Brian Arthur on the Second Economy

In my inbox today was a pointer to an article in McKinsey Quarterly by Brian Arthur, economist and technology thinker. In brief, he explores the idea that a “second economy” is developing apace “underneath” the visible one. He shows how IT has not only taken over doing individual mundane tasks: it is now handling the many connections through which information is created from data, and making new connections as needed.

Well, as IT people, we know that’s happening. But the use cases are worth reading through because of the inferences being drawn. This connectivity, says Arthur, is already to a large extent self-configuring, autonomous (that is, “human beings may design it but are not directly involved in running it”) and self-repairing. If the Industrial Revolution represents the economy as growing muscular power, the IT revolution represents it as growing neural capability. He carefully doesn’t call it “intelligence”, but it has the capability to react as, say, a bacterium can sense and swim towards a source of nutrition.

Two quotes caught my particular attention, for those of us concerned with enterprise IT.

“In any deep transformation, industries do not so much adopt the new body of technology as encounter it”. Think about what’s happening with consumerisation, with cloud, with the iPad (as I wrote earlier today in tribute to Steve Jobs).

Economic growth in the past has always worked through the creation of jobs (though it has rendered old ones redundant and created new ones). This may not hold in future; the jobs that most of us professionals prize are disappearing too. So “the main challenge of the economy is shifting from producing prosperity to distributing prosperity“. I’d guess the Spirit Level researchers would have something to say about that, since it’s clear that more equal societies are better not just for those at the bottom of the heap but for those at the top too. And that, too, implies redistribution.

Not a tech posting, this; but professionals, in any field, need to be stimulated to think about the consequences of what we do for those among whom we exist. Read it; it’s worth it.

• The Second Economy, W. Brian Arthur, McKinsey Quarterly, Oct 2011 [sign-up may be required]
• W Brian Arthur: External Professor, Santa Fe Institute, and Visiting Researcher, Intelligent Systems Lab, PARC
• You might want to look for a paper or digital copy of Arthur’s The Nature of Technology (ISBN: 9781416544050)
• The Spirit Level: Why Equality is Better for Everyone

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