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Comments on Price's Law Sanity Check

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Price's Law Sanity Check

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Price's Law is a hypothesis that in an organization, or across an industry, roughly half the productive output is being generated by a number of people equal to the square root of those participating in the activity. For a classic example: in a business of 100 people, half of the output can be traced to 10 participants.

For a physical analogy - of all the momentums of all the particles in a balloon, the only ones that contribute measurably to the balloon's shape and strength are the ones whose momentums are perpendicular to the balloon's surface, and only the momentums of the particles located at the balloon's surface have any value. Thus the square-cube relationship.

The following analogy might not be accurate, but for the sake of the question please assume that it is generally correct : just as there are many unique locations along a balloon's surface, there are many distinct roles in an organization or in an industry. They may be "young adult author, fantasy 18-20". These people, and only these people, receive useful feedback from reality about their performance, related to their role "I am #3, or #10 medium weight men's boxer". Having one lump role for a society "I am a #56,428 human being" is too generalized to be actionable. Having smaller roles encourages investing in what works, and does not necessarily eliminate social mobility (you can try to move up a weight or division).

My purpose in asking this question is, for the sake of a sci-fi story, I'm interested in comparing the output of a highly centralized society (which is going to be suffering greatly under Price's Law) from a highly decentralized one. Say, families attempting feed themselves, and where everyone has a role : "artist", "performer", "cook", "labor".

My thought is that the decentralized society, if I look along any axis it's investing in, will not take many people to be outperforming the centralized society with "programmer pools" of thousands. I would think you can sum labor, instead of square root, by drawing boundaries whose output takes care of the needs of the group (ex: "farming families (3-7 people) with a cow and acres"; "a roboticist in the family servicing the equipment"); as specifically opposed to a few hundred robiticists in an industry (needs met by salaries).

Does this understanding of Price's Law, and this structure sound, generally, right?

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2 comment threads

The survival of an organization depends on the demand for its output and profit ratio. With fewer in... (1 comment)
Sounds like BS. (1 comment)
Sounds like BS.
Olin Lathrop‭ wrote 6 months ago

This is a comment because it's only a knee-jerk reaction and not based on any real knowledge. How exactly is "output" defined. If a company of 100 people makes widgets, then only those that actually physically make the widgets count? What about those that designed the widgets? Those that get the word out about the widgets so people know about them? The people that ship the widgets, process the payments, etc? Is all management considered overhead? What value do you place on an organizational structure where once a path to proceed is chosen, the structure makes sure everyone is working along that path?

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