Friday, May 9, 2025

Economies of Scale

 



Marcus Feldthus2nd2nd|


Is bigger always better?

I keep coming back to George Stigler's paper on Economies of Scale from 1958.

Even that man, one of the leading figures of the neoliberal Chicago School of Economics, set out to investigate how to find the optimal size - not to confirm that bigger is always better, no, but to find out when bigger is not better.

This is an example of how the belief that bigger isn't always better is at the foundation of mainstream microeconomic thought.

And yet, companies continue to neglect that and even get defensive when sustainability researchers and practitioners talk about exploring how companies can be growth-independent to accelerate their sustainability efforts and think long-term.

They don't want to hear about how small is beautiful and less fragile. Nope, they don't want to hear any of that. They want more of the same. More growth, more staff, more clients, more power, more ego boosts, more short-term wins.

Company executives don't have to look at other disciplines to find reasons for, at some point, limiting growth; they can find answers within their discipline.

https://en.wikipedia.org/wiki/Economies_of_scale

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