Decentralization of industries tends to lower profits
When an economic system moves from centralized to decentralized (which generally correlates to moving from complicated to complex), the overall profits decrease. When an industry is centralized (i.e., a monopoly), the profit margins can be much higher than when the industry is governed by supply and demand from multiple providers.
… the sixth principle of decentralization: as industries become decentralized, overall profits decrease. Introduce starfish into the equation and wave good-bye to high profits. It’s why you want to be on the lookout for any starfish before they take an industry by storm.[1]
Principles of decentralization:
- When attacked, decentralized systems tend to become moreso
- Decentralized systems are easily mistaken for centralized systems
- Intelligence is spread throughout decentralized systems
- Decentralized systems can adapt rapidly
- Decentralized systems can grow quickly
- Decentralization of industries tends to lower profits