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@uclink4.berkeley.edu

Powerpoint slides

Transformative Moments

• Eras when advancing technology and changing business organizations transform economies and societies.
  
• Not a leading sector.
  
• Instead, many economic sectors acquire powerful new tools.
  
• Are we today living through such a shift in our economic landscape?
  
• 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.

How to Tell the Story of the Information Technology Revolution

• A two-fold story.
  
  • Innovations in technology.
    
  • Innovations in business organization and practice.
    
• 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.
    
• The business organization and practice story.
  
  • Changes in...
    • ...business organization
    • ...market structures
    • ...government regulations
    • ...human experience.
      
  • Difficulties of measurement.
    
  • The business innovations add up to 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?

Implications of the E-conomy

• Macroeconomic implications.
  
  • Substantial and unexpected increases in productivity.
    
  • Lower natural rate of unemployment.
    
  • But at bottom not primarily a macroeconomic phenomenon.
    
• Microeconomic implications
  
  • Resolving the production dilemma
    
  • Resolving the innovaon dilemma
    
  • A new business ecology?
    
  • Global Issues

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.
    
• 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
    • 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.
      
• 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...

E-conomy Sidebars...

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