Customer Reviews

Software as Capital: An Economic Perspective on Software Engineering

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Howard Baetjer, Jr., takes the reader through a highly informative and thought-provoking lesson in the economics of software engineering. Building on the solid theoretical work of the economists of the Austrian school, he identifies (through solid and thorough industry research) a number of problem areas in the existing marketplace for software, and offers viable solutions to each.

One need be neither an economist nor a software designer to gain usable knowledge from this book; its principles are applicable to any field. Baetjer does a superb job of fully explaining the underlying theories upon which he builds his thesis, using examples from other industries which make the more abstruse subject matter much easier to understand.

Regardless of your field, you will benefit from reading this well-written book.

Just the first chapter's examples of the capital structure of knowledge is worth the price of the book. In many ways software development went through its own communism, long documents, plan the whole thing before you do it, waterfall blah blah. All the Agile stuff, quick prototying , using prototyping to gather requirements, a discovery procedure... The root of all this lies in understanding the capital structure of knowledge.

The best part of this book was Dr. Baetjer's explanation of software as a capital good and the knowledge component of capital goods. Drawing on a rich economic tradition, he indicates that software provides a clear example of how the value of capital goods rests in embodied, unarticulated knowledge. Not only does he make this argument convincingly, he makes it clearly. I am neither an economist nor a software engineer, but found even the most difficult economic concepts relatively easy to grasp because of how he articulates them; they are made clear and concise without being dumbed-down for a lay audience. Dr. Baetjer brilliantly applies earlier theories of capital goods to the new field of software engineering.

If this sort of material interests you, I recommend:
Howard Baetjer, Review of Austrian Economics, "Capital as Embodied Knowledge: Some Implications for the Theory of Economic Growth," vol. 13 #2, September 2000
Thomas Sowell, Knowledge and Decisions, 1980 (or the 1996 edition)