destruction, Nash equilibrium, Network effects, new economy, Northern Rock, offshore financial centre, opioid epidemic / opioid crisis, passive investing, patent troll, Peter Thiel, plutocrats, prediction markets, prisoner's dilemma, proprietary trading, race to the bottom, rent-seeking, road to serfdom, Robert Bork, Ronald Reagan, Sam Peltzman, secular stagnation, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, SoftBank, Steve Jobs, stock buybacks, tech billionaire, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, undersea cable, Vanguard fund, vertical integration, very high income, wikimedia commons, William Shockley: the traitorous eight, you are the product, zero-sum game

Not content to own all the cigarette companies, American Tobacco started vertically integrating, owning every step of the cigarette production, even managing its own tobacco leaf growing. It was not an easy job to return to the premerger days, as these brands had already been fully integrated into one vast machine. Yet in the end American Tobacco was split off into an oligopoly of American Tobacco Company, R. J. Reynolds, Liggett & Myers, and Lorillard. Standard Oil was a different beast. It, too, had grown through many mergers, but a large part of its size came from vertical integration. There is a vast chain of production between when oil comes out of the ground and when it is burned as gasoline in cars.

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Not every theory or fad in economics has been correct, and we cannot entrust our economy to professors for hire who bear no consequences for their decisions. Antimonopoly is more than antitrust. While competition policy and antitrust laws are the main way to fight monopolies, they are not the only ways. Law and regulation must be geared toward preventing dominant companies from preventing new entrants. Vertical integration should face significant hurdles. Vertical integration by dominant firms should be prevented in any moderately to highly concentrated industry. Local monopolies should be broken up. Large companies should not be allowed to carve markets up like the mob, dividing the turf. For example, the McCarran Ferguson Act exempted insurance companies from antitrust and subjected them to state regulation where they enjoy local monopolies.

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Google, Facebook, and Amazon have great technology, but much of their current status and financial success comes from regulatory and antitrust mistakes. Amazon was allowed to buy dozens of e-commerce rivals and online booksellers to give it a monopsony position in the book industry. Google was able to buy its main competitor Doubeclick and vertically integrate online ad markets by buying advertising exchanges. Facebook was able to buy Instagram and Whatsapp with no regulatory challenges.12 In no small degree, nonexistent antitrust has allowed them to achieve their dominance. The scale of digital platforms puts them in a completely different category to the companies they compete against.

The Future of Technology by Tom Standage

air freight, Alan Greenspan, barriers to entry, business process, business process outsourcing, call centre, Clayton Christensen, computer vision, connected car, corporate governance, creative destruction, disintermediation, disruptive innovation, distributed generation, double helix, experimental economics, financial engineering, Ford Model T, full employment, hydrogen economy, hype cycle, industrial robot, informal economy, information asymmetry, information security, interchangeable parts, job satisfaction, labour market flexibility, Larry Ellison, Marc Andreessen, Marc Benioff, market design, Menlo Park, millennium bug, moral hazard, natural language processing, Network effects, new economy, Nicholas Carr, optical character recognition, PalmPilot, railway mania, rent-seeking, RFID, Salesforce, seminal paper, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, six sigma, Skype, smart grid, software as a service, spectrum auction, speech recognition, stem cell, Steve Ballmer, Steve Jurvetson, technological determinism, technology bubble, telemarketer, transcontinental railway, vertical integration, Y2K

But bmw also makes cars in the old-fashioned, vertically integrated way. Another parallel between the two industries is the use of “platforms” – underlying common designs that allow components to be shared between outwardly different products. This has the benefit of reducing costs, but it can be taken too far if it results in a bland product line-up. Nokia seems to have run into this problem, as Volkswagen did in the car business. If the car industry is any guide, then, the likely outcome is that the handset business will shift from vertical integration to a series of horizontal layers: chips, software, manufacturing, design and branding.

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Furthermore, a company could not just make handsets: to be taken seriously by the mobile-network operators, and ensure everything worked properly, it also had to manufacture the much larger and more complex base-stations that are used to provide mobile-phone coverage. All these requirements meant that the industry came to be dominated by large, vertically integrated firms such as Nokia, Motorola and Ericsson. “For many firms good at low-cost electronics, the barrier to entry was simply too high,” says Tony Milbourn of ttpCom, a British firm that designs and licenses hardware and software components for mobile phones. But the situation has changed. Radio chips can now be bought off the shelf, as can the software required to make a mobile phone work.

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So far, there is no sign of a Microsoft or Intel-like monopoly in any of the new horizontal layers of the handset industry; the most important standards are open, and exist at the network layer. The power of the mobile-network operators has no parallel in the pc industry; internet-service providers have very little clout. Instead, a better analogy for the mobile-phone industry’s new structure would seem to be carmaking. Like handset-makers, carmakers used to be entirely vertically integrated. But now there is a complex mix of different approaches. Some carmakers outsource the manufacturing of particular components (engines, for example, or lighting systems); Motorola does the same for the lids of its flip-phones. “For big sub-assemblies, it’s very similar to the automotive industry,” says Tom Lynch, president of Motorola’s mobile-phone business.

Cable Cowboy by Mark Robichaux

AOL-Time Warner, Barry Marshall: ulcers, Bear Stearns, call centre, Chuck Templeton: OpenTable:, corporate raider, cotton gin, estate planning, fear of failure, financial engineering, Irwin Jacobs, junk bonds, Michael Milken, mutually assured destruction, oil rush, profit maximization, rolodex, Ronald Reagan, shareholder value, Silicon Valley, Telecommunications Act of 1996, vertical integration

A big operator like TCI could give a new network a big head start, and as valuable as its laid wires were, if the cable industry kept growing, the new networks now launching could be even more valuable. By buying into networks, Malone thought, TCI could own both the pipe and the water f lowing through it. The cable wire and the cable programming, if owned under one roof, could be leveraged off of each other to create innumerable efficiencies. Vertical integration of companies would become an awesomely powerful and controversial tool for Malone to use in building TCI. Malone arrived at a simple conclusion: He wanted to own as much of the programming as he did of the wire. TCI, which would eventually reach 20 percent of the households, would seek to own 20 percent of every programmer that came calling.

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When a reporter asked Turner a decade later about the intervention and how he viewed Malone, the volatile entrepreneur paused serenely in the middle of a signature rant, and said with rare sincerity: “I’d gladly give my life to save his.” 16 Not only had Malone saved Turner Broadcasting through the deal, he had accomplished something far greater. Ultimately drawing in 31 separate cable operators, Malone had strengthened the fragile bonds of a rogue bunch. Now, as in few other industries, they were joined at the hip and even more vertically integrated. They were a brotherhood and a family, and to each, Malone was the godfather. Malone hadn’t acted out of loyalty—he had acted out of selfinterest, which turned out to be good for his shareholders, too. TCI would be handsomely rewarded for the Turner investment: nearly $6 billion in value at its peak 13 years later for an original investment of about $125 million.17 By keeping Ted Turner in control, Malone 91 9486_Robichaux_01.f.qxd 8/28/02 9:53 AM Page 92 92 C A B L E C O W B OY ensured continuation of the long-term, on-the-cheap programming deals he had struck with Turner’s company.

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Chairman, is that some people say, ‘Well, that’s just the marketplace at work; if they want to raise their rates 117 percent, that’s just market economics,’ ” Gore said with a sanctimony that would become familiar to all of America a few years later. “Well, it’s a monopoly! And the federal government has come in and told the local governments which grant the monopoly franchise, ‘Hands off! Let them fleece the consumers as much as they possibly can.’ ” 3 Then, in ominous tones, Gore touched on the cable industry’s vertical integration, its ownership of both cable systems and programming, and how it had reached staggering proportions. He stared at Malone, whose TCI owned stakes in 33 different cable channels, and declared war. “TCI for one—we’ll hear from its CEO today—is obviously hell-bent toward total domination of the market as it buys up not only more and more cable systems, but more and more major programming services, and even movie studios.”

Behemoth: A History of the Factory and the Making of the Modern World by Joshua B. Freeman

anti-communist, British Empire, Capital in the Twenty-First Century by Thomas Piketty, Charles Babbage, classic study, clean water, collective bargaining, company town, Corn Laws, corporate raider, cotton gin, deindustrialization, Deng Xiaoping, disruptive innovation, driverless car, en.wikipedia.org, factory automation, flying shuttle, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, global supply chain, Great Leap Forward, Herbert Marcuse, high-speed rail, household responsibility system, indoor plumbing, interchangeable parts, invisible hand, James Hargreaves, joint-stock company, knowledge worker, mass immigration, means of production, mittelstand, Naomi Klein, new economy, On the Economy of Machinery and Manufactures, Panopticon Jeremy Bentham, Pearl River Delta, post-industrial society, Ralph Waldo Emerson, rising living standards, Ronald Reagan, scientific management, Shenzhen special economic zone , Silicon Valley, special economic zone, spinning jenny, Steve Jobs, strikebreaker, techno-determinism, technoutopianism, the built environment, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tim Cook: Apple, transaction costs, union organizing, Upton Sinclair, urban planning, Vanguard fund, vertical integration, women in the workforce, working poor, Works Progress Administration, zero-sum game

Almost as soon as the New Shop was completed, Ford began planning a much larger complex in nearby Dearborn, buying massive tracts of land. Some was used for Ford endeavors besides the car company, including a separate firm that produced Fordson tractors. But most of it was devoted to making the Model T. Ford decided to advance to the extreme his effort at vertical integration, seeking to make not only parts but also basic materials like steel, glass, and rubber for his cars, eliminating the possibility of suppliers raising prices or not fulfilling orders when inventories were tight. The Dearborn property, along the Rouge River, allowed the direct delivery of bulk goods, including iron ore, coal, and sand, from Great Lakes ships and had plenty of water for industrial processes.

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Single-purpose, specialized machinery, which made it inexpensive to produce particular parts, made it expensive to switch over to new products (a problem that went all the way back to the high-speed but inflexible machinery used in the early Lowell mills). The changeover from the Model T to the Model A cost the Ford Motor Company $250 million ($3.5 billion in 2017 currency) and first place in sales to General Motors. Vertical integration had its downside, too, evident when the economy and auto sales tanked just a few years after the introduction of the Model A; Ford had a harder time cutting costs than the other major automakers, which bought most of their parts from outside suppliers. Over the course of the decade starting in 1927, Ford had a cumulative net loss, while General Motors made nearly $2 billion in after-tax profits.

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The Soviets located the plant in Togliatti, a small city on the Volga River that had recently been renamed for the deceased Italian communist leader. Though the site was not selected primarily because of the link to Italy, both sides made the most of the connection, portraying the new plant as an exemplar of Italian-Soviet friendship. The vertically integrated plant, which included its own smelter, eventually covered more than a thousand acres. When it began operation in 1970, it had over 42,000 employees, including nearly 35,000 production workers, with a majority under the age of thirty. The workforce kept growing, reaching an astounding 112,231 (46 percent female) in 1981.

Social Capital and Civil Society by Francis Fukuyama

Berlin Wall, blue-collar work, Fairchild Semiconductor, Fall of the Berlin Wall, feminist movement, Francis Fukuyama: the end of history, George Akerlof, German hyperinflation, Jane Jacobs, Joseph Schumpeter, Kevin Kelly, labor-force participation, low skilled workers, p-value, Pareto efficiency, postindustrial economy, principal–agent problem, RAND corporation, scientific management, Silicon Valley, The Death and Life of Great American Cities, the strength of weak ties, transaction costs, vertical integration, World Values Survey

Stewart and Victoria Brown, “The Invisible Key to Success,” For tu ne ( A u g . 5, 1996): 173-74. 452 Tanner Lectures on Human Values sible in large, vertically integrated firms. Much has been written about the cooperative character of Japanese firms and the way in which technology is shared among members of a keiretsu network. In a certain sense, the whole of Silicon Valley can be seen as a single large network organization that can tap expertise and specialized skills unavailable to even the largest vertically integrated Japanese electronics firms and their keiretsu networks. 22 The importance of social capital to technology development has some paradoxical results.

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In an industry characterized by rapid technological change and intense competition, such informal communication was often of more value than more conventional but less timely forums such as industry journals.19 She argues that the proprietary attitudes of a Route 128 firm like Digital Equipment proved to be a liability; unable ultimately to be a self-sufficient, vertically integrated producer of technology, it 19 Saxenian, Regional Advantage, pp. 32-33. [FUKUYAMA] Social Capital 451 lacked the informal links and trust necessary to share technology with rivals. That these technology networks had an ethical and social dimension critical to their economic function is clear from the following comment: “Local engineers recognize that the quality of the feedback and information obtained through their networks depends upon the credibility and trustworthiness of the information provider.

Platform Capitalism by Nick Srnicek

"World Economic Forum" Davos, 3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, Big Tech, Californian Ideology, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative economy, collective bargaining, data science, deindustrialization, deskilling, Didi Chuxing, digital capitalism, digital divide, disintermediation, driverless car, Ford Model T, future of work, gig economy, independent contractor, Infrastructure as a Service, Internet of things, Jean Tirole, Jeff Bezos, knowledge economy, knowledge worker, liquidity trap, low interest rates, low skilled workers, Lyft, Mark Zuckerberg, means of production, mittelstand, multi-sided market, natural language processing, Network effects, new economy, Oculus Rift, offshore financial centre, pattern recognition, platform as a service, quantitative easing, RFID, ride hailing / ride sharing, Robert Gordon, Salesforce, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, software as a service, surveillance capitalism, TaskRabbit, the built environment, total factor productivity, two-sided market, Uber and Lyft, Uber for X, uber lyft, unconventional monetary instruments, unorthodox policies, vertical integration, warehouse robotics, Zipcar

Given the reduction in labour costs provided by such an approach, it is no wonder that Marx wrote that the ‘piece-wage is the form of wages most in harmony with the capitalist mode of production’.60 Yet, as we have seen, this outsourcing of labour is part of a broader and longer outsourcing trend, which took hold in the 1970s. Jobs involving tradable goods were the first to be outsourced, while impersonal services were the next to go. In the 1990s Nike became a corporate ideal for contracting out, in that it contracted much of its labour to others. Rather than adopting vertical integration, Nike was premised upon the existence of a small core of designers and branders, who then outsourced the manufacturing of their goods to other companies. As a result, by 1996 people were already voicing concerns that we were transitioning to ‘a “just-in-time” age of “disposable” workers’.61 But the issue involves more than lean platforms.

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These evade traditional distinctions: they are neither horizontal mergers (combining companies that directly compete), nor vertical mergers (combining companies within the same supply chain), nor conglomerate mergers (combining suppliers of similar and complementary products).22 These mergers consist not so much in the vertical integration of classic Fordist firms or in the lean competencies of the post-Fordist era; they are more like rhizomatic connections driven by a permanent effort to place themselves in key platform positions. Let us take a first example. As access to the internet shifted away from desktop computing and towards handheld smartphones, control over the operating system (OS) platforms became essential.

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Perhaps surprisingly, network providers (i.e. those that provide the basic telecommunications infrastructure) are in a low margin position in the ecosystem around platforms – a position that has compelled them to push for discriminatory pricing in moving data around (the end of ‘net neutrality’) as a way to generate more revenues.25 The strategic importance of a position has much more to do with controlling data from businesses and customers than with just being lower in the stack. These first two expansionary tendencies give platform monopolies a distinct path of expansion by comparison to traditional business models premised on vertical integration, horizontal integration, or conglomeration.26 Instead, platform expansion is driven by the need for more data, which leads to what we might call the convergence thesis: the tendency for different platform companies to become increasingly similar as they encroach upon the same market and data areas.

Matchmakers: The New Economics of Multisided Platforms by David S. Evans, Richard Schmalensee

Airbnb, Alvin Roth, Andy Rubin, big-box store, business process, cashless society, Chuck Templeton: OpenTable:, creative destruction, Deng Xiaoping, digital divide, disruptive innovation, if you build it, they will come, information asymmetry, Internet Archive, invention of movable type, invention of the printing press, invention of the telegraph, invention of the telephone, Jean Tirole, John Markoff, Lyft, M-Pesa, market friction, market microstructure, Max Levchin, mobile money, multi-sided market, Network effects, PalmPilot, Productivity paradox, profit maximization, purchasing power parity, QR code, ride hailing / ride sharing, sharing economy, Silicon Valley, Snapchat, Steve Jobs, the long tail, Tim Cook: Apple, transaction costs, two-sided market, Uber for X, uber lyft, ubercab, vertical integration, Victor Gruen, Wayback Machine, winner-take-all economy

By 2014, more than 40 percent of the items sold on Amazon came from the third-party sellers.12 Windows is an example of a vertically integrated platform, depicted in figure 7-1. There are two groups of customers, A and B, just as there were in our basic description of a two-sided platform shown in figure 1-1. But in the case of this platform, the Customer B’s are complementary products, such as QuickBooks, that Customer A’s can use with the platform. The platform operator supplies some of these complementary products, just as Microsoft does with Office. Some vertically integrated multisided platforms, like Microsoft, operate significant businesses in competition with other participants on the platform.

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Some vertically integrated multisided platforms, like Microsoft, operate significant businesses in competition with other participants on the platform. FIGURE 7-1 A vertically integrated platform The platform facilitates interactions between two types of participants, A and B. B indicates products or services provided by the platform owner, and B indicates products or services provided by third parties that are unaffiliated with the platform owner. Amazon is an example of a hybrid reseller platform. In this case, as depicted in figure 7-2, one company operates a platform that helps connect consumers and sellers (like Amazon Marketplace), and a traditional store that buys from third-party sellers and resells their merchandise directly to consumers (like Amazon’s direct to consumer business).

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See credit/payment cards fleet cards, 86–92, 98–99 mobile, 58, 149–150, 156–164 M-PESA, 164, 167–181 PayPal, 80–81 PayPal, 80–82 personal computers, 19, 35 microchips, 40–41 operating systems, 43–44 pioneering platforms, 37 checklist for, 150–155 retail creative destruction and, 181–196 “Platform Competition in Two-Sided Markets” (Rochet & Tirole), 15 platforms, 16–17 foundational, 40 multi-homing with, 28 reseller, 107–108 sizing, 124–126 vertically integrated, 106–107 PriceGrabber, 186 price levels, 91–93 Priceline, 12 price structures, 91–93 pricing, 19, 30–35, 36, 85–100 access charges/usage fees, 94–95 assessment for, 151, 153–154 in B2B exchanges, 66 balancing interests in, 31–32, 35, 87–89 at Diners Club, 13 free, 93–94 ignition and, 82 maintaining optimal, 98–100 money side, 33–34, 93–94 new rules for, 96–98 at OpenTable, 10, 13–14 price level vs. price structure in, 91–93 sensitivity to, 96 single-sided vs. multisided, 89–91 subsidy side, 33–34, 93–94 traditional economics on, 15 printing press, 200–201 procurement, 67–68 profit, 57–58, 76.

The Green New Deal: Why the Fossil Fuel Civilization Will Collapse by 2028, and the Bold Economic Plan to Save Life on Earth by Jeremy Rifkin

"World Economic Forum" Davos, 1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, American Society of Civil Engineers: Report Card, autonomous vehicles, Bernie Sanders, Big Tech, bike sharing, blockchain, book value, borderless world, business cycle, business process, carbon footprint, carbon tax, circular economy, collective bargaining, corporate governance, corporate social responsibility, creative destruction, decarbonisation, digital rights, do well by doing good, electricity market, en.wikipedia.org, energy transition, failed state, general purpose technology, ghettoisation, green new deal, Greta Thunberg, high-speed rail, hydrogen economy, impact investing, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, it's over 9,000, Joseph Schumpeter, means of production, megacity, megaproject, military-industrial complex, Network effects, new economy, off grid, off-the-grid, oil shale / tar sands, peak oil, planetary scale, prudent man rule, remunicipalization, renewable energy credits, rewilding, Ronald Reagan, shareholder value, sharing economy, Sidewalk Labs, Silicon Valley, Skype, smart cities, smart grid, sovereign wealth fund, Steven Levy, subprime mortgage crisis, the built environment, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade route, union organizing, urban planning, vertical integration, warehouse automation, women in the workforce, zero-sum game

As mentioned, the federal government’s National Interstate and Defense Highways Act of 1956 connected the country with a single road system, spawning the development of suburban America.24 The federal government’s GI Bill offered free higher education for nearly 8 million veterans after World War II and the Korean War, providing the knowledge needed to promote a high-quality workforce to both complete the build-out of the Second Industrial Revolution infrastructure and manage the new business opportunities that plugged into it.25 The Federal Housing Administration (FHA)—created in 1934—helped millions of Americans afford home ownership after the war in the burgeoning suburbs just off the interstate highway exits (although it should be noted that minorities were often discriminated against by the FHA in securing mortgages). The Green New Deal, in turn, will require a similar effort if it is to succeed. The First and Second Industrial Revolution infrastructures were engineered to be centralized, top-down, and proprietary, and they needed to be vertically integrated to create economies of scale and return profits to investors. The result is that at the end of the Second Industrial Revolution, the global Fortune 500 companies, most of them US-based, account for $30 trillion in revenue, or around 37 percent of global GDP, with only 67.7 million employees out of a global workforce of nearly 3.5 billion people.26 This statistic tells us everything we need to know about how the benefits of the industrial era have been shared.

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In 2018, all renewables claimed a 35.2 percent share of energy sources in gross German power production; nearly 25 percent of all the power was solar and wind, and much of it was being produced by small electricity cooperatives.38 Germany’s once-powerful electric utilities—E.ON, RWE, EnBW, and Vattenfall—are producing only 5 percent of the new green electricity of the twenty-first century, taking them out of the game of “generating” green electricity.39 To their credit, these companies were ideally suited to generate electricity from centralized sources of energy—coal, oil, and natural gas—which require large amounts of capital to extract, transport, and transform into electric power on the grid. The enormous capital requirements inevitably led to the erection of giant, vertically integrated business operations to create economies of scale and return profits to investors. The new green energies, however, are distributed rather than centralized. The sun shines everywhere, and the wind blows everywhere, which means that they can be harnessed everywhere—on rooftops and along terrains—favoring literally millions of micro power-generating sites.

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Thus, the $112 billion of gas-fired power plants currently proposed or under construction, along with $32 billion of proposed gas pipelines to serve these power plants, are already at risk of becoming stranded assets. This has significant implications for investors in gas projects (both utilities and independent power producers) as well as regulators responsible for approving investment in vertically integrated territories.35 The United States’ northern neighbor, Canada, is also investing heavily in natural gas exploration, extraction, and sale. While Canada is regarded as a country fiercely dedicated to the environment and protection of its natural resources, there is another, darker Canadian persona deeply tied to fossil fuel energies.

The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn’t What It Used to Be by Moises Naim

"World Economic Forum" Davos, additive manufacturing, AOL-Time Warner, barriers to entry, Berlin Wall, bilateral investment treaty, business cycle, business process, business process outsourcing, call centre, citizen journalism, Clayton Christensen, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, conceptual framework, corporate governance, creative destruction, crony capitalism, deskilling, disinformation, disintermediation, disruptive innovation, don't be evil, Evgeny Morozov, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, illegal immigration, immigration reform, income inequality, income per capita, intangible asset, intermodal, invisible hand, job-hopping, Joseph Schumpeter, Julian Assange, Kickstarter, Lewis Mumford, liberation theology, Martin Wolf, mega-rich, megacity, military-industrial complex, Naomi Klein, Nate Silver, new economy, Northern Rock, Occupy movement, open borders, open economy, Peace of Westphalia, plutocrats, price mechanism, price stability, private military company, profit maximization, prosperity theology / prosperity gospel / gospel of success, radical decentralization, Ronald Coase, Ronald Reagan, seminal paper, Silicon Valley, Skype, Steve Jobs, The Nature of the Firm, Thomas Malthus, too big to fail, trade route, transaction costs, Twitter Arab Spring, vertical integration, Washington Consensus, WikiLeaks, World Values Survey, zero-sum game

He observed that modern firms faced numerous costs that were lower when the firm brought the functions in-house than they would have been when dealing at arms’ length with another enterprise. Included among such costs are those for drafting and enforcing sales contracts—expenses that Coase initially called “marketing costs” and later redubbed “transaction costs.” Specifically, transaction costs helped explain why some firms grew by vertically integrating—that is, by buying their suppliers or distributors—while others didn’t. Large oil producers, for example, prefer to own the refineries where their oil is processed, as this tends to be less risky and more efficient than relying on a commercial relationship with independent refiners whose actions the oil companies can’t control.

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In contrast, a large garment retailer like Zara and computer companies like Apple or Dell are less compelled to own the manufacturing facilities that make their products. They subcontract (“outsource”) the manufacturing to another firm and concentrate on the technology, design, and marketing and retailing of their products. The propensity to operate through a vertically integrated firm is driven by the structure of the market of buyers and sellers active in the different stages of the industry and by the kinds of investments needed to enter the business. In short, transaction costs determine the contours, growth patterns, and, ultimately, the very nature of firms.21 Although Coase’s insight became an important underpinning of economics in general, its main initial impact was in the field of industrial organization, which focuses on factors that stimulate or hinder competition among firms.

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The same applies to situations in which one army has exclusive control over the procurement of its weapons and technology and a second army is forced to depend on another nation’s arms industry. Thus, the transaction costs that some organizations are able to minimize by “internalizing” or controlling the provider or the distributors constitute one more barrier to potential new rivals and a barrier to gaining power more generally—and scale boosted by vertical integration provides a high protective barrier for incumbents inasmuch as newer, smaller players have a lesser chance to compete and succeed. It is worth noting that until the 1980s many governments were tempted to “integrate” vertically and own and operate airlines, smelters, cement factories, and banks.

Digital Bank: Strategies for Launching or Becoming a Digital Bank by Chris Skinner

algorithmic trading, AltaVista, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, bank run, Basel III, bitcoin, Bitcoin Ponzi scheme, business cycle, business intelligence, business process, business process outsourcing, buy and hold, call centre, cashless society, clean water, cloud computing, corporate social responsibility, credit crunch, cross-border payments, crowdsourcing, cryptocurrency, demand response, disintermediation, don't be evil, en.wikipedia.org, fault tolerance, fiat currency, financial innovation, gamification, Google Glasses, high net worth, informal economy, information security, Infrastructure as a Service, Internet of things, Jeff Bezos, Kevin Kelly, Kickstarter, M-Pesa, margin call, mass affluent, MITM: man-in-the-middle, mobile money, Mohammed Bouazizi, new economy, Northern Rock, Occupy movement, Pingit, platform as a service, Ponzi scheme, prediction markets, pre–internet, QR code, quantitative easing, ransomware, reserve currency, RFID, Salesforce, Satoshi Nakamoto, Silicon Valley, smart cities, social intelligence, software as a service, Steve Jobs, strong AI, Stuxnet, the long tail, trade route, unbanked and underbanked, underbanked, upwardly mobile, vertical integration, We are the 99%, web application, WikiLeaks, Y2K

It is deconstituted and needs to be reconstituted; it is modular and plug and play and no longer integrated and end-to-end; it is remote and human rather than local and face-to-face; and most of all it has digital at the core and the flow of logic flows from that core. This then leads us to a very different but clear challenge for the future Digital Bank. This bank has the challenge to turn a vertically integrated business – that owns the customer process end-to-end and organises itself around products and channels – into a horizontally-structured business. The new business is designed to provide functionality to the customer at their point of need, and organizes themselves around the customer’s data.

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However, the underlying data was still held in product silos and the Internet was not responsive to customer’s views of the world. Broadband had yet to appear and customers were reluctant to lose their branch connection. So, the banks left the Internet as another layer on top of the branch-based systems, alongside the call centre spaghetti. Banks had become locked into vertically-integrated processes, structured around product silos that were ill-suited to the multichannel world they now served. But it was ok. Using middleware, fudge, smoke and mirrors, it did the job. Then this perfect storm of mobile, cloud and big data appeared, augmented by customers tweeting and socialising 24/7 and most bankers went, “what the hell?”

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Like a smorgasbord of utilities, the trick will be to make your plate of edibles the most attractive to the target audience you are trying to reach and, by this time, we will all think of technology, software and infrastructure like electricity and the internet – just something you plug into and don’t care how it works. This then leads on to the component-based bank. The component-based bank Banks have traditionally been vertically integrated businesses, where the end-to-end process is offered to the customer as a complete package. Deposit accounts, trade finance, payments processing, loans, credit, mortgages, savings, investment and more are wrapped together as pieces of business. Within each separate product stream, banks also integrate the end-to-end, so corporates run their payables and receivables, electronic and paper, domestic and foreign exchange all through the one bank.

Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century by Torben Iversen, David Soskice

Andrei Shleifer, assortative mating, augmented reality, barriers to entry, Big Tech, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, centre right, clean tech, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, confounding variable, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, deskilling, Donald Trump, first-past-the-post, full employment, general purpose technology, gentrification, Gini coefficient, hiring and firing, implied volatility, income inequality, industrial cluster, inflation targeting, invisible hand, knowledge economy, labor-force participation, liberal capitalism, low skilled workers, low-wage service sector, means of production, middle-income trap, mirror neurons, mittelstand, Network effects, New Economic Geography, new economy, New Urbanism, non-tariff barriers, Occupy movement, offshore financial centre, open borders, open economy, passive investing, precariat, race to the bottom, radical decentralization, rent-seeking, RFID, road to serfdom, Robert Bork, Robert Gordon, Silicon Valley, smart cities, speech recognition, tacit knowledge, The Future of Employment, The Great Moderation, The Rise and Fall of American Growth, the strength of weak ties, too big to fail, trade liberalization, union organizing, urban decay, vertical integration, Washington Consensus, winner-take-all economy, working-age population, World Values Survey, young professional, zero-sum game

The “assembly-line logic” of unionization also applied to the organization of business. Because Fordism created extensive economies of scale in all phases of the production chain, plants became highly specialized and dependent on their suppliers and buyers. One way to manage this vulnerability through the corporate governance system was vertical integration, and the Fordist economy produced very large hierarchically controlled, multidivisional companies—most notably in the United States and the UK, where large-scale mass production was most pervasive. Alternatively, high trans-action costs were managed via strong employers’ associations with the power and incentives to induce cooperation among their members.

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The logic is captured in overlapping generations models where leaders have room to govern, but only with the tacit consent of future generations concerned about their own electability (Aldrich 1995; Soskice, Bates, and Epstein 1992). We thus see the key aspect of parties to be concern with reputation and clear party labels, as opposed to large mass organizations. Just as strong brand names do not require huge vertically integrated companies, mass membership is not a prerequisite for, and may sometimes be a hindrance to, reputation-based parties. The party label is the key bond between current and future politicians, and between current and future voters. The capacity to build up reliable party labels was undoubtedly aided by overall party-system stability.

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Highly routinized production processes were mentally and physically exhausting, especially when combined with piece-rate pay systems that paced and wore down workers. Many industrial workers aged prematurely or developed disabilities, and welfare state services, while increasingly encompassing, were themselves standardized and impersonal (Kitschelt 1994). The centralized top-down command structures that characterized all aspects of the system—from vertically integrated companies and centralized union confederations to a limited-access corporatist state—also shut down rank-and-file participation, and they were at least partly to blame for the widespread outbreak of wildcat strikes and protests in the “hot summer” of 1968. Educated youth with lofty ideals of participation and individual autonomy found little to like in this standardized and conformist society.

Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You by Sangeet Paul Choudary, Marshall W. van Alstyne, Geoffrey G. Parker

3D printing, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, Apple's 1984 Super Bowl advert, autonomous vehicles, barriers to entry, Benchmark Capital, big data - Walmart - Pop Tarts, bitcoin, blockchain, business cycle, business logic, business process, buy low sell high, chief data officer, Chuck Templeton: OpenTable:, clean water, cloud computing, connected car, corporate governance, crowdsourcing, data acquisition, data is the new oil, data science, digital map, discounted cash flows, disintermediation, driverless car, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Free Software Foundation, gigafactory, growth hacking, Haber-Bosch Process, High speed trading, independent contractor, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Kevin Roose, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Max Levchin, Metcalfe’s law, multi-sided market, Network effects, new economy, PalmPilot, payday loans, peer-to-peer lending, Peter Thiel, pets.com, pre–internet, price mechanism, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Salesforce, Satoshi Nakamoto, search costs, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, social bookmarking, social contagion, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the long tail, the payments system, Tim Cook: Apple, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, winner-take-all economy, zero-sum game, Zipcar

The management of human resources shifts from employees to crowds.18 Innovation shifts from in-house R & D to open innovation.19 The primary venue for activities in which value is created for participants shifts from an internal production department to a collection of external producers and consumers—which means that management of externalities becomes a key leadership skill. Growth comes not from horizontal integration and vertical integration but from functional integration and network orchestration. The focus on processes such as finance and accounting shifts from cash flows and assets you can own to communities and assets you can influence. And while platform businesses themselves are often extraordinarily profitable, the chief locus of wealth creation is now outside rather than inside the organization.

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Some of the competitive steps they’ve taken may seem obvious. They aren’t. Pipeline businesses like Nike have traditionally scaled in one of two ways. Some expand by owning and integrating a greater length of the value-creation-and-delivery pipeline—for example, by buying upstream suppliers or downstream distributors. This is referred to as vertical integration. Others expand by widening the pipeline to push more value through it. This is horizontal integration. When consumer goods companies grow by creating new products and brands, it’s an example of horizontal integration. In January 2012, Nike brought out a wearable technology device, the FuelBand, to track user fitness activities, including steps walked and calories burned.

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For decades, companies have studied the five forces model and used it to guide their decisions about which markets to enter and exit, what mergers or acquisitions to consider, what sorts of product innovation to pursue, and what supply chain strategies to employ. Approaches like horizontal integration (in which a firm controls most or all of a specific product or service marketplace) and vertical integration (in which a firm controls an entire value chain, from raw materials to manufacturing to marketing) have been analyzed and implemented based on the strategic implications of the five forces model. Under this model, Houghton Mifflin Harcourt competes with McGraw-Hill by striving to control the best authors and content and by using copyright to construct a moat around its fortress of value.

Capitalism in America: A History by Adrian Wooldridge, Alan Greenspan

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, agricultural Revolution, air freight, Airbnb, airline deregulation, Alan Greenspan, American Society of Civil Engineers: Report Card, Asian financial crisis, bank run, barriers to entry, Bear Stearns, Berlin Wall, Blitzscaling, Bonfire of the Vanities, book value, Bretton Woods, British Empire, business climate, business cycle, business process, California gold rush, Charles Lindbergh, cloud computing, collateralized debt obligation, collective bargaining, Corn Laws, Cornelius Vanderbilt, corporate governance, corporate raider, cotton gin, creative destruction, credit crunch, debt deflation, Deng Xiaoping, disruptive innovation, Donald Trump, driverless car, edge city, Elon Musk, equal pay for equal work, Everybody Ought to Be Rich, Fairchild Semiconductor, Fall of the Berlin Wall, fiat currency, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, full employment, general purpose technology, George Gilder, germ theory of disease, Glass-Steagall Act, global supply chain, Great Leap Forward, guns versus butter model, hiring and firing, Ida Tarbell, income per capita, indoor plumbing, informal economy, interchangeable parts, invention of the telegraph, invention of the telephone, Isaac Newton, Jeff Bezos, jimmy wales, John Maynard Keynes: technological unemployment, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, labor-force participation, land bank, Lewis Mumford, Louis Pasteur, low interest rates, low skilled workers, manufacturing employment, market bubble, Mason jar, mass immigration, McDonald's hot coffee lawsuit, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Michael Milken, military-industrial complex, minimum wage unemployment, mortgage debt, Myron Scholes, Network effects, new economy, New Urbanism, Northern Rock, oil rush, oil shale / tar sands, oil shock, Peter Thiel, Phillips curve, plutocrats, pneumatic tube, popular capitalism, post-industrial society, postindustrial economy, price stability, Productivity paradox, public intellectual, purchasing power parity, Ralph Nader, Ralph Waldo Emerson, RAND corporation, refrigerator car, reserve currency, rising living standards, road to serfdom, Robert Gordon, Robert Solow, Ronald Reagan, Sand Hill Road, savings glut, scientific management, secular stagnation, Silicon Valley, Silicon Valley startup, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, stem cell, Steve Jobs, Steve Wozniak, strikebreaker, supply-chain management, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, total factor productivity, trade route, transcontinental railway, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, Unsafe at Any Speed, Upton Sinclair, urban sprawl, Vannevar Bush, vertical integration, War on Poverty, washing machines reduced drudgery, Washington Consensus, white flight, wikimedia commons, William Shockley: the traitorous eight, women in the workforce, Works Progress Administration, Yom Kippur War, young professional

THE URGE TO MERGE The corporations that spread across the American business world, from transport to production to retailing, all had one thing in common, the quest for size. As the market became more mature, the quest for size inevitably led to mergers. The years between 1895 and 1904 saw a merger mania. Before the mania, consolidation had tended to take the form of vertical integration, as companies purchased their suppliers and distributors. The merger boom added horizontal integration to the mixture. Horizontal and vertical integration reinforced each other: as soon as it was born, U.S. Steel acquired massive iron ore deposits in the Lake Superior region, and by 1950, it owned 50 percent of all the country’s iron ore deposits.21 Two people were at the heart of the age of consolidation: Rockefeller and Morgan.

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Swift realized that he could save a lot of money if he slaughtered the cattle in the Midwest and transported them in refrigerated railway cars to the East. Transporting the steaks rather than the steers, as it were, not only did away with the need for long cattle drives (and the ensuing weight loss), but also reduced the weight of what you were transporting by half. Even by the standards of the time Swift was an enthusiastic practitioner of vertical integration: he even owned the rights to harvest ice in the Great Lakes and the icehouses along the railway tracks that replenished the ice. He quickly built a huge empire—by 1881, he owned nearly two hundred refrigerated cars and shipped something on the order of three thousand carcasses a week—and a highly fragmented industry consolidated into a handful of companies (Swift as well as Armour, Morris, and Hammond).

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“The generation between 1865 and 1895 was already mortgaged to the railways,” Henry Adams noted laconically, “and no one knew it better than the generation itself.” Despite these irrationalities, the corporation went on to conquer America’s industrial heartland. Having been more or less confined to the railways in the 1860s, vertically integrated companies dominated most of the country’s big industries by 1900: not only steel and oil but also technology and consumer goods. AT&T was founded in 1885, Eastman Kodak in 1888, and General Electric in 1892. The men who created these corporations typically followed the same sequence of moves that we have seen with Carnegie and Rockefeller.

Frugal Innovation: How to Do Better With Less by Jaideep Prabhu Navi Radjou

3D printing, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, barriers to entry, Baxter: Rethink Robotics, behavioural economics, benefit corporation, Bretton Woods, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, circular economy, cloud computing, collaborative consumption, collaborative economy, Computer Numeric Control, connected car, corporate social responsibility, creative destruction, crowdsourcing, disruptive innovation, driverless car, Elon Musk, fail fast, financial exclusion, financial innovation, gamification, global supply chain, IKEA effect, income inequality, industrial robot, intangible asset, Internet of things, job satisfaction, Khan Academy, Kickstarter, late fees, Lean Startup, low cost airline, M-Pesa, Mahatma Gandhi, Marc Benioff, megacity, minimum viable product, more computing power than Apollo, new economy, payday loans, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, planned obsolescence, precision agriculture, race to the bottom, reshoring, risk tolerance, Ronald Coase, Salesforce, scientific management, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, software as a service, standardized shipping container, Steve Jobs, supply-chain management, tacit knowledge, TaskRabbit, TED Talk, The Fortune at the Bottom of the Pyramid, the long tail, The Nature of the Firm, Tony Fadell, transaction costs, Travis Kalanick, unbanked and underbanked, underbanked, value engineering, vertical integration, women in the workforce, work culture , X Prize, yield management, Zipcar

Social networks and co-creation platforms are bringing together millions of disparate prosumers in creative communities, allowing them to collaborate in producing their own goods and services. In doing so, they are paving the way for what is being called the horizontal economy. The rise of the horizontal economy Vertically integrated value chains, controlled by companies that exclude customers, are being challenged by new value ecosystems orchestrated by customers themselves. The new ecosystems allow consumers to design, build, market, distribute and trade goods and services by and among themselves, without the need for intermediaries.

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Indeed, organisations are dying earlier: the average lifespan of a company in Standard & Poor’s 500 Index (the 500 leading publicly-traded firms in the US) shrank from 61 years in 1958 to 18 years in 2011, and will shrink further in the foreseeable future. Second, when companies claim to be building partner ecosystems, they are doing little more than finding new ways to lock customers into their brands. They are replacing vertical integration with a vertical ecosystem. But a brand-specific approach is becoming irrelevant, even counterproductive, as customers are themselves able to create the products they want, independent of established brands. Instead, companies need to build horizontal ecosystems that integrate their brands with those of other firms – including their rivals – to provide customers with the rich choice and highly personalised experiences that they expect.

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The company, which is over 160 years old, is radically transforming its bricks-and-mortar health-insurance business into a digital enabler of value-based care. Bertolini notes: To survive, most health insurers have only two options: either move up the health-care value chain, by exclusively serving the premium market, or move down the value chain by buying out hospitals and become vertically integrated. We chose neither, and instead decided to move deeper into the value chain by becoming the “Intel Inside” of the entire health-care system. As part of this strategy, Aetna offers a comprehensive portfolio of technology solutions and value-added services to hospitals and other health-care providers so that they can shift to a value-based care model.

No Shortcuts: Organizing for Power in the New Gilded Age by Jane F. McAlevey

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", affirmative action, Affordable Care Act / Obamacare, Albert Einstein, anti-communist, antiwork, call centre, clean water, collective bargaining, emotional labour, feminist movement, gentrification, hiring and firing, immigration reform, independent contractor, informal economy, Mark Zuckerberg, mass incarceration, Naomi Klein, new economy, no-fly zone, Occupy movement, precariat, Right to Buy, Ronald Reagan, Silicon Valley, Silicon Valley startup, single-payer health, The Chicago School, union organizing, Upton Sinclair, vertical integration, women in the workforce

The resulting deeply conservative judiciary has relentlessly chipped away at the major laws sustaining the victories of labor and civil rights, overturning hard-fought, key provisions of affirmative action and voting-rights protections. Moreover, along with austerity and privatization, conservative courts have facilitated a vertically integrated for-profit prison system, resulting in the mass incarceration of African Americans, detention centers overflowing with Latinos, and massive profits for the putrid penal system’s corporate shareholders.9 The corporate class also created their version of a popular front, seizing the cultural apparatus through such rulings as the Federal Communications Commission’s Clinton-era decision to allow multinationals to outright own the means of communication.

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In this chapter I highlight the decisive moments in the campaign when the decisions of the key individuals made the difference between winning and losing. I identify these decisions as embodying the organizing strategy that differs from New Labor’s mobilizing approach. The Global South Within the Global North Smithfield Foods is the largest pork producer in the world. It is a vertically integrated company that owns tens of thousands of acres of land where Smithfield farmers and contractors raise hogs that are taken to company-owned plants for slaughter, production, and packing, and then shipped to all 50 states as well as exported to China, Japan, and Europe. In the U.S. alone, the company markets twelve distinct brands, including Healthy Ones, Margherita, Farmland, and Armour.

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Meanwhile, over the decade that followed, there was an explosion of Mexican immigration into the region, the direct result of NAFTA as Smithfield scooped up hog farms in Mexico. The company displaced Mexican workers on previously Mexican-owned lands, then helped persuade them to cross the border to work in the big new plant in North Carolina. This was a perverse and extreme extension of the concept of Smithfield’s vertical integration.16 What began as a legal battle over the 100 labor law violations that had taken place during the 1994 election became a case study in how the laws are stacked against workers. At every turn, the National Labor Relations Board would rule in favor of the workers and against the company. And every time this happened, the company dragged out and stalled resolution by an appeal to the next level.

Taming the Sun: Innovations to Harness Solar Energy and Power the Planet by Varun Sivaram

"World Economic Forum" Davos, accelerated depreciation, addicted to oil, Albert Einstein, An Inconvenient Truth, asset light, asset-backed security, autonomous vehicles, bitcoin, blockchain, carbon footprint, carbon tax, clean tech, collateralized debt obligation, Colonization of Mars, currency risk, decarbonisation, deep learning, demand response, disruptive innovation, distributed generation, diversified portfolio, Donald Trump, electricity market, Elon Musk, energy security, energy transition, financial engineering, financial innovation, fixed income, gigafactory, global supply chain, global village, Google Earth, hive mind, hydrogen economy, index fund, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), Internet of things, low interest rates, M-Pesa, market clearing, market design, Masayoshi Son, mass immigration, megacity, Michael Shellenberger, mobile money, Negawatt, ocean acidification, off grid, off-the-grid, oil shock, peer-to-peer lending, performance metric, renewable energy transition, Richard Feynman, ride hailing / ride sharing, rolling blackouts, Ronald Reagan, Silicon Valley, Silicon Valley startup, smart grid, smart meter, SoftBank, Solyndra, sovereign wealth fund, Ted Nordhaus, Tesla Model S, time value of money, undersea cable, vertical integration, wikimedia commons

The solar industry comprises a diverse set of firms. One important category is upstream producers (or, interchangeably, manufacturers) of solar equipment, components, and panels. Another category is downstream developers that shepherd a solar project through its various stages of design, financing, construction, and operation. Some vertically integrated firms perform multiple upstream steps and even have divisions that deploy solar panels into downstream markets as well. The cost of solar power has fallen substantially in recent years and looks set to continue doing so. The simplest way to measure cost is to divide the up-front cost of a solar installation by its rated capacity in watts.

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But right now, large electric power companies looking to diversify from fossil fuels are the best-positioned entities to transform their business models and don the mantle of solar supermajors. Actually, this view applies only to some firms in the electric power sector. Electric power companies come in two major flavors, a result of a push for deregulation around the world. For much of the twentieth century, there was largely only one type: the vertically integrated utility. These utilities owned both power plants and the transmission lines and distribution infrastructure to deliver power to their customers, and they enjoyed a monopoly over a limited service territory to sell their power. Then, around the turn of the century, markets across North America and Europe started to deregulate—that is, they no longer awarded a monopoly to a single utility over all power-related activities.

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A whole host of solar providers offering SHS sizes between those of M-KOPA and Mobisol, such as Off-Grid Electric, has sprung up in East Africa. As competition saturates the initial markets, firms are expanding to new places, such as Nigeria and Ethiopia, to serve the massive untapped demand for electricity there. In addition to offering differently sized systems, PAYG firms vary in their level of vertical integration. At one extreme, Off-Grid Electric designs and provides its own SHSs, complete with appliance offerings. It also operates its own distribution, sales, and service channels. This approach enables it to learn about its customer preferences and quickly update its system offerings in response.

Masters of Management: How the Business Gurus and Their Ideas Have Changed the World—for Better and for Worse by Adrian Wooldridge

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, affirmative action, Alan Greenspan, barriers to entry, behavioural economics, Black Swan, blood diamond, borderless world, business climate, business cycle, business intelligence, business process, carbon footprint, Cass Sunstein, Clayton Christensen, clean tech, cloud computing, collaborative consumption, collapse of Lehman Brothers, collateralized debt obligation, commoditize, company town, corporate governance, corporate social responsibility, creative destruction, credit crunch, crowdsourcing, David Brooks, David Ricardo: comparative advantage, disintermediation, disruptive innovation, do well by doing good, don't be evil, Donald Trump, Edward Glaeser, Exxon Valdez, financial deregulation, Ford Model T, Frederick Winslow Taylor, future of work, George Gilder, global supply chain, Golden arches theory, hobby farmer, industrial cluster, intangible asset, It's morning again in America, job satisfaction, job-hopping, joint-stock company, Joseph Schumpeter, junk bonds, Just-in-time delivery, Kickstarter, knowledge economy, knowledge worker, lake wobegon effect, Long Term Capital Management, low skilled workers, Mark Zuckerberg, McMansion, means of production, Menlo Park, meritocracy, Michael Milken, military-industrial complex, mobile money, Naomi Klein, Netflix Prize, Network effects, new economy, Nick Leeson, Norman Macrae, open immigration, patent troll, Ponzi scheme, popular capitalism, post-industrial society, profit motive, purchasing power parity, radical decentralization, Ralph Nader, recommendation engine, Richard Florida, Richard Thaler, risk tolerance, Ronald Reagan, science of happiness, scientific management, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steven Levy, supply-chain management, tacit knowledge, technoutopianism, the long tail, The Soul of a New Machine, The Wealth of Nations by Adam Smith, Thomas Davenport, Tony Hsieh, too big to fail, vertical integration, wealth creators, women in the workforce, young professional, Zipcar

Thus, Alfred Sloan’s General Motors is a more awesome creation than the combustion engine, and the hospital is a more important medical breakthrough than any newfangled medicine. Drucker had no illusions about how difficult management is. In Managing in a Time of Great Change, a collection of essays published in 1995, he focused on three problems that are making the modern manager’s life hell. The first is the sheer scale of contemporary managerial change, as vertically integrated companies give way to networked organizations. The second is the frequency of managerial failure. Most managers, he points out, have failed to understand what it means to manage in revolutionary times, and they spend their time tinkering with their business when they should really be rethinking the whole theory on which it is based.

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The End of Certainty Companies have arguably been the world’s most important organizations since the midnineteenth century, the engines of global prosperity and the building blocks of most people’s social lives. But they are remarkably fluid organizations. Over the past couple of decades they have been forced to rethink almost every tenet of managerial wisdom. Once companies prided themselves on “vertical integration” and were run like self-contained empires, with as little recourse to outsiders as possible. Now they are “sticking to their knitting,” focusing on their core businesses and contracting everything else out to independent specialists. Once companies had a clear line of command and control, starting with the chairman at the top and stretching to the lowliest menial.

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In Remix: Making Art and Commerce Thrive in the Hybrid Economy, Lawrence Lessig, of Stanford University, argues that a host of new companies such as Flickr, Twitter, and Linux specialize in taking the shared efforts of thousands or even millions of people and then using them to create communities. If the Sloanist company’s core competency lay in vertical integration, the “hybrid” company’s core competency lies in organizing “communities of meaning,” tapping into the enthusiasm of thousands of people and then converting their ideas into a coherent product or service. Even those managers who are unfashionable enough to try to defend the old Sloanist fortress find that they are fighting a losing battle.

The Rise of the Network Society by Manuel Castells

air traffic controllers' union, Alan Greenspan, Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, Bob Noyce, borderless world, British Empire, business cycle, capital controls, classic study, complexity theory, computer age, Computer Lib, computerized trading, content marketing, creative destruction, Credit Default Swap, declining real wages, deindustrialization, delayed gratification, dematerialisation, deskilling, digital capitalism, digital divide, disintermediation, double helix, Douglas Engelbart, Douglas Engelbart, edge city, experimental subject, export processing zone, Fairchild Semiconductor, financial deregulation, financial independence, floating exchange rates, future of work, gentrification, global village, Gunnar Myrdal, Hacker Ethic, hiring and firing, Howard Rheingold, illegal immigration, income inequality, independent contractor, Induced demand, industrial robot, informal economy, information retrieval, intermodal, invention of the steam engine, invention of the telephone, inventory management, Ivan Sutherland, James Watt: steam engine, job automation, job-hopping, John Markoff, John Perry Barlow, Kanban, knowledge economy, knowledge worker, labor-force participation, laissez-faire capitalism, Leonard Kleinrock, longitudinal study, low skilled workers, manufacturing employment, Marc Andreessen, Marshall McLuhan, means of production, megacity, Menlo Park, military-industrial complex, moral panic, new economy, New Urbanism, offshore financial centre, oil shock, open economy, packet switching, Pearl River Delta, peer-to-peer, planetary scale, popular capitalism, popular electronics, post-Fordism, post-industrial society, Post-Keynesian economics, postindustrial economy, prediction markets, Productivity paradox, profit maximization, purchasing power parity, RAND corporation, Recombinant DNA, Robert Gordon, Robert Metcalfe, Robert Solow, seminal paper, Shenzhen special economic zone , Shoshana Zuboff, Silicon Valley, Silicon Valley startup, social software, South China Sea, South of Market, San Francisco, special economic zone, spinning jenny, statistical model, Steve Jobs, Steve Wozniak, Strategic Defense Initiative, tacit knowledge, technological determinism, Ted Nelson, the built environment, the medium is the message, the new new thing, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, transaction costs, urban renewal, urban sprawl, vertical integration, work culture , zero-sum game

How different is this from the structure of divisions and departments in a vertically integrated corporation? Most of the key suppliers are in fact controlled or influenced by financial, commercial or technological undertakings, belonging either to the parent firm or to the overarching keiretsu. Under such conditions, are we not observing a system of planned production under the premise of relative market control by the large corporation? Thus, what is important in this model is the vertical disintegration of production along a network of firms, a process that substitutes for the vertical integration of departments within the same corporate structure.

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In a parallel analysis to the notion of technological trajectories,10 I propose to consider the development of different organizational trajectories, namely specific arrangements of systems of means oriented toward increasing productivity and competitiveness in the new technological paradigm and in the new global economy. In most cases, these trajectories evolved from industrial organizational forms, such as the vertically integrated corporation and the independent small business firm, which had become unable to perform their tasks under the new structural conditions of production and markets, a trend that became fully apparent in the crisis of the 1970s. In other cultural contexts, new organizational forms emerged from pre-existing ones that had been pushed aside by the classical model of industrial organization, to find new life in the requirements of the new economy and in the possibilities offered by new technologies.

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The massproduction model was based on productivity gains obtained by economies of scale in an assembly-line-based, mechanized process of production of a standardized product, under the conditions of control of a large market by a specific organizational form: the large corporation structured on the principles of vertical integration, and institutionalized social and technical division of labor. These principles were embedded in the management methods known as “Taylorism” and “scientific organization of work,” methods adopted as guidelines by both Henry Ford and Lenin. When demand became unpredictable in quantity and quality, when markets were diversified worldwide and thereby difficult to control, and when the pace of technological change made obsolete single-purpose production equipment, the mass-production system became too rigid and too costly for the characteristics of the new economy.

24/7: Late Capitalism and the Ends of Sleep by Jonathan Crary

augmented reality, Berlin Wall, dematerialisation, Dissolution of the Soviet Union, Fall of the Berlin Wall, invention of movable type, Kevin Kelly, late capitalism, Lewis Mumford, mass incarceration, megacity, planetary scale, planned obsolescence, Ponzi scheme, vertical integration

On one hand I am affirming, along with some other writers, that the shape of contemporary technological culture still corresponds to the logic of modernization as it unfolded in the later nineteenth century—that is to say, that some key features of early-twenty-first-century capitalism can still be linked with aspects of the industrial projects associated with Werner Siemens, Thomas Edison, and George Eastman. Their names can stand emblematically for the development of vertically integrated corporate empires that reshaped crucial aspects of social behavior. Their prescient ambitions were realized through (1) an understanding of human needs as always mutable and expandable, (2) an embryonic conception of the commodity as potentially convertible into abstract flows, whether of images, sounds, or energy, (3) effective measures to decrease circulation time, and (4) in the case of Eastman and Edison, an early but clear vision of the economic reciprocities between “hardware” and “software.”

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The consequences of these nineteenth-century models, especially the facilitation and maximization of content distribution, would impose themselves onto human life much more comprehensively throughout the twentieth century. On the other hand, sometime in the late twentieth century it is possible to identify a constellation of forces and entities distinct from those of the nineteenth century and its sequential phases of modernization. By the 1990s, a thoroughgoing transformation of vertical integration had taken place, exemplified most familiarly by the innovations of Microsoft, Google, and others, even though some remnants of older hierarchical structures persisted alongside newer, more flexible and capillary models of implementation and control. Within this emerging context, technological consumption coincides with and becomes indistinguishable from strategies and effects of power.

Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity by Joseph E. Stiglitz

"World Economic Forum" Davos, accelerated depreciation, Airbnb, Alan Greenspan, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, basic income, behavioural economics, benefit corporation, Berlin Wall, bilateral investment treaty, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, deindustrialization, discovery of DNA, diversified portfolio, Donald Trump, eurozone crisis, Fall of the Berlin Wall, financial engineering, financial intermediation, Francis Fukuyama: the end of history, full employment, gender pay gap, George Akerlof, gig economy, Gini coefficient, Glass-Steagall Act, hiring and firing, housing crisis, Hyman Minsky, income inequality, independent contractor, inflation targeting, informal economy, information asymmetry, intangible asset, investor state dispute settlement, invisible hand, Isaac Newton, labor-force participation, liberal capitalism, low interest rates, low skilled workers, market fundamentalism, mini-job, moral hazard, non-tariff barriers, offshore financial centre, open economy, Paris climate accords, patent troll, pension reform, price mechanism, price stability, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, Robert Shiller, Ronald Reagan, selection bias, shareholder value, Silicon Valley, sovereign wealth fund, TaskRabbit, too big to fail, trade liberalization, transaction costs, transfer pricing, trickle-down economics, tulip mania, universal basic income, unorthodox policies, vertical integration, zero-sum game

When such a company imposes a high charge for the provision of a service (say, carrying a program over its cables) on its own subsidiary, it is simply transferring money from one pocket to another. The high charges may put its competitors at such a large disadvantage that it drives them out of business. The vertical integration of US cable and telecom companies with producers of media bodes ill for competition in that country in this vital sector.‡ There are similar forces at play for horizontal and vertical integration in Europe, and hopefully Europe will do a better job at circumscribing these ways of increasing market power. Some Europeans have suggested that it would do better if Europe were less attentive to competition and focused more on creating European or national champions—the big, multinational behemoths that are supposed to lead the charge against American or Chinese competitors.

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Regulators need to be on the lookout for these preemptive mergers and be ready to ask whether a merger or acquisition has the potential to undermine future competition (not just whether it would undermine current competition). Traditionally, antitrust authorities have focused attention on mergers and acquisitions within an industry and paid little attention to those between firms in different industries. But when competition is limited, such mergers, known as vertical integration, can weaken competition further. A cable or telecom company that buys a provider of entertainment services can limit further competition among providers of such services. This is true even if there is an obligation of the cable or telecom company to be neutral, so that it does not give preferences to its own subsidiary.

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See also Rewriting the Rules of the American Economy American model limitations, 12 bank resolution approach of, 181 CEO pay comparisons, 138 climate change role of, 328–29 Community Reinvestment Act, 235, 277–78 competition policy and, 130–31, 327 earned income tax credit in, 267 economy, compared to China, 298 formulaic system of, 198 free-trade agreement with Jordan, 316 GDP growth of, 4, 4–5 GMO disagreement with EU, 299 intellectual property protection in, 145 mission-driven corporations in, 143 NAFTA role with, 316 negative income tax, 253 Permanent Fund, 252–53 political mobilization in, 301 private schools regulation, 229 pro-Wall Street agenda, 159 rule of law defiance, 311–12 Shareholder Capitalism Doctrine, 21 taxation in, 188–89 Trump presidency (see Trump, Donald; Trump administration) universal basic income (UBI), 251–54 Universal Declaration of Human Rights (1948), 237 urban economies, 229–30, 231, 232, 236 values, European, 2, 299 vertical integration, 134–35 Vietnam, 321, 322 Volcker, Paul, 86 Volcker rule, 167 wage compression, 257 wage reduction Germany and, 44–45 as internal devaluation, 39–40 trade integration resulting in, 289 wages, minimum, 265–68 wage subsidies, 267–68, 279 wealth allocation and distribution of, 14 creation and distribution of, ECB and, 75 inequality and, 211–12 net wealth tax, 190–91, 200 taxing (see property taxes) Weber, Max, 9 welfare state conclusions about, 237–38 misguided blame for, 214–15 new approach to, 212 overview of, 211, 215 shared abundance, 212–13 social insurance central to, 239–40 strong, combating insecurity, 213–14 welfare state solutions affordable housing, 229–37 investing in education, 224–29 overview of, 223–24 wholesale funding, 169, 171 Wiedeking, Wendelin, 136 worker confidence, improving, 268–73 worker-owned businesses, 142–43 working conditions, adverse, 257–58 World Health Organization, 242 World Intellectual Property Organization, 324 World Trade Organization (WTO) committing to, 296 global rules-based systems of, 290, 310–12 Wu, Tim, 326–27 Xi Jinping, 297–98 Youth Guarantee program, 229, 276, 278–79, 279 zoning, 231 Also by Joseph E.

The Man Behind the Microchip: Robert Noyce and the Invention of Silicon Valley by Leslie Berlin

Apple II, Bob Noyce, book value, business cycle, California energy crisis, Charles Babbage, collective bargaining, computer age, data science, Fairchild Semiconductor, George Gilder, Henry Singleton, informal economy, John Markoff, Kickstarter, laissez-faire capitalism, low skilled workers, means of production, Menlo Park, military-industrial complex, Murray Gell-Mann, open economy, prudent man rule, Richard Feynman, rolling blackouts, ROLM, Ronald Reagan, Sand Hill Road, seminal paper, Silicon Valley, Silicon Valley startup, Steve Jobs, Steve Wozniak, tech worker, Teledyne, Tragedy of the Commons, union organizing, vertical integration, War on Poverty, women in the workforce, Yom Kippur War

The prototypical Silicon Valley semiconductor firm in the 1980s was the independent, “merchant” producer, which manufactured chips for end users other than itself (although Texas Instruments, IBM, and Motorola were vertically integrated companies). Merchant companies often got their start as entrepreneurial ventures; depended on continuous technological innovation and mass production; and before the 1980s, had traditionally regarded the government’s proper role to be that of an eager customer with very deep pockets. In sharp contrast to this model, the Japanese semiconductor industry consisted of six huge, vertically integrated electronics firms (Nippon Electric, Fujitsu, Hitachi, Toshiba, Mitsubishi Electric, and Oki Electric Industry), which had been developed with direct assistance from the government for the express purpose of growing Japan’s high-technology sector.

…

A focus on improving fab materials and equipment meant that SEMATECH would need to transform itself from a “horizontal” research collaboration among peers to what Noyce called a “’virtual’ vertical integration” between its members and the suppliers from whom they bought equipment and materials. In many ways this made SEMATECH even more like a Japanese research consortium—roughly 80 percent of which were vertically integrated—than had originally been imagined.46 Once the mission was defined, Noyce began speaking of SEMATECH as an effort to “strengthen the infrastructure” that supported the semiconductor manufacturing business.

…

Business cards: Miller Bonner, interview by author; Dan Seligson, interview by author. Organization chart: Turner Hasty, interview by author. From our base of shared knowledge: Noyce, “National Advisory Council on Semiconductors, Remarks by Dr. Robert N. Noyce,” 8 Mar. 1989, ST. Virtual vertical integration: Noyce quoted in “Partnering for Total Quality,” (“Prepared by SEMATECH for the U.S. Semiconductor Industry”), vol. 1, 15 Jun. 1990, 1, ST. Vertical integration of 80 percent of Japanese consortiums: Grindley, Mowery, and Silverman, SEMATECH and Cooperative Research, footnote 15. 88 percent small businesses: A Strategic Industry at Risk, 12. Supplier-manufacturer relations: An excellent survey from the late 1980s is Government Accounting Office, SEMATECH’s Efforts to Strengthen the U.S.

The Practice of Cloud System Administration: DevOps and SRE Practices for Web Services, Volume 2 by Thomas A. Limoncelli, Strata R. Chalup, Christina J. Hogan

active measures, Amazon Web Services, anti-pattern, barriers to entry, business process, cloud computing, commoditize, continuous integration, correlation coefficient, database schema, Debian, defense in depth, delayed gratification, DevOps, domain-specific language, en.wikipedia.org, fault tolerance, finite state, Firefox, functional programming, Google Glasses, information asymmetry, Infrastructure as a Service, intermodal, Internet of things, job automation, job satisfaction, Ken Thompson, Kickstarter, level 1 cache, load shedding, longitudinal study, loose coupling, machine readable, Malcom McLean invented shipping containers, Marc Andreessen, place-making, platform as a service, premature optimization, recommendation engine, revision control, risk tolerance, Salesforce, scientific management, seminal paper, side project, Silicon Valley, software as a service, sorting algorithm, standardized shipping container, statistical model, Steven Levy, supply-chain management, systems thinking, The future is already here, Toyota Production System, vertical integration, web application, Yogi Berra

Building such infrastructure requires large amounts of engineering talent, from physical engineering of a datacenter’s cooling system, electric service, and design, to technical expertise in running a datacenter and providing the services themselves. All of this can be very expensive. Amortizing the expense over many customers reduces cost. By comparison, doing it yourself saves money due to the benefits of vertical integration. Vertical integration means saving money by handling all levels of service delivery yourself, eliminating the uplift in cost due to “middle men” and service provider profit margins. There is a break-even point where vertical integration becomes more economical. Calculating the total cost of ownership (TCO) and return on investment (ROI) will help determine which is the best option. Deciding whether the cost of private versus public clouds is appropriate is similar to making a rent versus own decision about where you live.

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This appendix provides a history of five eras of computing technology: preweb era, first web era, dot-bomb era, second web era, and cloud computing era. For each era, describe the level of economic prosperity, the technological improvements, and the expectations for reliability and computing power. 2. The practice of owning the entire process instead of using external providers for certain steps or parts is called “vertical integration.” Which examples of vertical integration were described in this appendix? What were the benefits? 3. What role did open source software play in the maturation of the second web era? 4. Describe the redundant reliability levels replaced by ROC-style distributed computing. 5. The history discussed in this appendix is described as inevitable.

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Federal Emergency Management Administration web site, 324 User Acceptance Testing (UAT), 216 User identity in three-tier web service, 76 User satisfaction, monitoring, 336 User-specific data, global load balancing with, 82–83 User stories, 189 User wait time, automation for, 253 Utilization, segmentation by, 103 Utilization Limit load balancing, 74 Vagrant framework, 219 Value streams in DevOps, 176 Varnish HTTP accelerator, 478 VCSs (version control systems), 265–266 Velocity in DevOps, 179 Vendor lock-in, 56 Vendors design for operations, 48 oncall escalations, 298 Version conflicts in containers, 60–61 Version control systems (VCSs), 265–266 Version-controlled builds, 191 Vertical integration, 64 Views in live schema changes, 234 Virtual machine monitor (VMM), 58–59 Virtual machines benefits, 58 deployment phase, 218 disadvantages, 59–60 IaaS, 52 I/O, 58–59 overview, 57 service platform selection, 66 Virtual offices, 166–167 Virtuous cycle of quality, 200–201 Visibility at scale, 10–11 Visual Display of Quantitative Information, 362 Visualization, monitoring, 333, 358–362 VMM (virtual machine monitor), 58–59 Voice calls for alerts, 293 Volatile data in OS installation, 219–220 Wait time automation for, 253 service delivery, 201 WAN (wide area network) connections, 83 Warmed caches, 106 Watchdog timers, 130 Waterfall methodology overview, 173–175 phases, 199 WAUs (weekly active users), 373 “Weathering the Unexpected” article, 320 Web “Hit” logs, 340 “Web Search for a Planet: The Google Cluster Architecture” article, 464 Web servers, single-machine, 70–71 Web services four-tier, 77–80 three-tier, 71–77 Weber, W.

Fancy Bear Goes Phishing: The Dark History of the Information Age, in Five Extraordinary Hacks by Scott J. Shapiro

3D printing, 4chan, active measures, address space layout randomization, air gap, Airbnb, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, availability heuristic, Bernie Sanders, bitcoin, blockchain, borderless world, Brian Krebs, business logic, call centre, carbon tax, Cass Sunstein, cellular automata, cloud computing, cognitive dissonance, commoditize, Compatible Time-Sharing System, Computing Machinery and Intelligence, coronavirus, COVID-19, CRISPR, cryptocurrency, cyber-physical system, Daniel Kahneman / Amos Tversky, Debian, Dennis Ritchie, disinformation, Donald Trump, double helix, Dr. Strangelove, dumpster diving, Edward Snowden, en.wikipedia.org, Evgeny Morozov, evil maid attack, facts on the ground, false flag, feminist movement, Gabriella Coleman, gig economy, Hacker News, independent contractor, information security, Internet Archive, Internet of things, invisible hand, John Markoff, John von Neumann, Julian Assange, Ken Thompson, Larry Ellison, Laura Poitras, Linda problem, loss aversion, macro virus, Marc Andreessen, Mark Zuckerberg, Menlo Park, meta-analysis, Minecraft, Morris worm, Multics, PalmPilot, Paul Graham, pirate software, pre–internet, QWERTY keyboard, Ralph Nader, RAND corporation, ransomware, Reflections on Trusting Trust, Richard Stallman, Richard Thaler, Ronald Reagan, Satoshi Nakamoto, security theater, Shoshana Zuboff, side hustle, Silicon Valley, Skype, SoftBank, SQL injection, Steve Ballmer, Steve Jobs, Steven Levy, Stuxnet, supply-chain attack, surveillance capitalism, systems thinking, TaskRabbit, tech billionaire, tech worker, technological solutionism, the Cathedral and the Bazaar, the new new thing, the payments system, Turing machine, Turing test, Unsafe at Any Speed, vertical integration, Von Neumann architecture, Wargames Reagan, WarGames: Global Thermonuclear War, Wayback Machine, web application, WikiLeaks, winner-take-all economy, young professional, zero day, éminence grise

Paras had started his own DDoS mitigation service, ProTraf Solutions, and wanted Rutgers to pick ProTraf over Incapsula. And he wasn’t going to stop attacking his school until it switched. Vertical Integration In the hit NBC comedy 30 Rock, the corporate executive Jack Donaghy (played by Alec Baldwin) tries to explain to one of his head writers, Liz Lemon (played by Tina Fey), the economic concept of vertical integration: “Imagine that your favorite corn chip manufacturer also owned the number one diarrhea medication.” Liz’s eyes light up. “That’d be great ’cause then they could put a little sample of medication in each bag.”

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“That’d be great ’cause then they could put a little sample of medication in each bag.” Jack can see that Liz does not fully appreciate the business logic. “Keep thinking.” Liz turns the idea over in her mind as she works out the economics. “Except then they might be tempted to make the corn chips give you…” Jack smiles. “Vertical integration.” Although Donaghy called it “vertical integration,” lawyers have traditionally used another term: racketeering. In its strictest sense, a racket is a fraudulent scheme in which the racketeer creates a problem and forces the victim to pay for the solution. In a protection racket, for example, the local strongman threatens to torch neighborhood stores or beat up merchants if they do not pay for “protection”—the proverbial offer you can’t refuse.

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Mobsters do not offer this umbrella protection out of gratitude or goodwill. Their aim is to freeze out competitors. If a rival racketeer tries to muscle in, the local boss will protect his turf. The local mobster aims to monopolize protection services and be the only provider. When Donaghy described vertical integration to Lemon, she was shocked because his corn chip maker was running a scam—a diarrhea racket, if you will. It sold the medicine to cure the ailment it caused. “Wow, this should not be allowed to happen,” she gasped. According to the famous sociologist Charles Tilly, it is allowed to happen.

The New Elite: Inside the Minds of the Truly Wealthy by Dr. Jim Taylor

Alan Greenspan, Alvin Toffler, British Empire, business cycle, call centre, Cornelius Vanderbilt, dark matter, Donald Trump, estate planning, full employment, glass ceiling, income inequality, Jeff Bezos, Larry Ellison, longitudinal study, Louis Pasteur, Maui Hawaii, McMansion, means of production, passive income, performance metric, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ronald Reagan, stealth mode startup, Steve Jobs, Thorstein Veblen, trickle-down economics, vertical integration, women in the workforce, zero-sum game

They owned the inventions and the patents and the intellectual property. They owned the railroads, the steamships, and other means of distribution. They set the prices. They owned the public stock, the private bonds, and had strong relationships with the merchant bankers who financed it all. Today we’d call it being ‘‘vertically integrated.’’ Back then it was The Wealth of the Nation 29 less of an admired business strategy and more a source of populist resentment—a resentment which still lingers today. What happened to these name-brand fortunes? They were passed on to the heirs of these familiar names and distributed through the many high-profile charitable ventures that also bear their names.

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During the past decade, many iconic luxury brands, whose entire product lines were once extremely high priced and truly exclusive, have rolled out more accessible products (often accessories and jewelry) at price points well within the reach of the mass market. At the same time, several other trends have been subtly reshaping the luxury industry. Strong merger and acquisition activity has resulted in classic luxury brands becoming conglomerates—a brand portfolio within a growth-focused, vertically integrated commercial enterprise. Consider, for example, the inelegantly named LVMH Moët Hennessy—Louis Vuitton. Its lengthy moniker is a by-product of the company’s strategy of accumulating classic brands through (sometimes contentious) acquisitions. Now with over sixty brands and 60,000 employees, LVMH owns some of the world’s most famous luxury brands in a variety of categories, including champagne (Dom The New Luxury 95 Pérignon, Moët & Chandon), fashion (Louis Vuitton, Fendi, Donna Karan, Givenchy, Marc Jacobs), fragrances (Dior), watches (Tag Heuer), and retailing (Sephora, DFS, eLUXURY.com).

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Supreme Court, 26, 27 U.S. tax code, 26, 30, 37, 207 urban population, in 1800s, 23 vacations, 77 children’s influence on, 181 by mavericks, 142 by patrons, 152 values, 46, 56 Vanderbilt, Cornelius, 15, 26–27, 28 Vanderbilt, William, 27 Vanity Fair, 146 Veblen, Thorstein, 2 venture capital, 114 venture capital pool, 37 vertical integration, 28–29 vividness effect, 60 Vontobel, 215 wage increases, 31 Wall Street Journal, 64, 66, 142 Wal-Mart, 78, 179 Walton, Sam, 38 Made in America, 115–116 Washington, George, 22 wealth affluent teens’ view of creation, 175 concentration of, 5–6 consequences of, 138 241 distribution in U.S., 199–201 diversity, 127 explosion, 3 first five years, 118–120 learning about living with, 114–115 snowballing of, 122 Wealth and Democracy (Phillips), 25, 202, 206 wealth formation epochs, 21 agrarian wealth, 22–24 corporate wealth, 30–35 entrepreneurial wealth, 35–39 industrial wealth, 24–30 wealthy, 229 childhood of, 43–44, 46 current views of, 17–18 defining, 9–10 goals yet to attain, 189 images of, 15–16 misconception about, 20 myths and realities, 70–71 reinvention, 187–188 top activities of, 55 wealthy lifestyles, general attitudes toward, 15–16 Wilson, Charles, 31 wines, differentiating, 104 Winfrey, Oprah, 41, 99 Wiseman, Richard, 53 work ethic of children, 169 World War II, economic impact, 31 Worth, 143, 146 Worth-Harrison Taylor Study on the Status of Wealth in America, 226–228 wrestlers’ lifestyle, 128, 134–139 characteristics, 135 Yachting, 64 Yale School of Music, 192–193 youth, see teens Zildjian, Avedis, 100 This page intentionally left blank About the Authors Jim Taylor, Ph.D., is Vice Chairman of the market research consultancy Harrison Group and is among the country’s most respected marketing and branding consultants.

The Global Auction: The Broken Promises of Education, Jobs, and Incomes by Phillip Brown, Hugh Lauder, David Ashton

active measures, affirmative action, An Inconvenient Truth, barriers to entry, Branko Milanovic, BRICs, business process, business process outsourcing, call centre, classic study, collective bargaining, corporate governance, creative destruction, credit crunch, David Ricardo: comparative advantage, deindustrialization, deskilling, disruptive innovation, Dutch auction, Ford Model T, Frederick Winslow Taylor, full employment, future of work, glass ceiling, global supply chain, Great Leap Forward, immigration reform, income inequality, industrial cluster, industrial robot, intangible asset, job automation, Jon Ronson, Joseph Schumpeter, knowledge economy, knowledge worker, low skilled workers, manufacturing employment, market bubble, market design, meritocracy, neoliberal agenda, new economy, Paul Samuelson, pensions crisis, post-industrial society, profit maximization, purchasing power parity, QWERTY keyboard, race to the bottom, Richard Florida, Ronald Reagan, shared worldview, shareholder value, Silicon Valley, sovereign wealth fund, stem cell, tacit knowledge, tech worker, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, transaction costs, trickle-down economics, vertical integration, winner-take-all economy, working poor, zero-sum game

The modular organization is not limited to the formal organization giving them greater options in regard to what is done, how it is done, and where it is done because what is different now is not only the global supply of highly educated workers but also a growing number of low-cost providers able to deliver more for less. 102 The Global Auction What corporations produce themselves, for instance, will depend on the degree to which they focus on core competencies over trying to do everything for themselves within vertically integrated organizations. The fashion within American business literature is to focus on a narrow range of core competencies. This has encouraged corporate executives to virtually disintegrate rather than vertically integrate their organizations because it was assumed to offer a competitive advantage in areas of business for which they are best suited, with all other activities purchased or partnered. A senior manager for a British bank spoke of the “fever” among companies to stick to core competence, increasing the use of outsourcing.

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See also high-skill, low-wage workforce hourly wages, 117, 118 income inequalities, 124–25 industrial policy, lack of, 158 industrial revolutions, 21 Wilensky, Harold, 80 Williamson, Peter, 43, 57–58 Wilson, Timothy, 68 The Winner-Take-All Society, 122 IT revolution, 127 knowledge wars, 45–48 winner-takes-all, 11, 123, 160, 165n7 win-win scenario, 20, 111, 152–53 National Institute on Drug Abuse, 146 opportunity trap, 137 R&D (research and development), 44, 45 World Bank, 59, 130, 149 The World Is Flat, 66 World Trade Organization (WTO), 41 STEM subjects studies, 37–38, 39, 153 trade imbalance, 108–9 World University Rankings, 95 WTO (World Trade Organization), 41, 52 war for talent, 86 working poor, 163 universities. See colleges and universities 198 wage inequalities, 59–60 Wall Street, 111, 148 war for talent, 9, 83–90, 93–97, 148, 176n8, Young, Michael, 133, 182n3 value chain, 52, 54–56, 58, 98, 108–10, 128 Zeng, Ming, 43, 57–58 zero-sum game, 22 venture capital, 114–15 vertical integration, 103 Zhou, Eve, 45 ZTE, 42 Index

The Innovation Illusion: How So Little Is Created by So Many Working So Hard by Fredrik Erixon, Bjorn Weigel

Airbnb, Alan Greenspan, Albert Einstein, American ideology, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, Blue Ocean Strategy, BRICs, Burning Man, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, classic study, Clayton Christensen, Colonization of Mars, commoditize, commodity super cycle, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Dr. Strangelove, driverless car, Elon Musk, Erik Brynjolfsson, Fairchild Semiconductor, fear of failure, financial engineering, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, general purpose technology, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, Greenspan put, Herman Kahn, high net worth, hiring and firing, hockey-stick growth, Hyman Minsky, income inequality, income per capita, index fund, industrial robot, Internet of things, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, Just-in-time delivery, Kevin Kelly, knowledge economy, laissez-faire capitalism, low interest rates, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, middle-income trap, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, precautionary principle, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, Steve Ballmer, Steve Jobs, Steve Wozniak, subprime mortgage crisis, technological determinism, technological singularity, TED Talk, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, University of East Anglia, unpaid internship, Vanguard fund, vertical integration, Yogi Berra

Lately, however, M&A strategies have become associated with hidebound business operations. They are intended to consolidate, rather than build competition. Hence they are sometimes, if not often, used in order to defend market positions – and, in that way, they form part of a different type of globalization that emerged in the 1990s and promoted horizontal expansion, vertical integration, and corporate attempts to create stronger network effects on the market. More importantly, however, latter-year M&As are a sign of middle-aged corporates that have lost their ability to reproduce through innovation and have to get their vitality from other firms to stay on the market. Management and shareholders in middle-aged capitalism have chosen between different alternative uses of their capital, favoring mergers with or acquisitions of other companies because they believe they can better control the returns of M&As compared to other alternatives on offer.

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But as globalization changed character, modern competition typically came to be defined by controlled or managed competition within long, multiple, and fragmented supply chains. That process helped to increase scale and other benefits. Yet, given other market conditions, especially the rising fixed costs of market entry, vertical integration hardly promoted contestability of established markets close to the end customers. On the contrary, as entry costs to end markets increased significantly with globalization and supply-chain competition, competitive ambitions seem, perhaps surprisingly, to have turned further away from the ideal scenario of constant competition moving markets and prices toward the marginal costs of production.

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; Cecchetti and Kharroubi, “Reassessing the Impact of Finance on Growth.” 57.Swagel, “The Financial Crisis.” 58.Cecchetti and Kharroubi, “Why Growth in Finance Is a Drag on the Real Economy.” 59.Christensen, Kaufman, and Shih, “Innovation Killers,” 1–2. 60.Piketty, Capital in the Twenty-First Century, 264–81. 4 The Rise and Rise Again of Corporate Managerialism 1.Martti, Nokia: The Inside Story. 2.Steinbock, The Nokia Revolution. 3.Ahmad, Nokia’s Smartphone Problem. 4.Kuittinen, “Nokia Sells Handset Business to Microsoft.” 5.Lomas, “Nokia’s $7.2BN Devices & Services Exit.” 6.Cheng, “It’s Official: Motorola Mobility Now Belongs to Lenovo.” 7.Bass, “Microsoft’s Concept Videos.” 8.Jenkins, “Jenkins: Only Bill Gates Can Change Microsoft.” 9.Yarow, “Here’s What Steve Ballmer Thought about the iPhone.” 10.A good survey of companies failing at exits is McGrath, The End of Competitive Advantage. 11.Steinberg, “Among the First to Fall at I.B.M.” 12.Crainer, “‘Saving Big Blue.’” 13.Clinch, “How Apple Prompted This Country’s Downgrade.” 14.Schumpeter, Capitalism, Socialism and Democracy, 132. 15.Coase, “The Nature of the Firm,” 388. 16.Oliver Williamson, who received the Nobel Prize in economics for his work on economic governance, developed the idea of firm boundaries and put the emphasis on the internal or endogenous capacity of the firm to generate output that is more competitive than the market. 17.Santos and Eisenhardt, “Organizational Boundaries and Theories of Organization,” 491. 18.Coase, “The Nature of the Firm,” 390. 19.Coase, “The Nature of the Firm,” 404–5. 20.Zenger, Felin, and Bigelow, “Theories of the Firm–Market Boundary.” 21.Tett, The Silo Effect. 22.Morieux, “How Too Many Rules at Work Keep You from Getting Things Done.” 23.See, for instance, Caliendo and Rossi-Hansberg, “The Impact of Trade on Organization and Productivity.” 24.Zhou, “Coordination Costs, Organization Structure and Firm Growth.” 25.Langlois and Everett, “Complexity, Genuine Uncertainty, and the Economics of Organization”; Joskow, “Vertical Integration.” 26.Strom, “Big Companies Pay Later.” 27.Rajan and Zingales, “The Firm as a Dedicated Hierarchy.” 28.Bhide, The Origin and Evolution of New Business, 94. 29.Rajan and Zingales, “The Firm as a Dedicated Hierarchy,” 7. 30.Teece, “Profiting from Technological Innovation.” 31.Jensen, “Agency Cost of Free Cash Flow, Corporate Finance, and Takeovers.” 32.Stein, “Agency, Information and Corporate Investment”; Matvos and Seru, “Resource Allocation within Firms.” 33.See Berger and Ofek, “Diversification’s Effect on Firm Value”; Rajan, Servaes, and Zingales, “The Cost of Diversity.” 34.Scharfstein and Stein, “The Dark Side of Internal Capital Markets.” 35.Scharfstein and Stein.

Competition Demystified by Bruce C. Greenwald

additive manufacturing, airline deregulation, AltaVista, AOL-Time Warner, asset allocation, barriers to entry, book value, business cycle, creative destruction, cross-subsidies, deindustrialization, discounted cash flows, diversified portfolio, Do you want to sell sugared water for the rest of your life?, Everything should be made as simple as possible, fault tolerance, intangible asset, John Nash: game theory, Nash equilibrium, Network effects, new economy, oil shock, packet switching, PalmPilot, Pepsi Challenge, pets.com, price discrimination, price stability, revenue passenger mile, search costs, selective serotonin reuptake inhibitor (SSRI), shareholder value, Silicon Valley, six sigma, Steve Jobs, transaction costs, vertical integration, warehouse automation, yield management, zero-sum game

THE COORS DIFFERENCES During this period of consolidation, Coors’s share of the market remained stable at around 8 percent. It maintained its position despite—or perhaps because of—an approach to the business that set it apart from all the other brewers. When it went national after 1977, Coors counted on many of these differences to secure its success in the anticipated beer wars. First, Coors was vertically integrated to a staggering degree. It had its own strain of barley grown for it by farmers under contract and it processed for itself a large portion of the other grains that went into the beer. It designed an all-aluminum can, which it purchased from a captive manufacturer. In 1977, it bought its bottle supplier.

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In 1977, it bought its bottle supplier. It built much of its brewing and bottling equipment. Its much heralded “Rocky Mountain spring water,” which, it claimed, gave its beer superior drinking properties, came from land the company controlled. It developed its own coal-field to supply its energy requirements. This vertical integration may have been symptomatic of a frontier preference for self-reliance. It did not produce a permanent cost advantage. In 1977, Coors’s production costs were $29 per barrel, compared with $36.60 for AB. By 1985, Coors cost had risen to $49.50. AB, still not integrated, spent $51.80, not a major difference.

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Also, these components were equal to or better than those Compaq produced. Compaq’s competitive edge at the top end of the market had been eliminated, and it was left with nothing to show for its higher overhead expenses. Just as Ford’s plant at River Rouge, where iron ore entered at one end and finished automobiles emerged from the other end, became a victim of vertical integration as the automobile industry matured and external suppliers became more dependable and efficient, so Compaq was being hurt by doing internally too many of the steps that went into turning out a personal computer. ECONOMIES OF SCALE IN A GROWTH INDUSTRY Compaq’s original approach to the PC industry, targeting corporate customers with higher-quality machines for which they would be willing to pay a premium, was undoubtedly a success, even though it had to work its way through several serious challenges.

From Airline Reservations to Sonic the Hedgehog: A History of the Software Industry by Martin Campbell-Kelly

Apple II, Apple's 1984 Super Bowl advert, barriers to entry, Bill Gates: Altair 8800, business process, card file, Charles Babbage, computer age, computer vision, continuous integration, Dennis Ritchie, deskilling, Donald Knuth, Gary Kildall, Grace Hopper, history of Unix, hockey-stick growth, independent contractor, industrial research laboratory, information asymmetry, inventory management, John Markoff, John von Neumann, Larry Ellison, linear programming, longitudinal study, machine readable, Menlo Park, Mitch Kapor, Multics, Network effects, popular electronics, proprietary trading, RAND corporation, Robert X Cringely, Ronald Reagan, seminal paper, Silicon Valley, SimCity, software patent, Steve Jobs, Steve Wozniak, Steven Levy, Thomas Kuhn: the structure of scientific revolutions, vertical integration

It was this business environment that most distinguished Silicon Valley from the other nexus of electronics and telecommunications in the United States: Route 128 in Massachusetts, where large vertically integrated firms such as DEC and RCA predominated.6 It is now accepted that a cluster of firms is much more dynamic and responsive than a giant corporation. In the world of the personal computer, the IBM-compatible PC and the Macintosh exemplify the two approaches, the former being sourced from dozens of different suppliers and the latter being a product of a single vertically integrated firm. Clusters ultimately outperformed the “command economy” of vertically integrated corporations. Geographical proximity is crucial to the operation of a cluster.

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CSC was widely regarded as the best-managed company in the industry, and it was one of the few to eventually rescue something from the computer utility fad. UCC was less fortunate. In 1969, at the height of the boom, UCC’s Sam Wyly decided to enter the computer utility market. He planned a completely vertically integrated operation—hardware, communications, and software. In terms of hardware, UCC introduced its own terminal device, called COPE (Communications Oriented Processing Equipment), which was to be manufactured by its Computer Industries Inc. subsidiary. To establish a communications infrastructure, UCC attempted to merge with Western Union.

Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier by Edward L. Glaeser

affirmative action, Andrei Shleifer, Berlin Wall, Boeing 747, British Empire, Broken windows theory, carbon footprint, carbon tax, Celebration, Florida, classic study, clean water, company town, congestion charging, congestion pricing, Cornelius Vanderbilt, declining real wages, desegregation, different worldview, diversified portfolio, Edward Glaeser, Elisha Otis, endowment effect, European colonialism, Fairchild Semiconductor, financial innovation, Ford Model T, Frank Gehry, global village, Guggenheim Bilbao, haute cuisine, high-speed rail, Home mortgage interest deduction, James Watt: steam engine, Jane Jacobs, job-hopping, John Snow's cholera map, junk bonds, Lewis Mumford, machine readable, Mahatma Gandhi, McMansion, megacity, megaproject, Michael Milken, mortgage debt, mortgage tax deduction, New Urbanism, place-making, Ponzi scheme, Potemkin village, Ralph Waldo Emerson, rent control, RFID, Richard Florida, Rosa Parks, school vouchers, Seaside, Florida, Silicon Valley, Skype, smart cities, Steven Pinker, streetcar suburb, strikebreaker, Thales and the olive presses, the built environment, The Death and Life of Great American Cities, the new new thing, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, upwardly mobile, urban planning, urban renewal, urban sprawl, vertical integration, William Shockley: the traitorous eight, Works Progress Administration, young professional

Late-twentieth-century Detroit was dominated by a single industry that employed hundreds of thousands of less-skilled workers in three vast vertically integrated firms. What a toxic mixture! Cities like Detroit with big firms have suffered weaker employment growth than cities with more and smaller employers. In metropolitan areas, a 10 percent increase in the number of firms per worker in 1977 is associated with 9 percent more employment growth between 1977 and 2000. This relationship holds, no matter what types of industries are involved, how old the companies are, or how big the cities are. Big, vertically integrated firms may be productive in the short run, but they don’t create the energetic competition and new ideas that are so necessary for long-term urban success.

…

Just as in Rio’s favelas, in East Boston the density that enabled poor people to sell their labor enabled bacteria to flow, and Patrick Kennedy died of cholera. Kennedy’s son, however, also named Patrick, thrived. He started off working on the docks and saved enough to buy a saloon. He soon owned a second and then a third drinking establishment, catering increasingly to wealthier Bostonians. He vertically integrated his business—by importing whiskey. Patrick Kennedy followed the example of former Massachusetts governor Sam Adams, combining alcohol and politics. He was first elected to the Massachusetts legislature in 1884 and served several terms as a state representative and then state senator. In 1888, this son of a poor immigrant rose high enough to give a speech at the Democratic national convention.

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Ashbie health, see disease and health Henry IV, King Hershey highways hip-hop Holland Home Insurance Building homicide Honda Hong Kong Honolulu Hood, Raymond Horace horse travel housing, homes African Americans and in California in Chicago construction costs of in Dallas depreciation of in Detroit fair-housing laws federal policies on heating and cooling of home ownership in Houston land availability and in Leipzig Levittown in Los Angeles mass-produced middle-income families and mortgages and in New York City in Paris population growth and price swings in relationship between supply and affordability of renting of in Santa Clara County second homes in Sunbelt vouchers for wages and in Youngstown Housing and Urban Development, Department of Houston building construction in carbon emissions in commuting in energy use in Galleria shopping mall in housing in The Woodlands Howard, Ebenezer human capital see also education and skills Hunt, Richard Morris Hurricane Katrina Ibibo ideas and innovation in Bangalore and cities as gateways between cultures knowledge-destroying, in decline of Detroit in medieval world in New York City proximity and talent and creativity see also entrepreneurship Illinois immigrants in Boston in Canada Irish nativism and in New York City restaurants and impact bias income and wages crime rate and in Detroit gap between urban and rural areas in Harris County, Texas housing costs and middle-income families in New York City population size and productivity and skills and India Bangalore, see Bangalore building restrictions in carbon emissions in cars in crime in government in growth patterns in information technology industry in Kolkata Mumbai, see Mumbai Mysore urbanization in Indonesia industrial cities industry and manufacturing large, vertically integrated firms in in New York City information technology in India Jevons’s paradox and in Silicon Valley Infosys infrastructure building new restaurants and spending on water supplies Interfaith Internet Iowa Irish immigrants Islamic world Italy Milan Jacobs, Jane The Death and Life of Great American Cities Jacobs, Robert Japan education in Ministry of International Trade and Industry Nagasaki Tokyo Jefferson, Thomas Jenney, William Le Baron Jerusalem Jevons, William Stanley complementarity corollary of paradox of jobs business tax breaks and crime rate and diversity of outsourcing of unemployment wages from, see income and wages Johnson, Edward C.

Bricks & Mortals: Ten Great Buildings and the People They Made by Tom Wilkinson

Berlin Wall, British Empire, cuban missile crisis, Donald Trump, double helix, experimental subject, false memory syndrome, financial independence, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, gentrification, Google Glasses, housing crisis, Kitchen Debate, Lewis Mumford, Mahatma Gandhi, mass incarceration, megacity, neoliberal agenda, New Urbanism, nudge theory, Panopticon Jeremy Bentham, scientific management, starchitect, traveling salesman, trickle-down economics, Upton Sinclair, urban planning, vertical integration

At its peak in the 1930s the Rouge complex was the size of a city: it covered two square miles, employed 100,000 workers and produced 4,000 cars a day. Raw materials were shipped in from Ford’s mines via a specially dug canal, and within 28 hours had been transmuted into a car dispatched via a dedicated railway: ‘From ore to auto’, so the slogan went. This was the first vertically integrated operation in the world and perhaps the most complete example of vertical integration ever. Meanwhile, Ford’s reach, which had spread to encompass a world empire of suppliers and distributors, also began to infiltrate the domestic sphere of his workers. Ford’s home invasion was a response to the discovery that the assembly line, though fast, wasn’t quite as fast as he had hoped.

…

In his public pronouncements he constantly attributed the genesis of his own buildings to ‘Mr Ford’s ideas’ and proclaimed architecture to be ‘90 per cent business, 10 per cent art’. He had rearranged his own practice as a production line years before he began working for Ford, turning the traditional craft-based atelier of the genius architect into a collaborative and highly rationalised plan factory. Vertical integration, via the combination in one office of 400 designers, draughtsmen, clerical staff and mechanical and structural engineers (Kahn’s was one of the first firms of architects to directly employ engineers), and the organisation of these specialists into project teams, allowed the streamlined production of an enormous quantity of industrial buildings – among them over 1,000 structures for Ford, 127 for General Motors, 521 factories in the USSR and numerous domestic and public buildings.

Modern Monopolies: What It Takes to Dominate the 21st Century Economy by Alex Moazed, Nicholas L. Johnson

3D printing, Affordable Care Act / Obamacare, Airbnb, altcoin, Amazon Web Services, Andy Rubin, barriers to entry, basic income, bitcoin, blockchain, book value, Chuck Templeton: OpenTable:, cloud computing, commoditize, connected car, disintermediation, driverless car, fake it until you make it, future of work, gig economy, hockey-stick growth, if you build it, they will come, information asymmetry, Infrastructure as a Service, intangible asset, Internet of things, invisible hand, jimmy wales, John Gruber, Kickstarter, Lean Startup, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, means of production, Metcalfe’s law, money market fund, multi-sided market, Network effects, PalmPilot, patent troll, peer-to-peer lending, Peter Thiel, pets.com, platform as a service, power law, QWERTY keyboard, Ray Kurzweil, ride hailing / ride sharing, road to serfdom, Robert Metcalfe, Ronald Coase, Salesforce, self-driving car, sharing economy, Sheryl Sandberg, Silicon Valley, Skype, Snapchat, social graph, software as a service, software is eating the world, source of truth, Startup school, Steve Jobs, TaskRabbit, technological determinism, the medium is the message, transaction costs, transportation-network company, traveling salesman, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, white flight, winner-take-all economy, Y Combinator

Companies like Pets.com made the mistake of choosing a linear business model in the age of the platform. What is a linear business model? It’s the model that has dominated in various forms since the Industrial Revolution, when new technologies like steam power and railways gave rise to the large, vertically integrated organization. All of the titans of industry from the early twentieth century were linear businesses, including Standard Oil, General Motors (GM), U.S. Steel, General Electric, Walmart, Toyota, ExxonMobil, and on and on. Each of these companies created a product or service and sold it to a customer.

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By creating the optimal combination of activities, you would create a coherent system—a value chain—that would allow you to create and sustain a competitive advantage against your industry rivals. Figure 2.3. Value chains defined how a business was organized. Porter’s value chain and Henderson’s economies of scale have been the core tenets of business strategy for the last thirty years. Together, they became the strategic foundation of the large, vertically integrated organizations of the late twentieth century. However, even in these large organizations, Hayek’s local knowledge problem reared its head. The coordination problems related to local knowledge that Hayek described are a primary reason why Henderson’s economies-of-scale graph is U-shaped (see Figure 2.4).

…

Remember that transaction costs were the glue that held together a company’s value chain and determined what activities an organization internalized. As processing speeds radically increased and transaction costs fell at the end of the twentieth century, some value chains began to break up. With lower transaction costs, there was less need for vertically integrated organizations. Smaller, more agile competitors started to outmaneuver their larger, older rivals. A smaller competitor could attack one piece of an incumbent company’s value chain and disintermediate it or provide the same quality offering at a much lower price (see Figure 2.5). Figure 2.5.

British Rail by Christian Wolmar

accounting loophole / creative accounting, airport security, Beeching cuts, book value, Boris Johnson, COVID-19, driverless car, full employment, glass ceiling, high-speed rail, Hyperloop, Kaizen: continuous improvement, Kickstarter, vertical integration, éminence grise

This was, of course, essential to the improvement of every aspect of British Rail’s services. In short: my purpose was to produce a better railway. He goes on to make points about the structure of the industry: This structure was determined after widespread consultation. Initially I was in favour of a vertically-integrated rail system, but persuasive arguments encouraged me to move away from that concept. I was influenced by the fact that the safest transport industry in the country was also the most fragmented: namely Civil Aviation. The Airlines lease their aircraft; Airports are in multiple ownership; Air traffic control is another separate entity.

…

But the lady who famously claimed she was ‘not for turning’ wavered, and at the following year’s conference, held two months before her resignation, Parkinson announced that the government was now ‘determined to privatise British Rail’ and went on to emphasize the approach by saying, ‘The question now is not about whether we should privatise it, but how and when.’4 A working group of ministers and officials from the Department of Transport was set up to establish how this could be achieved, but its work was distracted not only by Thatcher’s replacement by John Major in the autumn of 1990 but also by the departure of Parkinson and the appointment of Malcolm Rifkind. There was fierce disagreement between the Treasury and the Department of Transport over whether there should be a vertically integrated model, where track and operations were kept together, or – as the Treasury favoured – a track authority model, which allowed different operators to run on tracks owned by a separate company. At one point, the Treasury was intent on creating an auction to sell each individual train path to the highest bidder – £x million for the 0800 from Kings Cross to Leeds, £y million for the 0900 – a madcap idea which was at the extreme end of free-market thinking and foundered on the rocks of reality when it was pointed out that train services are highly interdependent and people wanted the freedom to take any train, not just those of a particular operator.

…

One of the oddities of this story is that there is a small part of the United Kingdom’s rail network that was left out of the 1993 Railway Act and allowed to continue without being privatized or fragmented. The rail network in Northern Ireland was considered too small to bother separating out or privatizing, and the political situation in the province too delicate to upset with such a radical move. Therefore, in the post-BR era, Northern Ireland Railways has continued to operate as a vertically integrated railway under state ownership. It has invested in new trains and upgraded its infrastructure, and it achieved its highest ever passenger numbers of fifteen million in the year 2018/19, before the pandemic. Despite the fact that the United Kingdom was in the European Union, there was no pressure on the railway in Northern Ireland to separate out its functions and the British government left it very much to its own devices, even paying for the recent high level of investment.

An Empire of Wealth: Rise of American Economy Power 1607-2000 by John Steele Gordon

accounting loophole / creative accounting, Alan Greenspan, bank run, banking crisis, Bretton Woods, British Empire, business cycle, buttonwood tree, California gold rush, Charles Babbage, clean water, collective bargaining, Corn Laws, Cornelius Vanderbilt, corporate governance, cotton gin, cuban missile crisis, disintermediation, double entry bookkeeping, failed state, Fairchild Semiconductor, financial independence, flying shuttle, Ford Model T, Frederick Winslow Taylor, full employment, Glass-Steagall Act, global village, Ida Tarbell, imperial preference, industrial research laboratory, informal economy, interchangeable parts, invisible hand, Isaac Newton, it's over 9,000, Jacquard loom, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, junk bonds, lone genius, Louis Pasteur, low interest rates, margin call, Marshall McLuhan, means of production, megaproject, Menlo Park, Mikhail Gorbachev, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, New Urbanism, postindustrial economy, price mechanism, Ralph Waldo Emerson, RAND corporation, rent control, rent-seeking, reserve currency, rolodex, Ronald Reagan, Savings and loan crisis, spinning jenny, Suez canal 1869, The Wealth of Nations by Adam Smith, three-masted sailing ship, trade route, transaction costs, transcontinental railway, undersea cable, vertical integration, Yom Kippur War

Needless to say, Carnegie had calculated closely what he would get out of it. First, the Carnegie Steel Company would get guaranteed supplies of coke at the best possible price; second, he would get the surpassing executive skills of Henry Clay Frick; and third, he would further the vertical integration of the steel industry in general and his company in particular. Vertical integration simply means bringing under one corporation’s control part or all of the stream of production from raw materials to distribution. It had been going on since the dawn of the Industrial Revolution (Francis Cabot Lowell had been the first to integrate spinning and weaving in a single building) but greatly accelerated in the last quarter of the nineteenth century as industrialists sought economies of scale as well as of speed to cut costs.

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South Carolina, 62, 82–83, 85–86 nullification crisis and, 97 South Carolina colony, 24 Soviet Union, 361, 362, 375–76, 391, 403, 413 collapse of, 414–15 space race, 403–4 Spain, xv, 8–11, 15, 22, 23, 63–64 spinning jenny, 88 Sputnik, 403–4, 410 stagflation, 383 Staggers Act, 392 Stalin, Joseph, 354, 377 Standard Oil, 255–59, 263 standard time, 235–36 steamboats, 135–40, 162 monopolies in, 137, 142–45 steam engine, 132–34, 140, 141, 409 steam turbine, 305–6 Stedman, E. C., 213 steel industry, 240–49, 324, 371 Carnegie and, 242–43, 247–48 consolidation and mergers in, 262 expansion of, 259 Homestead strike and, 253–54 vertical integration in, 246–47 Steiger, William, 394–95 Stephenson, George, 147, 150 Stevens, John, 147 Stevens, Robert Livingston, 147 Stewart, A. T., 161–62 Stimson, Henry, 325 stock market crash of 1929, 314–16 prelude to, 311–15 see also Great Depression stock market crash of 1987, 397–98 stock markets, 154, 197–200, 232, 265, 321 boom of 1990s and, 417–18 brokerage techniques and, 368–69 brokered deposits and, 399–400 call money market of, 312–13 corruption in, 207–8, 215–16 crash of 1987 and, 397–98 deregulation of, 393–94 gold rush and, 185–86 panic of 1907 and, 278–80 postwar boom and, 367–69, 370 reform of, 339–42 security regulation and, 215–16 telegraph and, 157–58 Whitney scandal and, 341–42 World War I and, 289, 294 see also New York Stock Exchange strikes, 249, 371, 372 Homestead, 253–54 Strong, Benjamin, 312–13, 319, 397 Strong, George Templeton, 151, 165–66, 208, 221 Stuyvesant, Peter, 37–38 suburbs: automobile industry and, 300–301 after World War II, 366–67 sugar trade, 22–23 Supplies Priorities and Allocations Board (SPAB), 354 Supreme Court, U.S., 127, 239 income tax rulings of, 274–75, 276 New Deal and, 342, 344 separate-but-equal ruling of, 374 Standard Oil ruling of, 263 steamboat monopoly ruling of, 143–45, 146 Wabash ruling of, 237 Supreme Court in United States History, The (Warren), 145 Sutter, John, 179–80, 187 Symington, William, 134–36 Symmes, Zechariah, 34 Taft, William Howard, 276 Taft-Hartley Act, 371–72 Talleyrand, Charles de, 75 Taney, Roger B., 126 Tarbell, Ida, 256–57 Tariff Act, 73 Tariff of Abominations, 97 tariffs, 72–73, 76, 90, 96, 195, 200, 272, 273, 275, 292–93, 311, 378 nullification issue and, 97 Smoot-Hawley Act and, 320–22 taxes: capital gains, 394–95 direct, 274 income, see income tax indirect, 273–74 Tax Reform Act of 1978, 395 telegraph, 155–58, 166, 183, 301 Tennessee, 85, 124 Tennessee Valley Authority, 335 Terre Haute Express, 182 Texas, 86, 331 Theory of Moral Sentiments, The (Smith), 189 Thomas, Norman, 330 Thompson, Jeremiah, 110–11 Times (London), 109, 175–76 time zones, 235–36 tobacco trade, 14–17, 19–20, 22, 23, 45 Toleration Act (Maryland), 21–22 Tonnage Act, 73 transatlantic cable, 156–57 transcontinental railroad, 216–20 transistor, 407–8 transportation, 99–110, 184, 186–87, 255, 281, 402–3, 404 deregulation of, 392–93 see also automobile industry; Erie Canal; railroads; shipping industry; steamboats Treasury Department, U.S., 68, 70–71, 80, 119, 120, 192, 226, 332–33, 349, 389 Trevithick, Richard, 140, 146–47 “triangle trades,” 32 Trollope, Anthony, 246 Truman, Harry S., 369, 371–72, 374, 375–77, 380 Truman Doctrine, 376 Trust Company of America, 279 trusts, 258–59, 262–63 Tudor, Frederic, 177–78 Turkey, 285, 288, 375, 376 Twain, Mark, 139, 260 Tweed Ring, 220–21 unemployment, 264–65, 343, 346, 381, 383, 396 in Great Depression, 322, 324, 328, 336 in World War II, 355, 358 Union Pacific Railroad, 217, 219, 229–30 unions, see labor relations U.S.

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., 369, 371–72, 374, 375–77, 380 Truman Doctrine, 376 Trust Company of America, 279 trusts, 258–59, 262–63 Tudor, Frederic, 177–78 Turkey, 285, 288, 375, 376 Twain, Mark, 139, 260 Tweed Ring, 220–21 unemployment, 264–65, 343, 346, 381, 383, 396 in Great Depression, 322, 324, 328, 336 in World War II, 355, 358 Union Pacific Railroad, 217, 219, 229–30 unions, see labor relations U.S. Employment Service, 335 U.S. Steel, 262, 315 Vail, Alfred, 156 Van Buren, Martin, 130–31 Vandenberg, Arthur, 377 Vanderbilt, Cornelius, 142–43, 210, 260 in Erie Wars, 210–15 Vanderbilt, William H., 233–34 Vermont, 86 Versailles Treaty, 294, 311, 346, 379 vertical integration, 247 Veterans Administration, 365 Vietnam War, 383, 391, 403 Virginia, 74, 87 Virginia colony, 12–14, 21, 22, 40, 45, 47, 61 emigration to, 27–28 representative government in, 17–18 slavery in, 18–20 tobacco trade in, 14–17, 19–20 see also Jamestown colony Virginia Company, 10, 17 Volcker, Paul, 396 Voting Rights Act of 1965, 374 Wabash Railway vs.

Uncommon Grounds: The History of Coffee and How It Transformed Our World by Mark Pendergrast

business climate, business cycle, commoditize, Edward Lloyd's coffeehouse, Honoré de Balzac, it's over 9,000, land reform, microcredit, Mikhail Gorbachev, new economy, open economy, out of africa, profit motive, Ray Oldenburg, Ronald Reagan, Suez canal 1869, The Great Good Place, trade route, transcontinental railway, traveling salesman, vertical integration, women in the workforce

The Arbuckle plant along the Brooklyn waterfront occupied a dozen city blocks and stabled two hundred draft horses. Arbuckle started his own barrel factory after he got into the sugar business. The barrels were made from Arbuckle-owned timber stands in Virginia and North Carolina. The Brooklyn plant had its own hospital and dining room for employees. In the days before “vertical integration” became a buzzword, Arbuckle had mastered the concept. Out in the American West, strong, boiled Ariosa became the cowboy’s coffee of choice. “Cookie, pour me a cup o’ that condensed panther y’u call coffee,” a macho cowpoke would say. “This is the way I like it, plum bare-footed [black]. None o’ that dehorned stuff y’u get in town cafes for me.”

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Known as a predatory businessman, Havemeyer already had driven most competitors out of business. Outspoken, gruff, and dictatorial, Havemeyer saw nothing wrong in predatory pricing to drive out competition, but he was of course happy to allow Arbuckle to sell sugar, as long as the coffee magnate bought his product. Arbuckle, who had always sought vertical integration (control of a business at every stage of production), decided to build his own sugar refinery and go into competition with Havemeyer. Late in 1896 Havemeyer summoned coffee broker Hermann Sielcken. “He asked me in which way he could do a large business in roasted coffee,” Sielcken recalled later.

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He accused the well-intentioned folks who sell Fair Trade coffee of “cultural imperialism,” blasting those who blend “suffering, pain, and humiliation” into the beans they sell to “the affluent but guilt-ridden, Birkenstock-shod, politically correct, myopically naive creature known as the ‘huppie’”—whom he defined as a combination hippie-yuppie. McAlpin built a vertically integrated coffee empire under the name Distant Lands Trading Company. He owned thirteen coffee farms and three processing mills in Costa Rica and another processing mill in Colombia. He had joint ventures and quality control employees in Sumatra, Guatemala, Brazil, Honduras, and Ethiopia, along with roasting plants in Tyler, Texas, and Seattle.

The Quest: Energy, Security, and the Remaking of the Modern World by Daniel Yergin

"Hurricane Katrina" Superdome, "World Economic Forum" Davos, accelerated depreciation, addicted to oil, Alan Greenspan, Albert Einstein, An Inconvenient Truth, Asian financial crisis, Ayatollah Khomeini, banking crisis, Berlin Wall, bioinformatics, book value, borderless world, BRICs, business climate, California energy crisis, carbon credits, carbon footprint, carbon tax, Carl Icahn, Carmen Reinhart, clean tech, Climategate, Climatic Research Unit, colonial rule, Colonization of Mars, corporate governance, cuban missile crisis, data acquisition, decarbonisation, Deng Xiaoping, Dissolution of the Soviet Union, diversification, diversified portfolio, electricity market, Elon Musk, energy security, energy transition, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, fear of failure, financial innovation, flex fuel, Ford Model T, geopolitical risk, global supply chain, global village, Great Leap Forward, Greenspan put, high net worth, high-speed rail, hydraulic fracturing, income inequality, index fund, informal economy, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), It's morning again in America, James Watt: steam engine, John Deuss, John von Neumann, Kenneth Rogoff, life extension, Long Term Capital Management, Malacca Straits, market design, means of production, megacity, megaproject, Menlo Park, Mikhail Gorbachev, military-industrial complex, Mohammed Bouazizi, mutually assured destruction, new economy, no-fly zone, Norman Macrae, North Sea oil, nuclear winter, off grid, oil rush, oil shale / tar sands, oil shock, oil-for-food scandal, Paul Samuelson, peak oil, Piper Alpha, price mechanism, purchasing power parity, rent-seeking, rising living standards, Robert Metcalfe, Robert Shiller, Robert Solow, rolling blackouts, Ronald Coase, Ronald Reagan, Sand Hill Road, Savings and loan crisis, seminal paper, shareholder value, Shenzhen special economic zone , Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, smart grid, smart meter, South China Sea, sovereign wealth fund, special economic zone, Stuxnet, Suez crisis 1956, technology bubble, the built environment, The Nature of the Firm, the new new thing, trade route, transaction costs, unemployed young men, University of East Anglia, uranium enrichment, vertical integration, William Langewiesche, Yom Kippur War

“Here was a type of organization that was flexible and capable, a company that was tackling all the issues at the same time—exploration, production, and engineering—and everybody pursing the common goal, and not each branch operating separately.” He came back to Moscow convinced that the typical organization found in the rest of the world—vertically integrated companies with exploration and production, refining and marketing all in one company—was the way to organize a modern oil industry. Prior to the collapse of the Soviet Union, his efforts to promote a vertically integrated state-owned oil company were rebuffed. Opponents accused him of “destroying the oil sector.” He tried again after Russia became an independent state. For to stay with the existing setup, he said, would result in chaos.8 In November 1992, President Yeltsin adopted this approach in Decree 1403 on privatization in the oil industry.

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For to stay with the existing setup, he said, would result in chaos.8 In November 1992, President Yeltsin adopted this approach in Decree 1403 on privatization in the oil industry. The new law provided for three vertically integrated oil companies—Lukoil, Yukos, and Surgut. Each would combine upstream oil production areas with refining and marketing systems. They would become some of the largest companies in the world. The state would retain substantial ownership during a three-year transition period, while the new companies tried to assert control over now semi-independent individual production groups and refineries; quell rebellious subsidiaries; and capture control over oil sales, oil exports, and the hard currency that came from these transactions.

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Abramovich eventually sold Sibneft to the Russian gas giant Gazprom and moved to England, where he was said to be the second-richest person in the country, exceeded only by the Queen herself.12 Overall, by 1998, within six years of the collapse of the Soviet Union, the Russian oil industry had gone from a system run by a series of ministries and subordinated to central planning to a system of large vertically integrated companies, organized, at least in rough outline, similarly to the traditional companies in the West. During these years, they all operated largely autonomously from the state. Eventually the Russian Federation would have five large energy companies, each of whose oil reserves were comparable to the size of the largest western majors.

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William Thorndike

Albert Einstein, AOL-Time Warner, Atul Gawande, Berlin Wall, book value, Checklist Manifesto, choice architecture, Claude Shannon: information theory, collapse of Lehman Brothers, compound rate of return, corporate governance, discounted cash flows, diversified portfolio, Donald Trump, Fall of the Berlin Wall, Gordon Gekko, Henry Singleton, impact investing, intangible asset, Isaac Newton, junk bonds, Louis Pasteur, low interest rates, Mark Zuckerberg, NetJets, Norman Mailer, oil shock, pattern recognition, Ralph Waldo Emerson, Richard Feynman, shared worldview, shareholder value, six sigma, Steve Jobs, stock buybacks, Teledyne, Thomas Kuhn: the structure of scientific revolutions, value engineering, vertical integration

These companies had long been paragons of financial conservatism, using little leverage, reliably paying dividends, and rarely repurchasing shares. Most of them had followed fashion and actively diversified during the 1960s and 1970s in the quixotic pursuit of synergy, and many had ended up in restaurant and agricultural businesses in search of the elusive benefits of “vertical integration.” Ralston Purina was fairly typical of this group. In the early 1980s, Ralston was a Fortune 100 company with a long history in agricultural feed products. During the 1970s under CEO Hal Dean, the company had followed the same path as its peers, taking the enormous cash flow provided by its traditional feed businesses and engaging in a diversification program that left it with a melange of operating divisions, ranging from mushroom and soybean farms to the Jack in the Box chain of fast-food restaurants, the St.

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(TCI), 33, 83–107 —acquisitions at, 92–93, 94–95, 103–105, 203, 212–213 —capital allocation at, 88, 95, 102–104, 107, 212 —cash flow at, 10, 88, 89, 90–91, 92, 96, 100, 101 —decentralized approach at, 106–107 —frugality in cost control at, 88–89, 107 —joint ventures at, 93–94, 97, 105–106 —stock performance at, 98–99, 99f, 107 —stock repurchase programs at, 85, 91–92, 97, 105 Teledyne, 37–58 —acquisitions by, 11, 40–41 —capital allocation by, xii, 38, 42, 55, 57, 207 —cash flow at, 11, 44–45 —closing of underperforming business unit at, 45 —decentralized approach at, 43–44, 57 —diversification at, 40–41, 151 —dividend policy at, 37–38, 46, 51, 57 —investor relations at, 53, 54, 57 —portfolio investment at, 48–49, 50f, 57 —spin-offs at, 50–51, 96 —stock performance at, 38–39, 42, 42t, 47, 52–53, 52f —stock repurchase programs at, xi, 10, 45–48, 48t, 54–56, 142 Teledyne return, 44 Teleport, 95, 97 television industry, 14, 15–16, 18, 19–20, 24, 25, 28–29, 31, 111, 115, 116, 120–121, 154 Templeton, John, 1, 9 Texaco, 49 Texas Pacific Group (TPG), 164 textile industry, 133, 167–168, 182–183 Textron Corporation, 62 Thinking, Fast and Slow (Kahneman), 200 Thornton, Tex, 39, 43, 53 Tillerson, Rex, 201, 203, 206–207 Time Warner, 88, 101, 150 Tolstoy, Leo, 5 TQM, viii tracking stocks, 95 Transdigm, 34–35 Travelers Corporation, 175 Trenton Times, 113 Triangle Communications, 18, 29, 30, 31 Trump, Donald, 2 Turner, Ted, 93, 94 Turner Broadcasting System, 94 Ulrich, Laurel, xv Union Carbide, 134 United Artists Cable, 94 Unitrin, 51 Unitymedia, 213 US Airways, 175 Van de Kamp frozen seafood brand, 135 Vasco Metals, 41 vertical integration, 130 Viacom, 94 Vie, Dick, 51 Waldenbooks, 156 Wall Street Journal, 19, 38 Walton, Sam, xviii Wargo, David, 33, 89, 97, 101, 105, 106, 149, 161 Warner Communications, 85, 104 Washington Post. See Washington Post Company Washington Post Company, 109–127 —acquisitions by, 113, 115–116, 119–121 —Buffett and, 113, 114, 115, 117, 118, 120, 121, 122, 124, 125, 173, 186 —capital allocation by, 118–120 —cash flow at, 117, 118 —decentralized approach at, 125 —diversification by, 116, 119–120, 127 —divestiture by, 116 —dividends at, 118 —Pentagon Papers crisis and, 112 —pressmen’s strike at, 113–114 —stock performance at, 110, 111f —stock repurchase programs at, 114, 119, 121–122, 122f —Watergate scandal and, 112–113 Washington Star, 114, 117 Watergate scandal, 112–113 Weill, Sandy, 175 Welch, Jack, vii–viii, ix, x, xii, 1, 2, 5, 53, 62, 63, 197, 198f Wells Fargo, 175–176, 186 Western Tele-Communications, 96 Westinghouse, 93 Wexner, Leslie, 155 Whiz Kids, 43 Wiggins, Russ, 111–112, 123 Woodward, Bob, 112 Woodworth, Bob, 31 WTEN, 16–17, 24 Wyman, Tom, 130 Zelnick, Bob, 20 Zuckerberg, Mark, xviii About the Author Will Thorndike is a graduate of Harvard College and the Stanford Graduate School of Business.

The Raging 2020s: Companies, Countries, People - and the Fight for Our Future by Alec Ross

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Affordable Care Act / Obamacare, air gap, air traffic controllers' union, Airbnb, Albert Einstein, An Inconvenient Truth, autonomous vehicles, barriers to entry, benefit corporation, Bernie Sanders, Big Tech, big-box store, British Empire, call centre, capital controls, clean water, collective bargaining, computer vision, coronavirus, corporate governance, corporate raider, COVID-19, deep learning, Deng Xiaoping, Didi Chuxing, disinformation, Dissolution of the Soviet Union, Donald Trump, Double Irish / Dutch Sandwich, drone strike, dumpster diving, employer provided health coverage, Francis Fukuyama: the end of history, future of work, general purpose technology, gig economy, Gini coefficient, global supply chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, high-speed rail, hiring and firing, income inequality, independent contractor, information security, intangible asset, invisible hand, Jeff Bezos, knowledge worker, late capitalism, low skilled workers, Lyft, Marc Andreessen, Marc Benioff, mass immigration, megacity, military-industrial complex, minimum wage unemployment, mittelstand, mortgage tax deduction, natural language processing, Oculus Rift, off-the-grid, offshore financial centre, open economy, OpenAI, Parag Khanna, Paris climate accords, profit motive, race to the bottom, RAND corporation, ride hailing / ride sharing, Robert Bork, rolodex, Ronald Reagan, Salesforce, self-driving car, shareholder value, side hustle, side project, Silicon Valley, smart cities, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, sparse data, special economic zone, Steven Levy, stock buybacks, strikebreaker, TaskRabbit, tech bro, tech worker, transcontinental railway, transfer pricing, Travis Kalanick, trickle-down economics, Uber and Lyft, uber lyft, union organizing, Upton Sinclair, vertical integration, working poor

But as the poultry industry grew more consolidated, the Layfields found it harder and harder to stay afloat. Among economists, a business arrangement where a single company controls multiple stages of production is known as vertical integration. The more of the supply chain the company controls, the more it can reduce its production costs. Lower production costs mean lower prices, and lower prices mean more customers. Vertical integration is what enabled Gilded Age monopolies to conquer their industries. Modern poultry integrators have used it to entrench their dominance over the chicken supply chain. With integrators leveraging economies of scale, it became almost impossible for independent feed mills, hatcheries, farmers, and processors to stay in business.

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See also US Congress checks and balances in Code War and corporate power in cyber war and equality of opportunity in government of government service in gross domestic product of health care in loss of status as go-to model meat consumption in minimum wage in Nordic model and open vs. closed systems in organized labor in paralysis of government in political polarization of populism and race for technological dominance and social contract in tax havens and techno-authoritarianism in vetocracy in weakened institutions in World War II and United States Digital Service (USDS) University of California, Berkeley University of Chicago University of Massachusetts Amherst University of Toronto US Commerce Department US Congress lobbying and Tax Cuts and Jobs Act US Constitution US Customs and Border Protection US Department of Defense US Department of Labor US House of Representatives US Munitions List USNS Comfort US Senate US State Department U.S. Steel US Supreme Court Utah value-added tax (VAT) venture capitalist Verisign Verizon vertical integration Veterans Affairs Department (VA) vetocracy Visa Volkswagen Wagner Act (1935) Wall Street Wall Street Journal Walmart Walt Disney wartime, corporations and wastewater wealth gap WeChat welfare system. See safety net programs West Virginia West Virginia Public Employees Insurance Agency Wilson, Charles E.

Crude Volatility: The History and the Future of Boom-Bust Oil Prices by Robert McNally

"World Economic Forum" Davos, Alan Greenspan, American energy revolution, Asian financial crisis, banking crisis, barriers to entry, Bear Stearns, Bretton Woods, collective bargaining, credit crunch, energy security, energy transition, geopolitical risk, housing crisis, hydraulic fracturing, Ida Tarbell, index fund, Induced demand, interchangeable parts, invisible hand, joint-stock company, market clearing, market fundamentalism, megaproject, moral hazard, North Sea oil, oil rush, oil shale / tar sands, oil shock, peak oil, price discrimination, price elasticity of demand, price stability, sovereign wealth fund, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, transfer pricing, vertical integration

Standard Oil and the drillers went their separate ways—Standard Oil put its new Ohio crude on the market and Pennsylvania drillers decided “to compete with Standard Oil by developing their own transport, refining, and marketing organization.”94 STANDARD OIL’S IMPACT ON PRICE STABILITY By the mid-1880s, Standard Oil dominated all aspects of the oil business, from crude production to the marketing of refined products.95 The order and stability Rockefeller imposed on the oil industry enabled it to enormously grow in the United States and increasingly in nascent markets in Europe and Asia. Monopolization of refining and vertical integration with railroads and pipelines sufficed to indirectly limit the flow of oil from the wells and thereby, abolish pre-Standard Oil boom and bust price cycles, even if Rockefeller’s control was insufficient to solely set oil prices or entirely eliminate oil price volatility.96 During the twenty-one years preceding Standard Oil’s dominance, crude oil prices gyrated on average about 53 percent per year (figure 1.1).97 During Rockefeller’s period of control, prices fluctuated by about half as much—24 percent.

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Within each sector, firms are wary of investing in excessive capacity that could result in lower prices and profits. As we have seen, early drillers attempted to reach horizontal agreements to restrain drilling and production, and Standard Oil approached horizontal integration with the more aggressive method of buying and closing small, competing refineries, as well as vertical integration by controlling pipelines and drilling wells. By integrating, oil companies could naturally hedge themselves against price fluctuations elsewhere in the supply chain. In addition to securing supply chains, integration dampened the tendency of individual oil companies to drill too many wells, build too much refining capacity, and erect too many bulk transportation and storage facilities.

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Nordhauser, The Quest for Stability, 10–11. 65. de Chazeau and Kahn, Integration and Competition, 134. 66. “The small producer, with a lucky strike, can always hope to improve his market share; it may be in the interests of all to stabilize, but there will always be a maverick to start the competitive snowball. But the big firm, and especially the big vertically integrated firm, has heavy investments elsewhere which cry out for the assurance of continued supplies over time, investments which make it certain that he cannot hope to drive his rivals, similarly circumstanced, from the market. The big firm has more at stake and that larger stake makes it more conscious of the need and more willing to shoulder the burden of doing something to stabilize crude oil markets….

High Steel: The Daring Men Who Built the World's Greatest Skyline by Jim Rasenberger

AOL-Time Warner, Bear Stearns, collective bargaining, Donald Trump, East Village, Ford Model T, illegal immigration, Lewis Mumford, MITM: man-in-the-middle, scientific management, strikebreaker, Tacoma Narrows Bridge, union organizing, urban planning, vertical integration, young professional

For the moment, the business of AOL Time Warner—communications—was the red-hot center of the American economy, very much as steel had been a hundred years earlier. “Global media,” said Gerald Levin, then CEO of Time Warner, “will be and is fast becoming the predominant business force of the twenty-first century.” AOL Time Warner, much like that corporate behemoth of a century earlier, U.S. Steel, aspired to vertical integration of its industry, only now the plan had a new name: “synergy.” Instead of iron ore, the raw material would be human ideas. Rather than manufacture and ship steel ingots, the new company would produce and distribute “content” in the form of images, words, and sounds. But the goal was the same: to control the product from one end to the other.

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Nowhere was the deck more unevenly stacked against workers than in the steel industry. The kind of corporation that Andrew Carnegie and his fellow steel magnates envisioned controlled every aspect of production and distribution, much of this carried out by subsidiaries. The concept of total control was called “vertical integration,” and the steel-frame skyscraper was its soaring triumph. From the raw iron ore deposits of the Mesabi Range in northeastern Minnesota, Big Steel’s reach extended to the coalmines that supplied the coke needed to fuel the furnaces that converted the iron ore into steel. It included the plants along the Monongahela River near Pittsburgh, where the ore was melted down, swept clean of slag, and molded into steel ingots.

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See Ernst & Young building Time Warner Center Christmas fight at design of hole of ironworker dangers at ironworker frustrations at ironworkers from, at World Trade Center disaster ironworker skills at lack of steel at Monday mornings for ironworkers at raising gangs of safety at status of ironworkers after finishing superintendent job at topping out of walking bosses at winter weather at work at, after destruction of World Trade Center topping out, Time Warner Center Tower Building tower cranes Tracy, Jack Tracy, Mickey Treahy, Frank “Red,” Triborough Bridge Trinity Building Trinity Church Trump, Donald Trump World Tower truss bridges trusses Time Warner building World Trade Center trust tuberculosis tubes, framed tying off unions attempts to break Bloody Friday hard-hat riots and Chicago Chicago Local cleanup of World Trade Center disaster and Davis-Bacon Act and Wagner Act decline of dynamite conspiracy of history of, for ironworkers Los Angeles and Mohawk Indians and Newfoundlanders and New York City Local New York City Local New York City Local New York City membership book steel industry and strikes (see strikes) violence and, (see also violence) walking delegate Sam Parks and (see Parks, Sam) United Building Trades United Housesmiths’ and Bridgemen’s Union of New York and Vicinity U.S. Commission on Industrial Relations U.S. Commission on Labor Relations U.S. Steel building U.S. Steel Corporation (USX) unit stress Van Alen, William Verrazano-Narrows Bridge vertical integration vestibular-ocular reflex Victoria Bridge Vietnam War, Bloody Friday and violence Christmas fight at Time Warner Center dynamite conspiracy hard-hat riots midair murder union organizing and unions and Viollet-le-Duc wages bridgemen bridgemen, on Quebec Bridge ironworker workers compensation and Wagner Act walking boss job Walking Delegate, The (book) walking delegate job.

The Secret Life of Groceries: The Dark Miracle of the American Supermarket by Benjamin Lorr

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, barriers to entry, Boeing 747, Brownian motion, carbon footprint, collective bargaining, food miles, Ford Model T, global supply chain, hiring and firing, hive mind, independent contractor, Internet Archive, invention of the wheel, inventory management, Isaac Newton, Kanban, low skilled workers, Mason jar, obamacare, off grid, race to the bottom, Ralph Nader, risk tolerance, Ronald Reagan, Silicon Valley, supply-chain management, Toyota Production System, transatlantic slave trade, Upton Sinclair, vertical integration, Wayback Machine, Whole Earth Catalog, women in the workforce

Ford brought in his own coal on his own barges, smelted his own steel in his own plants, and cast, cut, and machined those ten thousand parts to fit his own internally created gauge. Which is to say, he attacked the logistical nightmare of mass auto production by dislocating his jaw and swallowing it whole: a quest for perfect vertical integration. Where we didn’t go big, we made things simple: homogenizing what was once a customizable product made by a small number of highly skilled generalist engineers into a single unvarying form capable of being assembled by swarms of men each skilled at exactly one twenty-four-second motion.

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These two forces fed each other: parts that were interchangeable were less of a burden to stockpile; plants designed to make a single type of machine were capable of digesting raw materials far quicker. The result was nothing short of a revolution in production.* None of this was possible in Japan. Geographically, there wasn’t the same physical expanse or westward ho mentality. Geologically, Japan had limited natural resources, so vertical integration—tying together the coal, iron ore, barges, and smelting plants—was impossible. Financially, widespread post–World War II inflation prevented the type of liquidity needed to advance purchase and stockpile tens of thousands of discrete parts. And perhaps most trying, the Japanese consumer simply did not share the American preference for the monotonous, homogenized, and mass-produced, valuing the customizable and unique instead.

…

These facilities operate aboveground and aboveboard, registering with industry associations and inspected frequently by teams of auditors. The space I visit is operated by one of the largest seafood producers in the world, a company that buys directly and exclusively from brokers, processors, and ponds that operate under its specifications. It is a model of vertical integration borrowed from the American poultry industry, and allows for far greater oversight and control. However, even here, where explicit exceptions are never made, I’m told implicit ones do. If an upstream buyer, e.g., your grocery store, is in need—say, the holidays have come and the people need their shrimp—there is no hesitation to apply pressure on brokers to increase their supply.

Once Upon a Time in Russia: The Rise of the Oligarchs―A True Story of Ambition, Wealth, Betrayal, and Murder by Ben Mezrich

"World Economic Forum" Davos, new economy, vertical integration

“As you may know,” Abramovich said, moving closer along the railing, “my trading company moves oil from the state refinery at Omsk in Siberia, which in turn gets its crude from the state-owned production units in Noyabrsk. I’ve spent the past few years familiarizing myself with this production line—from the drilling to the processing to the barrels I transport—and I’ve come to believe that, given the opportunity, I could do it better.” “By that you mean . . .” “Vertically integrate, combine the production and refining businesses with my trading company. Run it along my already existing shipping network—and we’ve got an entire oil company moving petroleum across all of Europe.” Berezovsky no longer felt the boat rocking beneath his feet as he focused in on what the younger man was proposing.

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“As long as we’re being direct—how much profit does your trading company currently bring in?” It wasn’t exactly polite conversation, asking a man how much money he made. But there would be time for cocktail chatter later. For his part, Abramovich didn’t seem put out by the question. “Forty million a year.” “And if we can organize this proposal of yours—if we ‘vertically integrate’ Omsk and Noyabrskneftegaz—how much cash would you generate?” “Maybe a hundred million a year?” Berezovsky reached forward with both hands and clasped the younger man by the shoulders. “It is from this that I will require certain funds to cover the expense of keeping things running smoothly.”

Once Upon a Time in Russia: The Rise of the Oligarchs and the Greatest Wealth in History by Ben Mezrich

"World Economic Forum" Davos, new economy, vertical integration

“As you may know,” Abramovich said, moving closer along the railing, “my trading company moves oil from the state refinery at Omsk in Siberia, which in turn gets its crude from the state-owned production units in Noyabrsk. I’ve spent the past few years familiarizing myself with this production line—from the drilling to the processing to the barrels I transport—and I’ve come to believe that, given the opportunity, I could do it better.” “By that you mean …” “Vertically integrate, combine the production and refining businesses with my trading company. Run it along my already existing shipping network—and we’ve got an entire oil company moving petroleum across all of Europe.” Berezovsky no longer felt the boat rocking beneath his feet as he focused in on what the younger man was proposing.

…

“As long as we’re being direct—how much profit does your trading company currently bring in?” It wasn’t exactly polite conversation, asking a man how much money he made. But there would be time for cocktail chatter later. For his part, Abramovich didn’t seem put out by the question. “Forty million a year.” “And if we can organize this proposal of yours—if we ‘vertically integrate’ Omsk and Noyabrskneftegaz—how much cash would you generate?” “Maybe a hundred million a year?” Berezovsky reached forward with both hands and clasped the younger man by the shoulders. “It is from this that I will require certain funds to cover the expense of keeping things running smoothly.”

World Without Mind: The Existential Threat of Big Tech by Franklin Foer

artificial general intelligence, back-to-the-land, Berlin Wall, big data - Walmart - Pop Tarts, Big Tech, big-box store, Buckminster Fuller, citizen journalism, Colonization of Mars, computer age, creative destruction, crowdsourcing, data is the new oil, data science, deep learning, DeepMind, don't be evil, Donald Trump, Double Irish / Dutch Sandwich, Douglas Engelbart, driverless car, Edward Snowden, Electric Kool-Aid Acid Test, Elon Musk, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, Geoffrey Hinton, global village, Google Glasses, Haight Ashbury, hive mind, income inequality, intangible asset, Jeff Bezos, job automation, John Markoff, Kevin Kelly, knowledge economy, Law of Accelerating Returns, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, move fast and break things, new economy, New Journalism, Norbert Wiener, off-the-grid, offshore financial centre, PageRank, Peace of Westphalia, Peter Thiel, planetary scale, Ray Kurzweil, scientific management, self-driving car, Silicon Valley, Singularitarianism, software is eating the world, Steve Jobs, Steven Levy, Stewart Brand, strong AI, supply-chain management, TED Talk, the medium is the message, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas L Friedman, Thorstein Veblen, Upton Sinclair, Vernor Vinge, vertical integration, We are as Gods, Whole Earth Catalog, yellow journalism

Google spread its money across Washington with joyous ecumenicism. Google spent about $17 million on influence peddlers of both partisan varietals. By one count, Google poured more into its D.C. apparatus than any other public company. An investigation by The Intercept concluded: “Google has achieved a kind of vertical integration with the government.” Somehow Google managed to overcome the recommendation of staffers on the Federal Trade Commission who found Google’s monopolistic machinations worthy of a lawsuit. Lobbyists for the companies have preserved a blissful state of barely regulated, barely taxed monopoly.

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Google executives set foot in the Obama White House more often than those of any other corporation: David Dayen, “The Android Administration,” Intercept, April 22, 2016. By one count, Google poured more into its D.C. apparatus than any other public company: “Mission Creep-y,” Public Citizen report, November 2014. “Google has achieved a kind of vertical integration with the government”: Dayen, “Android Administration.” Somehow Google managed to overcome the recommendation of staffers on the Federal Trade Commission: Brody Mullins, Rolfe Winkler, and Brent Kendall, “Inside the U.S. Antitrust Probe of Google,” Wall Street Journal, March 19, 2015. “Assuring the public has access to a multiplicity of information sources”: McChesney and Nichols, Death and Life, 151.

Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages by Carlota Pérez

agricultural Revolution, Alan Greenspan, Big bang: deregulation of the City of London, Bob Noyce, Bretton Woods, business cycle, capital controls, commoditize, Corn Laws, creative destruction, David Ricardo: comparative advantage, deindustrialization, distributed generation, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, Ford Model T, full employment, Hyman Minsky, informal economy, joint-stock company, Joseph Schumpeter, junk bonds, knowledge economy, late capitalism, market fundamentalism, military-industrial complex, new economy, nuclear winter, offshore financial centre, post-industrial society, profit motive, railway mania, Robert Shiller, Sand Hill Road, satellite internet, scientific management, Silicon Valley, Simon Kuznets, South Sea Bubble, Suez canal 1869, technological determinism, The Theory of the Leisure Class by Thorstein Veblen, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, trade route, tulip mania, Upton Sinclair, vertical integration, Washington Consensus

Technological Revolutions and Financial Capital 18 Table 2.3 A different techno-economic paradigm for each technological revolution, 1770 to 2000s Technological revolution Country of initial development Techno-economic paradigm ‘Common-sense’ innovation principles FIRST The ‘Industrial Revolution’ Britain Factory production Mechanization Productivity/time keeping and time saving Fluidity of movement (as ideal for machines with water-power and for transport through canals and other waterways) Local networks SECOND Age of Steam and Railways In Britain and spreading to Continent and USA Economies of agglomeration/Industrial cities/National markets Power centers with national networks Scale as progress Standard parts/machine-made machines Energy where needed (steam) Interdependent movement (of machines and of means of transport) THIRD Age of Steel, Electricity and Heavy Engineering USA and Germany overtaking Britain FOURTH Age of Oil, the Automobile and Mass Production In USA and spreading to Europe FIFTH Age of Information and Telecommunications In USA spreading to Europe and Asia Giant structures (steel) Economies of scale of plant/vertical integration Distributed power for industry (electricity) Science as a productive force Worldwide networks and empires (including cartels) Universal standardization Cost accounting for control and efficiency Great scale for world market power/‘small’ is successful, if local Mass production/mass markets Economies of scale (product and market volume)/ horizontal integration Standardization of products Energy intensity (oil based) Synthetic materials Functional specialization/hierarchical pyramids Centralization/metropolitan centers–suburbanization National powers, world agreements and confrontations Information-intensity (microelectronics-based ICT) Decentralized integration/network structures Knowledge as capital/intangible value added Heterogeneity, diversity, adaptability Segmentation of markets/proliferation of niches Economies of scope and specialization combined with scale Globalization/interaction between the global and the local Inward and outward cooperation/clusters Instant contact and action/instant global communications Technological Revolutions and Techno-Economic Paradigms 19 developed and developing countries.

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In an article in Fortune magazine, Geoffrey Colvin gathered evidence of overpaying for some of the mergers and acquisitions and suggested that this was probably due to having excess money.163 This aggregation process is another one of the changes brought about by each technological revolution and its enabling infrastructure. As a consequence, the typical size of the largest firms in each paradigm can be greater than that in the previous one and the ‘shape’ is also likely to be different. In the third surge, vertical integration from raw materials to final client in a core product became the ‘ideal’ form of the most powerful firms of the period. In the fourth surge, horizontal integration was more typical, so that final product manufacturers widened their range of similar products, rather than integrate backwards into raw materials.

Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger, Thomas Ramge

accounting loophole / creative accounting, Air France Flight 447, Airbnb, Alvin Roth, Apollo 11, Atul Gawande, augmented reality, banking crisis, basic income, Bayesian statistics, Bear Stearns, behavioural economics, bitcoin, blockchain, book value, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, centralized clearinghouse, Checklist Manifesto, cloud computing, cognitive bias, cognitive load, conceptual framework, creative destruction, Daniel Kahneman / Amos Tversky, data science, Didi Chuxing, disruptive innovation, Donald Trump, double entry bookkeeping, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, flying shuttle, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, fundamental attribution error, George Akerlof, gig economy, Google Glasses, Higgs boson, information asymmetry, interchangeable parts, invention of the telegraph, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge worker, labor-force participation, land reform, Large Hadron Collider, lone genius, low cost airline, low interest rates, Marc Andreessen, market bubble, market design, market fundamentalism, means of production, meta-analysis, Moneyball by Michael Lewis explains big data, multi-sided market, natural language processing, Neil Armstrong, Network effects, Nick Bostrom, Norbert Wiener, offshore financial centre, Parag Khanna, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price mechanism, purchasing power parity, radical decentralization, random walk, recommendation engine, Richard Thaler, ride hailing / ride sharing, Robinhood: mobile stock trading app, Sam Altman, scientific management, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, Snapchat, statistical model, Steve Jobs, subprime mortgage crisis, Suez canal 1869, tacit knowledge, technoutopianism, The Future of Employment, The Market for Lemons, The Nature of the Firm, transaction costs, universal basic income, vertical integration, William Langewiesche, Y Combinator

The following year sales doubled, while prices fell. The company was back on track. Many firms, and not just those in the automotive industry, have followed Ford’s model of combining the division of labor with centralized decision-making. These companies manufacture products within a tightly controlled, largely vertically integrated organization. Some critics of capitalism have argued that firms will increase in size and combine to form monopolies or oligopolies that may ultimately control the economy and undo the market as we know it. Although we have seen vast concentration in a number of sectors—from trains and steel in the late 1890s to huge conglomerates (sometimes called national champions) in the latter half of the twentieth century to digital behemoths such as Amazon, Google, Facebook, and Baidu in the twenty-first century—the firm hasn’t yet replaced the market.

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Honda’s sales fell from 90 percent to 30 percent of the market in Vietnam within only five years. The Chinese had not only deconstructed the basic architecture of state-of-the-art Japanese motorcycles, they had also deconstructed the basic organizational architecture of motorcycle manufacturing. Rather than opting for a firm’s centralized control and vertical integration, they succeeded by drawing on participants in a market to efficiently produce affordable motorcycles. Decentralized and diffuse or centralized and hierarchical? This is the choice we face when we want to coordinate efficiently. Do we opt for the market or choose the firm? Each offers unique qualities, and each differs starkly from the other.

Surveillance Valley: The Rise of the Military-Digital Complex by Yasha Levine

23andMe, activist fund / activist shareholder / activist investor, Adam Curtis, Airbnb, AltaVista, Amazon Web Services, Anne Wojcicki, anti-communist, AOL-Time Warner, Apple's 1984 Super Bowl advert, bitcoin, Black Lives Matter, borderless world, Boston Dynamics, British Empire, Californian Ideology, call centre, Charles Babbage, Chelsea Manning, cloud computing, collaborative editing, colonial rule, company town, computer age, computerized markets, corporate governance, crowdsourcing, cryptocurrency, data science, digital map, disinformation, don't be evil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dr. Strangelove, drone strike, dual-use technology, Edward Snowden, El Camino Real, Electric Kool-Aid Acid Test, Elon Musk, end-to-end encryption, fake news, fault tolerance, gentrification, George Gilder, ghettoisation, global village, Google Chrome, Google Earth, Google Hangouts, Greyball, Hacker Conference 1984, Howard Zinn, hypertext link, IBM and the Holocaust, index card, Jacob Appelbaum, Jeff Bezos, jimmy wales, John Gilmore, John Markoff, John Perry Barlow, John von Neumann, Julian Assange, Kevin Kelly, Kickstarter, Laura Poitras, life extension, Lyft, machine readable, Mark Zuckerberg, market bubble, Menlo Park, military-industrial complex, Mitch Kapor, natural language processing, Neal Stephenson, Network effects, new economy, Norbert Wiener, off-the-grid, One Laptop per Child (OLPC), packet switching, PageRank, Paul Buchheit, peer-to-peer, Peter Thiel, Philip Mirowski, plutocrats, private military company, RAND corporation, Ronald Reagan, Ross Ulbricht, Satoshi Nakamoto, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, Skype, slashdot, Snapchat, Snow Crash, SoftBank, speech recognition, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Susan Wojcicki, Telecommunications Act of 1996, telepresence, telepresence robot, The Bell Curve by Richard Herrnstein and Charles Murray, The Hackers Conference, Tony Fadell, uber lyft, vertical integration, Whole Earth Catalog, Whole Earth Review, WikiLeaks

A year later, President Bill Clinton signed the Telecommunications Act of 1996, a law that deregulated the telecommunications industry, allowing for the first time since the New Deal nearly unlimited corporate cross-ownership of the media: cable companies, radio stations, film studios, newspapers, phone companies, television broadcasters, and, of course, Internet service providers.73 The law triggered massive consolidation, culminating in just a handful of vertically integrated companies owning the bulk of the American media market. “This law is truly revolutionary legislation that will bring the future to our doorstep,” President Clinton declared when he signed the act. A handful of powerful telecommunications companies absorbed most of the privatized NSFNET providers that had been set up with funds from the National Science Foundation a decade earlier.

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So was Cory Doctorow, a best-selling young adult science fiction author whose books about a totalitarian government’s surveillance were read and admired by Laura Poitras, Jacob Appelbaum, Roger Dingledine, and Edward Snowden.122 Doctorow was a huge personality in the crypto movement who could fill giant conference halls at privacy conferences. He publicly endorsed OTF’s Internet Freedom mission. “I’m proud to be a volunteer OTF advisor,” he tweeted. From behind this hip and connected exterior, BBG and Radio Free Asia built a vertically integrated incubator for Internet Freedom technologies, pouring millions into projects big and small, including everything from evading censorship to helping political organizing, protests, and movement building. With its deep pockets and its recruitment of big-name privacy activists, the Open Technology Fund didn’t just thrust itself into the privacy movement.

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The industry would continue to consolidate over the next decade, not just domestically but also internationally. As I write this in 2017, two decades after the Telecommunications Act of 1996 was passed, the US media and telecommunications markets are concentrated in a way that has not been seen for a century: a handful of global, vertically integrated media companies—Verizon, AT&T, Comcast, Charter Communications, Time Warner—own most of the domestic media today, including television and radio networks, film studios, newspapers, and, of course, commercial Internet service providers. 77. “Louis Rossetto Sr., 78, Typesetting Executive,” New York Times, July 31, 1991. 78.

The Grid: The Fraying Wires Between Americans and Our Energy Future by Gretchen Bakke

addicted to oil, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, back-to-the-land, big-box store, Buckminster Fuller, demand response, dematerialisation, distributed generation, electricity market, energy security, energy transition, full employment, Gabriella Coleman, illegal immigration, indoor plumbing, Internet of things, Kickstarter, laissez-faire capitalism, Menlo Park, Neal Stephenson, Negawatt, new economy, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, off grid, off-the-grid, post-oil, profit motive, rolling blackouts, Ronald Reagan, self-driving car, Silicon Valley, smart grid, smart meter, the built environment, too big to fail, Twitter Arab Spring, vertical integration, washing machines reduced drudgery, Whole Earth Catalog

This was also the year that saw the creation of the Standard Oil Trust, a business entity that brought 90 percent of the world’s oil production and refining under the control of a nine-person board, headed by John D. Rockefeller. With twenty thousand oil wells, most in Pennsylvania, four thousand miles of pipeline, five thousand tank cars, and over one hundred thousand employees, Standard Oil was a thorough monopoly. Rockefeller’s sprawling vertically integrated corporation perfectly captured the trend in the late 1800s of replacing many small companies in competition with one another with single large entities capable of producing and moving products to market at a scale inconceivable to family businesses or local undertakings. The electricity business might have been a chaotic diversity of competing interests and alternate systems in the final decades of the nineteenth century, but it was the exception not the rule.

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Even power systems that had existed well before the utility monopolies had been established, such as small hydro in streams (popular in California well into the 1920s) or cogeneration plants (which in 1908 produced almost 60 percent of the electricity made in the United States), had been almost utterly erased by the utilities’ preference for large, dedicated power plants. And since no one else could enter the market, because the utilities wouldn’t buy their product no matter how cheaply or cleanly they made it, that was pretty much that. Regulation, back when it was hashed out in the early 1900s, had presumed exactly this kind of vertically integrated electricity system. No one really anticipated that one day more than half a century later that same entity might be in the position of a “customer” for modest quantities of electricity produced by someone else. Monopsony powers had been granted to the utilities almost by accident. This was what PURPA reversed: The utilities could still be monopolies, but they couldn’t be monopsonies anymore.

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But PURPA was not only important because it changed our ideas about how power might be “better” made, it also opened the door to honest-to-goodness competition in electrical power generation. As bidding auctions between small power providers gradually became the most effective way to integrate new forms of generation, and the companies making it, PURPA helped to prove that bigger wasn’t better and that monopoly-governed, vertically integrated, government-regulated megacompanies were far and away not the best way to make and manage American power. Small was not only beautiful but efficient, and, as it has turned out, cost-effective. The unexpected success of PURPA was a momentous outcome for the culture of electricity in this country.

Jihad vs. McWorld: Terrorism's Challenge to Democracy by Benjamin Barber

airport security, Alvin Toffler, anti-communist, Apple's 1984 Super Bowl advert, Ayatollah Khomeini, Berlin Wall, borderless world, Bretton Woods, British Empire, classic study, computer age, Corn Laws, Corrections Corporation of America, David Brooks, deindustrialization, Deng Xiaoping, digital map, export processing zone, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, George Gilder, global village, invisible hand, It's morning again in America, Joan Didion, Kevin Kelly, laissez-faire capitalism, late capitalism, Live Aid, market fundamentalism, Marshall McLuhan, minimum wage unemployment, new economy, Norbert Wiener, North Sea oil, off-the-grid, pirate software, Plato's cave, postnationalism / post nation state, profit motive, race to the bottom, Right to Buy, road to serfdom, Ronald Reagan, The Wealth of Nations by Adam Smith, Thomas L Friedman, undersea cable, vertical integration, young professional, zero-sum game

16 These questions suggest that, after looking at the four distinctive elements of film, television, books, and theme parks and how they have become at once both internationalized and Americanized, we will need to take notice of the new merger and acquisitions frenzy in the information sector—a vertical integration frenzy in the name of free choice and free markets that could result in a monopoly more perilous to liberty than any dreamed of by mineral and durable goods megamonopolists like John Rockefeller, Sr., or Andrew Carnegie.17 6 Hollyworld: McWorld’s Videology TO WHOM OR to what belongs this expiring century?

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(books) Capital Cities/ABC (newspapers, broadcasting) Cox Communications (newspapers) CBS (broadcasting) Buena Vista Films (Disney; motion pictures) Dow Jones (newspapers) Gannett (newspapers) General Electric (television) Paramount Communications (books, motion pictures) Harcourt Brace Jovanovich (books) Hearst (newspapers, magazines) Ingersoll (newspapers) International Thomson (newspapers) Knight Ridder (newspapers) Media News Group (Singleton; newspapers) Newhouse (newspapers, books, magazines) News Corporation Ltd. (Murdoch; newspapers, magazines, motion pictures) New York Times (newspapers) Reader’s Digest Association (books) Scripps-Howard (newspapers) Time Warner (magazines, books, motion pictures) Times Mirror (newspapers) Tribune Company (magazines) Vertical integration and horizontal integration go hand in hand: the imperative is to own deep and own wide. If you own movies, buy book companies and theme parks and sports teams (Paramount acquiring Simon & Schuster, Viacom buying Paramount). If you own hardware, buy software (Sony swallowing Columbia). If you own television stations, buy film libraries (Turner imbibing MGM’s library).

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Mandl (chief executive officer of AT&T’s Communications Services Group) says in explaining AT&T’s $12.6 billion projected buyout of McCaw Cellular Communications Inc. (it didn’t quite come to pass), “we’d like to see the AT&T brand on a national basis. We can offer end-to-end service.”4 The key to it all remains the informational/creative core, the software. In the terse words of Sumner Redstone, “software is the name of the game.”5 The vertical integration of media is a relatively new phenomenon. Bagdikian’s careful record-keeping suggests that most newspapers and magazines remained independent from the end of World War II into the 1970s. The early mergers occurred within sectors, creating newspaper empires, book conglomerates, and movie studio mergers—an unwelcome intrusion of monopoly but one that respected the boundaries separating different kinds of information and entertainment and that studiously avoided the durable-goods production domains on which spectators and consumers depended.

A Pipeline Runs Through It by Keith Fisher

accounting loophole / creative accounting, barriers to entry, British Empire, colonial rule, Dmitri Mendeleev, energy security, European colonialism, Ford Model T, full employment, Hernando de Soto, Ida Tarbell, joint-stock company, laissez-faire capitalism, Louis Blériot, Malacca Straits, Monroe Doctrine, oil rush, oil shale / tar sands, open economy, race to the bottom, Right to Buy, Scramble for Africa, Suez canal 1869, Suez crisis 1956, trade route, transatlantic slave trade, vertical integration

By 1888 over 70 per cent of crude shipments in the United States would be by pipeline, almost entirely by Standard’s National Transit Co.47 Standard Oil, through the control it wielded over crude transit, was now able to dictate which refineries would survive and how large they could grow. The only way to operate independently of the Standard alliance was by adopting Tidewater’s strategy of ‘vertical integration’ of operations, from production, through transit, to refining, designed to prevent Standard from holding all hostage by controlling either of the latter two stages. Tidewater had to establish its own refineries, the Ocean Oil Co. and the Chester Oil Co., after several independents that its pipeline was intended to serve, such as the new Solar Oil Co. at Williamsport, were taken over by Standard.

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The nation had been rid of human slavery … but the conviction was universal that the country was in real danger from another kind of slavery sought to be fastened on the American people, namely, the slavery that would result from aggregations of capital in the hands of a few individuals and corporations controlling, for their own profit and advantage exclusively, the entire business of the country.114 STANDARD OIL, PRODUCERS AND INDEPENDENTS Through the 1880s and into the 1890s, Standard Oil continued to dominate the US oil industry by maximizing its control over oil transit – the key to its control over producers and refiners.115 Standard was quick to pre-empt the emergence of competitors who, following the vertically integrated example of Tidewater, might successfully forge an unbroken chain from production, through transit, to refining and marketing to achieve full operational independence. In 1883 Standard Oil trustee W.G. Warden, concerned about competition from independent gathering pipelines, wrote to Rockefeller, ‘We must prevent all such enterprises from making any headway and make it as discouraging as possible for any such to start – No difference how small such an enterprise may start, we must prevent it from taking root as far as we can do so by legitimate & fair means.’116 Thus, to prevent the Baltimore & Ohio Railroad from establishing an integrated oil business, in 1885 Standard made a rare, early purchase of a production site in West Virginia.

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Pattison, who had originally ratified the law, vetoed a first attempt to repeal it, arguing, ‘The inevitable effect would be to drive competing lines into consolidation or to put the shippers of this important product at the mercy of the great monopolies which might be able to secure and hold the controlling interest in the stock or bonds of competing lines.’129 The successes of Mellon’s and Emery’s vertically integrated oil enterprises were, however, notable exceptions to the rule of Standard Oil’s huge dominance over oil transit, refining and marketing. Since in most producing areas Standard was the sole purchaser of crude oil, local oil trading and the oil exchanges became virtually irrelevant, to the extent that from January 1895 Standard’s crude oil purchaser, Joseph Seep, took to dictating to producers a daily ‘posted price’.

The People's Platform: Taking Back Power and Culture in the Digital Age by Astra Taylor

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Aaron Swartz, Alan Greenspan, American Legislative Exchange Council, Andrew Keen, AOL-Time Warner, barriers to entry, Berlin Wall, big-box store, Brewster Kahle, business logic, Californian Ideology, citizen journalism, cloud computing, collateralized debt obligation, Community Supported Agriculture, conceptual framework, content marketing, corporate social responsibility, creative destruction, cross-subsidies, crowdsourcing, David Brooks, digital capitalism, digital divide, digital Maoism, disinformation, disintermediation, don't be evil, Donald Trump, Edward Snowden, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, future of journalism, Gabriella Coleman, gentrification, George Gilder, Google Chrome, Google Glasses, hive mind, income inequality, informal economy, Internet Archive, Internet of things, invisible hand, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Julian Assange, Kevin Kelly, Kickstarter, knowledge worker, Laura Poitras, lolcat, Mark Zuckerberg, means of production, Metcalfe’s law, Naomi Klein, Narrative Science, Network effects, new economy, New Journalism, New Urbanism, Nicholas Carr, oil rush, peer-to-peer, Peter Thiel, planned obsolescence, plutocrats, post-work, power law, pre–internet, profit motive, recommendation engine, Richard Florida, Richard Stallman, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, slashdot, Slavoj Žižek, Snapchat, social graph, Steve Jobs, Stewart Brand, technological solutionism, technoutopianism, TED Talk, the long tail, trade route, Tragedy of the Commons, vertical integration, Whole Earth Catalog, WikiLeaks, winner-take-all economy, Works Progress Administration, Yochai Benkler, young professional

(Counterintuitively, given his outspoken libertarian views, PayPal founder and first Facebook investor Peter Thiel has declared competition overrated and praised monopolies for improving margins.30) What’s more, many of the emerging info-monopolies now dabble in hardware, software, and content, building their businesses at every possible level, vertically integrating as in the analog era. This is the contradiction at the center of the new information system: the more customized and user friendly our computers and mobile devices are, the more connected we are to an extensive and opaque circuit of machines that coordinate and keep tabs on our activities; everything is accessible and individualized, but only through companies that control the network from the bottom up.31 Amazon strives to control both the bookshelf and the book and everything in between.

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There are other possibilities worth considering. To prevent what may be the next wave of consolidation, Tim Wu, coiner of the term “Net neutrality,” argues that a “Separations Principle” is necessary, erecting a firewall between firms that transport and create information. Wu is worried about the potential vertical integration of companies like Verizon and Google or AT&T and Facebook into “information empires,” but his principle would also have more immediate effects. Apple, for example, would not be able to sell or stream music or movies at a loss to buoy the sale of hardware; Amazon would be prevented from pursuing its ambition of controlling the book market (a scenario in which most volumes are either published by or self-published through the company and tethered to the Kindle platform); and Google would be forbidden to promote its own products above competitors’ in search results.

The Digital Party: Political Organisation and Online Democracy by Paolo Gerbaudo

Airbnb, barriers to entry, basic income, Bernie Sanders, bitcoin, Californian Ideology, call centre, Cambridge Analytica, centre right, creative destruction, crowdsourcing, data science, digital capitalism, digital divide, digital rights, disintermediation, disruptive innovation, Donald Trump, Dunbar number, Edward Snowden, end-to-end encryption, Evgeny Morozov, feminist movement, gig economy, industrial robot, Jaron Lanier, Jeff Bezos, Jeremy Corbyn, jimmy wales, Joseph Schumpeter, Mark Zuckerberg, Network effects, Occupy movement, offshore financial centre, oil shock, post-industrial society, precariat, Ralph Waldo Emerson, Richard Florida, Richard Stallman, Ruby on Rails, self-driving car, Silicon Valley, Skype, Slavoj Žižek, smart cities, Snapchat, social web, software studies, Stewart Brand, technological solutionism, technoutopianism, the long tail, Thomas L Friedman, universal basic income, vertical integration, Vilfredo Pareto, WikiLeaks

The mass party displays a number of distinctive features: a mass base which contributes to the functioning of the party both financially and with its political militancy; a large and permanent bureaucracy occupied by professionalised political personnel; a highly hierarchical and centralised organisational structure; a capillary territorial presence; the vertical integration of cultural and social annex organisations; a clear class base (the working class for the left and the bourgeoisie for conservative parties); an explicit and persistent ideological orientation of the party’s strategy and policy platform.53 Mass parties were the parties of a mass society and were instrumental to the functioning of these societies as the vehicle for the social integration of the masses in the political arena, in response to the atomisation created by industrialisation and secularisation, as proposed by Sigmund Neumann and Moisei Ostrogorski.54 Pointing to the analogy between the mode of production and the mode of organisation in different historical eras, Italian intellectual Marco Revelli proposes that the mass party was the political equivalent to what the Fordist factory was in the economic sphere.

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It resembled it in its ‘gigantism’ and its effort ‘to incorporate large masses of men in a stable way, by arranging them in solid and permanent structures’.55 The party was conceived as a factory where politics had to be produced through collective ‘political work’, inspired by Taylorist criteria of efficiency and rationalisation, as if politics were some sort of manufactured good. In this structure, the militants were, according to Revelli, the equivalent of workers in the assembly line, the local cadres being the production technicians and the central committee the corporate board of directors. Members were vertically integrated starting from their place of abode, through the presence of local sections and cells, in turn coordinated in regional or provincial councils, and from there in national assemblies responsible for electing the party leadership. The analogy between the Fordist factory and the mass bureaucratic party goes a long way towards explaining why the crisis of the former has been accompanied by a decline of the latter.

The Great Fragmentation: And Why the Future of All Business Is Small by Steve Sammartino

3D printing, additive manufacturing, Airbnb, augmented reality, barriers to entry, behavioural economics, Bill Gates: Altair 8800, bitcoin, BRICs, Buckminster Fuller, citizen journalism, collaborative consumption, cryptocurrency, data science, David Heinemeier Hansson, deep learning, disruptive innovation, driverless car, Dunbar number, Elon Musk, fiat currency, Frederick Winslow Taylor, game design, gamification, Google X / Alphabet X, haute couture, helicopter parent, hype cycle, illegal immigration, index fund, Jeff Bezos, jimmy wales, Kickstarter, knowledge economy, Law of Accelerating Returns, lifelogging, market design, Mary Meeker, Metcalfe's law, Minecraft, minimum viable product, Network effects, new economy, peer-to-peer, planned obsolescence, post scarcity, prediction markets, pre–internet, profit motive, race to the bottom, random walk, Ray Kurzweil, recommendation engine, remote working, RFID, Rubik’s Cube, scientific management, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, skunkworks, Skype, social graph, social web, software is eating the world, Steve Jobs, subscription business, survivorship bias, The Home Computer Revolution, the long tail, too big to fail, US Airways Flight 1549, vertical integration, web application, zero-sum game

You have their attention, and that’s the asset that matters, especially when we’re living in a world of absolute channel explosion. There is only so much attention being handed out. The connection many of us already have is what large companies want most. We now live in the age of the one-person media company: ‘Nonglomerate’. We’re all nodes The vertically integrated mega corporate is being replaced by highly distributed horizontal networks of tiny nodes. We are those nodes. In the new media landscape a corporation, by definition, must now start as a single node, nothing but one single point of interest in the vast swathe of the internet. Now that the self-selected node can choose to create and attract attention and traffic, it can grow.

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Do expect marginalisation Our new digital world reveals unforeseeable alternatives to industry around every corner. While change is predictable, the new winners and the way they win often surprises. Small holes in the finance bucket are being created and it’s hard to see the revenue leaks being repaired. The next phase of finance will be for a far less vertically integrated service. More horizontal funding structures will emerge, each taking on parts of what banks offered, in ways we haven’t thought of just yet, and using means that technology hasn’t quite enabled yet. Banking revenue streams will be eroded by players who are not from the finance realm. New players and network connections will continue to be weaved through our financial system.

The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power by Michael A. Cusumano, Annabelle Gawer, David B. Yoffie

activist fund / activist shareholder / activist investor, Airbnb, AltaVista, Amazon Web Services, AOL-Time Warner, asset light, augmented reality, autonomous vehicles, barriers to entry, bitcoin, blockchain, business logic, Cambridge Analytica, Chuck Templeton: OpenTable:, cloud computing, collective bargaining, commoditize, CRISPR, crowdsourcing, cryptocurrency, deep learning, Didi Chuxing, distributed ledger, Donald Trump, driverless car, en.wikipedia.org, fake news, Firefox, general purpose technology, gig economy, Google Chrome, GPS: selective availability, Greyball, independent contractor, Internet of things, Jeff Bezos, Jeff Hawkins, John Zimmer (Lyft cofounder), Kevin Roose, Lean Startup, Lyft, machine translation, Mark Zuckerberg, market fundamentalism, Metcalfe’s law, move fast and break things, multi-sided market, Network effects, pattern recognition, platform as a service, Ponzi scheme, recommendation engine, Richard Feynman, ride hailing / ride sharing, Robert Metcalfe, Salesforce, self-driving car, sharing economy, Silicon Valley, Skype, Snapchat, SoftBank, software as a service, sovereign wealth fund, speech recognition, stealth mode startup, Steve Ballmer, Steve Jobs, Steven Levy, subscription business, Susan Wojcicki, TaskRabbit, too big to fail, transaction costs, transport as a service, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Vision Fund, web application, zero-sum game

In the longer term, however, driving competitors out of business ends up restricting consumer choice, which tends to lead to higher prices. At least, that is the theoretical argument against the kind of customer tying (for example, marketing different products and services to Amazon Prime members) and vertical integration (such as using information gained on third-party sales through the Amazon Marketplace transaction platform to enter those product segments directly) that Amazon has pursued.52 Historically, Amazon took advantage of a 1992 U.S. Supreme Court ruling that a U.S. state can require retailers to collect a sales tax only if they have a physical presence in that state.

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Microsoft, 181, 182 Vagenas, Andrew, 145–46 value geometric increases in digital platforms, 13 starting with a value proposition, 65–66 of transaction platforms, 80–81 Uber’s value proposition, 78 Van Alstyne, Marshall, 82–83, 111 Verge, The (news and media network), 132 Vertex, 232 vertical integration, 201 Vestager, Margrethe, 184 video games, 43–44 violence ethnic and religious violence related to false news, 188 extremist content, 203–4 mass shooting misinformation and harassment, 203 responsibility for, 178–79, 187 on YouTube, 203–5 See also hate speech virtual reality applications, 143–44 VMWare, 162–63 voice recognition, 220–23 Walmart competitors, 154–55 Flipkart purchase, 158–59 growth of, 153–54 Jet.com purchase, 156–58 whistleblower raises concerns, 158 Wang, Cher, 143 Waze (Google), 51–52, 53 WeChat (China), 41, 58, 101 WhatsApp (Facebook), 53, 77, 78 White Pages, 37 Whitman, Meg, 119–20, 123 Whole Foods, 56 Williams, Ev, 89 wind farm benefits from industrial Internet, 161 winner-take-all or winner-take most outcomes overview, 25, 31–32, 49, 214–17, 215t AT&T’s monopoly, 36–37 failed platforms resulting from, 109–10 hubris-related crashes, 124–25 See also platform market drivers Wired (magazine), 128, 132, 188 Wojcicki, Susan, 203–4 WordPerfect, 87 workforce, contract labor vs. employees overview, 192–93 Deliveroo, 195–96 FedEx, 196 Handy, 193–95 Xanadu (Canada), 227 Yahoo!

India's Long Road by Vijay Joshi

Affordable Care Act / Obamacare, barriers to entry, Basel III, basic income, blue-collar work, book value, Bretton Woods, business climate, capital controls, carbon tax, central bank independence, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, congestion charging, Cornelius Vanderbilt, corporate governance, creative destruction, crony capitalism, decarbonisation, deindustrialization, demographic dividend, demographic transition, Doha Development Round, eurozone crisis, facts on the ground, failed state, financial intermediation, financial repression, first-past-the-post, floating exchange rates, foreign exchange controls, full employment, germ theory of disease, Gini coefficient, global supply chain, global value chain, hiring and firing, income inequality, Indoor air pollution, Induced demand, inflation targeting, invisible hand, land reform, low interest rates, Mahatma Gandhi, manufacturing employment, Martin Wolf, means of production, microcredit, moral hazard, obamacare, Pareto efficiency, price elasticity of demand, price mechanism, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, race to the bottom, randomized controlled trial, rent-seeking, reserve currency, rising living standards, school choice, school vouchers, secular stagnation, Silicon Valley, smart cities, South China Sea, special drawing rights, The Future of Employment, The Market for Lemons, too big to fail, total factor productivity, trade liberalization, Tragedy of the Commons, transaction costs, universal basic income, urban sprawl, vertical integration, working-age population

Another source of disquiet about dominant firms in India’s private sector is that so many of them are ‘business houses’, i.e. conglomerates that are controlled by ‘promoter’ families and family trusts. It has been claimed, quite rightly, that the prevalence of conglomerates is not surprising, given the weakness of the state: it makes sense to do things in-​house and in vertically integrated operations since the infrastructure is poor, the legal system is slow at contract-​enforcement etc.23 But is promoter/​family control a healthy phenomenon? So far, overall, business houses have stood up to competitive challenges admirably. But family-​controlled firms have well-​ known problems such as loss of efficiency over time due to an inability to prevent management falling into the hands of incompetent offspring.

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The crucial point is that if the government chooses to privatize, and indeed even if it does not, the operation of a natural monopoly must be accompanied by regulation to prevent exploitation of consumers. Indeed, regulation is unavoidable in any network industry (e.g. electricity) that includes some natural monopoly element, even if other parts of the industry produce outputs which can be competitively produced. It follows that vertically integrated monopolies (like electricity) should be broken up, state or private monopoly being retained O w n e r s h i p, I n f r a s t r u c t u r e , a n d t h e E n v i r o n m e n t [ 117 ] 118 only where technically necessary, with the whole structure subject to an independent regulator. Although the discussion in this section has focused on non-​financial PSEs, it applies closely to financial PSEs such as public sector banks (PSBs).

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This deters investment and modernization, not only in electricity distribution but in electricity generation too.19 It does not help that the Constitution allows central and state governments to act at cross purposes since electricity is a ‘concurrent subject’. O w n e r s h i p, I n f r a s t r u c t u r e , a n d t h e E n v i r o n m e n t [ 121 ] 122 The Electricity Act of 2003 was supposed to change all this. On paper, it is excellent. It introduced a new framework requiring each state to unbundle its vertically-​integrated SEB into transmission, generation, and distribution companies, privatise if desired, allow competition and private sector entry in generation and distribution, and set up a regulator to issue licences and set tariffs. ‘Open access’ was mandated by the Act. This meant that large consumers were supposed to be able to buy electricity from multiple sellers (including directly from producers).

Connectography: Mapping the Future of Global Civilization by Parag Khanna

"World Economic Forum" Davos, 1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 9 dash line, additive manufacturing, Admiral Zheng, affirmative action, agricultural Revolution, Airbnb, Albert Einstein, amateurs talk tactics, professionals talk logistics, Amazon Mechanical Turk, Anthropocene, Asian financial crisis, asset allocation, autonomous vehicles, banking crisis, Basel III, Berlin Wall, bitcoin, Black Swan, blockchain, borderless world, Boycotts of Israel, Branko Milanovic, BRICs, British Empire, business intelligence, call centre, capital controls, Carl Icahn, charter city, circular economy, clean water, cloud computing, collateralized debt obligation, commoditize, complexity theory, continuation of politics by other means, corporate governance, corporate social responsibility, credit crunch, crony capitalism, crowdsourcing, cryptocurrency, cuban missile crisis, data is the new oil, David Ricardo: comparative advantage, deglobalization, deindustrialization, dematerialisation, Deng Xiaoping, Detroit bankruptcy, digital capitalism, digital divide, digital map, disruptive innovation, diversification, Doha Development Round, driverless car, Easter island, edge city, Edward Snowden, Elon Musk, energy security, Ethereum, ethereum blockchain, European colonialism, eurozone crisis, export processing zone, failed state, Fairphone, Fall of the Berlin Wall, family office, Ferguson, Missouri, financial innovation, financial repression, fixed income, forward guidance, gentrification, geopolitical risk, global supply chain, global value chain, global village, Google Earth, Great Leap Forward, Hernando de Soto, high net worth, high-speed rail, Hyperloop, ice-free Arctic, if you build it, they will come, illegal immigration, income inequality, income per capita, industrial cluster, industrial robot, informal economy, Infrastructure as a Service, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, Jane Jacobs, Jaron Lanier, John von Neumann, Julian Assange, Just-in-time delivery, Kevin Kelly, Khyber Pass, Kibera, Kickstarter, LNG terminal, low cost airline, low earth orbit, low interest rates, manufacturing employment, mass affluent, mass immigration, megacity, Mercator projection, Metcalfe’s law, microcredit, middle-income trap, mittelstand, Monroe Doctrine, Multics, mutually assured destruction, Neal Stephenson, New Economic Geography, new economy, New Urbanism, off grid, offshore financial centre, oil rush, oil shale / tar sands, oil shock, openstreetmap, out of africa, Panamax, Parag Khanna, Peace of Westphalia, peak oil, Pearl River Delta, Peter Thiel, Philip Mirowski, Planet Labs, plutocrats, post-oil, post-Panamax, precautionary principle, private military company, purchasing power parity, quantum entanglement, Quicken Loans, QWERTY keyboard, race to the bottom, Rana Plaza, rent-seeking, reserve currency, Robert Gordon, Robert Shiller, Robert Solow, rolling blackouts, Ronald Coase, Scramble for Africa, Second Machine Age, sharing economy, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, six sigma, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, Stuxnet, supply-chain management, sustainable-tourism, systems thinking, TaskRabbit, tech worker, TED Talk, telepresence, the built environment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, Tim Cook: Apple, trade route, Tragedy of the Commons, transaction costs, Tyler Cowen, UNCLOS, uranium enrichment, urban planning, urban sprawl, vertical integration, WikiLeaks, Yochai Benkler, young professional, zero day

Global infrastructures are morphing our world system from divisions to connections and from nations to nodes. Infrastructure is like a nervous system connecting all parts of the planetary body; capital and code are the blood cells flowing through it. More connectivity creates a world beyond states, a global society greater than the sum of its parts. Much as the world evolved from vertically integrated empires to horizontally interdependent states, now it is graduating toward a global network civilization whose map of connective corridors will supersede traditional maps of national borders. Each continental zone is already becoming an internally integrated mega-region (North America, South America, Europe, Africa, Arabia, South Asia, East Asia) with increasingly free trade coupled with intense connectivity across their thriving city-states.

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China seeks foreign raw materials and technology, not foreign territory. In our haste to make analogies between today’s global dynamics and pre–World War I Europe, most observers have missed the enormous differences. European nations traded heavily across each other prior to World War I, but they did so as vertically integrated mercantile empires exploiting raw materials from their own vast colonies. They traded in finished goods and didn’t outsource production to each other; we did not have today’s international manufacturing networks in 1895. The nineteenth and twentieth centuries brought trade interdependence; in the twenty-first century, we have complex supply chain dispersal as well.

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Throughout the first decade of the twenty-first century, Japan, Korea, Taiwan, and China continued massive spending on boosting innovation ecosystems through R&D, subsidies, and guaranteed purchases of companies’ output.7 A typical example is Japan’s backing of NEC’s satellites to boost its market share against American and European firms. Today, Toyota City near Nagoya and Samsung Town in Seoul are vertically integrated ecosystems of research, design, management, and components—hundreds of companies treated as extensions of the mother ship itself. When countries compete, they do so with their entire supply chains. That includes America: Washington’s bailout of General Motors was not only to salvage one company but to prevent its failure from wiping out all its secondary suppliers—and about one million jobs—across the country.

The Idea Factory: Bell Labs and the Great Age of American Innovation by Jon Gertner

Albert Einstein, back-to-the-land, Black Swan, business climate, Charles Babbage, Claude Shannon: information theory, Clayton Christensen, complexity theory, corporate governance, cuban missile crisis, Dennis Ritchie, Edward Thorp, Fairchild Semiconductor, Henry Singleton, horn antenna, Hush-A-Phone, information retrieval, invention of the telephone, James Watt: steam engine, Karl Jansky, Ken Thompson, knowledge economy, Leonard Kleinrock, machine readable, Metcalfe’s law, Nicholas Carr, Norbert Wiener, Picturephone, Richard Feynman, Robert Metcalfe, Russell Ohl, Sand Hill Road, Silicon Valley, Skype, space junk, Steve Jobs, Telecommunications Act of 1996, Teledyne, traveling salesman, undersea cable, uranium enrichment, vertical integration, William Shockley: the traitorous eight

During the trial, the judge would eventually hear a mountain of persuasive evidence put forward by government litigators; one after another, competitors would testify how Ma Bell had thwarted their efforts to enter the telecommunications business. At the same time, one could view the trial as a great war over ideas. To William Baxter, the driving force at Justice, AT&T’s fundamental problem was that it was both vertically and horizontally integrated. Vertical integration meant that the company controlled its research, development, manufacturing, and deployment. One way to visualize the verticality was to see Ma Bell as a series of boxes, stacked one atop another, each representing essential units of the company. The bottom box, where ideas and innovations began, was Bell Laboratories.

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The bottom box, where ideas and innovations began, was Bell Laboratories. Above that was Western Electric, where those innovations were in turn mass-produced. Above that was the top box, AT&T, which deployed the new technologies in the long-distance and local markets.23 Baxter did not object to the idea of vertical integration. It made sense that companies should fund research and bring the fruits of those investments to the market. It was the horizontal integration he considered unacceptable. Horizontal integration could be seen as a series of boxes, too, but these boxes stretched from side to side, or really from coast to coast, instead of from top to bottom.

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Pierce, “Mervin Joe Kelly: 1894–1971, National Academy of Sciences, Biographical Memoir, 1975. 12 Among academics, the widely accepted notion that Bell Labs was exclusively a “closed” innovation model—whereby every innovation is started and developed within the firm, as opposed to a more modern “open” innovation model, whereby a parent company depends collaboratively on customers and outside innovators for ideas—deserves more consideration. Without question, AT&T depended upon its vertical integration for innovations. But Bell Labs’ staffers were open to a stream of outside ideas through regular contacts with other industrial labs, military contractors, academic affiliates, patent licensing partners, and participants in weekly Bell Labs symposiums. Managers also acquired superior technologies from outside when warranted.

Coffeeland: One Man's Dark Empire and the Making of Our Favorite Drug by Augustine Sedgewick

affirmative action, Alfred Russel Wallace, British Empire, business cycle, California gold rush, classic study, collective bargaining, Day of the Dead, European colonialism, export processing zone, family office, Fellow of the Royal Society, Food sovereignty, Frederick Winslow Taylor, Honoré de Balzac, imperial preference, Joan Didion, Johann Wolfgang von Goethe, land reform, land tenure, Louis Pasteur, mass immigration, Monroe Doctrine, Philip Mirowski, race to the bottom, refrigerator car, scientific management, the scientific method, The Structural Transformation of the Public Sphere, trade route, vertical integration, wage slave, women in the workforce, working poor, zero-sum game

Their San Francisco–based cattle-raising/butchering/meatpacking operation was the only agricultural concern to rank among the country’s two hundred largest industrial enterprises in 1900, and its workforce was rigidly structured along racial and ethnic lines.25 Adams’s academic approach to the question of labor was based on his experience in the field. His work for two vertically integrated operations had pointed his thinking in a direction that diverged from the traditional California model of racial and ethnic competition. Instead, he ascribed to the state’s diverse social groups distinct traits. “Negro Laborers” took “readily to handling horses and mules” but were “notorious prevaricators”; “Mexican Laborers” were “peaceful, somewhat childish, rather lazy, unambitious, fairly faithful” but “not particularly adept at milking”; Japanese were “good hand workers” but “not mechanically inclined”; and so on.

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These high margins weren’t a problem for neighborhood grocers before World War I, because they generally didn’t compete against each other on price.18 That changed during the war, when increases in food prices made small independent grocers especially vulnerable to competition from new, centrally managed, vertically integrated chains of hundreds or thousands of stores. In many cases, the chain stores set up shop in small grocers’ coffee margins, cutting off their business at the pressure point of price, and no chain more so than the immense coffee business known as Great Atlantic & Pacific Tea Company—the A&P. Even in 1863, when it was one tea shop among many in Lower Manhattan, the A&P called itself “great.”19 Historian Richard Tedlow has described why tea was a good business “for an ambitious grocer to concentrate on” at the time.

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Even in 1863, when it was one tea shop among many in Lower Manhattan, the A&P called itself “great.”19 Historian Richard Tedlow has described why tea was a good business “for an ambitious grocer to concentrate on” at the time. The great distance between tea plantations and American stores, and the many businesses traditionally involved in the process of getting the product from one to the other, meant that retail tea prices were usually high. A&P found an advantage through vertical integration, bringing the functions of tea importer, roaster, wholesaler, and retailer together under one roof, and often beating other grocers’ tea prices by a third. Success in tea subsidized the growth of its stores. A&P had 200 outlets at the turn of the twentieth century and 650 by 1914. These early stores were similar to independent neighborhood grocery stores.

How to Fix Copyright by William Patry

A Declaration of the Independence of Cyberspace, barriers to entry, big-box store, borderless world, bread and circuses, business cycle, business intelligence, citizen journalism, cloud computing, commoditize, content marketing, creative destruction, crowdsourcing, death of newspapers, digital divide, en.wikipedia.org, facts on the ground, Frederick Winslow Taylor, George Akerlof, Glass-Steagall Act, Gordon Gekko, haute cuisine, informal economy, invisible hand, John Perry Barlow, Joseph Schumpeter, Kickstarter, knowledge economy, lone genius, means of production, moral panic, new economy, road to serfdom, Ronald Coase, Ronald Reagan, search costs, semantic web, shareholder value, Silicon Valley, The Chicago School, The Wealth of Nations by Adam Smith, trade route, transaction costs, trickle-down economics, Twitter Arab Spring, Tyler Cowen, vertical integration, winner-take-all economy, zero-sum game

Companies that buy the copyrights and then sell commodities embodying someone else’s creativity hopefully provide essential marketing skills and a revenue stream, but they are not engaging in creative activity themselves.111 Not everything that goes on in a media company can fairly be characterized as reliant on copyright. The largest purchasers and sellers of copyrighted works are large, vertically integrated multinational companies that generate revenue from thousands of sources, many of which have nothing to do with copyrighted works, including trading in monetary fluctuations, trading in financial instruments, real estate ventures, and operating theme parks. Counting total revenues at such companies as dependent on copyright because some of the revenues involve selling copyrighted works is poor economics.

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To recap, there is the highly result-oriented initial classification of some industries, but not others, as being part of the creative industries.Then, the aggregate figures for those industries are derived by attributing all revenues generated as being dependent on copyright, as if nothing would have been done without copyright protection, as if every revenuegenerating part of every company in the industry is directly involved in producing works dependent on copyright, and without ever specifying what level of copyright is required even for those few works that may remotely be said to be copyright dependent. These are vast, vertically integrated multinational companies, with revenue sources from thousands of activities, many of which have nothing to do with the production or distribution of copyrighted works.147 Creativity Can’t Be Measured Beyond all this, no efforts are ever made to measure creativity even by those who loudly assert that copyright is necessary to increase creativity.148 If we want to increase creativity levels we have to be able to measure those levels; otherwise we can’t tell if creativity is being increased or decreased.

Narconomics: How to Run a Drug Cartel by Tom Wainwright

"World Economic Forum" Davos, Airbnb, barriers to entry, bitcoin, business process, call centre, carbon credits, collateralized debt obligation, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, failed state, financial innovation, illegal immigration, Mark Zuckerberg, microcredit, price elasticity of demand, price mechanism, RAND corporation, Ronald Reagan, Sam Peltzman, Skype, TED Talk, vertical integration

The opium gum is boiled with water and lime in order to extract morphine, which is then turned into heroin with the help of a few readily available chemicals: sodium carbonate, hydrochloric acid, and a bit of charcoal. By now barely 5 percent of its original weight, the finished product is ready for shipment. Keeping the business vertically integrated, from production to distribution, allows the cartel to reap greater rewards. “The profit margins are higher on heroin—there’s no payback to Colombia,” says Kevin Merrill, the assistant special agent in charge of the DEA’s division in Denver, Colorado. Mexican cartels have historically been reluctant to enter the heroin market for two reasons.

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The amount of heroin seized at the US border with Mexico octupled, from about 250 kilograms in 2005 to more than 2,000 kilograms in 2013. For the United States, the DEA figures that Mexican cartels now supply virtually all the heroin in the West, and about half of that in the East (the rest is mostly from Colombia and Afghanistan). The vertical integration of the heroin business has been maintained, with the cartels selling the drug through cells of mainly Mexican and Honduran dealers. Members of the cells are recalled to Mexico every four to six months, outfoxing the DEA’s attempts to infiltrate the groups. Dealers work the streets between 6:00 a.m. and 5:00 p.m. before counting up the proceeds and reporting back to base in Mexico, where the “command and control” still takes place, Merrill says.

Celebration of Fools: An Inside Look at the Rise and Fall of JCPenney by Bill Hare

business climate, fake news, glass ceiling, haute couture, haute cuisine, McMansion, pneumatic tube, Ronald Reagan, shareholder value, vertical integration, walking around money, warehouse automation, women in the workforce

Putting 20 designer pieces into each Macy's meant a production run of 260. For Penney, it would mean 32,000. And the flip side of meeting the production challenge, of course, seemed to be turning the designer brand into a commodity. So a big Penney contract did not seem to be worth it to the majority of upscale suppliers. It was a lose-lose situation. Vertical Integration! Still, there were some victories. In addition to men's designer Lee Wright's signing, Halston, who was fading in stature but still well known, agreed to design a women's line for Penney. Also, the company's developing private brand expertise in wool was revved up further. If more big names wouldn't sign on, Penney would produce and promote more private brand apparel.

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Now six "merchandising divisions" had been created, a grab-bag term relating to multiple functions and not just actual "merchandising" per se. Each division contained three general areas along with support functions: merchandise (buying), merchandising (presentation), and marketing (promotion). The idea was that vertically integrated divisions— women's, men's, children's, home, home improvement, and automotive—would spawn faster, more focused results. Overall plans would still come from the executive suite, but important day-to-day moves would be decided much closer to the action. Bill Howell, the former field leader who had been handpicked by Seibert over the other finalists, Bob Gill and Dave Miller, immediately praised this new arrangement (to which he had contributed).

Rebooting India: Realizing a Billion Aspirations by Nandan Nilekani

Airbnb, Atul Gawande, autonomous vehicles, barriers to entry, bitcoin, call centre, carbon credits, cashless society, clean water, cloud computing, collaborative consumption, congestion charging, DARPA: Urban Challenge, data science, dematerialisation, demographic dividend, digital rights, driverless car, Edward Snowden, en.wikipedia.org, energy security, fail fast, financial exclusion, gamification, Google Hangouts, illegal immigration, informal economy, information security, Khan Academy, Kickstarter, knowledge economy, land reform, law of one price, M-Pesa, machine readable, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, mobile money, Mohammed Bouazizi, more computing power than Apollo, Negawatt, Network effects, new economy, off-the-grid, offshore financial centre, price mechanism, price stability, rent-seeking, RFID, Ronald Coase, school choice, school vouchers, self-driving car, sharing economy, Silicon Valley, single source of truth, Skype, smart grid, smart meter, software is eating the world, source of truth, Steve Jobs, systems thinking, The future is already here, The Nature of the Firm, transaction costs, vertical integration, WikiLeaks, work culture

As the accompanying diagram illustrates, taxes added up at each stage, and attempts to avoid this ballooning tax bill created distorted incentives for manufacturers. T. Koshy, a former executive director at the National Securities Depository Limited, who has worked extensively in the field of taxation, gives us an example. ‘The cascading tax system incentivizes vertical integration so that the same firm tries to carry out as many of the intermediate manufacturing steps as possible in order to pay less tax.’ In our example, that would mean one firm controlling the entire manufacturing and supply chain, all the way from making yarn to selling the finished shirt in a retail store.

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Equally important, the system is set up to be self-policing; the taxes from every stage feed into the next, and if one link in the chain fails—one manufacturer does not file taxes correctly, for example—the entire chain collapses. Since it applies only to the value added by each manufacturer and not to the total value, VAT also encourages specialization, rather than the kind of vertical integration that arose in the earlier cascading tax regime. Increasing the levels of transparency and making it harder to game the system result in increased revenue collection and a lesser burden of oversight upon the tax authorities. Koshy adds, ‘VAT is a truer measure of economic growth than creating artificial incentives through tax holidays and exemptions.’

Red Flags: Why Xi's China Is in Jeopardy by George Magnus

"World Economic Forum" Davos, 3D printing, 9 dash line, Admiral Zheng, AlphaGo, Asian financial crisis, autonomous vehicles, balance sheet recession, banking crisis, Bear Stearns, Bretton Woods, Brexit referendum, BRICs, British Empire, business process, capital controls, carbon footprint, Carmen Reinhart, cloud computing, colonial exploitation, corporate governance, crony capitalism, currency manipulation / currency intervention, currency peg, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, financial deregulation, financial innovation, financial repression, fixed income, floating exchange rates, full employment, general purpose technology, Gini coefficient, global reserve currency, Great Leap Forward, high net worth, high-speed rail, hiring and firing, Hyman Minsky, income inequality, industrial robot, information security, Internet of things, invention of movable type, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, labour market flexibility, labour mobility, land reform, Malacca Straits, means of production, megacity, megaproject, middle-income trap, Minsky moment, money market fund, moral hazard, non-tariff barriers, Northern Rock, offshore financial centre, old age dependency ratio, open economy, peer-to-peer lending, pension reform, price mechanism, purchasing power parity, regulatory arbitrage, rent-seeking, reserve currency, rising living standards, risk tolerance, Shenzhen special economic zone , smart cities, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, speech recognition, The Wealth of Nations by Adam Smith, total factor productivity, trade route, urban planning, vertical integration, Washington Consensus, women in the workforce, working-age population, zero-sum game

Foreign trade became a state monopoly, the main objectives of which were self-sufficiency and an import structure tailored by the demand for essential producer goods. Plans would replace prices as the means of deciding what would be produced, how resources would be allocated and what people would get paid. Industrial firms were largely vertically integrated enterprises, which controlled and managed employment strictly, and which, from about 1951, took on typical urban spending and cradle-to-grave care commitments, commonly known as the ‘iron rice bowl’. Agriculture was organised on a collective basis, migration from the countryside was subject to rigidly applied regulations and controls, and there was no labour mobility.

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When Trump visited China later in the year, the US side made hay over $250 billion of trade agreements. Both sides had an interest in hailing breakthroughs, but little of substance was achieved. The Obama administration had actually agreed the resumption of beef imports. China’s appetite for natural gas is limited because vertically integrated coal to chemical companies are much more likely to burn coal. Although China ostensibly welcomed the admission of credit-card companies, and credit-rating agencies, and the easing of limits on foreign ownership of financial services companies, its enthusiasm and tolerance are much less than its rhetoric.

Ghost Road: Beyond the Driverless Car by Anthony M. Townsend

A Pattern Language, active measures, AI winter, algorithmic trading, Alvin Toffler, Amazon Robotics, asset-backed security, augmented reality, autonomous vehicles, backpropagation, big-box store, bike sharing, Blitzscaling, Boston Dynamics, business process, Captain Sullenberger Hudson, car-free, carbon footprint, carbon tax, circular economy, company town, computer vision, conceptual framework, congestion charging, congestion pricing, connected car, creative destruction, crew resource management, crowdsourcing, DARPA: Urban Challenge, data is the new oil, Dean Kamen, deep learning, deepfake, deindustrialization, delayed gratification, deliberate practice, dematerialisation, deskilling, Didi Chuxing, drive until you qualify, driverless car, drop ship, Edward Glaeser, Elaine Herzberg, Elon Musk, en.wikipedia.org, extreme commuting, financial engineering, financial innovation, Flash crash, food desert, Ford Model T, fulfillment center, Future Shock, General Motors Futurama, gig economy, Google bus, Greyball, haute couture, helicopter parent, independent contractor, inventory management, invisible hand, Jane Jacobs, Jeff Bezos, Jevons paradox, jitney, job automation, John Markoff, John von Neumann, Joseph Schumpeter, Kickstarter, Kiva Systems, Lewis Mumford, loss aversion, Lyft, Masayoshi Son, megacity, microapartment, minimum viable product, mortgage debt, New Urbanism, Nick Bostrom, North Sea oil, Ocado, openstreetmap, pattern recognition, Peter Calthorpe, random walk, Ray Kurzweil, Ray Oldenburg, rent-seeking, ride hailing / ride sharing, Rodney Brooks, self-driving car, sharing economy, Shoshana Zuboff, Sidewalk Labs, Silicon Valley, Silicon Valley startup, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, SoftBank, software as a service, sovereign wealth fund, Stephen Hawking, Steve Jobs, surveillance capitalism, technological singularity, TED Talk, Tesla Model S, The Coming Technological Singularity, The Death and Life of Great American Cities, The future is already here, The Future of Employment, The Great Good Place, too big to fail, traffic fines, transit-oriented development, Travis Kalanick, Uber and Lyft, uber lyft, urban planning, urban sprawl, US Airways Flight 1549, Vernor Vinge, vertical integration, Vision Fund, warehouse automation, warehouse robotics

All of this points toward diversification for taxis in the driverless revolution, rather than a new round in ride-hail’s endless race to a profitless bottom. Uber is clearly turning in this direction. “We want to be the Amazon for transportation,” CEO Dara Khosrowshahi declared in 2018, as the company moved toward forming a new kind of vertically integrated urbanmobility empire. “We are going to also offer third-party transportation services. . . . All of it to be real-time information, all of it to be optimized for you, and all of it to be done with a push of a button,” he promised. Coming off a wave of acquisitions, investments, and partnerships that brought a vast array of bike-share, car-share, and scooter-share services under its umbrella, Khosrowshahi was well on his way to delivering on this bold vision.

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See driverless shuttles Shyp, 133 Sidewalk Labs, 209, 210, 211, 222, 232 Silverdome (Pontiac, MI), 196n SilverRide, 95 Singapore, 97, 167, 169, 177, 209, 211 singletons, 237–38 Singularity predictions, 234–35, 236–38 Skype, 56 smartphones, 13, 64, 89, 90, 139, 169 see also mobile phones SoftBank, 176, 176–78, 238 software trains, 70–71, 70–72, 197, 200–201, 202, 204, 206 Son, Masayoshi, 176, 178 Space10 (IKEA), 72–73 specialization overview, 16 shifts in daily travel patterns, 53–54 of taxibot rides, 95–97 of traditional automobiles, 52, 80 vehicular variety increase, 16, 18, 52–55 see also specific types of AVs Speedostat, 24 Sprinter delivery vans (Mercedes), 125 Stae, 247 Standard Oil, 174 Starship conveyors, 55–56, 57, 125, 192 Starship Technologies, 56, 57, 124–25 Starsky Robotics, 46 status quo bias, 49–50, 52 steering wheel introduction, 4 Steffens, Lincoln, 180 store closures in US, 117–18, 121 streetcars, 58, 59, 88–89, 106, 174–75, 180–81, 186 “street furniture,” 77 suitcases, semi-autonomous, 125 Sullenberger, Chesley, 45 Superintelligence (Bostrom), 236–37 supermarket, origins of, 116 Superpedestrian, 66 surge pricing, 17, 87, 181 Swift Nick, 161 task model for computerization of work, 150–54, 151, 155 taxibots (AV cabs) computer models of growth, 97–98, 99 doubts about cost-effectiveness, 97–98 impact on taxi business, 94–95 overview, 60–61, 94–95 price savings, 94, 96 rides for pregnant women, 96–97 specialization of rides, 95–97 traffic congestion and, 99 Waymo self-driving taxi service, 8, 46, 97, 230, 240–41 see also mobility as a service taxis automation predicted by 2030, 10–11 impact of taxibot takeover, 94–95 meters in, 169 number of vehicles, 10 ride-hail push to deregulate the taxi business, 40 Waymo self-driving taxi service, 8, 46, 97, 230, 240–41 Teague, 127 TECO Line streetcar (Tampa, FL), 58, 59 Teetor, Ralph, 24, 26 Tel Aviv’s traffic gridlock, 85–87, 88 Tesla, 26–29, 44, 60, 62, 231 three big stories of the driverless revolution, 16–20, 187–88, 238, 248, 253 see also financialization of mobility; materialization; specialization Thrun, Sebastian, xiv, 7, 8 ticketing in transit systems, 89, 90–91, 93, 109, 110–11 time wasted on commuting, 9, 12, 30–31 Toffler, Alvin, 120 toll roads in Great Britain, 162–63 Toronto, Canada, 209–10, 213–14, 222 traction monopolies investors, 176–78, 182–83 in New York City, 174, 174, 180 in Philadelphia, 180 SoftBank, 176, 176–78, 238 in streetcar era, 174, 174–75, 180 traffic congestion cost of time wasted, 9, 12, 30 driverless shuttles and, 106 predicted effects of AVs, 9 ride-hail and, 168 taxibots and, 99 see also congestion pricing trafficgeddons, 85–86 Trafi, 109, 216 transects of the driverless city, 187–88, 188–89, 194–95, 198–99, 200–201, 206–7, 208 transit oriented development (TOD), 200, 202, 203–4 transit systems autonomist contempt for, 214–15 impact of ride-hail, 215–16 as mobility integrators, 216 response to driverless revolution, 214–17 ticketing in, 89, 90–91, 93, 109, 110–11 as transportation utilities, 216 workforce changes, 216–17 TransMilenio (Bogotá), 69 Trikala, Greece, 102–3 trip chaining, 54 Tron (film), 137 trucks and trucking accident risks, 156 automated fleets impact on economic risks, 156–58 automation and types of truck drivers, 153–54 freight AVs and, 125–26 industrial sprawl and, 12–13 investment in self-driving truck startups, 152 “land trains” and “road trains,” 69 last-mile delivery, 121–29, 154, 218 platoons and platooning, 68–69, 70–71 self-driving tractor-trailers, 68, 122 software trains, 70–71 volatile energy costs, 157 Tsukuba, Japan, 6, 8, 216 turnpike trusts in Great Britain, 162–63 Turpin, Dick, 161 Uber betrayal of cities, 181 Careem purchase by, 177 competition with Lyft, 177–78, 179 congestion pricing, 179, 181 dynamic pricing, 181 fatal AV–pedestrian accident, 231 Greyball program, 178 initial public offering, 97, 177, 181 Jump bike-share platform, 202 limited global footprint, 98 market cap, 97 Micromobility Robotics, 67 number of vehicles, 10 partnerships with public transit, 110–11 relationship with transit, 215 SoftBank and, 177 specialization and variety of rides, 95, 96, 110–11 subscriptions, 244 surge pricing, 17, 87, 181 taxibots, 97 traffic congestion and, 168 Uber Eats, 124 vertically integrated urban-mobility empire, 98 Udelv, 57–58 unmanned aerial vehicles (UAVs), 246 UPS, 116, 120, 127, 130 urban design and driverless cities automation and urban concentration, 186–87 automobiles and urban expansion, 185 complete streets (shared streets), 208–9 core, 187, 188, 188–96, 194–95 desakota, 187, 189, 205–8, 206–7 freight tunnels, 211 fulfillment zone, 187, 188, 196–99, 198–99 infill housing, 204, 253–55 legibility, 229–30, 231 megablocks, 209–10 microsprawl, 187, 189, 200–201, 200–205, 243 parking, 189–93 population growth and home building, 253–54 separation of people and vehicles, 208–12, 210 transects, 187–88, 188–89, 194–95, 198–99, 200–201, 206–7, 208 transit oriented development (TOD), 200, 202, 203–4 urban growth since 1950, 186 Urbanetic, 58 Urban Mobility in a Digital Age, 88 urban ushers, 76–77, 77–79 Vélib system (Paris), 63 VeoRide, 67 Via, 107 Vickrey, William, 165–67, 168, 169, 172 Vinge, Vernor, 233–34 Vision Fund, 176, 178 Vitruvius, 169 von Neumann, John, 234 “Walking City” (Herron), 74 warehouseless distribution systems, 157–58 Waste Management, 142 wayfinding, 229–30 Waymo improvement in rate of disengagement, 42 lidar cost reduction, 35 market cap, 97 market share goal for 2030, 11 remote human safety monitors, 46, 98 self-driving taxi service, 8, 46, 97, 230, 240–41 see also Google Waze, 86–87 Webb, Kevin, 233 Where Do Cars Go at Night?

Why Aren't They Shouting?: A Banker’s Tale of Change, Computers and Perpetual Crisis by Kevin Rodgers

Alan Greenspan, algorithmic trading, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black-Scholes formula, buy and hold, buy low sell high, call centre, capital asset pricing model, collapse of Lehman Brothers, Credit Default Swap, currency peg, currency risk, diversification, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, fixed income, Flash crash, Francis Fukuyama: the end of history, Glass-Steagall Act, Hyman Minsky, implied volatility, index fund, interest rate derivative, interest rate swap, invisible hand, John Meriwether, latency arbitrage, law of one price, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, Minsky moment, money market fund, Myron Scholes, Northern Rock, Panopticon Jeremy Bentham, Ponzi scheme, prisoner's dilemma, proprietary trading, quantitative easing, race to the bottom, risk tolerance, risk-adjusted returns, Silicon Valley, systems thinking, technology bubble, The Myth of the Rational Market, The Wisdom of Crowds, Tobin tax, too big to fail, value at risk, vertical integration, Y2K, zero-coupon bond, zero-sum game

Thus it was that tens of thousands of individual loans, each of which was risky and definitely ‘sub-investment grade’ (a rating lower than BBB, or, less kindly, ‘junk’), were transformed by the power of combination, blending and high-speed computerised mathematics into securities where, according to S&P’s definition of AAA, ‘the obligor … has extremely strong capacity to meet its financial commitments’.16 Designing the deals was made easier by the credit agencies’ helpful practice of making their evaluation software available to banks – this allowed the desired ratings to be built into structures right from the drawing board. It was computer-aided design for CDOs. Through 2005, 2006 and 2007 the variants kept coming. In July 2006, to great internal fanfare, Deutsche acquired MortgageIT, a US mortgage originator, for $429 million. ‘It is a key element of the Bank’s build-out of a vertically integrated mortgage origination and securitization platform [and] will provide significant competitive advantages, such as access to a steady source of product for distribution into the mortgage capital markets’, said the press release in the rather bland manner of such things.17 What it meant was that the one-stop shop was getting yet another aisle and growing still further as a result.

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The ‘steady source of product’ was more loans to be packaged into CDOs for eager investors, thus solving the perennial problem of finding enough assets for them to buy. In truth, we at Deutsche were a little late to this particular party; our rivals at the big US banks had already bought other originators. Lehman Brothers – a giant in the mortgage market – had bought five. This vertical integration was an attempt to simplify, or at least internalise, the complex chain of deals behind any CDO: a broker would persuade a borrower to take out a loan from the originator; that loan would be sold from the originator to a bank (or, rather, to a bank-owned special purpose vehicle); it would then be repackaged and sold on to the end investor.

Postcapitalism: A Guide to Our Future by Paul Mason

air traffic controllers' union, Alan Greenspan, Alfred Russel Wallace, bank run, banking crisis, banks create money, Basel III, basic income, Bernie Madoff, Bill Gates: Altair 8800, bitcoin, Bletchley Park, Branko Milanovic, Bretton Woods, BRICs, British Empire, business cycle, business process, butterfly effect, call centre, capital controls, carbon tax, Cesare Marchetti: Marchetti’s constant, Claude Shannon: information theory, collaborative economy, collective bargaining, commons-based peer production, Corn Laws, corporate social responsibility, creative destruction, credit crunch, currency manipulation / currency intervention, currency peg, David Graeber, deglobalization, deindustrialization, deskilling, discovery of the americas, disinformation, Downton Abbey, drone strike, en.wikipedia.org, energy security, eurozone crisis, factory automation, false flag, financial engineering, financial repression, Firefox, Fractional reserve banking, Frederick Winslow Taylor, fulfillment center, full employment, future of work, game design, Glass-Steagall Act, green new deal, guns versus butter model, Herbert Marcuse, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Perry Barlow, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, late capitalism, low interest rates, low skilled workers, market clearing, means of production, Metcalfe's law, microservices, middle-income trap, Money creation, money: store of value / unit of account / medium of exchange, mortgage debt, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, Norbert Wiener, Occupy movement, oil shale / tar sands, oil shock, Paul Samuelson, payday loans, Pearl River Delta, post-industrial society, power law, precariat, precautionary principle, price mechanism, profit motive, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, RFID, Richard Stallman, Robert Gordon, Robert Metcalfe, scientific management, secular stagnation, sharing economy, Stewart Brand, structural adjustment programs, supply-chain management, technological determinism, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, Transnistria, Twitter Arab Spring, union organizing, universal basic income, urban decay, urban planning, vertical integration, Vilfredo Pareto, wages for housework, WikiLeaks, women in the workforce, Yochai Benkler