Tools for Thought: What Is New and Important About the "Economy"

1
Tools for Thought What Is New and Important
About the "E-conomy"

• Stephen S. Cohen, J. Bradford DeLong, and John
  Zysman
• February 27, 2000
• Comments Are Welcome
• E_conomy_at_uclink4.berkeley.edu

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Transformative Moments

• Eras when advancing technology and changing
  business organizations transform economies and
  societies.
• Not a leading sector.
• Instead, many sectors acquire powerful new tools.
• Are we today living through such a shift?
• Perhaps... Modern information and communications
  technologies are tools for thought.
• They amplify brainpower in the way the
  technologies of the Industrial Revolution
  amplified muscle power.

3
How to Tell the Story of the Information
Technology Revolution?

• A two-fold story.
• Innovations in technology.
• Innovations in business organization and
  practice.

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The Technology Story

• The doubling of semiconductor capability and
  productivity every-eighteen-months.
• A rate that has carried us from the room-sized
  vacuum-tube computers to the modern Internet.
• The complementary surge in the capacity of the
  communications network to transmit digital
  information.

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The Business Organization Story

• Changes in...
• ...business organization and market structures
• ...government regulations and human experience.
• Difficulties of measurement.
• A new business ecology with...
• ...a prominent role for venture capital
• ...the start-up and the spinoff
• ...new option-based ways of compensating skilled
  workers and entrepreneurs
• but will this new business ecology last?

6
Macroeconomic Implications of the E-conomy

• Substantial and unexpected increases in
  productivity.
• Lower natural rate of unemployment.
• But at bottom the E-conomy is not primarily a
  macroeconomic phenomenon.

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The Most Important Implications of the E-conomy

• Resolving the production dilemma
• Resolving the innovaon dilemma
• A new business ecology?
• Global Issues

8
Sustaining the Transformation

• Pilgrimages to Silicon Valley
• People come to Silicon Valley today much as
  people came to Manchester at the start of the
  industrial revolution.
• They come to marvel at the accomplishments of new
  technology, new organizational forms and new
  industry.
• They come to try to understand what this all
  means.
• When they leave, it would be good if they had a
  framework to structure the information, visions
  and debates.

9
Sustaining the Transformation

• For the past fifty years, governments have by and
  large gotten policy right.
• Policy has been right in two broad directions.
• Resources investments in research, development,
  and education
• Rules the systems of public and private
  governance and market organization required to
  make the market for information technology work

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Sustaining the Transformation

• Resources investments in research, development,
  and education
• Public investment in science and technology
• Public investment in technological education
• Rules the systems of public and private
  governance and market organization required to
  make the market for information technology work
• Open competition.
• Open standards.
• Intellectual property.

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Sustaining the Transformation

• How to extend this success into the future?
• Public investment in...
• ...basic research into science and technology
• ...the technological-age education of people
• Rule making
• Privacy
• Security
• New property rights
• Flexibility and inclusion
• Global issues...