Economy of Scope

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= doing more with the same thing, related to 'mutualization'


Contents

Definition

According to the Wikipedia:

"Economies of scope make product diversification efficient if they are based on the common and recurrent use of .. an indivisible physical asset." (http://en.wikipedia.org/wiki/Economies_of_scope)


Description

1.

"An economy of scope exists between the production of two goods when two goods which share a CommonCost are produced together such that the CommonCost is reduced.

The affect of an economy of scope is to increase the efficiency of production as a result of increasing the number of different but related products offered.

This may happen when the same knowledge and information is required both to produce something and to consume that product within subsequent productions. Also, this may happen when similar information is required both to produce something and to produce a different product." (http://appropriatesoftware.net/wiki?EconomyOfScope)


2. Michel Bauwens:

"My short definition of EoS is very simple and should be understandable I think: "doing more with less"; and this is mainly achieved by mutualizing infrastructures, both immaterial (open source knowledge, code, design) and material (co-working, fablabs, carsharing, idle-sourcing ...); for contemporary implementations we should add: using distributed machinery in distributed workplace to allow local production in microfactories, through the process of manufacturing on demand, while achieving scope through the global immaterial cooperation on both the design of the products, the design of the machinery to produce them, and even the processes through which to make both the previous aspects (ex. the xtreme manufacturing methodology of OSE/WikiSpeed)."


Discussion

MY CURRENT UNDERSTANDING OF ECONOMIES OF SCALE AND SCOPE

Tom Atlee:

"ECONOMIES OF SCALE (ground economics in "growth" - i.e., efficiently produced and monetized mass commodities which leave people hungry for more and more as they produce and consume more and more). This involves making lots of stuff at a cheap per-piece rate and getting everyone to buy it all so you make a good profit (partly to pay back the infrastructure investment required to make lots of stuff cheaply and massively). Externalize costs wherever possible, so you can continually profit while degrading society and nature wherever you deem it necessary for your business. Make things that break down so people have to buy replacements. Maintain a sense of scarcity: Make people feel inadequate (intrinsically or in contrast to others) and don't truly satisfy their deep needs, but keep them coming back to buy temporary pseudo-satisfyers (your products and services). Get people working at jobs they may not like in order to get money to buy the stuff you make, which they often buy to counter the stress they have accumulated doing their jobs. Privatize all parts of the commons you can manage so that people have to pay you to use them. Ship things from cheap-production areas to expensive consumption areas - even if they must be shipped great distances - to improve your profits (which works as long as you can externalize the environmental and social costs of all that transformation). Design machines and create technologies to facilitate mass production, to increase per-person "productivity" and to replace expensive human labor - and thus increase profits. Set up a massive financial industry to profitably manage the movement of money and to facilitate bets on the ups and downs of the resulting out-of-equilibrium economy. Use GDP as the primary economic indicator to keep the focus on the flow of money and the growth of consumption. The "efficiency" of such economies of scale lies in the monetarily cheap per-piece rate achieved by the mass-productivity and cost-externalization in the system as a whole.

ECONOMIES OF SCOPE (ground economics in the free creative participation of everyone, in the true satisfaction of deep needs, and in the natural abundance of peer production, immateriality, community, creativity and the commons). Make only the "stuff" your community really needs to function. Focus on satisfying deep personal/interpersonal needs using primarily non-material aspects of life like spirit, learning, beauty, community, relationship, nature, activity, conversation, creativity, games, celebration, and other forms of deep enjoyment and mutual pleasure that involve little material or money. Share ideas, culture, designs and all other immaterial knowledge, resources and enjoyables freely. Set things up so that people can meet most of their material needs through sharing and gifting networks: This vastly reduces how much "stuff" they and their community need to have on hand, thereby reducing environmental impact (less material flow-through) and making up for the possibly higher per-piece cost of locally producing smaller quantities of needed "stuff". Set things up (with, for example, guaranteed minimum income for everyone) so that people tend to do productive work that they enjoy; their productive activity then becomes part of their high quality of life, rather than a drain on it. Design machines and technology to facilitate on-demand local production and for replacement of unpleasant human labor to free people up to do what they want, thus enhancing quality of life while reducing environmental impact. Use quality of life/sustainability statistics as the main economic indicator(s) so that monetary considerations do not trump the long term (sustainable) satisfaction of deep human needs. Minimize the financial sector that does little truly productive work, freeing up resources for productive work and lessening the danger of arbitrary financial colonization or collapse. Likewise, minimize bureaucracy. The "scope" of economies of scope embraces the scope of participation and the depth, breadth and longevity of the needs met. The "efficiency" of such economies of scope lies in the lower costs (financial, social, and environmental - all!!) of reduced material consumption in the context of a refreshed sense of abundance and quality of life." (email: march 2013)


More Information

  1. Transaction Costs
  2. Coordination Costs
  3. Economy of Scale