Category Archives: Digital Economy

Digital Economy Series: In a fully digital economy will the dollar still be king?

We trade in what we value. Whether it be a young child trading a small coin for a sweet at a corner store, the consistent portion of a wage over many years in exchange for a house, or the complexity of financial transactions to fund a manufacturers expansion. If we value something we will participate in a fair exchange with the seller.

money coins finance cash
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We are all aware of the barter economy, of an era long past, where that form of trade was the primary mechanism to establish fair exchange between parties. Over the course of time it was hard currency that first supplanted this ancient mechanism, then promissory notes, until now where digital representations of cash are the means through which value is exchanged fairly.

Also today, it is a sovereign currency, the dollar (or Euro, Renminbi or Yen) if you will, that is king. It is this fiat currency, this legal tender of value backed by an issuing government that is implicitly trusted so that we can fairly exchange value. Whether its that young child at the corner shop, or the insurance company guaranteeing the importation of that machinery, we all implicitly trust that issuing authority.

We pay, and governments collect, taxes based on that trust. Businesses leverage the inherent strengths of the banking system to invest in growth, based on that trust. Governments trust other governments based on that trust.

But in a fully digital economy, what entity will be the foundation of that trust? The case could be made that a single global currency could become king. Where, over the coming decades, a currency founded on blockchain principles could supplant the many sovereign currencies in existence today. The case could also be made for a return to the barter system. Where, again over the coming decades, the nascent peer-to-peer sharing economy becomes the most trusted mechanism for the fair exchange of value.

For I don’t believe that we can safely assume the future of financial transactions is just a more efficient version of what we experience today. Where sovereign entities of trust anchor computerised exchanges of value at retail, commercial and government levels. What if the world moves to a type of universal basic income or universal basic services model? Where the accumulation of wealth is a foreign concept to most and bartering is de rigueur. Or, what if the digital economy transforms into the intelligence economy? Where real value is no longer held in varying compositions of bits, but in prized abstractions of knowledge stored in quantum computing machines.

But I do believe that human nature will fundamentally remain unaltered in the coming decades. In a fully digitised economy there will continue to be shining examples of our “better angels” and likewise examples of those with more sinister intent. And, because of our human nature we will still form systems of governance and administrative oversight. We will still need the ability to enforce exclusion upon those who are a danger to society. We will still participate in fair exchanges of value. And don’t forget, people will still be people. At our core we’ll be motivated by the desire to either work toward goals, to work with people, or to work to accumulate power.

Given all this, and as we look far over the time horizon, will the dollar still be king in a fully digital economy? More than likely, the literal dollar won’t be king but the metaphorical dollar will be. Even though human nature is not likely to change, the mechanism for the fair exchange will continue to change. For each of us will continue to have something of value that is worthy of trading.

 


For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, review my IT Strategy blog, subscribe to my YouTube channel, or buy my ‘Jobs. Future. You.’ workbook.

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Digital Economy Series: “In a fully digital economy will you still be needed to work in a factory or sit at an office-desk?”

vehicles on road between high rise buildings
Photo by Craig Adderley on Pexels.com

Work. Whether we sit in an office, walk in a manufacturing facility, or perform some other task, those of us who work are living examples basic economic theory. We are all playing our part in turning an input into an output. We could be making sales calls to increase demand for an output, driving a truck to deliver raw materials, or even developing software to make the process better. Whether our organisation produces goods or services, we are all being paid to perform our part somewhere along the value chain.

The economy of tomorrow, the time when teenagers of today have teenage grandchildren, is more than likely to be a fully digital economy. For we can see evidence of this transition already. The value chain of decades ago was all about atoms, all about making and using physical goods. Today it is a mix of atoms and bits, it is an economy where value is created in the digital sphere as well as the physical sphere. Tomorrow the value chain may well be dominated by that which is digital.

Consider primary industries. Aren’t mines and farms becoming more automated? What about the secondary industries of manufacturing and construction, isn’t automation taking hold there as well? Even for higher value sectors such as finance, health and professional services we are witnessing inroads being made by either automated or intelligence-laden digital processes.

Thus it can be argued that there will be less employment in industry sectors that create value out of atoms. Indeed, even though the value of these sectors is growing across the OECD, related employment is largely stagnant.

But where is value created in the digital economy and what part do workers play in it? Value in the digital economy is created in the manufacture of ICT hardware, in the creation of software and services that use software, and in the collecting, processing and disseminating of data and information.

Regarding the manufacture of ICT hardware, it is not too hard to see full automation in production and logistics. But in the research, development and design phases we humans will still be critical for success.

Regarding the creation of software and software-based services, is it not too far fetched to contemplate software writing software? Where designers set the input and output requirements for new software or a new service, and the computer creates and tests the complete set of algorithms and interfaces.

Finally, regarding the management of data and information. Apart from employees performing regulatory oversight, it is possible to imagine the only other scenario in which human involvement is necessary is where faulty data collection sensors need to be replaced.

So, in this fully digital economy will you still be needed to work in a factory or sit at a desk in the office?

The answer is a qualified yes. While there are many factors that should be taken into consideration the foundational truth is that an economy is there to serve the society. For we grow things, we produce things, we teach things, we regulate things and so on for our individual and collective benefit.

Even though you may accept the propositions that 1. we are moving to an economy that is dominated by bits and, 2. just like production involving atoms has become more automated so too will bits-based production. We will still be human. Thus, even though what we value and how we pay for it will more than likely change, there will still be economic production to serve the needs of the population.

So yes, the factory will still be around to produce physical goods, but the types of work that are open to humans are those that are less automated. And yes, the office-desk job will still be around, but it too will involve non-automated people and thinking skills.

Therefore, even though what will be available and how it is produced will be different from today, basic economic theory will still apply. No matter the industry sector, in a fully digital economy people will still have roles as productive links somewhere in the value chain.

 


For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, review my IT Strategy blog, subscribe to my YouTube channel, or buy my ‘Jobs. Future. You.’ workbook.

Digital Economy Series: “Is there only an upside to your life, your job, your community in a digital economy?”

Tomorrow’s teenage grandchildren

Just like those in their retirement years today have witnessed so much change since their teenage years, so will today’s teenagers when they reach their autumn years and help raise teenage grandchildren.

For those currently in the latter seasons of life, what have they witnessed over the course of their adult dyf - future possibilityyears? Consider the geopolitical tensions pushing history to unfold in uncertain directions (ie. Cuban missile crisis), the scientific developments ushering in hope (penicillin) and despair (nuclear fission), and popular music performers swaying the life choices of fans across the globe (Bob Dylan, Jimi Hendrix) are among the many changes witnessed.

 We now know how all of this unfolded, for it is today’s lived reality. Looking back over these decades we view this historical path as the “business as usual” path. The scenario that happened and that we now experience, study and use as reference points for what may happen in the decades ahead.

 But what of other possibilities, of other scenarios, of other ways that things could work out. Just like our current reality could have turned out differently, what paths could history take for today’s teenagers? Specifically, what could unfold in our context of focus – the digital economy.

 Its relatively easy to imagine one scenario – the business as usual path. For example, in 50 years time (ie, the lived experience of the teenage grandchildren of today’s teenagers) and based on what we know now, it is conceivable that consumer purchases will all be cashless and will involve automated delivery technology, and that all business transactions will use blockchain technology for goods and services prioritised by company-wide artificial intelligence algorithms?

How could things turn out?

But what about other scenarios? Will the history of the digital economy unfold such that there will only be an upside for your life, your job and your community? Where machines and robots undertake the work we don’t want to do, provide for our needs effectively and facilitate the richness of humanity’s many bonds and opportunities?

Imagine, then, a scenario unfolding where everything is restricted, or perhaps a scenario where anarchy rules.

First, restriction. Today we live with our social media feed being individually unique. No one else on the planet has exactly the social media friends and followers as I. Likewise with the configuration of ads I see in my browser; they are unique to me. And what about my purchase history where I shop with loyalty cards. This too is unique to me, as are the offers I receive. Why not then, in the time ahead, only seeing on my screen the things I am interested in? Only being shown political messages that will resonate with me, only being offered membership to social groups aligned with my past experiences and interests.

 A scenario where the lives we live have boundaries that can not be altered. Where a superficial peace is the dominant mood.

Second, the anarchy scenario. Today there are forces that seek to upend the order that liberal democracy has brought to bear upon hundreds of millions of people across our world. What if they succeed? What if the internet is technically re-architected into ideologically walled gardens, that the Global Currency – the US Dollar – is replaced by the Chinese Renminbi, the German Mark and the Brazilian Real, and that the bounds of ordinary life are limited to self-contained urban zones each with different digital capabilities and intents.

 A scenario where social and business life is dissimilar across the many enclaves, in which tension is a common theme.

With business as usual, life retains its complexity; with restriction it is hollow; as for anarchy it is wearying.

The future is not set

As outlined above, an AI-rich digital economy that supports quality of life is a likely outcome of the business as usual path. But what of the other two scenarios under consideration? For the consumer, the restriction path implies only uniquely tailored goods and services. Similarly for business. Where success is tied to this unique tailoring, implying that prospects for innovation are limited by the scope of these personalising algorithms.

 With respect to the dystopian scenario, some enclaves no doubt will have the economic resources to realise a business as usual outcome, but most are likely to be unrecognisable societies by today’s standards. And so, due to resource scarcity, lack of trust, and through the application of technical digital capabilities built up over decades, local oligopolies reign supreme with deep surveillance and intense social stratification core characteristics of each society.

 Understand that the future is not set. History indeed can unfold along one of these three paths. To our question at the start, the answer then is no. We are not assured of beneficial outcomes for our life, our jobs, our community in a digital economy.

 


For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, review my IT Strategy blog, subscribe to my YouTube channel, or buy my ‘Jobs. Future. You.’ workbook.