Tag Archives: technology

What’s the internet? Start here

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It’s more than 16 years since I started writing about the economic and social effects of digital technologies, and some technical knowledge has stuck as well. It was always obvious to me that the internet was going to have – eventually – a revolutionary impact on society. But I do remember discussing my first or second book with a Very Eminent Economist who said that the internet was nothing more than a reduction in transactions costs, and as good economic models already included those, we didn’t need to bother thinking any further about it.

Anyway, despite knowing some things about matters digital, I’ve just devoured John Naughton’s [amazon_link id=”0857384252″ target=”_blank” ]What You Really Need to Know About the Internet: From Gutenberg to Zuckerberg[/amazon_link]. Although it covered some ground that I found familiar, there was plenty of new insight and information too, all written in his characteristically clear style. So for example, if you’re not sure about the difference between the World Wide Web and the Internet (and that’s lots of people, no shame in it), you’ll learn loads from this book.

It gives a terrific overview of a wide range of the business, economic and social trends resulting from the internet and its uses (including the Web). There is both historical context and reflection about future trends. The chapter on the flaws of the copyright regime is excellent, a really useful short introduction to the main issues.

One quibble I would have is that John concludes that economics has little to offer as a perspective on the digital world because it is the science of allocating scarce resources. Apart from the fact that time and attention are the new scarce resources, economics has a lot to offer in thinking about the structure of network markets. (My Very Eminent Economist of the 1990s will have changed his mind by now.) Having said that, I agree with the book’s contention that ecosystem thinking is particularly fruitful.

There were also some lovely details. I enjoyed the quotation from George Miller of ‘The Magical Number Seven Plus or Minus Two’ fame: “My problem is that I have been persecuted by an integer.” And I loved it that the reference to Douglas Adams’ [amazon_link id=”0434003484″ target=”_blank” ]The Hitchhiker’s Guide to the Galaxy[/amazon_link] was footnote 42. What else?

[amazon_image id=”0857384252″ link=”true” target=”_blank” size=”medium” ]From Gutenberg to Zuckerberg: What You Really Need to Know About the Internet[/amazon_image]

Making our own progress

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This is my least favourite day of the year, so I’ve been gazing moodily out at the rain while reading this and that online. Courtesy of Andrew Kelly of the Bristol Festival of Ideas, I came across this extraordinary essay, Dark Ecology, by Paul Kingsnorth. I can’t do justice to its existential gloom – it needs to be read to get the full, intense flavour of its despair and anger. It took me on to the Dark Mountain Manifesto, launched by Kingsnorth in 2009. Point 1 of the manifesto is:

“We live in a time of social, economic and ecological unravelling. All around us are signs that our whole way of living is already passing into history. We will face this reality honestly and learn how to live with it.”

Empires and societies clearly do collapse. Ecological disasters occur. There is a large literature on it – recent references would include Joseph Tainter’s [amazon_link id=”052138673X” target=”_blank” ]The Collapse of Complex Societies[/amazon_link] and Jared Diamond’s [amazon_link id=”0241958687″ target=”_blank” ]Collapse[/amazon_link].

[amazon_image id=”052138673X” link=”true” target=”_blank” size=”medium” ]The Collapse of Complex Societies (New Studies in Archaeology)[/amazon_image]

And yet, New Year’s grouch though I am, the Dark Mountain call to withdraw from modern, technological society does not convince me at all. It conflates environmental questions, which any sensible person will be concerned about, with a range of different economic and social questions. It therefore rejects any application of the conventional framework of policy thought to the environmental problems – whereas I believe pricing carbon properly would be the biggest single step possible towards environmental sustainability, meaning anybody who cares about this should be focused on the political economy of raising the price of carbon-use.

This isn’t to say there won’t be some dark times ahead. The global economy isn’t remotely out of the financial/economic crisis, and political leaders haven’t begun to respond adequately to tackle huge challenges ranging from the fiscal via the demographic to the ecological. But progress, including technological progress, is both possible and continuing; while many of the problems identified by Kingsnorth are in principle soluble. To take one (minor) example, his “human scale” shops are feasible – it is weak competition policy and dismal planning policies that have turned the UK into a monoculture of giant stores.

Indeed, I hope Dark Mountainism doesn’t spread too far, interesting as the manifesto is. As Paul Krugman set out in a brilliant but relatively unknown QJE paper (pdf), History versus Expectations, in 1990, the rate at which the economy grows depends fundamentally on positive expectations for the future outweighing the habits of the past: people need to have a sense of progress for it to occur. Much better to engage with the world and change it, than to withdraw from it.

A happy, peaceful and prosperous 2013 to all readers of this blog –  and here’s to making it happen.

Whose internet?

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It was with great excitement that I read this morning that John Naughton‘s new book [amazon_link id=”0857384252″ target=”_blank” ]From Gutenberg to Zuckerberg: What You Really Need to Know About the Internet[/amazon_link] is out. I’ve ordered it pronto, and am sure it’s a worthy successor to his [amazon_link id=”075381093X” target=”_blank” ]A Brief History of the Future: Origins of the Internet[/amazon_link] from 2000; but meanwhile he has written a column about the new book in today’s Observer.

[amazon_image id=”0857384252″ link=”true” target=”_blank” size=”medium” ]From Gutenberg to Zuckerberg: What You Really Need to Know About the Internet[/amazon_image]

The theme of the column is the intensifying struggle to control the Internet – on the one hand by authoritarian governments, as demonstrated at the recent ITU-organised WCIT-12 World Conference on International Telecommunications, and on the other hand by large corporations – something that always happens in the communications and media sector, as Tim Wu documented in his brilliant book [amazon_link id=”B0092I2BFS” target=”_blank” ]The Master Switch[/amazon_link].

[amazon_image id=”B0092I2BFS” link=”true” target=”_blank” size=”medium” ]MASTER SWITCH THE AIR EXP by WU TIMOTHY ( Author ) ON Mar-01-2011, Paperback[/amazon_image]

Naughton writes: “Ever since the internet burst into public consciousness in 1993, the big question has been whether the most disruptive communications technology since print would be captured by the established power structures – nation states and giant corporations – that dominate our world and shape its development. And since then, virtually every newsworthy event in the evolution of the network has really just been another skirmish in the ongoing war to control the internet.”

Interestingly, I heard some two years ago that China was becoming much more active in the UN organisations but especially the ITU (International Telecommunications Union) based in Geneva. Maybe that diplomatic investment is paying off. I agree with John Naughton that the struggle is going to be immensely important.

The idea of progress

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A while ago I started reading [amazon_link id=”1451695764″ target=”_blank” ]Abundance: Why the Future is Better than You Think[/amazon_link], by Peter Diamandis and Steven Kotler, only to put it down part way through. It’s very readable but has a rather breathless tone which put me off. It also covers the same kind of territory of techno-optimism as the excellent [amazon_link id=”1846683572″ target=”_blank” ]An Optimist’s Tour of the Future[/amazon_link] by Mark Stevenson and [amazon_link id=”0007267126″ target=”_blank” ]The Rational Optimist: How Prosperity Evolves[/amazon_link] by Matt Ridley – even some of the examples overlap. And it has some of the environmental optimist flavour of Mark Lynas’s [amazon_link id=”000731342X” target=”_blank” ]The God Species: How the Planet Can Survive the Age of Humans[/amazon_link]. Having said this, I finished Abundance yesterday and did enjoy it.

[amazon_image id=”1451695764″ link=”true” target=”_blank” size=”medium” ]Abundance: The Future Is Better Than You Think[/amazon_image]

It is important to point out that for all the well-founded economic and environmental and political gloom in so many countries at present, there has been huge progress over our lifetimes in things that matter to us, from improved longevity and health to smartphones and low-energy lightbulbs. And that there is at present an amazing array of technological discoveries close to commercial potential – all of the innovations covered in these titles in what could be described as the techno-optimism genre.

It’s all the more important as there’s a countervailing techno-pessimism genre, including Brynjolfsson and McAfee’s [amazon_link id=”B005WTR4ZI” target=”_blank” ]Race Against the Machine[/amazon_link] arguing that innovation is making people redundant, a theme picked up by Paul Krugman in his column Rise of the Robots this week, with as a side-branch Robert Gordon asserting that innovation-driven growth is over anyway.

Why is it important to be optimistic? Because expectations about the future shape today’s decisions. Paul Krugman himself demonstrated this in a marvellous but little known 1991 QJE paper on endogenous growth theory, History Versus Expectations (pdf), showing that growth outcomes depend on expectations of a promising future outweighing the disappointments of the past.

History casts a long shadow unless the future shines a bright light. Progress only occurs when people believe in the idea of progress.

Having said that, the techno-optimists can lack important nuance. Abundance is a good example of that shortcoming. The authors allow no room for doubt, and give no space to questions such as how the investment required for the innovations they describe will be financed, how innovators will succeed when incumbents have so many relevant markets sown up, where the complementary infrastructure will come from, and how politics will navigate the sharing of costs and benefits. So I prefer (not surprisingly) my own (2001) formulation of the ‘[amazon_link id=”1587990822″ target=”_blank” ]Paradoxes of Prosperity[/amazon_link]’.

I don’t want to sound too down on Abundance just because I happen to have read some other similar books. It has loads of good nuggets of information and soundbites. For example:

“When seen through the lens of technology, few resources are truly scarce; they’s mainly inaccessible.”

“Human beings are designed to be local optimists and global pessimists.” (We are more optimistic about thing we think we can control, think we’re all more intelligent and better drivers than average etc. – although global pessimism is what helps impending disasters become self-averting. Was there a genuine Y2K problem or not?)

I was interested to learn that India has switched from being a major importer to a major exporter of cotton thanks to GM varieties.

I also really liked, for personal reasons, Bill Joy being quoted on the ‘dematerialisation’ being brought about by modern technologies. In 1996 I published The Weightless World (pdf), which used the fact that the economy of 1990 literally had no greater physical mass than the economy of 1980, thanks to minaturisation and the use of new materials and the switch towards services. Bill Joy has updated this by pointing out that one smartphone is now a phone, camera, TV screen, radio, web browser, tape recorder, range of books etc.

So, if you know someone who’s feeling – not surprisingly – pessimistic about the state of the world, you should give them one of the techno-optimism books as a seasonal gift. Cheering up the population one person at a time until we collectively believe in the possibility of progress again is an important civic duty.

[amazon_image id=”1846683572″ link=”true” target=”_blank” size=”medium” ]An Optimist’s Tour of the Future[/amazon_image]

Technology, people and place

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Diego Comin, Mikhail Dmitriev, Esteban Rossi-Hansberg have written a fascinating summary of their work on the diffusion of technology, published as a CEPR working paper. The headline is that distance matters, and that the diffusion process follows the same kind of pattern seen in the transmission of epidemics.

The authors note that their data (covering a large number of technologies) strongly confirms the  pattern of east-to-west diffusion of technology described by Jared Diamond in his fantastic book [amazon_link id=”0099302780″ target=”_blank” ]Guns, Germs and Steel[/amazon_link]. The argument there was that geographical latitude explained the success of certain important agricultural innovations. So how could it also matter for the spread of, say, ATMs, cellphones or TVs? “Distance is a significantly more important impediment across parallels than across meridians.” The VoxEU authors suggest this is because technologies are spread – like diseases – by people, and the patterns of social contact for reasons of history and geography are more prevalent east-to-west than north-to-south.

[amazon_image id=”0099302780″ link=”true” target=”_blank” size=”medium” ]Guns, Germs and Steel: A short history of everybody for the last 13,000 years[/amazon_image]

There is a forward-looking aspect to this, of course. Trends in the movement of people do change over time, and have changed with globalisation. More significant, anybody thinking about long-term growth needs to think about the adoption of ideas. Most new ideas will come from outside the borders of one country, attached to people from elsewhere. One cannot think about innovation (among other things) without thinking about immigration – as Ian Goldin, Geoffrey Cameron and Meera Balarajan argued in their book [amazon_link id=”069115631X” target=”_blank” ]Exceptional People: How Migration Shaped Our World and Will Define Our Future[/amazon_link].

[amazon_image id=”069115631X” link=”true” target=”_blank” size=”medium” ]Exceptional People: How Migration Shaped Our World and Will Define Our Future[/amazon_image]