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Just prior to the time of the industrial revolution, economists discovered the concept of "economies of scale" the long and the short of this concept is that you can save a lot of resources by making a shit-ton of a given product. This mentality was the driving force in the advancement of mass production in industry. When there are more customers than products, mass production feeds the needs of the masses. This is why an economy based on mass production has served the United States so well till now. Now, with the advent of the internet and the dawning of The Information Age a new type of economy began to grow out of the rotted corpse that mass production had left behind. With the ability to buy products and services through this global network of computers, suddenly several economic constraints were rendered obsolete. For example, geography used to be a limiting factor in the types of goods one could buy, also, geography used to restrict the vendors we had access to. Believe it or not there was a time when, if our local music store didn't have a particular album, we didn't get that album. The internet allows the common customer to reach out across the entire planet and have access to all the information that is available. The ability to access global markets and diverse pricing structures generates an anomaly in business the I like to call "monopolized specialization". What I mean by this is that the most powerful device the internet affords us is an incredibly vast amount of substitutability. Take this example: Two farmers live in a town and both have decided to sell corn this year. One farmer sells his corn for $10.00 a pound. The other farmer, who knows that his corn is slightly better tasting than his competitor, can still make a good living selling his crops for $11.00 a pound. Sometimes the villagers buy the cheaper corn and sometimes they spring for the tastier corn. The people of this village still only have two choices of corn. The guy on the other side of the mountain range selling his corn for $5.00 a pound is geographically restricted from effecting the sales of our little town. Now imagine that all of a sudden everyone on the planet could buy instantly from whoever they wanted, not concerning themselves with geographic constraints. All of a sudden no one on the planet can sell corn except the one guy who happens to be able to sell it for a dollar and make a profit. All competitors are eliminated leaving only the one vendor who had the best deal. This example is a bit extreme but it illustrates an important point. In an economy dominated by monopolized specialization, if you want to do anything for profit you will have to be the very best at it because 99% of the business will go to the best dealer. This forces monopolies to form through no fault of their own, simply put, no one is going to pay $11.00 for a pound of corn when they can get it just as easily for a dollar. So all the corn dealers across the globe (save the lucky one) go out of business or are forced to become even more specialized. An example of this would be if the out-of-work-farmar could go into business developing better ways to transport corn to the customer, he may succeed, he may not, but he better be the very best at corn-shipping or the market won't even notice him. The contradiction inherent to this system is that it caters to the consumer, while at the same time causing massive amounts of economic instability. If John-Q-conglomerate, being the only shoe manufacturer in the world, starts to slack and some up-start company comes up with a better way to do things, John-Q-conglomerate might just find itself out of work. This means cheaper shoes for the everyone, but it also means a huge amount working class people who never know how long their company will last, how long their pay-checks will keep coming, how long until some technology makes their whole livelihood obsolete. I'd hate for anyone to think of this post as a paranoid stream of statements hell bent on overthrowing the internet. Far from it, as my previous posts have illustrated, it is my feeling that the advancement of technology is not something that can be slowed or feared. It is there because we are here. As long as humans continue to think, technology will continue to grow. I do feel, however, that the more we know about the potential pit-falls of technologies, especially ones effecting the global economy, the better equipped we are to grow to meet the needs of the future.
Posts: 484 | Registered: Jan 2005
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