Our one dominant model of technology-driven economic progress is the industrial revolution. Manufacturing.
As Ai companies argue for market cap based on projected economic output... I'm increasingly thinking this model can be badly misleading.
It's very rare that the PC Revolution and or the internet Revolution are used as a primary model to explain technology and how it affects the economy.
Network enabled PCS are administrative powerhouses. They really did permeate all aspects of administration. But... The number of employees in administrative adjacent roles is higher, not lower. Accountants, university armin. HR. Project management. Etc.
It's very unclear how to quantify economic output/product. From this ambiguity , everything downstream is also vague.
The web also totally exploded in use. Web companies got huge revenue, even huger your profits.
It's very hard to draw lines, and apply economic reasoning that describes who gains what.
Users get to use Facebook, google and whatnot. Customers/advertisers get to advertize. The tech companies business model is based on network effects, momentum and whatnot.
What value is being created? Who is capturing how much of IT? These questions are almost philosophical. You just cannot apply reasoning like you would to the economics of mass produced cars.
Dopamine fracking , financial arbitrage racking, sales fracking... As a phenomenon, I think these occur in places where competition between firms is most intense over something that isn't correlated to external value.
Before advertising bands, cigarette companies were ad fracking. Tobacco is a commodity. Producing cigarettes is trivial. The only thing differentiating a billion dollars Tobacco Company from a million dollar Tobacco Company was the recognizability of their brand.
Government suppliers, or urban real estate can get to a point where the main driver of success, is lawyers.
A lot of industries went through a gradual process, as they matured... Where the domain of competition is decreasingly relevant to external value. The digital industries often start here or reach this point quickly.
Is manufacturing actually the exception?
The original sin is the idea that the profit motive on a free market will solve all our resource allocation problems, and that consumption demand should be the ultimate arbiter of social value. Markets are pretty freaking amazing things. But their efficiency relies on assumptions that knowledge economies and software break on pretty much every front. So, it's really no surprise that we're in this mess. I don't really know what would work better, though, in a way that can practically evolve from our existing systems.
Hey, I appreciate your insight. Especially your observation that when the underlying assumptions are wrong/broken then the model produces less reliable results.
Like you, I also don't know what would work better, nor do I believe any one individual can know.
But I do have some ideas for what would make a good framework for the evaluation?
If the idea is to allocate resources in a way that provides the most benefit to the most people, where most feel they are getting a 'fair deal' or something...
and we have social institutions that convert 'resources' to value (in quotes because time, attention, etc are 'resources'. The key principle is organizing human behavior over time to produce something humans value)...
Companies Religion Sports Government
then think about what value each creates, how it is delivered, how it is captured, ... recognizing that each offers some unique strengths and unique limitations.