Vkshv Essay

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The economist George Stigler once observed that the extent of economic specialization was limited by the extent of the market. 5 As market activity expanded, more opportunities existed for economic actors to deepen their own expertise in one activity and trade for access to other items that were needed (instead of trying to obtain all the needed items themselves). To see this, think about the typical subsistence farmer of more than a hundred years ago. That farmer grew crops, raised chickens and pigs, perhaps grazed cattle and sheep, milked cows, and bartered time during the harvest with other farmers to bring in the crops. Most of the food that nineteenth-century farmers ate came from their own or nearby farms. Today’s modern farmers, by contrast, focus on one (or, at most, a very few) crop or specialize instead in raising chickens, or pigs, or cattle. They have access to highly specialized machinery, as well as the latest research on seed types, fertilizers, pesticides, watering systems, and the like. And when they take their crops or animals to market, the prices are set on national or international exchanges, complete with the option of forward contracts for many of the most common agricultural commodities. Today’s farmers probably eat better than their nineteenth-century predecessors, but little, if any, of their food now comes from their own farms. As a result of this much more specialized system, the output of today’s farmers dwarfs that of their predecessors and is the reason that less than 5 percent of the labor Chesbrough, Henry. Open Services Innovation : Rethinking Your Business to Grow and Compete in a New Era (2nd Edition). Hoboken, NJ, USA: Jossey-Bass, 2010. p 72. http://site.ebrary.com/lib/rit/Doc?id=10441387&ppg=88 Copyright © 2010. Jossey-Bass. All rights

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