Friday, August 21, 2009

The Information Age and the effect on the middle class

Nicholas Carr’s book The Big Switch has been on my mind this week. In my opinion: a must read. Besides the IT impact, it also looks at Cloud Computing and the networked world from a social-economical point of view. For instance: the similarity and difference between the shift into the Industrial Age and the shift into the Information Age is explicitly made.

But, I’m not sure if I totally concur with the proposed negative effect on doing work and the erosion of the financial strength of the middle class.

Without a doubt, when shifting into the industrial age, the way of doing work and business changed completely. Forever. Part of this was the introduction of the efficient production process and the big corporations (as we still know today). Economy of scale.

Because of this (but not only), the middle class flourished and became wealthier. Workers got more, and bought more. And, this new and readily available thing called “electricity” meant never before seen products. Which were sold. More production was needed. Bigger salaries. Et cetera, the virtuous circle is clear. (I’m leaving the big depression out of this, which you might not agree uppon). This process gave a more healthy spread of the wealth.

The statement that is given is that when the Information Age enters its mature state, the effect on the middle class will be totally different. The middle class will financially lose ground and the rich/poor ratio will skew; like it did before the Industrial Age. Perhaps even more (one signal is the Long Tail paradigm seen “dark”, were everybody can join in for nothing, and only a happy few take all the apples. I.e.: YouTube.).

This got me wondering. Is this true for all? Make no mistake, I think there’s a clear-cut case for the media industry: newspapers, music, films, et cetera. It’s being overwhelmed with free and readily accessible information, sharing and amateur production(s). The real deep professional's part gets lost in the shallow waters of information overload (although, "gets lost" doesn't mean "dissapears").

In fact, one can state that: everything that can be virtualized or digitized can succum to the zero cost of (sharing) information-paradigm.

A small, non exhaustive list of industries:

- Automotive

- Consumer Products

- Energy & Utilities

- Financial Services

- Healthcare

- Industrial Machinery

- Nonprofit & Public Sector

- Retail

- Technology

- Telecommunications

- Transportation Services

And Media

I’m a strong believer that the true digital (and networked) world in which we live (and which will further mature), combined with the steep increase in abundance of bandwidth, will have a massive impact in the way we do our work and how we organize our industries and business (although, a shift to IPv6 will be mandatory). A signal as “going in to the cloud” is one of them (let’s try to use this phenomenon to take on the energy problem the world faces?). Another one is the further and more swift rise of the knowledge worker and the service sector.

But, does this mean that all the industries and its workers as we now know them are threatened in their existence? (Here, I over-dramatize the statement to try to make a point). My statement: Does every industry, as summarized above, “suit” the thesis presented?

If not, what will be the effect for the middle class and the way of work? Will there come another (not anticipated?) positive spiral to next nirvana (again, dramatized)?

What’s your opinion?

1 comment:

Robbert said...

Hi Vince,

well I believe all big companies will fall and have to shrink to the level they actually can adapt and be agile. So YES, big companies will be threatended in their exsistence! For the middle class workers the extinction of big companies is a chance to work for a small of medium sized firm where they can do their jobs and have influence on how this job will be organized. In my opinion the answer to this question at first will be different for different parts of the world. In the third world more and more production activities will be done over there. But as prices and wages grow over there the trigger to outsource production (this is still needed in the Information Age) will be less and less!