Working and Living in London 2020 Part 5
Economics - based on intellectual property not physical goods
Economics is the primary driver behind social and political order - defining the principle sources of value in society and the mechanisms for its distribution. With the five hundred-year delta in mind, what will be the new economic model to replace the industrial age? How will this differ from today's concepts of material wealth and well being? Most political regimes of the world are based on managing the disparity of material wealth - I want what you have got: I vote Labour, or I don't want to part with my material possessions: I vote Conservative. Many of us talk about the information economy, and we know that the industrial economy is gradually coming to an end, but do we have any idea about what the information economy is based on?
I'd like to share with you a particular view of the new economic order. And I'll start by introducing a popular American word, 'stuff'. In the US everyone talks about his or her 'stuff' - good stuff, really nice stuff. And we've become extremely effective over the last hundred years in producing more and more stuff. So much so that the poorest households in North America today have as much stuff as the average middle class households had in 1971. They all have their refrigerators, washing machines, cars, toasters, etc. And the better and faster we become at producing new stuff the more difficult we find it to sustain differentiation.
One major furnishings company has a campaign to make the garage the new 'decoratable' space in your house. And you have to ask yourself: what are they trying to achieve? Most of us today spend much of our domestic life in the kitchen. 20 or 30 years ago a kitchen was a scullery, no one would ever dream of spending time in the scullery. Today the kitchen is the most popular room in the house, and certainly the most highly invested in terms of technology and decoration. So now corporations are looking for new frontiers: the garage becomes the new decoratable space! That may sound farcical today, but I'm sure that in 10 or 20 years' time we'll be spending most of our time in the garage.
Where does the material rat race end? In the West, we've all got enough stuff to keep us happy for several lifetimes. Do we really want more? And the interesting aspect of stuff is that whatever Sony produces in the laboratory this week, Philips or Panasonic will be able to produce next week. In a sense the world has become a giant copying machine, and there's almost no possibility of sustained differentiation in producing better stuff. Thus the value crisis for companies in the fast moving consumer goods business.
So the big corporations are asking, how do we sustain our value in a world that has become a giant copying machine? How can we generate new value for the shareholder in this highly competitively, highly tuned production economy? I recently talked with the CEO of a major oil company, and he had to admit that the fuel that his company puts into your tank isn't a million miles different from the fuel that you'd receive if you went to a Shell or a Texaco filling station. There is absolutely no difference in the base product. And so many of our major industries, both production and service based, are being commoditised. The real question that chief executives are asking themselves is how do we escape from this commodity trap. Because there's little value left in producing yet more stuff.
The fact that Yahoo! has reached the same market capitalisation as Unilever must shed some light on this dilemma.
[http://www.neontronwebdesigndevon.co.uk/]
Economics is the primary driver behind social and political order - defining the principle sources of value in society and the mechanisms for its distribution. With the five hundred-year delta in mind, what will be the new economic model to replace the industrial age? How will this differ from today's concepts of material wealth and well being? Most political regimes of the world are based on managing the disparity of material wealth - I want what you have got: I vote Labour, or I don't want to part with my material possessions: I vote Conservative. Many of us talk about the information economy, and we know that the industrial economy is gradually coming to an end, but do we have any idea about what the information economy is based on?
I'd like to share with you a particular view of the new economic order. And I'll start by introducing a popular American word, 'stuff'. In the US everyone talks about his or her 'stuff' - good stuff, really nice stuff. And we've become extremely effective over the last hundred years in producing more and more stuff. So much so that the poorest households in North America today have as much stuff as the average middle class households had in 1971. They all have their refrigerators, washing machines, cars, toasters, etc. And the better and faster we become at producing new stuff the more difficult we find it to sustain differentiation.
One major furnishings company has a campaign to make the garage the new 'decoratable' space in your house. And you have to ask yourself: what are they trying to achieve? Most of us today spend much of our domestic life in the kitchen. 20 or 30 years ago a kitchen was a scullery, no one would ever dream of spending time in the scullery. Today the kitchen is the most popular room in the house, and certainly the most highly invested in terms of technology and decoration. So now corporations are looking for new frontiers: the garage becomes the new decoratable space! That may sound farcical today, but I'm sure that in 10 or 20 years' time we'll be spending most of our time in the garage.
Where does the material rat race end? In the West, we've all got enough stuff to keep us happy for several lifetimes. Do we really want more? And the interesting aspect of stuff is that whatever Sony produces in the laboratory this week, Philips or Panasonic will be able to produce next week. In a sense the world has become a giant copying machine, and there's almost no possibility of sustained differentiation in producing better stuff. Thus the value crisis for companies in the fast moving consumer goods business.
So the big corporations are asking, how do we sustain our value in a world that has become a giant copying machine? How can we generate new value for the shareholder in this highly competitively, highly tuned production economy? I recently talked with the CEO of a major oil company, and he had to admit that the fuel that his company puts into your tank isn't a million miles different from the fuel that you'd receive if you went to a Shell or a Texaco filling station. There is absolutely no difference in the base product. And so many of our major industries, both production and service based, are being commoditised. The real question that chief executives are asking themselves is how do we escape from this commodity trap. Because there's little value left in producing yet more stuff.
The fact that Yahoo! has reached the same market capitalisation as Unilever must shed some light on this dilemma.
[http://www.neontronwebdesigndevon.co.uk/]
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