But, let me conclude by emphasizing some obvious restrictions. I'm sure all of you are already thinking to yourselves, "But, but, but, he's forgot but but but...." Yes, let's go back to those but-but-buts. One restriction is, I mentioned at the beginning, "all other things being equal". Obviously the best organization is not going to help with an idiot as a CEO, and the success of Microsoft certainly depends, at least in part, on the unusual qualities of Bill Gates, as well as on the unusual organization of Microsoft.
In addition, I've been talking about conditions to maximize productivity and creativity and moneymaking ability. There are other considerations in organized human groups, and there are conditions under which productivity is not the thing you're most interested in. There are conditions where more centralization may be appropriate. For example, during a war, you do not want your air force, army, and navy to be fiercely competing with each other, but instead you want during a war more centralized control than you do in peace time. And there are also human groups for which productivity and differential money-making ability are not the overriding consideration. I don't want you to go home tonight and each of you to say to your spouse or significant other, "Darling, I've just heard this guy Jared Diamond, who says that within human groups competition is what spurs productivity and innovation, and so I think we need to follow his advice in our household. For the next month let's see which of us earns a bigger income, and at the end of the month the bigger income-producer will keep on with the job, and the one of us who has lower income and is less efficient can turn to scrubbing the floors and shopping at the supermarkets." That just illustrates: there are other considerations in a marriage than optimizing productivity.
Again, I don't want you to go home to your several children, and say, "Sweetie-pies, I heard this talk today by this guy Jared Diamond who enunciated some principles that I think would be really good for rearing children. We're going to see what your grades are at mid-term, and based on those grades, whichever one of you comes closer to getting all A's, that one we will support to the hilt, private schools, college, whatever you need, whereas those of you who get poor grades can start jobs as a shoe-shine boy or girl" No! In a family, and in some other human groups, productivity is not the appropriate consideration for judging the best organization of the group.
Nevertheless there are some human groups where productivity is indeed
a significant consideration. And that certainly includes businesses,
industrial belts, and to a considerable degree, countries. In order
to understand how to organize these businesses, we could perform natural
experiments. We could set up, if we were rich enough, a hundred businesses,
organized a hundred different ways, see which businesses went bankrupt,
and after 20 years figure that we now have the correct industrial organization.
But that's an inefficient way to do it. We can instead learn from the
comparative approach, by looking to natural experiments of history.
I hope that some of you will be able to apply these lessons to acquiring
the wealth that has so far eluded me.