(2003-12-14) Blaser Ehrlich Coase Political Parties

Britt Blaser (with pointers to others: Slashdot, Cory Doctorow, Clay Shirky and John Robb) on Everett Ehrlich's article applying Ronald Coase's Theory Of The Firm to Political Party formation.

Ehrlich: For all Howard Dean's talk about wanting to represent the truly "Democratic wing of the Democratic Party," the paradox is that he is essentially a third-party candidate using modern technology to achieve a takeover of the Democratic Party. Other candidates -- John Kerry, John Edwards, Wesley Clark -- are competing to take control of the party's fundraising, organizational and media operations. But Dean is not interested in taking control of those depreciating assets. He is creating his own party, his own lists, his own money, his own organization. What he wants are the Democratic brand name and legacy, the party's last remaining assets of value, as part of his marketing strategy... But the Internet has changed all that in one crucial respect that wouldn’t surprise Coase one bit. To an economist, the “trick” of the Internet is that it drives the cost of information down to virtually zero. So according to Coase’s theory, smaller information-gathering costs mean smaller organizations. And that’s why the Internet has made it easier for small folks, whether small firms or dark-horse candidates such as Howard Dean, to take on the big ones.