Standing on the Sun. Christopher Meyer

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СКАЧАТЬ in developed economies, who can now layer browsing and snapshooting onto their calling and texting. But it's been a crucial development in emerging economies, where the value delivered previously had not reached the threshold to justify the purchase. The breakthrough performance of mobile Internet devices ensures that they will become ubiquitous and that ubiquity in itself will become the story as the network they combine to create becomes the prevailing information infrastructure.

      Already, cell phones have become the safest and most convenient means for individuals to transfer funds in many parts of Africa, simply because the devices have the capability and are at hand. In Bangladesh, entrepreneur Kamal Quadir has created CellBazaar, a market along the lines of Craigslist, to connect buyers and sellers, and has chosen to base it on a mobile device platform. (Yes, Kamal is Iqbal's brother.) In Katine, Uganda, farmers use phones to check prices, and, armed with market information, they band together to eliminate predatory middlemen.

      What does this mean for capitalism? If gaining access to functioning markets is as simple as using a handheld device, a whole class of potential entrepreneurs who were sitting on the sidelines will now be in the system and helping to shape it, at the expense of those who have used their capital advantage to extract value. The economic value of this connectivity is conveyed by this statistic: although the emerging economies' income per capita is about one-ninth of the G7's ($3,000 per year versus $28,700), the penetration of mobile phones is effectively the same—76 phones per 100 people, versus 76 per 109. As ubiquitous mobile devices increasingly promote transparency and inclusiveness, expect them to have an impact on many industries beyond banking, including media, medicine, and education.

      The Internet of Things

      The advent of a new Internet of things is a third, fundamentally important change in capitalism's environment. Using a combination of miniature connected sensors and radio frequency identification (RFID) tags, inanimate objects become collectors and transmitters of data. If you put the right kind of sensor on a bridge, for example, it can detect movement that falls outside acceptable parameters and is therefore a sign of deterioration. If you give it the ability to transmit that data to the Internet, the need for maintenance can be spotted by engineers remotely. As we explore in chapter 3, that ubiquitous sensing capability changes the rules for capitalists because it makes the effects of their activities visible to the broader society. Impacts they used to think of as externalities become increasingly measurable and attributable.

      If capital is defined by ownership and markets, it seems technology is changing both. Already 5 billion of the world's 6.9 billion people have cell phones. The next generation of IT will be cheaper again.¹⁴ So markets will become much more connected, arbitrage more challenging, bottlenecks more difficult to create. We've seen this in the case of labor markets, where connectivity has shifted demand for everything from radiologists to call center operators from the United States to India.

      And for some people, IT will take much of the need for capital out of capitalism. More efficient use of equipment, pay-by-the-seat information systems, access to intellectual capital that used to be a corporate asset—all these trends favor and empower the small business and individual. It appears that the revolution is finally arriving—and it's profitable!

      And back to poor Jack Ablin, our Chicago investor. Happily he's not poor any more: P&G recovered fully from its share-price tumble. But the rollercoaster ride he took is another property of the new world. Its intense interconnection makes for unpredictable volatility. It creates the preconditions for an explosion of innovation, and that's what we expect. But it also creates the risk of other kinds of cascades, some of them potentially catastrophic. The cascading power blackouts in the northeast United States in 1965 and the one-day Dow Jones Industrial Average loss of 23 percent in 1987 were both the results of connected system components (in one case circuit breakers, in the other programmed trading instructions). The Internet of things, meanwhile, is an ideal host for an Ebola-strength computer virus planning its leap from the information world to the physical one. This book isn't about that—but don't say we didn't warn you.

      Trading New Goods

      There's a related fundamental development in capitalism's environment: the source of value has changed. What people pay for in markets is increasingly intangible rather than tangible. This has been a long-term trend—perhaps as long as human history—and it shows up markedly in the shift every developed economy has experienced from product manufacturing to service provision. But it's also about products. The price of a product like Apple's iPad has very little to do with the cost of the plastic, metal, and silicon that go into its manufacture. What customers value is its design, its connectedness, its intelligence.

      When the source of value changes, it has big implications for the economic system. And information has unique economic properties. As a simple example, land doesn't depreciate—but property, plant, and equipment do. Thus the shift from an agrarian to an industrial economy called for new capitalization solutions, accounting rules, and financial instruments. Likewise, as we move from an industrial to an information economy, we must deal with a new fact of life. Although mass-produced, tangible goods have substantial marginal production costs, information goods have essentially zero marginal costs. Once someone has paid for the first recording or software solution or essay to be created, any additional copies are almost cost free. In a world where many goods cost nothing, it is meaningful to talk of a gift economy—and new approaches must be devised to fairly fund the creation of new goods. Insisting on retaining the old models—copyright and patent systems, for example—as they are is a rear-guard action.

      When we refer to information goods we are talking about much more than the media and entertainment offerings that consumers buy. We're also talking about the “machine tools” of the information economy: CAD/CAM software, spreadsheets, website designs, instructional videos. In the industrial world, both tools and offerings were tangible: behind the manufacture of a physical tube of toothpaste was a physical toothpaste-making machine—and it was, and remains, expensive. Consumers didn't pay for the machines, but through their consumption of toothpaste they funded them. Today, the media industry is in turmoil because the marginal costs of the goods they produce is zero, and so people readily give them away (try giving away your used toothpaste). But increasingly, the capital equipment of the information economy is also information goods, and these production tools are also being shared freely.

      When Linux appeared and then succeeded, the self-organized network of volunteer coders was remarked on, but few observers outside the software industry—and not many within it—considered it of great importance. When Wikipedia appeared and put Microsoft's Encarta out of business, commentators began to see Web 2.0 as a mode of production. Now SourceForge.net, a product of Geeknet, Inc., is a superstore of open source software and a hangout for volunteers who want to work on it, a kind of global souk for free machine tools—230,000 of them.

      The ability to freely share capital equipment undermines some of the most well established ideas about barriers to entry. It challenges the very meaning of terms like capital and ownership. It also suggests the rate of innovation will continue to accelerate. Thanks to free sharing, innovations become instantly available everywhere. Imagine how rapidly the Industrial Revolution would have progressed if machine tools had been free.

      Spanning the World

      One last fundamental alteration in capitalism's environment is something we would describe as a phase change. After centuries of becoming increasingly international, the context of trade suddenly has become truly global. Picture an historical map of the world, with pinpoints of activity in the earliest commercial centers. Now think of how those points of commerce began to interact regionally, the lines between them multiplying and broadening to the point that they became saturated splotches of trade. Now consider the current СКАЧАТЬ