The law of diminishing returns states that adding more of one factor of production (while keeping others

constant) will at some point yield lower per unit returns. While this seems to hold true in the context of
material production processes, it begs the question if this is true in the context of information resources
added to the production process in general and to that of information products or services specifically.
Could in this context the law of diminishing returns become one of increasing returns?

And what about the concept of opportunity cost (i.e. the cost of an activity measured in terms of an
alternative not chosen)? It relates scarcity to choice and apparently ensures the efficient use of scarce
resources. Yet information is rarely scarce. Also, the same units of information can be used at the same
time in different production processes. We do not need to choose between them.

Are these concepts still universally relevant in the context of the economy relating to information, or are
they only relevant to material production as a special case within a wider economic paradigm (e.g.
physical production which dominated the agrarian and industrial ages)? Do we need to extend our
economic theory to make it relevant for the information age? Has the bursting of the dot com bubble
been an example of applying the wrong paradigm?

The question Does investing systemically create more value for the dollar than a linear system? could be
related to the above, since the essence of systems thinking relates to emergence (i.e. the arising of new
properties from interacting parts at the level of the whole). The interaction of production factors co-
produces the emergence of the value of the product (e.g. as measured quantitatively or qualitatively).
This is also true in the production of material goods. If we operate profitably, this value is of course
greater than that of the sum of the values of the parts (if we use the current economic growth related
measures). This value may, however, increase multi-fold in the context of information, due to its
abundant, win / win and synergistic nature.

Categories

thoughts on governance in the information age

systemic cooperative strategy

societal governance from a biomatrix theory perspective

information age governance challenges

workshop in systemic transformation

starting this blog: a personal reflection

new economic theory

how to explore economic theory from a systemic perspective

mei (matter, energy, information)

law of diminishing returns and opportunity costs

economic growth

limits

market paradigm

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systemic governance

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leadership

the dominance and limits of the people centred leadership paradigm

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leaders knowing what but not how

field versus web leadership

the absence of technological leadership

comments on systemic in-formation leadership

reflections on a phd colloquium

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the case of sustainability

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the case of futures research

systems thinking in MBA programmes

benchmarking systems thinking

fragmentation of systems thinking

is benchmarking unsystemic?

benchmarking and worldview

benchmarking systemic structures and praxis

benchmarking action learning projects

pioneers have no peers

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