I've written a great deal about making firms more entrepreneurial. What I have not mentioned is the competitive pressure that we in the developed countries will feel to do this.
Through the early 1900's, the developed countries held a competitive advantage because of industrial capacity. Today, we have an advantage because of the pairing of knowledge workers and information technology (IT) through our corporations in what we've come to call an information economy. Yet the relative productivity advantage we have is rapidly disappearing.
The industrial economy had huge barriers to entry. By contrast, the information economy does not. A few guys in a basement can launch a business that is soon worth millions - even billions. This has consequences for national policy.
Professionals in the US, Canada, the UK, Australia, France, Germany and the rest of the EU will increasingly be competing with professionals in China, India, Malaysia, and other rapidly developing countries like the Ukraine and Taiwan. Professionals making $80,000 in developed countries will have trouble competing with similarly educated and equipped professionals making $8,000.
Individual effort has never been as big a determinant of productivity as the system in which these individuals are working. A hard working trapper in the Great Lakes makes less than a hard working dry land wheat farmer in Saskatchewan. The industrious assembly line worker makes less than the industrious programmer. Changing from an agricultural to industrial or industrial to information economy always makes a bigger difference than individual effort within an old economy.
The developed nations have an opportunity to transform again - to become an entrepreneurial economy instead of an information economy. To pretend that we can continue to demand big salaries in a world of 6 billion increasingly armed with laptops and university educations borders on denial.
What will it mean to become an entrepreneurial instead of information economy? For one thing, it means that we'll rely on an increasing percentage of our work force to act like entrepreneurs instead of knowledge workers, to move from positions within bureaucracies to positions within dynamic markets. Such markets suggest a reliance on the information economy - a smooth and continual operation of markets that are communicated across networks that blend and distort the difference between Facebook and NASDAQ, between eBay and Monster.com.
For me, the prospect of the popularization of entrepreneurship is exciting for so many reasons. But beyond what it opens up as possibility for the individual, it is a practical and increasingly necessary solution to emerging economies that will easily underbid us should we continue to rely on an information economy that has outlived its advantage.
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About Me
- Ron Davison
- Working in the basement on the Escher Expressway (every direction down hill for fuel savings) and Mobius Strip DNA (for immortality).
6 comments:
Ron, I am piqued by your use of the term, "information economy". I am thinking perhaps you mean to suggest that Westerners have an advantage in their grasp of the international language [English], and, consequently, in their literacy levels.
So far as high ground goes, well that runs contrary to your suggestion that it is desirable for everybody to melt into a large web of small scale, international entrepreneurs.
Traditionally, wealth has been dispersed by the more affluent; given to those who earned positions of trust within their realm. But what you are suggesting borders on communism, and is almost frighteningly dependent on this technology which inherently removes ownership rights to intellectual property, and which enables a level of privacy invasion I find disturbing on a basic level.
I would be interested to see you tackle these issues head on, instead of circling around them, as I have observed you are inclined to do. I must confess, there appears to be a missing premise here in all this circle talk.
Well- it's been three days and no answer from "Ron". Accuse a man of being a scheming communist, and he runs away. Sheesh!!
Chrlane,
Thanks for the wake up call. I've been mostly away the last couple of days.
Information economy means that lots of us are making a living by manipulating symbols rather than real things. In an agricultural economy, a man moves the earth with a hoe. In an industrial economy, he moves it with a back hoe. In an information economy, he only deals with blue prints for the back hoe.
And as to the creation and transmission of wealth - well, I don't see that as something exclusive to elites who choose to share. I'll certainly be writing more about all this - with your questions in mind.
P.S. - it is true that we Americans are terribly sensitive to accusations of communism. I've been waiting for the call from homeland security ever since I read your comment.
I wouldn't say that anybody _chose_ to share, except for the wiser among us who had the foresight to understand that this was the only way they could survive.
So far as blue prints, well clearly not everyone with the blueprints can interpret them to their fullest. Not even within the so-called "information economy". *rolleyes*
I'll be looking for your next insights. ;)
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