FIFA, Footballs, and Firms: Aligning Humans in an AI-Led World

The world has been obsessed with the FIFA World Cup. Every bar with a sports screen across the world was full. Why? It’s a great game. It’s the best emotional psychodrama around. It’s also a beautiful living example of how we humans align ourselves into social structures, including teams. They are the means by which we humans negotiate agreement. We create institutions, organizations, and even ideas, brands, and sports to align ourselves into groups with a common purpose and understanding. This matters now for two reasons. First, AI is an extraordinary aid to truth-seeking. This is already eroding our trust and willingness to remain aligned with existing structures and giving us the means to create new ones. Second, AI and automation are dissolving the containers we’ve lived our lives within: companies, nation-states, traditional 9-to-5 office spaces, legacy universities, centralized banking systems, geographic neighborhoods, mainstream media networks, and clubs of various kinds, including sports.

But now we can (or soon will) create and earn using armies of AI agents, robotics, and automation, which is why we are witnessing an explosive increase in the number of solopreneurs. Soon, sole traders can mint as much revenue as a Fortune 500 firm or at least enough to have quite a nice life. Entrepreneurs can thus also be digital nomads, increasingly escaping the boundaries of states. But how will we align ourselves going forward in an era of AI and automation? We must consider how human alignment takes place in this new era in contrast to how it took place before.

Our innate desire to belong has always been the fundamental organizing mechanism of society. But AI and automation are now rewiring that mechanism, entirely bypassing the legacy containers we used to pledge allegiance to, like the traditional firm or the nation-state.

We have entered an era where a single individual, or a small, decentralized collective, holds the power to write the prompts and set the autonomous loops that shape not just a corporate balance sheet, but the trajectory of humanity itself. The new levers of power, prompts and loops, are increasingly about managing civilizational outcomes, not just managing businesses.

This shift demands a completely new architecture of thought. The old industrial management textbooks are obsolete; we need a radically new framework for how we arrange ourselves.

We must examine the mechanics of this new alignment. In the old world, it mattered deeply which team you supported on the pitch. In an AI-led world, it will matter even more who, and what, you choose to align with when the stadium itself disappears.

Will we still pledge our loyalty to firms? Will we remain bound to nations?

The Firm

In 1937, Sir Ronald Coase asked why we align ourselves into firms at all. He won the Nobel Prize for his answer. Coase framed the ultimate puzzle that gave rise to modern organizational theory. He asked, if the decentralized market is perfectly efficient (as economists claim), why do these massive islands of central planning (corporations) exist at all?

Why didn’t Henry Ford just buy every single screw, tire, windshield, and hour of labor by shouting out orders to independent market suppliers on the street corner? After all, that’s how the stock market started in the Netherlands in 1602 with the establishment of the Dutch East India Company, which needed a designated, structured marketplace where the public could trade its newly minted corporate shares. See Joseph de la Vega’s book, Confusión de Confusiones (1688 and still on Amazon!), since it was the very first book ever written about a stock exchange. He wrote, “The handshakes are followed by shouting, the shouting by insults, the insults by impudence and more insults, shouting, pushes, and handshakes until the business is finished.” That’s negotiated alignment. India was the same. The stock market originated when locals began shouting out orders underneath a Banyan Tree in front of Mumbai’s town hall in 1850. I remember open outcry on the trading floor at Bankers Trust. Yes, even Foreign Exchange operated this way until about 2000. So, asking why we create firms instead of shouting is not as dumb a question as it may seem.

Coase’s conclusions were revolutionary. He observed that to make a contract on the open market, a business has to spend time and money discovering prices, negotiating terms, drawing up legal documents, and enforcing agreements. He realized that a firm forms as a voluntary “bunker” to escape these market costs. Inside the firm, you replace 1,000 messy market contracts with one simple relationship: management. This is why pretty much every book on leadership, even today, is about corporate management. But today, AI, automation, exascale computing, and more are empowering individuals to accomplish all these tasks without needing to operate within a firm.

The back story matters in Coase’s case. In 1931, he won the Sir Ernest Cassel Traveling Scholarship, packed his bags, and boarded a ship for a year-long fieldwork tour of factories in the United States. The Great Depression was just getting underway. A great macroeconomic debate of the day was raging: Should a society be run via Soviet-style central planning, or could it rely on a free market? Vladimir Lenin had famously boasted at the time that when the communists took over, they would turn the entire Soviet Union into “one giant factory” run entirely by central command. Free-market economists at the time argued this was a mathematically impossible, highly inefficient nightmare. But was it? Coase went to America to find out.

Armed with letters of introduction from the Bank of England, he went to tour the most important production facilities in the world at that time: the massive Ford Motor Company and General Motors. He totally broke the mold of economics by refusing to sit in a library, choosing instead to walk the loud, greasy floors of the world’s largest industrial plants. Nobody had ever done this before. He interviewed factory managers, entrepreneurs, and corporate purchasing agents. He didn’t ask them about abstract economic equations; he asked them practical operational questions. Why do you buy this specific part from an outside supplier, but make this other part internally? How do you decide when to fire a contractor and hire a full-time employee instead?

Coase looked around the Ford and GM factories and realized something startling: Massive American corporations were just like centrally planned economies. Inside the walls of Ford, Adam Smith’s “invisible hand” didn’t exist. Workers didn’t bid against each other to see who would put the tires on the car. There was no price mechanism. Instead, resources were allocated by executive decree. A manager gave an order, and a worker executed it. Huh? Americans were aligning around centralization, not individualism.

His factory tour also revealed the limit. He asked: If central planning works so well for Ford, why doesn’t Ford just grow until it swallows the entire US economy? He realized that a firm will stop expanding the moment the cost of organizing one more task internally exceeds the transaction costs of buying it on the external market. Coase found the boundary of the firm by examining the physical and contractual frictions on the floors of Ford and GM.

He established that firms exist to reduce transaction costs (the cost of finding prices, negotiating, and writing contracts on the open market).

Coase treated the firm as a bit of a mechanical abstraction, a legal bunker where an entrepreneur bosses people around to save money.

Remember, at that time nobody had yet written a book about corporate leadership. That came a year later, in 1938, with Chester Barnard’s The Functions of the Executive (also still on Amazon!). Barnard was president of New Jersey Bell Telephone Company. He wrote that the leader’s primary job isn’t to issue orders but to articulate the organization’s purpose, create a flawless communication system, and manage individuals’ willingness to cooperate. Alignment. Teams.

Coase bitterly complained that his work was “much cited but little used” in a paper he wrote in 1972 (The Nature of the Firm: Origins, Evolution and Development). He did, however, single out the work of a young scholar at Oxford who had picked up on his ideas in 1961 in a paper entitled “Information, Expectations and the Theory of the Firm.” The young scholar had had quite an argument with his supervisor, Sir John Hicks, about the topic. Hicks said it would be very hard to make a breakthrough in theoretical economics. But the young man persisted.

He explained in his thesis that the ultimate barrier to human progress isn’t just that contracts and transaction costs are expensive. It is also true that human expectations naturally diverge. Left to themselves, a group of people will look at the exact same world and data and form wildly different guesses about the future. They are not aligned.

He argued that a firm’s true purpose is to act as an internal information sanctuary or even as a war room that could force those expectations to converge. The firm does not just aggregate capital or labor; it aggregates and standardizes cognition and unifies opinions and expectations. Firms exist to eliminate market informational noise, creating a controlled environment where a group of people can finally align their expectations and execute a unified strategy.

In other words, firms are not just physical synthesis engines. They are also a cognitive alignment machine. Firms are a way to align teams of people around data, truth, and vision. Coase talked about the division of labor, but this young writer introduced the idea of a division of knowledge. He showed that complex tasks require highly specialized information that cannot be efficiently bought and sold on a street corner. The firm acts as a specialized repository, a “cognitive container”, that stores, synthesizes, and deploys this collective know-how far better than the open market ever could. Coase proved that using the market isn’t free. It costs the decision factory time and money. There are search, negotiation, and enforcement costs, which we now call transaction costs. Firms exist to internalize those activities and lower those costs.

The young scholar said, “True, but firms also exist to align the way people think and what they agree to believe and to do. Firms allow people to achieve aligned goals, visions, and understandings of what is true more easily than if they tried to operate alone. Coase saw the ledger; the young man saw a nervous system of cognition and decision-making.

Sir John Hicks introduced the two. They conferred over many nights and many glasses of port and became friends.

The young man was my Dad, Harald Malmgren, whose 90^th Birthday would have been this month. He and I discussed this fascinating period of his life when he riffed with two men who went on to win Nobel prizes.

My Dad and I often chatted about this idea that we humans need organizing structures. It was once just a family, a tribe, a village, and then kingdoms, city-states, nation-states, and then multinational, multilateral, and supranational organizations like the United Nations, NATO, the World Bank, the IMF, and others. It’s also been culture: marriages, families, communities, belief systems such as Christianity, Islam, and Hinduism, modern secularism, and a wide range of religions, as well as sports and sports teams.

We are joiners. We usually feel safer in groups. From an evolutionary standpoint, a solitary human was a dead human. These structures, or containers, transform a random assortment of individuals into a cohesive unit bound by shared values, vision, and mutual obligations. Without these containers, we are left to generate our own meaning entirely from scratch, which is psychologically exhausting. We need belonging. We need these containers to improve our decision-making.

This is why we created companies. Joint-stock companies like the Dutch East India Company evolved into modern firms. The world economy is defined by firms. That’s the real modern sport. Not football logos but corporate logos. We may watch Spain beat Argentina, but everybody watched Erling Haaland change his shoe brands at every match, well aware that he was negotiating with all of them: Nike, Puma. Firms spend $20m+ a year renting his endorsements.

Today, AI, automation, and exascale computing, in conjunction with the internet, are reducing the need for firms and nation-states altogether. Individuals can now know as much as anyone in the marketplace thanks to the internet, AI, and democratized supercomputing. They can now manage armies of AI agents and align activities with prompts and recursive loops instead of managing people alone. If firms no longer have a monopoly on lowering transaction costs, and states no longer have a monopoly on synthesizing belief and enforcing order, alignment doesn’t disappear. It just moves. It moves out of the institution and into something both older and more demanding: the compelling vision of an individual, amplified by their adherents and multitude of AI agents.

Solopreneurs and Knowledge Workers

Peter Drucker, writing a generation after Coase, anticipated the rise of the “knowledge worker”—an individual whose most valuable asset was their own expertise, something a firm could never truly own the way it owned a factory or a patent. Drucker predicted that once knowledge itself became portable, the balance of power between the individual and the institution would fundamentally shift. He didn’t live to see how far that shift would go. I don’t think anyone did.

Today, top-tier talent increasingly rejects the single-employer model, preferring to assemble a kinetic portfolio of activities across multiple domains simultaneously. Yet, a structural friction remains: the state still demands a reporting container.

In the United States, visionaries are solving this by leaning into the S-Corporation. This structure allows the solo operator to register a legal entity, appoint themselves as the sole employee, and issue themselves a W-2. It perfectly satisfies the state’s demand for a taxable container. But behind the scenes, that solo founder is deploying swarms of AI agents to wield the operational bandwidth of a multi-person, multinational firm.

The data confirms this massive structural migration. We are witnessing a historic, staggering surge in solo entrepreneurship. S-Corps have become the absolute dominant business structure in America. The number of active S-Corps filed with the IRS skyrocketed from roughly 545,400 in 1980 to over 5.1 million today, now comprising nearly 38% of all business tax returns, while traditional C-Corporations have steadily declined. This trend hit hyperdrive following the pandemic and the explosive deployment of generative AI. Business applications reached a record-breaking 5.5 million filings in 2023 and have sustained an unprecedented clip through mid-2026, consistently averaging over 500,000 new applications per month.

By utilizing the S-Corp, the modern leader gives the state exactly what it wants: a neat, legible legal box that pays payroll taxes and files a corporate return. But inside that box, the traditional human hierarchy has been entirely replaced by synthetic intelligence. It is the ultimate realization of Coase and Malmgren’s work. We are witnessing the collapse of the traditional firm as a necessary mechanism for human alignment, replaced entirely by the sovereign individual and the algorithm.

The Third Chapter

We are witnessing the third major chapter in the theory of the firm: a structural shift from friction to information to pure sovereign intent.

Ronald Coase argued that open markets are highly inefficient due to the friction of transaction costs—discovering prices, negotiating contracts, and enforcing agreements. The firm exists as a rigid, hierarchical structure to internalize those costs. The firm was the ultimate industrial “hardware,” a mechanical container designed to force efficiency.

A generation later, H.B. Malmgren recognized that Coase’s mechanical view was fundamentally incomplete. Firms do much more than lower costs; they process information to stabilize a volatile world. By aligning expectations, vision, and goals among diverse actors, my father argued that the firm acts as a localized zone of predictability. This was a massive leap forward, recognizing the firm not just as an accounting structure, but as an information system—a network of shared human intent navigating uncertainty.

I am now arguing that humans can achieve this alignment without these containers at all. The final scaffolding is melting away.

If AI agents drop transaction and search costs to near-zero (solving Coase), and instantly provide global, shared situational awareness and predictive modeling (solving Malmgren), the bureaucratic shell of the firm may increasingly be rendered obsolete. Fluid networks replace static hierarchies. When you remove the need for a corporate or governmental container to handle friction and stabilize information, what is left? The human element.

We are moving into a completely new architecture where a human-centric philosophy, what I call Heartware, becomes the primary organizing and stabilizing force. Sovereign individuals are now augmented by highly capable AI swarms to orchestrate massive, complex outcomes dynamically. Just as we once asked what drives the firm (profit) or the state (power), we must now ask what drives this new sovereign network. What is their human operating system (IOS)? It is Heartware.

For a century, we spent our energy trying to solve the firm’s problems (corporate ladder-jockeying, quarterly KPIs) and the state’s problems (bureaucratic politics). Today, once you break away from these containers, the aperture widens. You stop asking what your job title dictates, and you ask yourself: What problems am I actually trying to solve? AI agents and supercomputing give us the power to align at the societal and civilizational level. Instead of learning to write prompts that execute individual tasks on behalf of a corporation, we can think bigger.

We now have the power to prompt at the civilizational level.

The defining question of our era is no longer, “What is good for the firm?” or even, “What is good for the state?” We are finally empowered to ask, “What is good for humanity?” Happily, this realization is arriving at the exact moment we are gaining the technological leverage to solve a much bigger, more meaningful class of problems.

The Friction and Fiction of Misfits

The most important quality in this new world is our capacity to imagine. Our powers of creation now allow us to build what was previously unimaginable. But who actually does the imagining? It is the person who used to be seen as a source of friction inside the firm. The person who asked uncomfortable questions. The person who saw things