Grazed from Who’s Who Legal. Author: Clive Gringas.
To appreciate why the “cloud” is the future of computing, one must understand a law of economics coined in 1890 and learn what happened around the same time at 57 Holborn Viaduct in London, England. In 1890, Alfred Marshall finished a decade’s work. His eight-volume Principles of Economics was finally ready. Those who read the fourth volume were introduced, for the first time, to the concept of “economies of scale”. Marshall’s analysis, then novel, was that in some trades “in which a man gains no very great new economies by increasing the scale of his production, it often happens that a business remains of about the same size for many years, if not for many generations.” These could be contrasted with trades.
“in which a large business can command very important advantages, which are beyond the reach of a small business. A new man, working his way up in such a trade, has to set his energy and flexibility, his industry and care for small details, against the broader economies of his rivals with their larger capital, their higher specialization of machinery and labour, and their larger trade connection. If then he can double his production, and sell at anything like his old rate, he will have more than doubled his profits. This will raise his credit with bankers and other shrewd lenders; and will enable him to increase his business further, and to attain yet further economies, and yet higher profits: and this again will increase his business and so on. It seems at first that no point is marked out at which he need stop.”…