Standing on the Sun. Christopher Meyer

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СКАЧАТЬ Y2K? It was a yawn in India, China, and Brazil. The surplus from these economies' rapid growth pours into the seemingly instant creation of infrastructure that has more intelligence, higher efficiency, and more ubiquitous connectivity than what came before.

      Economies built on this infrastructure will be taking on board some new economic realities with it: that many forms of value can be shared without limit; that tools and processes can spread almost instantly, at minimal marginal cost; that physical capital may be more anchor than asset; that human and capital resources can be accessed around the world. These are not merely complicating developments to integrate into today's capitalism like epicycles being added to a geocentric model of the universe. These are fundamentally different assumptions. They subvert many of the basic tenets of economics like scarcity, competitive advantage, the power of wealth, and the importance of location. Net: we can expect two decades in which the shape of capitalism will be in the most rapid flux in history.

      Set in New Lands

      At any given time, there is a dominant form of capitalism that feels more or less definitional. Capitalism does have a center of gravity, and it's determined in a very simple way. It's wherever the most wealth creation is taking place. Spain and its conquistadores, Britain with its East India Company, the United States with, at one time, Detroit, then Hollywood, then Silicon Valley. The players in the economies marked by the most valuable entrepreneurial activity lay claim to the concept. They call the most shots and set the overall tone. Other forms of capitalism are talked about with reference to the version practiced at the epicenter. And the epicenter for a long time has been the United States.

      The United States has been the colossus of capitalism for more than a century—ever since the term gained currency, really. (The word didn't even exist in English, claims the Oxford English Dictionary, until William Makepeace Thackeray used it in his 1854 novel The Newcomes.) But the center of the action is gradually drifting to what are called the emerging economies: Brazil, India, and China in particular. (Russia? Intentionally left blank. More later.) Goldman Sachs also likes to talk about the “next eleven” countries with the greatest economic potential in the twenty-first century: Mexico, Nigeria, Egypt, Turkey, Iran, Pakistan, Bangladesh, Indonesia, Vietnam, South Korea, and the Philippines. When we speak of the emerging economies, we most often refer to these fourteen nations.

      You'd have to have been living in Outer Mongolia to be unaware that the emerging economies are rapidly gaining in almost every measurement of economic importance. (Oh, wait—our point is that if you were living in Outer Mongolia, you probably would know.) A few facts help underscore both the magnitude and the immediacy of the phenomenon:

       In 2000, 77 percent of world GDP was produced by the rich countries. By 2050, this number will fall to 32 percent.

       Today, as Yale's Jeff Garten has pointed out, the globe hosts six billion people, one billion of them living in rich countries. By 2050, there will be nine billion people—and still only one billion in today's rich countries.

       It used to be that the rapid growth rates of emerging economies were dismissed because they started from a small base. No longer. In 2005, China alone accounted for no less than 33 percent of the growth in world GDP. We've already seen how much difference that makes in the global economy in this decade's commodity price run-up: new demand from emerging economies drove the prices of iron ore, shipping hulls, copper, and the like to Himalayan levels.

       Of the world's twenty-five hundred largest publicly held companies (based on market capitalization), nearly half are now based outside North America and Western Europe. The proportion from emerging economies has grown at a compound annual rate of 14 percent, to the point that in 2010 the headquarters of more than a quarter of these twenty-five hundred companies were in emerging economies.1

       Whereas in 2000, the U.S. GDP was about eight times that of China, by 2008 the ratio had shrunk to about four: $14 trillion versus $4.3 trillion.2 Jim O'Neill, Goldman Sachs chief economist, has estimated that China could lead the GDP league by 2027.

      We could go on, but here's the real question: why are economists like O'Neill so certain the trend will continue? It's because the conditions exist for both growing consumption and growing production in the emerging economies.

      The world's consumption engine for decades has been the acquisitive American middle class. But the planet's population growth has occurred mainly in its poorer countries. As economic conditions have improved in the less-developed parts of the world, whole new middle classes have arisen that, though not proportionately huge in their nations, represent prodigious numbers of eager new consumers. Goldman Sachs analysis claims that roughly 2.4 billion income earners globally will attain middle-class status in the decade 2010–2020. The ratio of those in the BRIC countries (Brazil, Russia, India, and China) to those in the G7 (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States), it says, will be 2 to 1.

      At the same time, it's been recognized that consumption is not only a middle-class activity. There are the upper classes, of course, and it is not immaterial to mention that there are already more than a million Chinese millionaires. Barclays Capital recently released a report showing that China buys 12 percent of the world's luxury goods, and its consumption of them is rising by at least 20 percent per year. (Extrapolating, the country will be snapping up one-third of such goods by 2015.)

      But more importantly there are the lower classes to consider. The 2.5 billion people in the world said to live on less than $2.50 per day—the group famously named by C. K. Prahalad “the bottom of the pyramid”—may individually make minuscule purchases, but collectively they represent an enormous demand for basic goods and services. With virtually all the growth of global population occurring outside the high-income world, the fastest-growing segment of consumers is the have-nots, and capitalists increasingly will target that segment.

      Income per capita is surely a different-looking number in most of the world than it is in the mature economies of the West: in 2007, India's GDP per capita was $1,050, for example, whereas in Germany it was $40,320. To put this in purchasing power terms, the average Indian has 6 percent of the income of someone living in the United States, and the German counterpart has 76 percent.³

      When capitalism is practiced by the comfortable—wealthy managers catering to the tastes of wealthy customers—it takes on a certain character. Priorities and practices may change, however, when capitalism focuses on the bottom of the pyramid. At a macro level, business will perceive that there is less and less money to be made selling diamond-studded cell phones to the elite few, and more and more to be made selling practical provisions to the many. (It was William Randolph Hearst, responding to someone's disdain for his “yellow journalism,” who declared, “If you write for the classes you will eat with the masses. But if you write for the masses you will eat with the classes.”)

      Here's our suspicion: when the prototypical capitalist is someone selling cheap cell phones to struggling millions, as opposed to David Yurman watches to the affluent, the nature of capitalism itself changes. Indeed, even if you've been in the business of selling basic cell phones to millions of ordinary folks but in rich markets, your tried-and-true approaches may fail you. Vodafone, the world's second-largest provider of mobile services (after China Mobile Limited), discovered this when it ventured into India and found it could not be profitable with the same business model that had served it well in the developed world. Geared to produce profits at an average revenue per user (ARPU) of about $50 per month, Vodafone foundered when revenues from Indian consumers proved to be less than 10 percent of that, and falling, as new low-usage segments signed up.⁴ Its need to charge 8 cents per minute minimum to cover costs was wildly out of line with a population whose demand would be almost insatiable at 2 cents per minute.

      Tellingly, even СКАЧАТЬ