Between Maker and Market - The Quiet Power of Middlemen NIRANJAN GIDWANI

 

In the beginning, there was a straight line. A farmer sold to a family, a carpenter built for a neighbor, a saver lent to a small workshop down the street. Over time, that straight line has twisted into a maze of warehouses, brokers, platforms, apps, banks, funds, influencers, and algorithms. Each taking a small slice and offering, in return, a promise: “Trust me. I will make this easier.”

The rise of invisible bridges

The modern economy runs on bridges that most people never see. A small manufacturer rarely sells directly to distant customers. A chain of distributors, logistics providers, marketplaces, and financiers turns a local product into a global offering. In finance, deposits do not simply sit in a local vault. They are sliced, bundled, and transformed by layers of financial intermediaries that channel savings into mortgages, infrastructure, and corporate credit.

Digital platforms added a new kind of middle layer. Some connect buyers and sellers of goods, others match drivers and passengers, landlords and travelers, merchants and micro-lenders. What once required a physical broker with a notebook now happens through code that continuously matches, prices, and settles across borders and time zones.

Why middlemen matter

For all the criticism they attract, middlemen exist because they solve real problems.

They reduce search and transaction costs. Finding the right supplier, vetting quality, arranging transport, and handling payment is costly and risky when done one-to-one. Intermediaries specialize in these frictions and spread costs over many users.

They manage information asymmetry. In markets where buyers cannot easily verify quality or reliability, expert intermediaries test, curate, and signal quality, making trade possible that would otherwise never occur.

They unlock financing and liquidity. Trade and supply chain finance platforms allow small suppliers to convert invoices into cash, using the creditworthiness of large buyers and the infrastructure of specialist funders.

They bring scale and stability. Large logistical and financial intermediaries can invest in infrastructure, technology, and risk systems that small producers or consumers cannot, smoothing shocks and supporting global flows.

In many sectors, when intermediaries were removed abruptly, chaos followed. Shelves went empty, prices spiked, or informal intermediaries emerged anyway, often less transparent and more exploitative than the ones they replaced.

When bridges become bottlenecks

Yet every bridge could become a bottleneck. As supply chains lengthen and financial structures grow more layered, information gets lost while margins accumulate. A product that starts with a modest cost at origin passes through handlers, distributors, marketers, and financiers until the final consumer pays a price that reflects complexity more than value.

As intermediaries scale, a few dominate entire channels,  from online retail to app stores to global logistics, giving them leverage over producers, workers, and regulators.

Customers see a simple price and sleek interface, but not the layers of fees paid by sellers or the share taken at each step, obscuring who actually earns how much in the chain. The longer and more fragmented the chain, the harder it is to trace labor practices, environmental impact, or human rights risks, even when end consumers claim to care deeply.

Critics argue that a “middleman economy” can swallow value by extracting rents, shaping regulation, and deepening complexity beyond what efficiency requires. Defenders respond that cutting intermediaries out entirely simply shifts their functions of risk assessment, coordination and financing back onto producers and consumers, often at higher cost and with more fragility.

The direction of travel

The present moment is a tension between “shorter is better” and “platforms are powerful.” On one side, technology enables more direct models. Farms delivering boxes to homes, creators selling subscriptions to their audience, manufacturers running their own digital storefronts, communities pooling savings and lending via apps. On the other, the same technology empowers central platforms that quietly become the new middle layer, aggregating data, attention, and bargaining power at unprecedented scale.

Regulators and investors increasingly push for transparency, resilience, and ESG accountability across supply and financial chains, not just within a single firm. Yet legal systems and oversight tools still move slower than globalized operations and digital intermediation. The likely future is not a world without middlemen, but one where chains are selectively shortened where the cost of complexity and opacity exceeds the value of specialization.

Some functions are re-internalized using technology (direct channels, embedded finance), while others remain with highly specialized intermediaries. New “bridge” institutions emerge to translate ESG, risk, and compliance expectations across fragmented networks.

The real battle is not between “middleman” and “no middleman,” but between extractive and enabling intermediation.

Lessons for boards and stewards

For boards and governance leaders, the middleman economy is no longer a background detail. It is a core part of strategy, risk, and purpose. Several lessons stand out. Boards need clear visibility into who the key intermediaries are in operations, finance, technology, and data, and how power, value, and risk are distributed among them.

Integrate supply chain governance into corporate governance. Oversight cannot stop at the legal boundary of the company. Committees and reporting should cover critical third parties, scope 3 impacts, and reliance on platforms. 

Dependence on a small number of intermediaries, whether in logistics, cloud, data, or finance, must be explicitly examined and mitigated. Governance that pushes for transparent contracts, responsible data use, decent working conditions along the chain, and realistic pricing helps sustain trust with regulators, employees, and communities.

Stewardship in this context means asking not only, “What do our intermediaries do for us?” but also, “What do they do in our name?”

The challenge for leaders, boards, and citizens is not to romanticize a world without middlemen, but to design an economy where every link in the chain can justify its place. 

Power is not in standing between people, but in bringing them closer without standing in their way.