06 January 2009

On the Wikinomics Paradox

In the long run, what drives the wealth and success of an economy is productivity and efficiency. In my opinion, many of the principles of wikinomics continue to hold the promise of an extraordinary amount of efficiency and productivity to be unleashed, which should/ could have amazing long-term benefits. But in the short to medium term, I see the potential for a very difficult paradox - what makes the economy more efficient and productive as a whole causing a major dislocation of workers, who as we all know are also the consumers, and as they have less to spend the economy potentially shrivels up in a way similar to the paradox of thrift.

Well, yes, but economics doesn't really enter into it (except as a by-product): what we're talking about here is mathematics. Things that can be done in a distributed fashion online, will get done (subject to a raft-load of caveats) because on the Internet - the Great Greaser - there's no friction to stop it. Whether people suffer dislocation doesn't enter into it - however regrettable it may be.

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