The Next Economic Paradigm

Tag: corporations

How Collaboration Distorts Markets

Adam Smith From the un-encyclopedia

Long before the word “economics” and “capitalism” were even invented, a Scottish social philosopher and political economist named Adam Smith describes how wages are determined by competition between workers and competition between employers – not necessarily competition between workers and employers.

 An Inquiry into the Nature and Causes of the Wealth of Nations

Published on March 9th 1776, The Wealth of Nations, in part,  describes the fundamental dynamics of labor markets at the dawn of the industrial revolution.  In essence, when workers compete with each other for a limited number of jobs, wages fall.  When employers compete with each other for a limited number of workers, wages increase.

He also described what happens when workers decide not to compete with each other; and instead form unions.   Unions effectively distort the market toward increased wages.  Likewise, Adam Smith describes what happens when employers decide not to compete with other employers (tacitly or implicitly) for workers.  This activity also distorts the market, except, towards decreased wages.

Why are we fighting again?

Adam Smith does not mention specifically that these mutual distortions manifests in workers and employers competing with each other in lieu of competing with themselves.  Since the 1780’s, vast resources have been committed to preserving the fight without really questioning why the fight needs to exist in the first place.

A fish has no word for water

One of the ways that corporations form tacit collusion is with arcade job descriptions and skill codes.  When a company or an industry develops its own language, this makes it very difficult for outsiders to enter and insiders to leave.   Yet, this is precisely what needs to happen in order for the diffusion of innovation to flow across the entire economic spectrum.

For example;

A medical instrument manufacturer and an aerospace company and a sporting equipment company would have very different ways of describing the environment that they operate in.  However, an engineer designing a carbon fiber composite aircraft structure would be equally adept at designing a composite athletic prosthetics.  Yet today, engineers from multiple industries are rarely interchanged.  In fact, interchange has been largely suppressed.

Innovation Economics

If workers were able to cross industries they would benefit from increasing employment options and the ability to shift rapidly with economic cycles.  In Adam Smith’s analysis, this would drive wages up.  On the other hand, employers would also have a greater pool of qualified workers to hire, which in Mr. Smith’s analysis would drive wages down. Both would benefit from  increased exchange of  knowledge, access to innovation, transfer of wisdom, and diversification of risk.

If workers and employers could produce the exact same labor relations outcome by collaborating among themselves, there would be no need for the massive infrastructure of social division and political rhetoric that we have invested in preserving the fight.

Public Knowledge Asset Inventory

The Internet has made collaboration and interchange vastly more efficient than competing yet our economic system remains in the 1780’s.  We are watching a public knowledge asset inventory forming outside the construct of corporations.  We are watching corporations begin to index their skill codes to the public knowledge inventory rather than their internal ontologies.

We now need to recognize the importance in which we formulate this public asset.  If we do it right, astonishing value will be released.  If we do not, the invisible hand of capitalism will remain, well, invisible. As such, even a distorted image would be an improvement.

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Video: Money vs. Productivity

The questions are:

1. What is money? 2. Why is it important? 3. Why is it all so confusing?

The answers are:

1. You are money. 2. You are important. 3. You’re not supposed to know this.

This video provide an easy way to find the truth among the high-fiber ambiguity that has become our political morass. Oh Yeah, they want you to be confused because they don’t want you to act any differently.

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Is it Social Media or Corporate Media?

Visionaries Ho!

There are no shortage of intelligent and visionary social media celebrities.  They write great books about markets, social media tools, strategies, and on-line reputation for the benefit of the millions of people stuck on any part of the slippery social media learning curve.  They are infinitely generous with their knowledge and share it freely at countless conferences, blog posts, and syndicated articles.

There is, however, one thing that most of these Guru’s have in common – they consult to and are paid by large corporations. I could be considered part of this crowd for whatever my influence is worth.  So the question about causation is due – will social media develop as a function of corporate interaction with it?

If so, then it is not social media – it is corporate media.

This is no surprise, nor should there be any apparent concern, after all, everyone has to make a living and it is better that the corporations pay people to create content that benefits me.   The practice is conducted quite ethically too -most readily disclose where their financial support comes from and we all benefit from free information that helps us keep the playing field as level as it can be.

But at the end of the day, it’s all about eye-balls and bullhorns.  In order to produce eyeballs and bullhorns, people must be sitting at a computer or, at least, staring at a handset.  The longer you can keep people interacting with the brand instead of interacting with each other, the better off everyone is, right?

Social Media Consumer Advocate

A consumer advocate is someone who helps look after the best interest of the consumer for product safety and false advertising.  Social media is pushing the envelope of the corporate interaction with consumers.  “Advertising” no longer lends itself to the objective review of a billboard, commercial, or public statement.  Social Media Marketing is increasingly sophisticated and manipulative.  The vulnerable people; children and elders are no less vulnerable on social media, and may be more.

Social anomalies?

Some of the emerging research related to social media is surprising with increased instances of what can be considered social anomalies:

Infantilism; adults doing childish things like playing silly games in ‘public’
Attention deficit hyperactivity disorder; constantly checking for updates and new photos,
Depression and loneliness; preference of social media over real live interaction
Narcissism; The excessive love or admiration of one’s image of their self.

Is it social because it is media or is it media because it is social?

We need to ask ourselves what is the difference between computer enabled reality and computer simulated reality.   If we lose “causation” the entire body of analysis can be called into the question: is social media or is it corporate media?

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Is Freedom A New Economic Paradigm?

A New Economic System of the country of Montenegro is based on complete and unfettered economic freedom; in other words, the elimination of all barriers to conducting business.  Is Freedom A New Economic Paradigm?

Veselin Vukotić ‘s paper titled Economic Freedom and New Economic Paradigm, offers a case study that enlightens us as to some of the core changes, some easy and some difficult, that any proclaimed ‘new economic paradigm’ would place on people, culture, politics, and the markets.  From this insight, perhaps we’ll see a new paradigm emerge.

Freedom; A competitive Advantage

Montenegro has achieved a competitive advantage in their Eastern European region by reducing international trade barriers, treating foreign and domestic concerns equally, reducing “contribution” fees and other taxes, reduction of public spending, affirmation of private property, and encouraging entrepreneurship.   Veselin Vukotić  also notes that the concept of economic freedom is a complete theoretical and practical expression of an idea.  He quotes Plato:

The difference between concepts is the difference between starting ideas!

Therefore, he concludes that the idea of economic freedom is freedom of an individual to conduct business (earn money), and that business is the key factor of a society’s development and individual wealth.  While we now know that unfettered capitalism breaks down at some point, he does accomplish something important – the elimination of all government as a defining element of freedom.

The Singularity Solution

We know it is often easier to solve a problem if we can remove certain elements, even temporarily, and analyze components individually.  Suppose we eliminate Government from the equation, corporations would rule.  However, corporations are made up of individuals, so individuals would rule…they would rule whom?  The logic also breaks down.

There is one exception: what if all individuals were corporations and they ruled only themselves? Corporations are keeping government out of their affairs by keeping people off the books.  The solution is for everyone to structure their existence as a corporation contracting to each other for every conceivable business arrangement.  Heck, it only costs 40 dollars to open a business in the the U.S.

Self-regulating Freedom?

Knowledge would be shared freely, people would be paid for their productivity, diversity and strategic combination of knowledge would be rewarded.  Everyone would own their knowledge and would seek to accumulate more.   Trade barriers would be eliminated, taxes would be reduced, private property would be affirmed, and entrepreneurship would be encouraged.  Like a family, no corporation could become wealthy at the expense of another corporation for very long.

Would you be willing to pay the government to leave you alone? Is that Freedom or a new economic paradigm or both?

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A Learning Revolution

Today I received an invitation to join a poll, but it was not the Gallup organization.  Today, I was given some currency to trade – it was not dollars.  Today 1200 people read my ideas – but not through traditional media.  Today, I did not work for a corporation – but I did work and I did earn convertible currency. I voted 10-15 times today, but not for politicians.

Is this the way things will become?  Ask any 25 year old what their aspirations are and, by definition, that is the way things will become.

A Learning Revolution

Today, the Wall Street Journal is reporting a strange new paradigm of populist angst.  In the past, public sentiment would swing back and forth between anger against the corporations (liberals) and anger against government (conservatives).  Today, however, things are different. People no longer view these populist swings as opposing forces.  Rather, people see government and business as one big swindle that takes all of the assets of the people and delivering them directly to the hands of the rich and powerful.

“They’re [people] mad at institutions — all institutions,” said Karin Johanson, a Democratic strategist. “Nobody can underestimate the angst, or even fear, of the American voter right now…The institutions they were relying on which were assuring them of their security were not there.”

So, dear reader, here we sit at our computer screens fully rational and aware that there is nothing we can do to impact change at this macro level.  Sure, we can join fringe groups on Facebook, or we could write a letter to our so-called Representatives.  Or… WE CAN REVOLT!!! Except, who are we going to revolt against?  Government? , Corporations?, Each other?  It’s like attacking a cloud…no middle, no defined edges, and no distinguishing features, except lightening.

For example: (WSJ) The double-edged anger is creating difficulty for both parties. Voters are demanding solutions to problems in health care, but remain wary of both government agencies and private firms that could play a role in a solution. People are upset about deregulation and furious at re-regulation. They want government action, but not if it swells the deficit.

“The greatest movement within the tea party is ‘None of the above,’” said Jim Bancroft, a founder of the tea-party group in Hartford, Conn. Officials in both political parties “need to be totally removed — every single one of them,” he said.

It would really not have mattered if John McCain or Barack Obama were president.  The difference would have us entering the same vortex with either a scowl or a smile.    The job of the President in this day and age is not unlike US Airways Captain “Sully” Sullenberger – land the crippled jet on the icy river by gliding as slow as possible, as low as possible, as level as possible, for as long as possible and hope that the hull does not sink.

Whatever is left will become the new economic paradigm: the fabric of society must remain intact, capitalism must be preserved, and social priorities must be enabled. It will be neither socialism not capitalism – both have failed.  We need to learn Social Capitalism where social media is the dominant institution that issues a productivity based currency.   So sit back, keep your eyes, ears, and minds open. Learn from each other. Let the pilot do his job – love him or hate him, he’s got the rudder.

Photo credit:  Bill Moseley

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