FEED THE WEB FIRST

Because information trumps mass, all commerce…

…migrates to the network economy.

MIT Media Lab director Nicholas Negroponte guesstimates that the online economy will have reached $1 trillion by 2000. Most tenured economists think that figure is terribly optimistic. But actually that optimistic figure is terribly underestimated. It doesn’t anticipate the scale on which the economic world will move on to the internet as the network economy infiltrates cars and traffic and steel and corn. Even if all cars aren’t sold online immediately, the way cars are designed, manufactured, built, and operated will depend on network logic and chip power.

The current concern about the size of the online market will have diminishing relevance, because all commerce is jumping on to the internet. The distinctions between the network economy and the industrial economy will likewise blur and fade, as all economic activity is touched in some way by network rules. The key distinction remaining will be between the animated versus the inert.

The realm of the inert encompasses any object that is divorced from its economic information. A head of lettuce today for instance does not contain any financial information beyond a price sticker. Once applied, that price is fixed, too. It doesn’t change unless a human changes it. The economic consequences of lettuce sales elsewhere, or a change in the general global economy do not affect the head of lettuce itself. Instead, lettuce-related information flows through wholly separate channels–news programs or business newsletters–that are divorced from the lettuce itself. The lettuce is economically inert.

The realm of the animated is different. It’s vastly interconnected. In this coming world a head of lettuce carries its own identity and price, displayed perhaps on an LED slab nearby, or on a disposable chip attached to its stem. The price changes as the lettuce ages, as lettuce down the street is discounted, as the weather in California changes, as the dollar surges in relation to the Mexican peso. Traders back in supermarket headquarters manage the “yield” of lettuce prices using the same algorithms that airlines use to maximize their profits from airline seats. (An unsold seat on a 747 is as perishable as an unsold head of lettuce.) In relation to the net, the lettuce is animated. It is dynamic, adaptive, and interacting with events. A river of money and information flows through it. And if money and information flow through something, then it’s part of the network economy.

 

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This is a blog version of a book of mine first published in 1998. I am re-issuing it (two posts per week) unaltered on its 10th anniversary. Comments welcomed. More details here.
-- KK