Monday, 30 December 2013

The Weightless Economy


101010

``Can people eat 1s and 0s?'' by Quah, D.

December 2005

Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics


First, what the weightless economy isn't: It isn't just the knowledge-based economy. The knowledge-based economy might be taken to be nothing more than the proposition that knowledge matters for economic performance. Such an idea is both classical and new. It is classical in that the economists who invented growth accounting in the 1950s had already estimated over two-thirds of economic progress in the 20th century to be due to technical change, i.e., to ongoing progress in knowledge generally defined. Going back further, we might consider the first Industrial Revolution, where the deployment of machines such as spinning Jennies and steam engines significantly boosted economic performance. These machines were the physical embodiment of new knowledge. The world was therefore, by the time of this Industrial Revolution, already a knowledge-based economy. Take yet another example. Knowledge is very much the key ingredient in, say, the mathematical development of the properties of the square root of -1. (What else could be?) This knowledge allows understanding the properties of electricity and magnetism. Ultimately therefore, the spread of electricity usage throughout modern economies from 1899 on must be due to knowledge. Such an interpretation of the knowledge-based economy---perhaps mundane, arguably low-key, undoubtedly pervasive---applies not only to the past. Its relevance continues today in poorer parts of the global economy. The World Bank's 1998 World Development Report reminds us that certain very basic knowledge of health, sanitary procedure, and disease control has saved over 30 million West Africans from the affliction of river blindness. Turning to where room for improvement remains, a little knowledge of the presence of readily-available treatments will go a long way to alleviate the suffering of the 2 million who die each year and the 900 million made ill by the dehydrating effects of diarrhea. These examples of the economic importance of knowledge are classical, illustrating principles at work in any economy. They shed no light on what is new and important in the knowledge-based economy now. Instead, it is the weightless economy where the economic significance of knowledge achieves greatest contemporary resonance. The weightless economy, in this view, comprises four main elements:
  1. Information and communications technology (ICT), the Internet.
  2. Intellectual assets: Not only patents and copyrights but also, more broadly, namebrands, trademarks, advertising, financial and consulting services, and education.
  3. Electronic libraries and databases: Including new media, video entertainment, and broadcasting.
  4. Biotechnology: Carbon-based libraries and databases, pharmaceuticals.
(In principle, 3. and 4. could be grouped together in one encompassing category Libraries and databases. However, listing separately the silicon- and carbon-based forms helps emphasize the broad coverage intended.) A rationale and coherence inform the selection of these categories. The different items enumerated have two features in common: First, they are systems for managing knowledge. Second, they are knowledge-products, i.e., commodities whose physical properties resemble those of knowledge, regardless of whether the commodities themselves contain significant amounts of knowledge as traditionally understood. A visual metaphor might help. Appropriately interpreted, knowledge, at its most basic, is just a string of 1s and 0s, i.e., a bitstring. Any idea, any image, any information can be written as a bitstring. To read or interpret a bitstring, we use yet another bitstring. To manage bitstrings---to add them together, to merge them, to remove them, to mutate them---we use still other bitstrings. Bitstrings can be implemented in electronics, in silicon, or in carbon. The casing material is irrelevant: it doesn't affect how the bitstrings work, and it doesn't affect their value. Such a picture of the weightless economy brings its analysis close to mathematics developed earlier by Alan Turing and John von Neumann. The writings collected below attempt to expand on and criticize this theme. Another source is the knowledge trail on D.Quah picture on FathomFathom.com (search for "Quah"). A couple of Fathom stories freely available are Welcome to the weightless world (2000) and Going cheap on the Net (2000).
Danny Quah, dq@econ.lse.ac.uk
LSE Economics Department
Houghton Street
London WC2A 2AE

(Sure, there's some duplication here, but the stuff is infinitely expansible.)
Software tools are back here.

WEBSITES FOR THE INFORMATION ECONOMY

WEIGHTLESS ECONOMY COLUMNS AND ARTICLES

(by Diane Coyle)

  • Economic View, The Independent, 22 April 1996
  • The weightless economy produces a new breed of superstar, The Independent, 19 December 1996
  • We need new ways to measure the `weightless' economy, The Independent, 4 February 1997
  • Services make countries rich, says Bank, The Independent, 10 February 1997
  • Economics, but not as we know it, The Independent, 09 September 1997
  • The Weightless World, Capstone London and MIT Press Cambridge, 1997 Weightless World book cover
    (Diane Coyle's The Weightless World)
  • Why knowledge is the new engine of economic growth, The Independent, 23 April 1998
  • Let science drive economic growth forward (Enterprise Issues), The Independent, 17 March 1999
  • Getting the Measure of the New Economy (with Danny Quah), May 2002. iSociety at The Work Foundation

Many writings, still to be organized and annotated

  • Listing in World Wide Words
  • Has the IT revolution had its chips? (Mark Atkinson, The Observer, 27 October 1996)
  • Twin peaks: Ca ne se passe pas qu a la tele (Bernard Cazes, Les Livres et Les Idees, Societal, February 1997)
  • Economic growth in the information age: From physical capital to weightless economy (Gavin Cameron, Journal of International Affairs, Spring 1998, 51(2))
  • Weighing the `weightless economy' (Anthony Harris, The Times, 19 February 1997)
  • Policymakers are losing their grip on the weightless economy (David Howell, The Independent, 26 June 1997)
  • Weightless economy rewrites the rules (Charles Leadbeater, New Statesman, February 1998)
  • Living on Thin Air (Charles Leadbeater, 1999, Viking: Penguin Books, London)
  • Making it so: The weightless economy is crap (Denis MacShane, Tribune, 10 April 1998)
  • The Outlook: `Weightless economy' raises heavy issues (Kimberley Strassel, The Wall Street Journal Europe, 08 June 1998)
  • The European Economist interview: The Weightless Economy (Kimberley Strassel, The Wall Street Journal Europe, 25 January 1999)
  • The weightless economy (Economic Spotlight, No. 20, March 1999, Structural Issues, HM Treasury)
  • The Techno-Elite: Floating to wealth in a weightless economy (Robert Chote, p. 10, The Financial Times, 20 April 1999)
  • "In the beginning was the Command Line", Neal Stephenson. April 1999. Cars and Operating Systems. Selling 1s and 0s to the masses (Print version)
  • The World Economy Survey (Pam Woodall, The Economist, 28 September 1996)

(Columns, articles, and recent presentations by Danny Quah)

Full itemization occurs further below, but for those who want a quick peek into what I've written on this topic, some representative dissemination (i.e., nontechnical) material is:
  • The excess supply of knowledge (December 2005)
    A condensed version appears in Newsweek's Special Edition Issues 2006 The Knowledge Revolution: Why Victory Will Go to the Smartest Nations and Companies (December 2005 - February 2006), p. 43.
  • A weightless economy (December 1998)
    Published (in 18 languages): The UNESCO Courier, December 1998
  • The weightless economy: In whose interest? (April 2000)
    CEP's CentrePiece, Spring 2000, vol. 5 no. 1, pp. 28--30. PDF (essentially my presentation to the ESRC Social Science Conference, November 1999)
  • The weightless developing economy: Presentation to the United Nations Economic and Social Council (May 2000) PDF
    Published: Department of Economic and Social Affairs, Second Committee of the Fifty-fifth session of the General Assembly and the Economic and Social Council 2000
More technical papers include:
  • Almost efficient innovation by pricing intellectual property (May 2002) [Technical paper]
    [ and abstract]
  • 24/7 competitive innovation (April 2002) [Technical paper]
    [Paper and abstract]
  • Matching demand and supply in a weightless economy: Market-based creativity with and without IPRs (March 2002) [Technical paper]
    [Paper and abstract]
  • Spatial agglomeration dynamics (February 2002) [Technical paper]
    [Paper and abstract]
  • Technology dissemination and economic growth: Lessons for the New Economy (February 2002). Public Lecture
    The University of Hong Kong's 90th Anniversary Celebrations
    [Paper and abstract]
  • Demand-driven knowledge clusters in a weightless economy (April 2001) [Technical paper]
    [Paper and abstract]
  • The weightless economy in economic development (January 1999)
    [World Institute for Development Economics Research/UNU DP#155]
    Also, [CEP DP#417]. Published: Ch. 4 in Information Technology, Productivity, and Economic Growth: International Evidence, ed. Matti Pohjola, Oxford University Press, 2001
  • Internet cluster emergence (February 2000)
    [CEP DP#441]. Published: European Economic Review May 2000, vol. 44 no. 4-6, pp. 1032-1044.
    Easier to read:
    1. The mother of all Internet clusters (From a NASA satellite) Source
    2. [Groningen Conference, The Web as an Economic Phenomenon, 21 December 1999 (with pictures); getting waves in space to converge]
  • Increasingly weightless economies (February 1997) [Abstract]
    Published: Bank of England Quarterly Bulletin, February 1997, vol. 37 no. 1, pp. 49-56 (PDF version available here with thanks to the Bank of England's Inflation Report Division).
When a PDF version has been made available, it is likely easiest if your browser is configured to view PDF files online. If a PDF file appears corrupt, try clearing the disk (and memory) cache on your browser.
The full list is:
  1. The invisible hand and the weightless economy (May 1996, transcript from a public lecture 26 February 1996) [CEP OP#12]
    See also Discarding non-stick frying pans for economic growth (September 1996)
  2. Growth and dematerialisation: Why nonstick frying pans have lost the edge (October 1996) (Preprint:PDF)
    Published: CEP's CentrePiece, October 1996, vol. 1 no. 3, pp. 20-25
  3. Increasingly weightless economies (February 1997) [Abstract]
    Published: Bank of England Quarterly Bulletin, February 1997, vol. 37 no. 1, pp. 49-56 (PDF version available here with thanks to the Bank of England's Inflation Report Division).
  4. The weightless economy: Nintendo and heavy metal (February 1997) (Preprint:PDF)
    Published: CEP's CentrePiece, February 1997, vol. 2 no. 1, pp. 25-27
  5. The weightless economy packs a heavy punch (May 1997) (Preprint:PDF)
    Published: The Independent on Sunday, 18 May 1997 (Business, p. 4)
  6. The weightless economy: Weight of the evidence (June 1997) (Preprint:PDF)
    Published: CEP's CentrePiece, June 1997, vol. 2 no. 2, pp. 25-26
  7. Weightless economy radio interview (transcript)
    ABC (Australia) Radio National Background Briefing, 28 September 1997
  8. As productive as a French farmer (September 1997)
    Published: The Asian Wall Street Journal, 29 September 1997 (PDF)
    A (slightly longer) preprint ``TFP myths for East Asia's fast-growing economies''[PDF] is also available.
  9. The weightless economy: ``Europe'' in the weightless economy (October 1997) (Preprint:PDF)
    Published: CEP's CentrePiece, October 1997, vol. 2 no. 3, pp. 29-32
  10. Eating 1s and 0s: Interactive digital media and the weightless economy (November 1997) (PDF)
    [Keynote address delivered to `` The Artist, the Citizen, and the Entrepreneur,'' an international seminar for the Council of Europe (organized by ARTEC and CICV in collaboration with the Arts Council of England) 26 November 1997]
  11. NOT the revenge of the nerds (April 1998)
    Published as `` Devise and conquer,'' in: Information Strategy (The Economist Group), May 1998, pp. 18-21 (Reprint version available here with thanks to Information Strategy).
    (Related) Informed Business Services: 13 May 1998 Press Release on the Knowledge Management Informed Debate, 25 June 1998 (Transcript)
  12. Policies for the weightless economy (April 1998) (PDF)
    Social Market Foundation Lecture, 21 April 1998
  13. The weightless economy: ``Planes, trains, and technological advances'' (May 1998) (Preprint:PDF)
    Published: CEP's CentrePiece, June 1998, vol. 3 no. 2, pp. 27--29
  14. Creating wealth in the weightless economy [Presentation, 18 June 1998]
    CEPR Lunchtime Briefing, 18 June 1998
  15. Knowledge Management Informed Debate 25 June 1998
    (Transcript)
  16. How weightless is the UK economy? [Seminar, July 1998]
    10 Downing St. seminar, 03 July 1998
  17. Boom or Bust [Radio interview]
    BBC Radio 4 Analysis programme with Bridget Roswell, 08 July 1998 (repeated 12 July 1998)
  18. Does it matter that Britain no longer makes things? [Radio interview]
    BBC Radio 4 The World This Weekend programme with James Cox, Sunday 16 August 1998
  19. The weightless economy: No heavy lifting (August 1998) (Preprint:PDF)
    CEP's CentrePiece, Fall 1998, vol. 3 no. 3, pp. 30--32
  20. Creating wealth in the weightless economy [Corporate briefing]
    SNS Studiefvrbundet Ndringsliv och Samhdlle, Center for Business and Policy Studies, Stockholm, 29 September 1998
  21. Growth and wealth creation in the weightless, knowledge-based economy (October 1998) (Preprint:PDF)
    Colloquium, Belgian Enterprise Foundation, Brussels, 07 October 1998
    Published (in 3 languages): Invitation pour la societe de la connaisance. Aspects lies au management et a l'organisation du travail. Actus du colluque organise le 7 Octobre 1998 par la Fondation de l'Enterprise Fondation de l'Entreprise, Bruxelles, 1998
  22. A weightless economy (December 1998)
    Published (in 18 languages): The UNESCO Courier, December 1998
  23. The weightless economy in economic development (January 1999) [Technical paper]
    [World Institute for Development Economics Research/UNU DP#155]
    Also, [CEP DP#417]. Published: Ch. 4 in Information Technology, Productivity, and Economic Growth: International Evidence, ed. Matti Pohjola, Oxford University Press, 2001
  24. The weightless economy: Weightless Property (February 1999) (Preprint:PDF)
    CEP's CentrePiece, Spring 1999, vol. 4 no. 1, pp. 30--32
  25. The weightless economy in growth (March 1999) (PDF)
    Published: The Business Economist, March 1999, vol. 30 no. 1, pp. 40--53
  26. A weightless economy on the Internet (January 1999)
    SNS Studiefvrbundet Ndringsliv och Samhdlle, Center for Business and Policy Studies Conference The Internet and Society, Stockholm, 25 January 1999
  27. Increasingly weightless economies and economic growth (January 1999)
    DTI/CEPR Conference on the Economics of the Knowledge-Driven Economy, London, 27 January 1999
  28. Doing business in the weightless economy (February 1999)
    Andersen Consulting European Technology Summit, Cannes, 01 February 1999
  29. The weightless, knowledge-based economy (March 1999)
    Anglo-German Foundation and KPMG, Berlin, 19 March 1999
  30. Cluster emergence on a global continuum (March 1999) [Technical paper]
  31. E-commerce and the weightless economy (June 1999)
    Economic Policy Roundtable, Frankfurt, 11 June 1999
  32. The weightless economy: Because it's your weightless economy too (June 1999) (Preprint:PDF)
    CEP's CentrePiece, Summer 1999, vol. 4 no. 2, pp. 30--32
  33. Knowledge, the weightless economy, and economic growth (June 1999)
    (Australia) Department of Industry, Science, and Resources. Canberra, 18 June 1999
  34. Knowledge and competitiveness (July 1999)
    ESRC and Department of Trade and Industry. DTI Conference Centre, London, 12 July 1999
  35. The weightless economy: Tradeoffs going cheap on the Net (October 1999) (Preprint:PDF)
    CEP's CentrePiece, Winter 1999, vol. 4 no. 3, pp. 28--32
  36. Unpacking globalisation and new technology in Britain (16 November 1999)
    ESRC Social Science Conference Future Britain: A Global Future?, London
  37. BBC Newsnight: New economy, 12 January 2000
  38. Internet cluster emergence (February 2000) [Technical paper]
    [CEP DP#441]. Published: European Economic Review May 2000, vol. 44 no. 4-6, pp. 1032-1044
  39. Cross-country growth comparison: Theory to empirics (February 2000) [Technical paper]
    [CEP DP#442]
  40. Bloomberg TV: Internet economy, 25 February 2000
  41. The weightless economy BBC Radio 4 Analysis programme, May 2000 (Recorded Cape Town, South Africa)
  42. Policies for the weightless economy in economic development (May 2000)
    Panel on Development of information technology in a knowledge-based economy, United Nations Economic and Social Council 2000, New York, 05 May 2000.
    Published: UNU WIDER Angle August 2000
  43. The weightless economy: In whose interest? (April 2000)
    CEP's CentrePiece, Spring 2000, vol. 5 no. 1, pp. 28--30. PDF (essentially my presentation to the ESRC Social Science Conference, November 1999)
  44. ICT++ in Economic Performance (May 2000)
    Merrill Lynch Panel on Controversies that Matter for Markets, London, 09 May 2000. PDF
  45. The Weightless Economy (May 2000)
    Norbolsa Annual Conference, Bilbao Spain, 23 May 2000
  46. The weightless knowledge economy (June 2000)
    Keynote address to Asia-Europe Young Leaders Symposium IV, Limerick Ireland, 13 June 2000. PDF transcript
  47. The new weightless economy (September 2000)
    EVA - Centre for Finnish Business and Policy Studies seminar. Nokia HQ, Helsinki, 08 September 2000 PDF transcript Official EVA transcript and summary
  48. Some distinctive aspects of the New Economy (September 2000)
    NIESR - Technical Progress, Economic Growth, and the New Economy. London Chamber of Commerce and Industry, 29 September 2000
  49. The weightless new economy (October 2000)
    European Institute LSE and the British Council - Gurukul Chevening Senior Scholarship Programme on Globalisation and Leadership. London, 05 October 2000
  50. New technology, new economy (October 2000)
    Enterprise LSE - Keynote session, Merrill Lynch Executive Program. London, 13 October 2000 PDF transcript
  51. The Weightless Economy: Strategic Implications for Business and Government (December 2000)
    Commonwealth Top Management Programme: Transformation towards the Knowledge Economy. Penang Malaysia, 09 December 2000 PDF Presentation slides (3/page)
  52. Look to consumption, not production, for key to growth (January 2001)
    Letter to Editor, Financial Times 05 January 2001
    [Text]
  53. B2C [pdf] - English translation from Kauppalehti, Finnish independent business news (January 2001)
    UNU WIDER media -> 'In Media 2001' -> Kauppalehti, 16 January 2001
  54. ICT Clusters in Development: Theory and Evidence (February 2001)
    [Preprint and abstract]. Published: EIB Papers 2001, vol. 6, no. 1, pp. 85-100
  55. Is there an e-Economy? (March 2001) 3/page PDF slides
    Opening session, The European Commission's The e-Economy in Europe conference, Brussels 01 March 2001
  56. Demand-driven knowledge clusters in a weightless economy (April 2001) [Technical paper]
    [Paper and abstract]
  57. Technology dissemination and economic growth: Lessons for the New Economy (February 2002). Public Lecture
    The University of Hong Kong's 90th Anniversary Celebrations
    [Paper and abstract]
  58. Spatial agglomeration dynamics (February 2002) [Technical paper]
    [Paper and abstract]
  59. Matching demand and supply in a weightless economy: Market-based creativity with and without IPRs (March 2002) [Technical paper]
    [Paper and abstract]
  60. 24/7 Competitive Innovation (April 2002) [Technical paper]
    [Paper and abstract]
  61. Almost efficient innovation by pricing intellectual property (May 2002) [Technical paper]
    [Paper and abstract]
  62. Digital goods and the New Economy (October 2002)
    [Paper and abstract]
  63. The new economy: Challenges to economic policy (May 2003, Helsinki) Program and video
  64. History matters: Trading technologies and the marketplace for ideas (LSE Magazine, June 2003).
    Preprint
  65. Spatial cluster empirics (June 2003) with Helen Simpson
    [Paper and abstract]
  66. World Science Forum (November 2005)
    [Presentation: The production and consumption of knowledge.
    (WMV format) video of session]
  67. The excess supply of knowledge (December 2005)
    Condensed version in Newsweek's Special Edition Issues 2006 The Knowledge Revolution: Why Victory Will Go to the Smartest Nations and Companies (December 2005 - February 2006), p. 43.
  68. A World Without Intellectual Property (Rights) (January 2006)
    CEO Series Workshop, World Economic Forum Annual Meeting

Economics for Humans

          
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* Book: Betterness: Economics for Humans. by Umair Haque. Harvard Business Press Books, 2011


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From the publisher:
"Betterness: Economics for Humans" is a powerful call to arms for a post-capitalist economy. Umair Haque argues that just as positive psychology revolutionized our understanding of mental health by recasting the field as more than just treating mental illness, we need to rethink our economic paradigm. Why? Because business as we know it has reached a state of diminishing returns--though we work harder and harder, we never seem to get anywhere. This has led to a diminishing of the common wealth: ... Read More »
"Betterness: Economics for Humans" is a powerful call to arms for a post-capitalist economy. Umair Haque argues that just as positive psychology revolutionized our understanding of mental health by recasting the field as more than just treating mental illness, we need to rethink our economic paradigm. Why? Because business as we know it has reached a state of diminishing returns--though we work harder and harder, we never seem to get anywhere. This has led to a diminishing of the common wealth: wage stagnation, widening economic inequality, the depletion of the natural world, and more. To get out of this trap, we need to rethink the future of human exchange. In short, we need to get out of business and into betterness." (http://hbr.org/product/betterness-economics-for-humans/an/11135-PDF-ENG)


Excerpts

Business Isn’t As Profitable As Betterness

Umair Haque:
"Academics have spent decades studying in great detail whether responsible companies are also more profitable companies, and three decades of evidence suggest that betterness yields greater equity returns, asset returns, and profitability. Researchers Marc Orlitzky, Frank L. Schmidt, and Sara L. Rynes found that responsibility was significantly positively correlated with financial performance: “corporate virtue,” in their words, “is likely to pay off.” Their work (PDF) was a meta-analysis of 52 studies, with over 33,878 total observations. Whew, that’s a whole lotta outperformance. How is that outperformance achieved? One pioneering study that I like concluded that responsibility fuels outperformance because it is risk management: better insurance against adverse future events. "If you can’t demonstrate that at the very least you’re not harming people, you probably won’t have a seat at the table. "
In People and Profits?, a landmark book reviewing three decades of research, Harvard’s Joshua Daniel Margolis and the University of Michigan’s James P. Walsh found that “when treated as an independent variable, corporate social performance is found to have a positive relationship to financial performance in 42 studies (53%), no relationship in 19 studies (24%), a negative relationship in 4 studies (5%), and a mixed relationship in 15 studies (19%).” They say, pithily: “the findings might be encouraging for advocates of corporate social performance and problematic in the eyes of opponents and critics.” In a recent interview, Margolis said, “There have been 80 academic studies in the last 30 years attempting to document the relationship between social enterprise activities and corporate financial performance. The majority of results (53%) point to a positive relationship, and only 5% of studies indicate a negative impact on the bottom line."
Economics isn’t physics, and the messy human world doesn’t obey ironclad laws. Yet, the link between greater returns and what isn’t quite yet at this point what I’d call betterness but more like not-worseness--for “responsibility” is essentially the notion that a firm inflicts less damage than rivals do--is one of the strongest relationships to be found in modern economics, grounded in thirty solid years of evidence. I’d conclude: business as shoulder-shruggingly usual isn’t as profitable as not-worseness.
And I’d bet that’s an arc that will continue an unbroken ascent toward full-blown betterness. My claim isn’t merely that “corporate responsibility is associated with greater profitability,” based on several decades of backward-looking evidence, nor is it that responsibility is the cause of profitability. It’s subtler and forward looking. Rather, I’m suggesting that in a resource-constrained, hungry, transparent, winner-take-all world, what we’re used to calling “responsibility” and seeing as a luxury will be akin to table stakes in tomorrow’s game, a competence necessary to enter the arena of human exchange. If you can’t demonstrate that at the very least and at the barest minimum, you’re not harming people, nature, communities, society, or tomorrow’s generations, forget about vanquishing your rivals; you probably won’t have a seat at the table.
And at that table, the measure of success isn’t likely to simply be better profits, equity returns, asset returns, and shareholder value. Those are part of an industrial-era definition of success that’s already increasingly out of date.


The bigger picture of twenty-first-century competition is richer, more nuanced and complex. Companies are beginning to be judged against a whole new set of criteria by customers, governments, communities, employees, and investors. They’re already saying, so you made a profit. Yawn. Did you actually have an impact? Did what you do have a positive, lasting consequence that was meaningful in human terms?
Harvard Business School’s Ioannis Ioannou and Georgios Serafeim recently found that socially responsible firms receive more favorable ratings from securities analysts: “We find evidence that in earlier periods, CSR [corporate social responsibility] strategies were perceived as value-destructing and thus, had a negative impact on investment recommendations, whereas for later periods, CSR strengths are perceived as value-creating, reversing the earlier negative into a positive impact on recommendations: analysts are more likely to recommend a stock ‘buy’ for CSR-strong firms in later years.”
See what just happened? The folks that recommend to the world’s investors whether to buy or sell your shares just upended their expectations about better and worse--and in which direction prosperity lies. Decode the message inside the logic, and they’re issuing a manifesto worthy of an uprising. It says: Want to create shareholder value in the twenty-first century? Tough. Now, it depends first on not destroying real wealth--and better yet, on creating it. Continue to map that trajectory, and here’s what you might conclude: we’re heading toward a world of human exchange in which hard-nosed measures of a company’s impact are as important to a company’s vitality and viability as yesterday’s weary conceits of “profit.”

Responsibility is strongly associated with greater profitability, equity and asset returns, and shareholder value creation. But that’s no longer good enough. Today, the bar is being raised; success is itself changing. Those are yesterday’s definitions of success, and more importantly, arcing toward betterness lets companies begin outperforming on tomorrow’s measures of success, which are going to hinge on the creation of real wealth." (http://www.fastcoexist.com/1679052/business-isnt-as-profitable-as-betterness)


The Corporation As You Know It Is Probably Obsolete

Umair Haque:
"There is a groundswell in new kinds of corporate forms that is gaining steam. Consider the rise of “for-benefit” corporations. They’re a new kind of corporate form, built from the ground up to create wealth, instead of being tiresomely legally bound to return maximum profit to shareholders.
Imagine, for a moment, the new organizational possibilities that the novel legal and contractual design of these organizations opens up, where bonuses are tied to marginal wealth attained by people, communities, and society, roles are created to manage benefits (think “chief impact officer”), and transparent accounts demonstrate real, meaningful benefits, not earnings. You’d have an organization geared to do explosively more than just buy and sell crap that’s slightly updated every year or so, on yesterday’s moldy old terms. You’d have instead an organization tuned not just to make stuff, but to have real relationships, to meaningfully enhance lives, to push the boundaries of elevating human potential, to laser-lock on to creating wealth, to do all the above in ways that matter, count, last, endure, inspire, amaze, and delight--and to do all the above habitually, consistently, and repeatedly. "You might begin to nervously ask yourself: 'Is there a bullet out there somewhere with my name on it?'"
Now put that new arsenal of enterprise, its disruptive new set of capabilities, its unexplored, undeployed firepower in the hands of someone with the unsatisfied hunger, unyielding determination, and laser-sharp insight of a Steve Jobs, Sergey Brin, Larry Page, or Richard Branson, and you might just begin to nervously ask yourself: “is there a bullet out there somewhere with my name on it?” Sure, the fact is that there’s no corporation in the world that works quite like this--yet. But the truth is that when there is, it’s going to put “business” as usual out of business. Ultracompetition Can Only be Won Through Betterness
In the twentieth century, rivalry was most often about a single kind of counterorganization: competitors. That was yesterday: in the twenty-first century, a new range of insurgent counterorganizations must be contended with, hell-bent on toppling imperious incumbents from their comfy, cushy thrones. They are markets, networks, and communities composed of a huge variety of actors: NGOs, peer and trade groups, customer and supplier communities, activist investors, and labor organizations, to name just a few.
Hypercompetition is an increase of like-for-like competitive intensity. Ultracompetition is increased competitive intensity across new kinds of counterorganizations. This turns up the pressure dramatically. Ever consider students a counterorganization? Think again. At Harvard Medical School, students self-organized to pressure professors to stop accepting gifts from pharmaceutical companies, citing a clear lack of interest and diluted objectivity. The result? Harvard profs stopped accepting gifts, and the structure of pharmaceutical marketing changed, just a tiny bit.
The lesson? Often, you can’t negotiate and bargain with ultra-competitors; the Harvard Med students weren’t interested in selling out, at any price. And you can’t lock out them out or ignore them; ultracompetitors don’t go away. Expand a small number of Harvard Med students to a metamovement of thousands of protests consisting of millions of people erupting across the globe, and you begin to get the picture of just how rapidly ultracompetition is intensifying.
To meet the new challenges of ultracompetitors requires organizations to learn how to become ultracompetitive. Ultracompetition isn’t just quantitatively greater, but qualitatively different. That means, in turn, it can’t be responded to simply by doing more of the same, harder, better, and faster, but only by better, in terms of real marginal wealth creation. It can’t be responded to through better marketing, cheaper products, or bigger threats. It requires a sea change in how to compete. Our products and services may be competitive when measured against our rivals, but are they competitive when measured against the full spectrum of counterorganizations?
For mere businesses, the answer is almost always no. Like Big Food, Big Pharma, Big Energy, and Wall Street, they are increasingly vulnerable to ultracompetitors. Companies in betterness, in contrast, are learning that the key to answering the threat of economic insurgency isn’t to ignore it, deny it, or try to crush it, but to redraw the boundaries of competitiveness." (http://www.fastcoexist.com/1679054/the-corporation-as-you-know-it-is-probably-obsolete)


The Next Global Economy Asks Companies To Create More Than Just Profit

Umair Haque:
"The global economy is a human construct--a tool. And every so often, it gets radically updated, as it did after World War II at the historic Bretton Woods conference, where a new global monetary and financial architecture was laid down.
Already, economists at governments, universities, and international agencies are hard at work laying the groundwork for the next global economy. Its contours? New systems of national accounts that explicitly count not just gross product, but the full spectrum of wealth creation. "Like a car that goes nowhere, a company that is useless to people, communities, the natural world, and future generations has no use."
I’ve called for countries to build national balance sheets, that take into account more than just GDP. Some countries are already taking baby steps in that very direction, and when they get there, the terms of an authentically beneficial human exchange will change, probably radically.
In the United States, the State of the USA project, under the guidance of the National Academy of Science, is starting to utilize hundreds of indicators to measure different kinds of wealth: education, health, and the environment, to name just a few. Economists in America, France, and Sweden are busy updating national accounts to measure not just industrial output in financial terms, but real wealth in human terms.
When this great shift is complete, companies will face a new hurdle: in a twenty-first-century global economy, built on holistic national accounts, they will have to prove that they earned returns in next-generation terms, those that flowed into a positive impact and weren’t earned through negative impact. Those that can’t will quickly be revealed as perhaps financially “profitable,” but economically bankrupt because they will be able to contribute little, if anything, to better, more accurate, valid, and meaningful measures of economic welfare.
Here’s what the new rules of competition might force you to conclude. Useless is useless. Like a car that goes nowhere, a company that is useless to people, communities, the natural world, and future generations has no use. Destroying the Common Wealth is easy, abundant, and cheap. It is what the vast majority of organizations do. Enhancing it, in contrast, is the scarcest, rarest, and single most disruptive capability an organization can possess. Betterness is the future because business isn’t good enough for people, communities, society, investors, governments--all of whom are demanding it--or even for companies, which are less and less able to survive on its dwindling morsels of profitability. "Yesterday’s arid, adversarial, and arrogant conception of advantage doesn’t cut the mustard."
Hence, in the twenty-first century’s new competitive landscape, yesterday’s arid, adversarial, and arrogant conception of advantage doesn’t cut the mustard. Next-generation advantage isn’t merely competitive; it is generative. You may best your industrial-age rivals at the practice of “business,” but that’s no guarantee of having created enduring wealth and, hence, little foundation for relevance to constituencies that are beginning to fist-poundingly demand it. In this new landscape, next-level advantage is generative (not just competitive).
Poiesis--the root word of poetry--means to create, to generate. In the words of the great philosopher, Martin Heidegger, it is a transformative “bringing forth.” Companies in betterness generate new wealth, and a generative advantage means being able to multiply the Common Wealth to a greater degree than rivals. Creating wealth means adding to our metaphorical buckets, instead of emptying them--whether social, intellectual, human, emotional capital, or beyond.
From an economic perspective, generative advantage is about creating a surplus in authentic wealth, not just a skyrocketing share price. It means a larger multiplier than rivals, more real wealth created per dollar, yen, or renminbi earned.
Further--and crucially--by wealth creation, I refer not merely to “triple bottom lines” or other near-term measures championed by sustainability advocates. Economically questionable, they’re often half-measures of flows, not stocks, and more crucially, they’re often measures of inflows, flows into the firm, not outward to the Common Wealth. So, for example, by the creation of intellectual capital, I don’t merely mean that the firm itself books more patents and trademarks of its own, but that its customers are demonstrably smarter. By the creation of social capital, I don’t mean that a firm enjoys more trust with constituencies, but that constituencies are able to form closer, more coherent relationships. Creating wealth means igniting it in your constituencies, bringing forth their potential to live meaningfully better.


Companies in business often can’t ignite a generative advantage, because they have chosen instead to gain competitive advantage. Beating competitors doesn’t mean that you have actually created, generated, or ignited any wealth, merely that you have either prevented others from doing so or that you have captured a larger share of the wealth that they have created. Taken to the limit, competitive advantage becomes the living expression of what economists call rent seeking. Wikipedia offers an easily understood definition of the term:
- Rent seeking occurs when an individual, organization, or firm seeks to earn income by capturing economic rent through manipulation or exploitation of the economic environment, rather than by earning profits through economic transactions and the production of added wealth.
For example, retailers like Tesco compete by building land banks--hoarding prime locations to lock out rivals, while never building on them. That leads to a competitive advantage, but it’s the denial of generative advantage because the Common Wealth is damaged, instead of enhanced. Pharmaceutical players spend billions influencing doctors, seeking control over their key distribution channel. The result is competitive advantage, but not poiesis; marginal human potential isn’t brought forth when clinicians overtreat patients and when doctors prescribe drugs that benefit themmost instead of prescribing the best drugs at the lowest cost. The list is endless, but the story’s the same: rent seeking.
Merely capturing more rent can never yield a surplus. When Tesco blocks rivals from opening shops in your neighborhood and jacks up prices, the added margin isn’t value that has been created anew. It is simply a transfer of value from you to Tesco. No marginal surplus of higher-order capital has been created.
Generative advantage and competitive advantage are like night and day. Adversarial, arrogant, and alienating, competitive advantage is often extractive. It can be enjoyed without creating any wealth, and indeed, simply by transferring wealth from others. Hence, competitive advantage isn’t concerned with poeisis, generating surplus wealth for tomorrow, but with its very opposite, capturing value from today. So where orthodox business seeks merely to capture rent from an existing surplus, betterness seeks to create an authentic surplus in real wealth.
So why don’t more organizations create a generative advantage by multiplying the Common Wealth and put their clunking, wheezing rivals out of their misery? Because they can’t. Though they might have been built to last, built for greatness, or built to innovate, they weren’t built for betterness. The foundation of next-level advantage stems from reimagining human organization, not changing the structure of our companies yet again, but reconceiving why we built them in the first place and what we want them to do for us." (http://www.fastcoexist.com/1679058/the-next-global-economy-asks-companies-create-more-than-just-profit_

Banking IT crisis

 

The following is brief resume of an interesting bbc radio 4  programme. An audio link is also added which explains in more detail.

Blogger Link http://www.p2pfoundation.net/Transfinancial_Economics
 
Thursday 26 December 2013/ The Report
 
 

The 'Cyber Monday' computer meltdown that affected RBS and NatWest customers as they tried to bag bargains in the run-up to Christmas was just the latest in a string of IT glitches that have plagued the big UK banks in recent years.
But is there a greater problem than the inconvenience caused for shoppers? Melanie Abbott talks to those who have worked on the huge, ageing computer systems at the heart of the UK banking system and finds out that banks like RBS face a massive dilemma - spend billions replacing their 'mainframes' or risk bigger, more serious problems in the next few years.
Melanie finds out about the scale and size of the IT systems behind our everyday transactions as she becomes the first journalist allowed access to one of the secret data centres that power the banking payments system at Vocalink. And she hears from Andrew Tyrie, chair of the Treasury Select Committee, about the urgent need to solve the banks' IT problem before they damage the entire financial system.



http://www.bbc.co.uk/programmes/b03m7zms

A Listing of Economic Systems

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From Wikipedia, the free encyclopedia
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An economic system is a specific set of social institutions which deals with the production, distribution and consumption of goods and services in a particular society.

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Systems science portal
An economic system is a specific set of social institutions which deals with the production, distribution and consumption of goods and services in a particular society.

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This category has the following 20 subcategories, out of 20 total.

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The following 111 pages are in this category, out of 111 total. This list may not reflect recent changes (learn more).

 

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Will Big Data keeps its promise?

Blogger Ref   https://wiki.p2pfoundation.net/Transfinancial_Economics The following link has very important implications for economics e...