Economics has never really been a topic that has filled me with excitement and wonder. I have always viewed it as a “tick box” subject when it comes to studies. Well, that was until recently. Over the recent past I have become increasingly aware of the subtleties of economics and more over the various manifestations there of. To be more precise, I have become quite fascinated by the evolution of economics or rather economic models over the past decade or so.
Basically I am talking about economic restructuring; the phenomenon of Western urban areas shifting from being manufacturing-centric to a more service-centric economic base.
This transformation has affected demographics including income distribution, employment, and social hierarchy; institutional arrangements including the growth of the corporate giants, homogeneous producer services, a robust more informal economy, nonstandard work; as well as geographic spacing including the rise of world cities, spatial mismatch, and metropolitan growth differentials.
The world economy is now in a state of near constant flux as countries; companies and people are making massive strides across the economic playing field essentially disrupting the status quo.
This has given rise to various new economic models. Here are a few of them:
The term knowledge economy was popularized by Peter Drucker as the title of Chapter 12 in his book The Age of Discontinuity. The knowledge economy is the use of knowledge to generate tangible and intangible value. Technology has helped to transfer a part of human knowledge to machines. This is machine learning – AI – not the start of post-humanism (although that’s another discussion altogether). This transferred knowledge can be used by decision support systems in various fields and generate economic value.
The knowledge economy however is also possible without technology. Technology just acts as a huge catalyst.
The Digital Economy was coined in Don Tapscott‘s 1995 best-seller The Digital Economy: Promise and Peril in the Age of Networked Intelligence. The Digital Economy was among the first books to show how the Internet would change the way we did business. It became an international best-seller within one month of its release. The digital economy is also sometimes referred to to as the “internet economy” or even the “new economy”. In essence, the digital economy is the product of the dot-com bubble of the late 1990’s.
According to Mesenbourg (Assistant Director for Economic Programs U.S. Bureau of the Census, 2001); there are three main components of the ‘Digital Economy’ concept :
- supporting infrastructure (hardware, software, telecoms, networks, etc.),
- e-business (how business is conducted, any process that an organization conducts over computer-mediated networks),
- e-commerce (transfer of goods, for example when a book is sold online).
The App economy has literally taken off in the last 8 years. The app economy refers to the range of economic activity surrounding mobile applications. Mobile apps created new fortunes for many fast moving entrepreneurs and has changed the way business is done. The app economy encompasses everything from the sale of apps, ad revenue or public relations generated by free apps, and the hardware devices on which apps are designed to run.
In 2007, virtually no mobile apps existed. As of 2011, more than 25 billion apps have been downloaded.
One of my personal favourites; A sharing economy. This economy can take a number of forms, including using technology to provide information that enables the optimisation of resources through the redistribution, sharing and reuse of excess capacity in goods and services. A common premise is that when information about goods is shared (typically via an online marketplace), the value of those goods may increase for the business, for individuals, for the community and for society in general.
Collaborative consumption as a phenomenon is a class of economic arrangements in which participants share access to products or services, rather than having individual ownership.
This collaborative consumption model is used in many online and offline business that I can guarantee you have already interacted with. Organisations such as eBay as well as emerging sectors such as social lending, peer-to-peer accommodation (Airbnb), peer-to-peer task assignments or travel advising, car sharing (Rent My Ride) or commute-bus sharing.
The fact of the matter is that technology is the enabler of a lot of these various economies.
What that means is that we have not seen the last thrust of innovation in terms of these economies; in fact, we are just scratching the surface. When we look at futurist trends that start thinking about the worker of the future; the business of the future and let’s not forget the currency of the future we begin to realise that the “innovate or die” is not just sensationalism – it’s real!