Yes, it's taken me a long time to get round to it but I've at last read Clay Shirky's Here Comes Everybody and really enjoyed it. It's a highly readable guide to the world of social networks, crowdsourcing, open source – and the underlying theory of networks, power laws, strong and weak links etc. Although much of the material feels quite familiar now – after all, we've had Linked, Wikinomics, The Tipping Point, Critical Mass and so on – Shirky brings it together in a way which tells a coherent story about why digital technologies have made this matter so much now.

There were a few new anecdotes I particularly enjoyed. One was the brief account of the lawsuit brought by a bus company, Transports Schiocchet Excursions, against a group of cleaning women working at the European Commission in Luxembourg. The women switched from using the bus service – which had banned them from talking or eating on the bus during the 40 minute journey from Moselle – to a cheaper, friendlier carpool. The company argued that their action was illegally depriving it of revenue. Shirky notes that this is ludicrous – yet it is the same tactic being used by record companies suing their customers for preferring other channels of music distribution. The lawsuit he reported occurred in 2005 and was an appeal against an earlier 2003 defeat for the company in a French court. A bit of searching reveals that his anecdote up to this point has spread far across the internet.  I hunted a bit further and found this notice in the Official Journal of the European Union indicating that the bus company had continued to appeal until its case was thrown out – with costs awarded against it – on 11 June 2009. If a smallish transport company will pursue a dozen cleaning women through the courts for over six years, on the grounds that their exercise of choice has supposedly cost it millions of Euros in potential revenues, we can imagine the scale of the record majors' likely efforts before they give up.

Anyway, back to the book. I think the big message I took was the merit of the award of the latest economics Nobel memorial prize to Oliver Williamson and Elinor Ostrom for their work on the way transactions costs shape institutions, whether businesses or social institutions. This is why the internet and mobiles are reshaping everything: the cost of exchanging information is a key transaction cost and it has become close to zero. If you can think of an institution or organization that hasn't yet changed utterly as a result, just be patient: it will.

For those who've not yet come across Yoram Bauman, the Stand-Up Economist, you have a treat in store. Now he's going beyond entertaining to educating with the publication of volume 1 (on microeconomics) of The Cartoon Guide to Economics. It's good fun and graphic books certainly seem to work well with young people, if my own sons are anything to go by. (I tried Logicomix about Russell and Frege on my eldest son this Christmas, and he liked it.)

Here's the best quote on the back cover: “Had Art Spiegelman and John Maynard Keynes collaborated on a comic
book on economics, they could only have dreamed of coming up with
something this good.” —Jonathan A. Shayne, a.k.a. Merle Hazard, country singer and founder of Shayne & Co., LLC

Bauman says a number of translations are in the works, including simplified Chinese: “For the simplified Chinese version, I’ve suggested as a working title The Cartoon Introduction to Socialism With Chineses Characteristics.”

Thomas Levenson's Newton and the Counterfeiter is the best kind of work for me, because it succeeds on two levels. On one level it is an historical narrative, and an excellent one at that, telling the story of the transition of money from an agricultural to an industrial age in a short period of British history that has ramifications to the present day. On another level it is a fascinating human interest story of the intertwining progress of two men: Sir Isaac Newton and one William Chaloner.

Toward the end of the 17th century, Britain's currency was in disarray. The silver coinage was being clipped and the metal was fleeing abroad because the government had fixed the price of silver too low (so it was worth more as bullion than as money). In 1688, the average circulating silver coin was 15% underweight because of clipping. By late 1695, over one-half of the circulating coinage had disappeared altogether. People literally had no money, and the result was that “no trade is managed but by trust”. The founding of the Bank of England in 1694 did not help: most of the banknotes being printed were £100, a huge sum, and while some £5 notes were being printed, £5 represented a month's salary for a professional so the notes were useless for everyday commerce.

When there is a financial crisis today, the government turns to investment bankers or celebrities for advice. But back in the day, the secretary of the Treasury, William Lowndes, hit on a different approach. He wrote not only to bankers and businesspersons, but also to Britain's wisest men, including the philosopher John Locke, the architect Christopher Wren and the cleverest man who had (and has) ever lived, Isaac Newton, then the Lucasian Professors or Mathematics at Cambridge University.

Newton knew exactly what was wrong. In Levenson's words, he explained that the currency criminals were “rational actors responding to an uncomplicated set of incentives”.  Newton, and others of the wise men, recommended a complete recoinage. The King assented to the “Great Recoinage” in January 1696 and Newton was offered the post of Warden of the MInt, which he happily accepted. He set about revolutionising the productivity of the Mint (which he achieved) and completed the calling in and remounting of the entire silver coinage in a incredibly efficient manner. Which is where Chaloner comes in to the story.

As warden of the Royal Mint, Newton estimated that 20% of the coins taken in during The Great Recoinage were counterfeit. Counterfeiting was high treason, punishable by being hanged, drawn and quartered (although, unlike other treasoners, counterfeiters were not cut down from the gallows until actually dead) yet it was flourishing because of the difficulty in securing convictions. Newton not only revolutionised the minting, he took personal control of the anti-counterfeiter squad, became a Justice of the Peace, set up a network of informants and personally cross-examined suspects.

As Newton began to modernise the processes of money, so Chaloner went on a parallel journey from hand-stamping counterfeit coins to engraving plates to produce counterfeit banknotes (although, interestingly, it was counterfeit lottery tickets that contributed to his downfall). The heart of Levenson's story is the way in which these journeys crossed.

Chaloner was not unique. He was part of one of the many coining gangs that existed, but he was one of the best. He forged French “pistols”, English guineas and other coins and became renowned for the quality of his work. He purchased a large house in the then semi-rural suburb of Knightsbridge and “rode in a carriage”. How's that for flash? Chaloner had chutzpah. He knew, as Newton did, that equipment was being smuggled out of the mint and sold to counterfeiters so he tried to get himself a position at the mint, ostensibly to put a stop to this abuse, but undoubtedly because he actually wanted to observe Newton's new process and equipment at close hand. It was in the guise of an interested member of the general public that he subsequently went “offer his services” to Parliament, an offer that Newton vigorously (and successfully) opposed. His next scheme was for forgeries of the mint's “machine-struck” coins and he set up a gang centred in Egham but one of his co-conspirators was arrested on an unrelated charged and he blew the whistle in a plea bargain. Newton heard about this by accident three months later and cleverly “turned” another of the gang.

The downfall was swift. Amazingly, Chaloner was recognised by Newton by chance on a visit to Parliament and was then arrested and sent to Newgate.  By January 1699 Newton was working on a thorough investigation of Chaloner. He used a comprehensive network of spies and informants, taking many statements from all his old contacts. Chaloner was hanged in March.

When the previous holder of the post passed away, also in 1699, Newton became Master of the Mint.  In those days, the Master obtained mint seigniorage and so it was a most lucrative position. Newton because a wealthy man and, despite losing a huge amount of money in the South Sea Bubble, lived a comfortable life to the end. By the end of his time as Master, he had moved Britain to a gold standard and “trade and society flourished as never before”.

What a guy. He was a pivotal figure in the transition from ancient to modern money, just as he was in transition from ancient to modern society. By 1698, a watershed year in the history of money, coins were less than half of the money supply in England. The Royal Mint was no longer the dominant source of money and power was passing from the monarch to the London money markets and banks. By the time of his death in 1727, the gold standard he had (albeit accidentally) established in 1717 was a factor in Britain's burgeoning economy and empire.

Anyone with an interest in money, Newton, the story of the British financial services market or the history of London will find the book a marvellous read.

Dave Birch

Whether you agree with him or not, John Kay is always a thought-provoking columnist. On Google books, which he wrote about in his Financial Times column earlier this week, I agree with him completely and as ever he sets out the issues with great clarity. His conclusion is that the global public interest is being overlooked entirely in the court process:

The principal American contributions are barely disguised
expressions of diverse economic interests. Competing software
businesses are afraid of Google’s dominance. Publishers fear any
departure from their existing business model and so, with less cause,
do authors. Established vested interests will win the short-term
political battle. But the market will destroy these vested interests in
the end, as has happened in music. …..

What is needed is a public option. The great libraries of the past –
from Oxford’s Bodleian Library to Andrew Carnegie’s small town
facilities – have made incalculable contributions to scholarship and
economic progress. These outcomes were the result of philanthropic and
state action, which facilitated private enterprise. Comprehensive
digitisation of printed media will cost a few hundred million dollars –
large enough to constitute a commercial entry barrier, so the fear of
Google is justified – but tiny relative to existing global library
budgets, far less the potential economic benefits of wider reading and
better scholarship. 

He, like Suzanne Scotchmer at the Global Economic Symposium, and James Boyle in The Public Domain, points us towards thinking seriously about this issue – certainly more so than policymakers who think this debate is only about 'piracy'.

A tweet from the esteemed Ken Banks (@kiwanja) made me send off for The Starfish and the Spider by Ori Brafman and Rod A Beckstrom, which saw me through a couple of snowy journeys this week. I enjoyed it a lot, not least because it completely confirms me in my views about how organizations and industries work.

The title comes from the contrast between spiders (centralized – cut off its head and it dies) and starfish (decentralized – cut off any bit at all and it regenerates, giving you two starfish where you had one). If a spider treats a starfish as if it were centralized, it loses the battle. One of the first examples in the book is the approach the record majors took to P2P music filesharing, which I've always thought will figure for ever in business schools as a case study in terrible strategic decision-making.

The book translates its analysis into the handy rules which are required in management books, and it makes this a really approachable, practical and sensible guide for people in business or any kind of organization in fact. I'd put it in the same category of practical usefulness as the terrific Ricardo Semler's Maverick, or Atul Gawande's Better, although not as well-written as either. (Gawande has a new book out, The Checklist Manifesto, which I haven't read.)

The analysis in Starfish reminded me a lot of an older and seminal book, Kevin Kelly's Out of Control. (Kelly's online book-in-progress The Technium is also worth a look.)

I'd add something they don't spell out, which is that the change in optimal organizational form is technology-driven. When it's expensive to communicate information, a hierarchy is a good model (like a hub-and-spoke transport network). When it's cheap, it's more efficient to get the information and the decisions widely-dispersed. This seems obvious to me and I wrote an IPEG paper on governance about it a while ago, The Common Thread. But I don't know of other references to it. Maybe somebody who knows the IO literature better can help me?