One of the largest and most important “economies of scale” is in complying with government regulation.
Small business are crushed with huge costs (on the order of 10% of Gross Revenue) to comply with government tax, accounting and legal requirements, compared to fractions of a percent endured by large corporations — who have departments lobbying the government to create and refine the laws crushing their future competition.
Solve that, and many of the existing “diseconomies of scale” would become lethal to these large, sclerotic enterprises.
having really read the article (rather than skimming it the first time), i think this gets at the point of the (rather rambling) essay, trying to distinguish legal scale (in which regulatory capture fits) vs. technical scale (the normal kind of scale).
before the 70's, we relied on the latter kind of scale along with a robust focus on decentralizing power, and benfitted from all sorts of innovation (in which government also played a central role with major r&d spending).
these days, we rely on legal scale, just being big and being able to throw your weight around, which hides a lot of waste (like concentrating wealth among those who don't know how to innovate with it). and we're losing, not just against other countries, but compared to our former selves.
Small business are crushed with huge costs (on the order of 10% of Gross Revenue) to comply with government tax, accounting and legal requirements, compared to fractions of a percent endured by large corporations — who have departments lobbying the government to create and refine the laws crushing their future competition.
Solve that, and many of the existing “diseconomies of scale” would become lethal to these large, sclerotic enterprises.