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In a fully digital economy will you still be needed to work in a factory or sit at an office-desk?

Posted By Administration, Tuesday, March 5, 2019

Paul Tero a member of our Emerging Fellows program proceeds with his marvelous journey to the land of digital economy in his third blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Work. Whether we sit in an office, walk in a manufacturing facility, or perform some other task, those of us who work are living examples basic economic theory. We are all playing our part in turning an input into an output. We could be making sales calls to increase demand for a product, driving a truck to deliver raw materials, or even developing software to make the process better. Whether our organisation produces goods or services, we are all being paid to perform our part somewhere along the value chain.

 

The economy of tomorrow, the time when teenagers of today have teenage grandchildren, is more than likely to be a fully digital economy. We can see evidence of this transition already. The value chain decades ago was all about atoms, all about making and using physical goods. Today it is a mix of atoms and bits, it is an economy where value is created in the digital sphere as well as the physical sphere. Tomorrow the value chain may well be dominated by that which is digital.

 

Consider the primary industries. Aren’t mines and farms becoming more automated? What about the secondary industries of manufacturing and construction? Isn’t automation taking hold there as well? Even for higher value sectors such as finance, health and professional services we are witnessing inroads being made by either automated or intelligence-laden digital processes. It can be argued that there will be less employment in industry sectors that create value out of atoms. Even though the value of these sectors is growing across the OECD, related employment is largely stagnant.

 

Where is value created in the digital economy and what part do workers play in it? Value in the digital economy is created in the manufacture of ICT hardware, in the creation of software and services that use software, and in the collecting, processing and disseminating of data and information.

 

Regarding the manufacture of ICT hardware, it is not too hard to see full automation in production and logistics. But in the research, development and design phases we humans will still be critical for success. Regarding the creation of software and software-based services, is it not too far-fetched to contemplate software writing software? Where designers set the input and output requirements for new software or a new service, and the computer creates and tests the complete set of algorithms and interfaces. Finally, regarding the management of data and information. Apart from employees performing regulatory oversight, it is possible to imagine the only other scenario in which human involvement is necessary is where faulty data collection sensors need to be replaced. Given this, what then is the response to the headline question?

 

The answer is a qualified yes. While there are many factors that should be taken into consideration, and which are being ably explored by my Emerging Fellow colleagues, the foundational truth is that an economy is there to serve society. For we grow things, we produce things, we teach things, we regulate things and so on for our individual and collective benefit.

 

Even though you may accept the propositions that (a) we are moving to an economy that is dominated by bits and, (b) just like production involving atoms having become more automated, so too will bits-based production. We will still be human. And even though what we value and how we pay for it will more than likely change, there will still be economic production to serve the needs of the population. So yes, the factory will still be around to produce physical goods, but the types of work that are open to humans are those that are less automated. And yes, the office-desk job will still be around, but it too will involve non-automated people and thinking skills.

 

Even though what will be available and how it is produced will be different from today, basic economic theory will still apply. No matter the industry sector, in a fully digital economy people will still have roles as productive links somewhere in the value chain.

 

 

© Paul Tero 2019

Tags:  economics  production  work 

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Could social entrepreneurs do better than capitalists?

Posted By Administration, Sunday, February 24, 2019
Updated: Wednesday, February 27, 2019

Esmee Wilcox has published her second blog post in our Emerging Fellows program. She believes social entrepreneurs are succeeding where they understand how to make use of the creative capital. The views expressed are those of the author and not necessarily those of the APF or its other members. 


It’s easy to think of social entrepreneurs as providing the antidote to modern capitalism. Seen from this perspective, social entrepreneurs are likely to remain at the margins of unreformed capitalism in the latter half of this century. The production of social value out of balance with the primacy of the economy. But hidden within the creative means of producing social goods lie the opportunities to tackle complex global challenges. So where are there hints of these new social norms that could displace how we value economic capital? How might this help us transition towards a world rich in creative capital?

Looking back, there are examples of nineteenth and twentieth-century capitalism that shifted the organising model towards greater social benefits. The Co-operative movement is well known. Public enterprise perhaps less so, but particularly influential in the USA in shifting popular perceptions of what was important for society at large. From the distribution of ice for food safety in rapidly growing municipalities in the early twentieth-century, to the building of ships to keep supply lines open during the second world war. They required a level of social co-operation to displace private gain.

They were distinct from charitable activity that is dependent on philanthropy and separate from the means of economic production. Not only did these co-operative enterprises challenge the imbalance of economic and social value. What they also did through a co-operative model was to demonstrate a more creative means of enterprise.

The social values that were necessary to engage workers in producing social benefits, were what enabled the production of economically valuable goods to be more efficient and innovative. It’s the same empathy, generosity and inclusivity that enables us to work across disciplines and organisational siloes in our modern creative enterprises. We need these organising principles to be widespread to tackle the complex, interconnected issues of our times. We live with hyper-connectivity in our age of the internet. The social, political and environmental challenges we face exist within complex systems.

Co-operative enterprises are more akin to self-organising systems, which we know are capable of co-evolving with changes in the external, operating environment. This self-organising model challenges the existing economic order that links power and status with capital and hierarchies. We no longer need ‘rent-seeking’ managers that disconnect those thinking about the problem from those experiencing the problem. People are able to think and solve problems in dynamic systems themselves. Human capability and ingenuity is released in unexpected places.

Communities that are poor in capital and consumptive power threaten those that steadfastly hold onto it. Government institutions need to stop seeing socially inclusive enterprises as replacements for welfare programmes. Government Innovation Prizes could hint at a shift in practice, making it easier for new social enterprises to find a way in to organising around a myriad of complex societal issues. But it’s Social Innovation Incubators that are countering the institutional bias against people from poor places, who have been held back from accessing their own creative capital. Acknowledging and bridging the gap between those that know the rules of the game and those that want to create new ones.

Vested interests will give up economic power where the alternative is more compelling in the present. However much we may foresee the redundancy of capitalism as it stands, social enterprise will only displace it where it can also be resonant now.

Social entrepreneurs are succeeding where they understand how to make use of the creative capital that is more evenly distributed amongst us. The economic capital we have now won’t be meaningful in the age of scarcity at the end of the twenty-first century. What will matter is how we self-organise around the complex challenges of our times. Empathetic, inclusive, and generous social entrepreneurs can show us how to make this transition.

© Esmee Wilcox 2019

Tags:  capitalism  economics  entrepreneurship 

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Is growing inequality sustainable?

Posted By Administration, Tuesday, February 19, 2019
Updated: Wednesday, February 27, 2019

Felistus Mbole a member of our Emerging Fellows program warns about the increased inequality in her second blog post. The views expressed are those of the author and not necessarily those of the APF or its other members. 


Economic inequality is growing globally. The richest one percent of society owns 45% of global wealth and are on track to owning two-thirds of the world’s wealth by the year 2030. In 2017, the wealth of the world’s poorest 50% was equal to that of only 42 billionaires compared to 380 of them in 2009 according to OXFAM. What does this mean for society? Is this level of inequality sustainable?

Society largely comprises owners of capital and the providers of labour. Governments regulate the relationship between these two parties and provide public goods and services. Today, the global economy is larger today than ever before. The growth is far from proportionately distributed. The incomes to workers have not increased as fast as returns on capital, widening the inequality gap. The situation has worsened since the 2008 financial crisis. This trend will be sustained based on the current trajectory.

Income is a key component of economic inequality. Since around 1980, income inequality has been increasing in almost all regions globally but at different rates. The same variances are also evident within the regions and countries. The core twin drivers of this change have been education and technology. The gap between skilled labour and unskilled labour wages has been growing for decades. Advancement of technology has led to increased demand for skilled labour, putting a premium price on it. Variances in levels and types of education can account for as much as 60% of the difference in wages. A higher level of education leads to increased productivity and indirectly to faster diffusion of technology through innovation. Both factors contribute to faster economic growth. The higher the divergence in levels of education, the greater the income inequality.

The World Inequality Report looks at the proportion of the national wealth held by the top ten percent of society. It ranks Europe as the most equal society today at 37% and Middle-East the least equal at 61%. Sub-Saharan Africa, Brazil, and India are in-between at 55%. The rate of growth in inequality is decreasing in Europe but rising in the USA. It has remained relatively constant in Sub-Saharan Africa, Brazil, India and Asia in the last three decades. The rapid increase in income inequality in the USA is due to massive educational inequalities and a non-progressive tax system.

Is growing inequality sustainable? Based on the current trajectory in the use of technology and divergence in access to education, inequality could rise to alarming levels. It could lead to precarious levels of distrust between the wealthy and the poor. Globalisation will allow capital to flow across tax jurisdictions. It is likely to make redistribution of income through heavy taxation untenable. Advanced inequality could result in polarisation of society into wealthy elites and the poor in future. It could lead to a highly dissatisfied class within society and cause political, economic and social upheavals.

How can this potentially volatile situation be avoided? Public and social institutions, and policies shape inequality. Progressive tax systems and public investments in human development such as quality education and healthcare have shown promise to minimise further widening of the economic inequality gap. Their impact is amplified by creation of employment opportunities. Strong labour unions and government regulations are crucial in ensuring that these factors work in harmony to decrease inequality.

Two key questions beg answers: Will governments be able to develop and implement the right policies? Would higher taxation levels be acceptable to capitalists whose core motive is to maximise returns on capital? The time to fix inequality is now rather than when political, economic, and social catastrophes set in. Tackling inequality will require the political will of governments and the good will of capitalists.

© Felistus Mbole 2019

Tags:  economics  education  inequality 

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How have we defined liberty in the past?

Posted By Administration, Friday, February 15, 2019
Updated: Wednesday, February 27, 2019

Ruth Lewis a member of our Emerging Fellows program examines the definition of liberty in her second blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

Past philosophers have often stepped outside the current paradigm of their times, pushing controversial or even blasphemous ideas to challenge the current worldview. They were the futurists of past times, evolving a forward worldview that would change the oppressive society in which they lived, just as futurists today challenge our society’s worldviews, helping to shape the forward visions and actions of our society’s future.

In the 18th Century, the Enlightenment was shaped by philosophers like Immanuel Kant, Jean-Jacques Rousseau, Adam Smith and Voltaire who pushed beyond the paradigm of their times, the enshrined First and Second Estate’s monopoly on power and faith. They showed that freedom could be gained for the common people through rational and scientific thought. They promoted dangerous ideas of liberty, tolerance, and separation of church and state. They proposed the concept of a constitutional government, which could formalise the limitations and exercise of political power over the population. These concepts of liberty spread from Britain to the Americas inspiring the American Revolution, and to France inspiring the French Revolution. This latter upheaval intended to free the commoners of the yoke of feudalism, but led to tyranny, despotism and a dictatorship in many ways worse than the original regime.

The 19th Century introduced concepts like democracy and social philosophy, that inspired philosophers like John Stuart Mill to highlight and repudiate inequality and subjugation between lower and middle classes and the aristocracy, between women and men in education, property ownership, marriage and political influence, and between slaves and their masters. Mill highlighted the dangers of the repressive societal pressure that can stifle freedom of thought and discussion, of character and of action.

The development of the law of human rights had foundation in ancient societies and religions and entered Western law through transcripts including Magna Carta, the English Bill of Rights, the French Declaration of the Right of Man and Citizen and the US Constitution and Bill of Rights. However, a unified declaration of human rights was constituted through the United Nations after the existential horror of World War II. This formed the concept of ‘crimes against humanity’, attempting to enshrine the right to life and liberty for all people on Earth, holding governments accountable for the treatment of people living within their sphere of influence.

In the mid- 20th Century, philosopher Sir Isaiah Berlin described a two-toned way of looking at the world – as either a fox or a hedgehog, based on the Archilochus poem. This described how people’s knowledge and approaches to life can be inspired as a fox by many little things, or as a hedgehog by one ‘Big Idea’. A fox will reconcile to recognise that ‘the truth’ may be fully unknowable, but the hedgehog – who tries to fit the universe to a unifying code – will never be content until ‘truth’ is fully explained. Berlin was a master fox who drew inspiration from many sources. His 1958 essay ‘Two Concepts of Liberty’ described the conflict between ‘negative freedom’, in pursuit of freedom from oppression, and ‘positive freedom’ which describes what we are free to do. Berlin’s concept of negative freedom was formed after fleeing the Russian Revolution as a child, where he realised that a revolution founded in the freeing the proletariat from State oppression could deliver an even more despotic and oppressive rule.

In our contemporary complex, interconnected world, our Western worldview is formed by multifaceted information reacting with our historically based roots. In internal overload, it seems to produce a humanistic purposeless of meaning. Our liberty to see and speak and act as we feel seems to have led to a morass of confusion and a lack of purpose. What do we need to free ourselves from? Can our liberty to think as a fox through many versions of the truth formulate a higher-level purpose for our humanity and produce the agency to take us there? Now that we are free, what do we want to do?

If our past is the key to our future, our notions of personal liberty formed through adversity and interpreted by our philosophers should give us the wisdom to invest in a better future for our world. But our hard-won liberty has given rise to private asset ownership through economic capitalism and wealth accumulation for some but not all, echoing the inequalities of past centuries which we have sought to overturn.

© Ruth Lewis 2019

Tags:  freedom  law  people 

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Does China’s Success Undermine the Washington Consensus?

Posted By Administration, Wednesday, February 13, 2019
Updated: Wednesday, February 27, 2019

Robin Jourdan evaluates the economic effect of China on Washington Consensus in her second blog post for our Emerging Fellows program. The views expressed are those of the author and not necessarily those of the APF or its other members. 


China. The Red Dragon. Fabled, mysterious, and powerful. It is one of the great civilizations of the world. China has the world’s oldest, surviving culture. To 2009, its relationship with the world’s powers could be summed up best by Den Xiaoping’s advice to build China’s strength while maintaining a low, international profile. Since 2009, its economic and political model, the Beijing Consensus, aka The China Model, has thrived and expanded to other parts of the globe. Its set of policies consists of state-led finances and limited and hybridized property rights under an autocratic framework. The current economic success of China challenges an already weakened Washington Consensus, which makes prominent use of private property and market-based distributions.

China has transformed itself from a closed, planned economy to a financial powerhouse. It has done this at the same time that the Washington Consensus has failed to deliver economic stability and growth to many. Successes of the Beijing Consensus include China itself. Since the late 1970s, China’s economy has grown at an unheard-of rate of 10% annually. Using the One Belt One Road Initiative, smile diplomacy, and checkbook diplomacy, China has provided much-needed infrastructure, like highways and airports, at home and abroad. China has become the land that failed to fail and is on a trajectory to become a viable global superpower. The Chinese economy is moving from an export-driven model to one based on investment and consumer demand. Such a development suggests a more mature economy thriving just as trust in the West, especially with the US, is at an all-time low. This success can’t help but represent a challenge to democracy and capitalism.

Of late, China is dealing with internal challenges: inequality, unstable financial conditions, and environmental sustainability. Since 1980 GDP produced by state companies has fallen while private sector output has risen over 300 times. Private (non-state) sector business is buoying wages and the Chinese economy. Success in the increasingly stratified society correlates to a Chinese (Party) way of living. These come at a time when the Chinese Communist Party’s tactics of political repression, its poor human rights reputation, and regional ambitions cast a dark shadow. Recent years have seen China’s GDP growth rate drop lower than neighboring India’s. Such contradictions in other societies have proven thorny.

China’s economic miracle appears to be ending. Who knows what the Party will choose next? The “what-if’s” are growing.

One question that remains is how can the two couldn’t-be-more-different superpowers (China and the US) co-exist at the end of this century? Turning to history, the co-habitation example of the US and USSR doesn’t warrant repeating. A business-as-usual scenario would be simply an unfinished option. The US and Europe could impose a chill on China, which may well be of small consequence anyhow. If China prevails; a fragile condition might exist, given the contesting resources of the US and the West. Or a new relationship could arise. It is undeniable that China is on its way to becoming a science superpower. Perhaps the language of logic and scientific method could become the building blocks of a China-US Peace, a sort of “East-phalia” situation. Such a peace could build on familiar and successful models: International Space Station and the Antarctica treaties.

However, the high hurdle continues to be inequality. These superpowers need to apply lessons from other societies (Iceland, Sweden, and others) that seem to have made more progress eradicating inequality than anywhere else. Perhaps it’s time to decouple Beijing and Washington’s political systems from economics and move past the “us” -vs- “them” unsustainable scenarios.

© Robin Jourdan 2019

Tags:  China  economics  the US 

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Is there only an upside to your life, your job, your community in a digital economy?

Posted By Administration, Friday, February 8, 2019
Updated: Wednesday, February 27, 2019

Paul Tero a member of our Emerging Fellows program proceeds with his marvelous journey to the land of digital economy in his second blog post. The views expressed are those of the author and not necessarily those of the APF or its other members. 


Those in their retirement years today have witnessed so much change since their teenage years. As will today’s teenagers when they reach their autumn years and help to raise teenage grandchildren.

For those currently in the latter seasons of life, what have they witnessed over the course of their adult years?Among them, consider geopolitical tensions pushing history to unfold in uncertain directions (the Cuban missile crisis); consider scientific developments ushering in both hope (penicillin) and despair (nuclear fission); and consider popular music performers swaying the life choices of fans across the globe (Bob Dylan, Jimi Hendrix).

We now know how all of these unfolded, for it is today’s lived reality. Looking back over these decades we view this historical path as the “business as usual” path. The scenario that happened and that we now experience, study and use as reference points for what may happen in the decades ahead.

But what of other possibilities, of other scenarios, of other ways that things could have worked out. Just like our current reality could have turned out differently, what paths could history take for today’s teenagers? Specifically, what could unfold in our context of focus – the digital economy.

It is relatively easy to imagine one scenario – the business as usual path. Based on what we now know, it is conceivable that in 50 years consumer purchases to be all cashless and to involve automated delivery technology. It is easy to imagine company-wide artificial intelligence algorithms driving block-chain-based goods and services production.

But what about other scenarios? Will the history of the digital economy only unfold as a positive for your life, your job and your community? A utopia where machines undertake the work we don’t want to do and facilitate the richness of human potential? What about other possibilities? Perhaps a scenario where everything is restricted, or one where anarchy rules.

First, contemplate the likelihood of the restriction scenario. Today we live with our social media feed being individually unique. No one else on the planet has exactly the social media friends and followers as I. Similarly, with my shopping history. What is recorded on my loyalty cards is unique to me, as are the offers I receive. Why not then, in the time ahead, only seeing on my screens the things I am interested in? Only being shown political messages that will resonate with me, only being offered membership to social groups aligned with my past experiences and interests. A scenario where the lives we live have boundaries that can not be altered. Where a superficial peace is the dominant mood.

Second, the anarchy scenario. Today there are forces that seek to upend the order that liberal democracy has brought across our globe. What if they succeed? What if the internet is technically re-architected into ideologically walled gardens, that the Global Currency – the US Dollar – is replaced by the Chinese Renminbi, the German Neu Mark and the Brazilian Real, and that the bounds of ordinary life are limited to self-contained urban zones each with different digital capabilities and intents. A scenario where social and business life is quite dissimilar across the many enclaves, in which tension is a common theme.

Therefore, with business as usual, liferetains its complexity; with restriction it is hollow; with anarchy it is wearying. For the easily conceivable scenario, an AI-rich digital economy that supports quality of life is a likely outcome. For the restriction scenario boundaries are implied: consumer experience is limited to a uniquely tailored set of goods and services; business success is bounded by this unique tailoring. Where prospects for innovation are limited by the scope of these personalising algorithms.

Finally, the dystopian scenario. Some enclaves may well have the resources to realise a business as usual outcome, but most are likely to be unrecognisable societies by today’s standards. For these, through resource scarcity, lack of trust, and the application of digital capabilities built up over decades, local oligopolies may well reign supreme. Where societies become marked by deep surveillance and intense social stratification.

Understand that the future is not set. History indeed can unfold along one of these three paths. To our question at the start, the answer then is no. We are not assured of beneficial outcomes for our life, our jobs, our community in a digital economy.

© Paul Tero 2019

Tags:  economics  job  life 

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Is Financialization the New Feudalism?

Posted By Administration, Monday, February 4, 2019
Updated: Wednesday, February 27, 2019

Alex Floate, a member of our Emerging Fellows program studies the nature of financialization in his second blog post. The views expressed are those of the author and not necessarily those of the APF or its other members. 


Jan opened the mail from New North Bank; it included a voter guide for the upcoming 2040 state elections. “New North needs your support; without it your debt payments may increase” the top line read. It listed the candidates, some supported by New North, some by Eastern Pacific Bank or others. At the bottom was the option to ‘Vote Now’, with each choice for the New North candidate earning you points towards their coveted Platinum Earners club. Jan, needing just a few more points to reduce the rates on his student loans, enthusiastically chose the ‘All New North’ option.

One analogy of feudalism is of a political-economic system where the rentier class of Lords and Vassals, control the land holdings of the peasant class. This analogy has seen use in describing many societies outside traditional feudal Europe, such as Japan under the Shogun and India under zamindars where peasants were beholden to landowners for their homes and livelihoods. As the financialization of the economy grows and inequality increases, will we see its return?

Financialization is a system that seeks profit and wealth through financial markets and products rather than creation of new wealth and tangible products. With a short-term view it often inflates the value of existing assets instead of creating new assets such as infrastructure, goods or research and innovation. By siphoning off value through interest, speculation and fees for transactional work, profits from innovation and labor become undervalued. Ultimately it overvalues the present and undervalues the future.

Financialization rewards those who already have assets while moving capital from enterprises and activities that create assets. Social implications are a divorce from the egalitarian principal that one’s reward is the result of their effort and labor. The result of these ‘rent seeking’ activities is increasing financial inequality and concentration of wealth and power among the participating firms and individuals.

Under a default scenario of the future, the financialization of the economy will continue and grow more pervasive. Interests, both financial and political, will continue to ensure that markets for financial instruments are minimally regulated. Attempts to protect those without assets from exploitation and usury will be thwarted or become simply a façade. Many governments, forced to reduce taxation for the financial class, will have less ability to maintain infrastructure or uphold the social contract with their citizens. Access to goods, services and even currency will increasingly come in the form of subscription or require financing. A separation between the rentier class and dependent peasants will be the dominant economic and political reality.

However, there are other possible futures in which financialization becomes less of an economic and political driver. Among these are a collapse of the system that could result in even greater dystopian possibilities. Post-capitalists present a disciplined future where technology and humanitarian principles appear as the main drivers to
move away from a system that embraces financialization and the resultant inequality it produces.

The groundwork for all possible futures is being laid today by politicians and their various constituencies. Not only must they contend with the sway of the rich and powerful, but with populist and nationalist forces that will also affect the economy in dynamic ways.

© E Alex Floate 2019

Tags:  economics  feudalism  financialization 

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What has been the Impact of Digitisation on Corporate Structures?

Posted By Website Admin, Friday, February 1, 2019
Updated: Wednesday, February 27, 2019

Charlotte Aguilar-Millan publishes her second blog post in our Emerging Fellows program. She inspects the impact of digitisation on corporate structures. The views expressed are those of the author and not necessarily those of the APF or its other members. 


What if the option to earn the same amount of money as you do now was offered to you, but rather than working over a 12-month period, this money was generated in only 9 months? This flexibility is becoming ever more present in workers lives as a result of the rise of a new concept known as the ‘gig economy’. The term gig economy was once uttered with fear due to the instability of short term contracts. However, with the rise in skilled labour adapting to the gig economy, it is now a growing platform with which businesses are expected to adapt.

The gig economy can range from those working on zero hour contracts such as the likes of Uber and Deliveroo, to areas in which seasonality can be seen within skilled professions. With the introduction of websites such as Hourly Nerd, Upwork, Freelancer and Fiverr, professional careers are now appearing as part of the gig economy. This includes tasks such as copy writing, accountancy, translation or even coding.

Take Upwork, for example, where roughly a decade ago two friends in Silicon Valley created this platform. Today it has grown to now being listed on the Nasdaq. Upwork remains free to post advertisements requesting specialist work. This gives the gig worker the flexibility to submit a bid for work within a timeframe that suits them. The platform then offers a paid tier for a more specialist pool of workers. From the gig worker, Upwork then deducts a set percentage of the fee, linked to the amount billed. Upwork provides an interview process and handles payment securely for clients. Both parties can feel secure that the advert posted is authentic, and that the specialised skill offered is also authenticated through Upwork’s vetting process.

So why are we all not signing up to the gig economy? This short term contract culture has created more instability over a worker’s long term future. Gig economy workers can find it harder to navigate life events – such as buying a house – when there is no guarantee of a fixed income. The gig economy itself has expanded labour market competition to bidding for advertised work. Not only from those within the same country, but also accessing a global pool of gig workers. This means that those in developing countries are able to provide the same services for much lower prices. Gig economy workers in more developed countries are finding that their services can be easily undercut on price, and they must either develop a specialist niche or accept lower pay to stay competitive.

The long term effects of the gig economy could also create negative futures. Governments have shown little innovation in how the gig economy could affect future tax revenues. Which country will receive the corporation tax if a company in the UK hires a gig worker from Singapore, but pays using a platform based in the US? Policymakers have a much slower reaction time to these changes in the employment market.

Corporations have taken this evolving landscape of work and altered their business models. It is no longer a requirement for successful companies to pack all staff within office buildings. There has been a decline in requirements for office space in the typical corporate structure as a result of digitisation. With staff able to work from home or contractors only made use of when required, a disembodied company is now emerging.

The disembodied company sees that large areas of work are seasonal and as a result having an office full of workers is not cost effective. Digitisation has allowed companies to disperse their staff away from the old structure of all being based in one building. They have adapted to new policies such as home allowances to assist staff to pay for home bills whilst working from home.

The gig economy helps companies make it easier to search for talent and reduces employment costs. It also means that work for the gig economy worker can fit in with their lives. Further, gone are the days of the toxic boss and navigation of office politics given that contracts typically are short term allowing for non-renewal if one party wishes. If a gig worker wants to work longer hours in one month to take the other off, the flexibility
is there.

Overall digitisation is allowing a reduction in face to face communication where the same workers are no longer needed to collaborate effectively by being in the same vicinity. Instead, by companies effectively utilising technology, a typical office structure is no longer needed. The gig economy is seeing unprecedented growth particularly for those who desire flexibility over security. This is fundamentally changing the way in which companies operate. It is now up to legislation to adapt to these new work dynamics as companies evolve with the use of the gig economy.

© Charlotte
Aguilar-Millan 2019

Tags:  corporate structure  digitisation  economics 

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Is Use More Important than Ownership?

Posted By Administration, Tuesday, January 29, 2019
Updated: Wednesday, February 27, 2019

Tim Morgan publishes his second blog post in our Emerging Fellows program by comparing the concept of ‘use’ against the ‘ownership’ notion. The views expressed are those of the author and not necessarily those of the APF or its other members. 


When artificial intelligence pioneer Marvin Minsky was a graduate student in 1952, he constructed a simple machine which he kept on his desk. Acclaimed scientist and writer Arthur C. Clarke once saw the device, finding it both sinister and fascinating. The machine had a single switch. When activated, the device did one thing: it would raise a small arm and flip the switch back to the OFF position. This “Useless Machine” is an automation with only a single use: it turns itself off.

Minsky understood a fundamental aspect of automation: use is inextricably bound up with the structure, operating rules, and intent of the automation. His Useless Machine was a minimalist example of that active fusion of intent and capability. No matter who owned the machine or operated it, it would always lead to the same result. It would turn itself off.

We appear to see two contradictory trends at work with automation and capital. There is a long history of owners ceding use of their capital to intermediaries like banks, managers, and companies. Automation is clearly amplifying that trend via everything from programmatically traded stocks and commodities to “lights-out” automation of shipment planning and warehouse management. Even hobbyist gardeners can now buy an autonomous gardening robot like FarmBot to seed, weed, and feed their backyard garden based on the bot’s sophisticated algorithms and design.

Conversely, we also see automation pushing direct control back to the owners. That same FarmBot gives its owner the tools to plan the garden they want, schedule watering that adapts to local weather, and alert them to problems. The average owner has far more sophisticated control over the quality of their home-grown food than if they had bought it from intermediaries like local farmers, a local supermarket, or grown it the old fashioned way.

Can we reconcile automation simultaneously degrading ownership and amplifying it? We can if we consider how use plays out via the automation. Owners get more control over the use of their capital by embedding rules and algorithms into the capital itself. A factory produces goods. A fully automated factory would produce goods exactly the way the owner wants. The automation allows the owner to use the capital the way they see fit, restoring more direct control. The flip side is that automation is increasingly dependent on outside integration. The automated control is spreading out into the vast network of supporting services like cloud storage, software tools, and data services like weather reporting or goods pricing.

The resolution to the contradiction is that Ownership and Use are fusing together via dependence on a vast network of embedded, actively changing automation infrastructure. With each piece of capital automation, we add its capabilities to the networks of the world. This amplifies the capabilities of other items, creating new opportunities and synergies across the network.

Automation is creating a new world of Networkable Capital that is both amplifying control and spreading out the benefits to others in a seemingly magical halo of interdependent capabilities. That bodes well for bringing the benefits of Networked Capitalism to everyone in the future.

Now if we can only keep it from shutting itself off.

© Tim Morgan 2019

Tags:  automation  machine  network 

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Is the Washington Consensus compatible with Liberal Economics?

Posted By Administration, Friday, January 25, 2019
Updated: Wednesday, February 27, 2019

Robin Jourdan a member of our Emerging Fellows program examines liberal economics in the light of Washington Consensus in her first installment. The views expressed are those of the author and not necessarily those of the APF or its other members.

The compatibility of the Washington Consensus with Liberal Economics invites reflection on the evolution of economic thought. The origins of classical Liberalism can be found in the American, French, and Industrial Revolutions. In its simplest form, Liberalism as the celebration of individual liberty dates back to the works of Aristotle. Conversations about politics, human rights, and free markets continue today. The Washington Consensus is about establishing a democratic framework to support the Liberal Economy. On many points they are self-reinforcing. However, the two are also counterbalancing. What remains are questions of where the balance lies and the continued relevance of either.

Such an element is inequality. Inequality, often expressed as a negative, is really the freedom from want across and within nations. It may actually clash with the ability to make unrestrained profits. Yet people want both. This issue has separated the Washington Consensus from traditional Liberal Economics. Liberal Economics recognized that there are some people who will simply not be successful in the system. As a result, they shaped a social safety net, albeit imperfect, for them.

It’s easy to say that the Washington Consensus and Liberal Economics has had a love-hate relationship with nature. From protections in the US from 1872 onwards, the natural world has been viewed contentiously with economic success. A race-to-the-bottom strategy for developing countries to provide the cheapest labor has almost always been at the expense of both the worker and the environment. It’s now known that these practices are unsustainable.

As a result, there is no escaping the realities of today’s climate crisis. With it is a series of deadlocks from those who fear accelerated job losses and few alternate paths available. These, led by access to education, must come online quickly to assuage fears of economic ruin. What’s needed is the motivation to shoulder an economic makeover that changes our relationships to both environment and workforce.

What’s past is prologue. From sci-tech to demographics, the global economy is entering a new age. Today, more people globally enjoy greater peace and prosperity than they did in the 20th century when the Liberal world order was the dominant protector. The post-2008 financial crisis has brought a mix of responses, austerity and government intervention. The world doesn’t seem to work as it did even 10 years ago.

The next 50 years could go many ways for Liberal Economics. For some, staying the course will bring a reality of hardship and blame as nationalist struggles emerge into civil wars. Anxious acts for peace may diminish as memories of WW2 fade. For others, a world of distrust might strain with advances in education and medicine. In this world, could pressures of “getting ahead” further compete with individual freedoms?

Revised rules could provide for mutually managed fair trade and green development. Ideals like full employment during the transition to an entire green economy can be prioritized.

Could six decades of uneasy integration be undone if incrementalism is inadequate? Might democracy unbundle itself from flawed and disappointing elements? Energy dynamics may create new alignments, especially with geopolitical significance. What if economic growth were enabled by open immigration policies more than property rights? The rise of service and experience economies challenge such old thinking. Could frustration about
inequality and a new authority of women correlate to more balanced economic
success across the globe?

Will the Washington Consensus or Liberal Economics have staying power in the face of any of these possibilities? Significantly, democratic politics has been called-up from its comfortable place on the sofa and is increasingly on the edge of relevance.

© Robin Jourdan 2019

Tags:  economics  Liberalism  Washington Consensus 

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