The Digital Economy. Tim Jordan

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1 The Meaning of the Digital Economy

       Hype and #Hyper-hype

      The digital economy has been an object of fear, fascination and greedy hope for over thirty years. The rise of the digital economy has been marked by a number of companies that are both hugely influential on society and are hugely financially successful. As the names roll off the tongue – Google, Facebook, Alibaba, Amazon, Tencent, Apple, etc. – who could deny the digital economy’s importance? But what is the digital economy? And how does it relate to wider social changes marked by the rise of the internet and the digital?

      A start to answering these questions is to acknowledge the fog of hype that has so often surrounded and obscured them. And one thing the internet and the digital economy have never been short of is hype. From being the greatest revolution in humanity since, variously, the Gutenberg Press, the invention of language, the invention of the wheel and the taming of fire, the internet and the digital have not lacked boosters willing to proclaim their fundamentally transformative effects. This is not only true for the digital economy but is frequently true for it in a more intense way, often because of the great financial gain that seems possible. For the hashtag generation, the economic effects of the digital could easily be expressed as #hyper-hype. The over-reaching of some commentators – such as Anderson’s (2013) positing of a ‘second industrial revolution’ based on email, 3D printing and offshore factories, or Zuboff’s (2019) claim of a new stage of capitalism based on surveillance – should not blind us to changes that are important to the ways twenty-first century economies function.

      There is, also, an opposite and just as unenlightening position about the digital economy to #hyper-hype that amounts to a shrug, expressed in various forms of the claim: ‘it’s really just the same old capitalism’. It is important in understanding the digital economy to see past claims it is a fundamental revolution or really nothing new at all. One way to turn down the brightness of #hyper-hype and disperse the fog of the anti-capitalist shrug is to define the question being asked more clearly and proceed to specify a path toward understanding the digital economy. This will be the task of this introductory chapter, starting with a question.

Either hyping or rejecting claims that there is a ‘digital economy’ all too often presuppose a question that is left implicit: When referring to the ‘new’ digital economy are we referring to changes that digital and internet socio-technologies have brought to the existing economy, turning the whole economy into a ‘digital economy’, or does the latter refer to a new kind of economic activity that can be called digital? For example, a McKinsey report into China’s digital economy placed heavy emphasis on the fast take-up of mobile payments as evidence of a quickly growing Chinese digital economy, but if we pause and think about mobile payments it is not clear whether they are indicators of the effect of digital mobility on the whole economy or are part of new economic practices which require such mobility (Woetzel et al. 2017). Any analysis that effectively collapses the digital economy into the whole economy will have a strong tendency to miss two things: first, the distinctiveness of the digital compared to prior economic processes; second, how much of the preceding economy remains non-digital. The danger is of a kind of selective blindness that sees digital processes everywhere but misses already existing practices, such as buying things in a supermarket, that remain a key part of the economy. To grasp what may be new and distinctive about the digital and the economy without giving in to either hyper-hype or dismissal of the digital as new, means accepting the premise that there was complex economic activity prior to the digital which may or may not have been affected by any new kinds of economic activity related to the internet and the digital. The issue then becomes one of identifying if there is any distinctively new economic activity. The simplest way to explore this question is through a sectoral analysis that looks for a new digital sector existing alongside and intersecting with the sectors that already existed. If such digital economic activity can be identified it will then be possible to consider what effect such new activities might have on other economic activities. Knowing what is specific to the digital economy is the first step to understanding its effects on the economy.

      The first attempt at identifying an economic sector that is distinctively digital will be to review statistical evidence for a digital economy, hoping to establish if such an economy can be counted and, if so, how significant it is. The initial hypothesised picture of the economy is then that it is made up of distinct yet interacting economic sectors, one of which is relatively new and is called the digital. Counting this can be done by determining which existing companies operate in the digital sector. A first approximation may be possible by developing existing definitions and using these to help establish what a digital company might look like; for example by looking at the difference between an Apple, Tencent or Google compared to a Petrobas, China Bank or Walmart.

To develop this strategy while also offering something more substantial than common sense, I will present a view first through the work of the Organisation for Economic Co-operation and Development (OECD) analysis of what it called the ‘information economy’. It is not entirely clear that an information economy is the same as a digital economy – though all companies usually thought of as digital were included by the OECD within the information economy – but for the purposes of this initial discussion it can be taken as an indicator of the potential scale of the economic activity under analysis. Second, I will develop an analysis based on the 500 largest companies by market value looked at in relation to key indicators: revenue, assets, profit (net income) and employment (numbers of workers employed). Centring on market value allows for a direct comparison between different kinds of economic activity, which is crucial for the case being made here. Market value is also less subject to short-term economic tactics when compared to indicators like revenue or profit. For example, profit can be affected by a company working on its figures by writing-down costs; similarly revenue does not adequately allow for a comparison between different industrial sectors (with the financial sector being particularly different here) (Dullforce 2015).

      An understanding of the size and value of the digital economy can appropriately, if cautiously, begin from the market value of existing companies. Of course, caution should be taken here as market value reflects what buyers are willing to pay for the shares of a company, and accordingly, especially during booms and busts, it may reflect a market view not necessarily connected to other ways of understanding economic activity. Limiting my analysis to the top 500 companies creates a workable statistical base that is generally considered to cover around two-thirds of economic activity. Despite these limitations, the point is to create a first view through OECD and top 500 company statistics; for reasons that will become clear while exploring these numbers it is not worth undertaking any more СКАЧАТЬ