downside: Human capital is "out there" logged on to the internet, ready to buy. On the downside, the human capital representing retail walk-in customers is being sharply reduced. Again, using the Amazon example, the smaller bookstores are being forced out of business, and the ones that remain are large-volume chain stores whose discount pricing is another nail in the small business coffin. As smaller stores close, employees lose jobs, landlords lose rent, book publishers lose one source of their distribution. Human capital, therefore, is sacrificed on the altar of computer and Internet expedience.
Rather than a new Industrial Revolution, we are finding ourselves in a different climate of change. It is a change responding to the different patterns, habits, and needs of the eventual consumer, and the technological advances that permit businessmen to reach them quicker and more efficiently. "The agent of change is the individual entrepreneur responding to incentives embodied in the institutional framework. The sources of change are changes in relative prices or preferences." (North 83) In simplistic terms, today's entrepreneurs go where their input creates greater output. (Or, to use the answer by bank robber Willie Sutton, when asked why he robbed banks: "Because that's there the money is".)
Today's internet entrepreneurs are not really "scientists" in the sense that economics is a science. Neal, for example, argues that "economists should spend more time and effort on comparative historical researcha" (Neal 320) The new industrial revolution and its conforming institutions, however, have only one thing in common with historical economics: One produces what is in demand and for whose production a profit is possible (if not necessary).
This increase in worldwide demand has produced not merely new and somewhat novel enterprises, but also forced (or encouraged might be a better term) traditional firms to establish w...