Technology and ideology are shaking the foundations of twenty-first-century capitalism.
The answer to the question “What happened?” is clear. Science and technology happened. Science and technology are the engines of prosperity. Of course, one is free to ignore science and technology, but only at your peril. The world does not stand still because you are reading a religious text. If you do not master the latest in science and technology, then your competitors will. Changing social trends may have set the stage for this transition.
The future of the computer is set to disappear and become a utility, sold like electricity and water. Computer chips will gradually disappear as computation is done “in the clouds.” By way of example from 1900 to 1925, the number of automobile start-up companies hit 3,000, which the market simply could not support and simply the heyday of the information revolution is yet to come.
So how will middlemen survive in the future? They will have to add value to their work and provide the one commodity that robots cannot deliver: common sense. Eventually people will cherish a new commodity: wisdom.
“Good judgment will continue to be highly valued: “Perfect capitalism” is when the producer and the consumer have infinite knowledge of the market, so that prices are perfectly determined. All the turmoil that this revolution is creating can be summarised in one concept: the transition from commodity capitalism to intellectual capitalism.
What is replacing commodity capitalism is intellectual capitalism.
As MIT economist Lester Thurow has said, “Today, knowledge and skills now stand alone as the only source of comparative advantage. … Silicon Valley and Route 128 are where they are simply because that is where the brainpower is. They have nothing else going for them.”
Why is this historic transition rocking the foundation of capitalism?
Quite simply, the human brain cannot be mass-produced. While hardware can be mass-produced and sold by the ton, the human brain cannot, meaning that common sense will be the currency of the future. Unlike with commodities, to create intellectual capital you have to nurture, cultivate, and educate a human being, which takes decades of individual effort. As Thurow says, “With everything else dropping out of the competitive equation, knowledge has become the only source of long-run sustainable competitive advantage.”
This shift from commodity capitalism to intellectual capitalism is a gradual one, starting in the last century, but it is accelerating every decade. MIT economist Thurow writes, “After correcting for general inflation, natural resource prices have fallen almost 60 percent from the mid-1970s to mid-1990s.” This chart says so much.
Unfortunately, many nations do not grasp this fundamental fact and do not prepare their citizens for the future, relying instead mainly on commodities. This means that many nations that are rich in natural resources and do not understand this principle may sink into poverty in the future.
Intellectual capitalism does not mean jobs only for software programmers and scientists but in a broad spectrum of activities that involve creativity, artistic ability, innovation, leadership, and analysis—i.e., common sense. The workforce has to be educated to meet the challenges of the twenty-first century, not to duck them. In particular, science curricula have to be overhauled and teachers have to be retrained to become relevant for the technological society of the future.
As MIT economist Lester Thurow has said, “Success or failure depends upon whether a country is making a successful transition to the man-made brainpower industries of the future—not on the size of any particular sector.”
This means creating a new wave of innovative entrepreneurs who will create new industries and new wealth from these technological innovations. The energy and vitality of these people must be unleashed. They must be allowed to inject new leadership into the marketplace. But the breakup of the Soviet Union has made it clear that in the future the nations that will rise to the top will be those that build their economies, which in turn depends on cultivating and nourishing science and technology.
We are currently in the third wave, where wealth is generated from information. The wealth of nations is now measured by electrons circulating around the world on fiber-optic cables and satellites, eventually dancing across computer screens on Wall Street and other financial capitals. Science, commerce, and entertainment travel at the speed of light, giving us limitless information anytime, anywhere.
Statistics highlight that on the Internet, 29 percent of visitors log on in English, followed by 22 percent in Chinese, 8 percent in Spanish, 6 percent in Japanese, and 5 percent in French. English is already the de facto planetary language of science, finance, business, and entertainment. English is the number-one second language on the planet. No matter where I travel, I find that English has emerged as the lingua franca. In Asia, for example, when Vietnamese, Japanese, and Chinese are in a meeting, they use English to communicate. Currently, there are about 6,000 languages being spoken on earth, and 90 percent of them are expected to become extinct in the coming decades, according to Michael E. Krauss, formerly of the University of Alaska’s Native Language Center.
The telecommunications revolution is accelerating this process, as people living in even the most remote regions of the earth are exposed to English. This will also accelerate economic development as their societies are further integrated into the world economy, thereby raising living standards and economic activity.
The fall in the price of oil is a major tax cut for so many global citizens and the countries that are net fuel importers. Lets hope the opportunities to rid the world of the despots and dictators that are now presenting themselves are not wasted.
Bring on 2015 and all it’s opportunities.