PRESTOPUNDIT

[the] significance of the long tail [of small Internet and technology businesses] represents a subtle but significant economic change. The industrial economy was characterized by concentrated industries, in media as well as heavy manufacturing. There is no "long tail" in the steel industry .. The reduced significance of capital means that the cost of entry is lowered in many industries. Today, we see this in the shops that people have set up on eBay or in the blogs that compete with traditional pundits.

Another characteristic of capitalism "without capital" is less bureaucracy .. corporate bureaucracy emerges to regulate risk-taking in an environment in which new projects are very expensive .. When a new project can be hatched in a basement on a small budget, fast failure is more efficient than organized planning. Galbraith, writing in an era when the economy was dominated by heavy industry and oligopolies, saw entrepreneurship as little more than a quaint myth. Bhide, writing more recently, sees the entrepreneur as thriving in circumstances of high ambiguity and low capital intensity -- situations that have become increasingly prevalent in the computer age ..

The industrial economy required planning and bureaucracy. The Internet economy instead is better described by Friedrich Hayek's terms spontaneous order and competition as a discovery procedure.