Information Economies Cannot be Geographic Economies
If you haven’t noticed, things are a bit…confusing on the global stage. Some might point at the global pandemic as the cause. Others at a certain, shall we say, difference of opinion between members of the old Soviet bloc. Still others might point at the last four decades of irrational behavior by a demographic group who are now so overleveraged and dependent on debt that the increase of interest rates will torpedo their entire fiscal edifice.
I prefer to just roll all of it into a giant ball, take a step back, and say…
Not because I’m dismissive of the current problems we face. Far from it. They occupy most of my thoughts. And in the interests of maintaining some form of sanity and not frothing at the mouth, I needed a framework to wrangle my thoughts.
Here’s what I came up with.
A few months ago, I read Peter Drucker’s Post-Capitalist Society. It’s a chewy read, one I’m still processing and will probably write about later, but it got me to thinking about economics. Well, more like meta-economics. Let me clarify.
Microeconomics: how individuals and companies make decisions. Macroeconomics: the study of an economy as a whole.
Meta-economics: the study of Faceboo…wait no, the study of economies.
Right now, there are three types of economies in play.
I. Agricultural — grow stuff
II. Industrial — process stuff
III. Informational — think about stuff
In a given country or swath of geography that is chopped up into countries, all of these economies exist right now. From subsistence farmers in India with Facebook pages to Tik-Tok’in beekeepers in the middle of New York City.
These economies go through the following stages:
- Survival — making just enough to be self-sufficient
- Growth — making more than enough and selling the excess
- Extraction — selling so much that it is no longer self-sufficient
- Dependence — requiring external inputs to continue to sellable
And, because this sounds like gibberish, here are examples:
Agricultural Survival — Growing enough corn to feed yourself
Agricultural Growth — Growing enough to feed yourself and sell to your neighbors
Agricultural Extraction — Selling all your corn and buying rice to feed yourself
Agricultural Dependence — Getting subsidies from the government because corn exports are a key component of the economy.
So, in this rough framework of mine, you can see how Extraction and Dependence weaken Survival and Growth. Which shouldn’t be shocking to anyone who looks into how food scarcity is possible in countries that, and I wish I was kidding, export food.
Global economies cannot function in a resilient manner without each country holding its local Agricultural and Industrial economies to a Survival or Growth state. If you sell all your food off, you have hungry workers who won’t be able to help you grow your food.
(I can’t believe I have to type that out but I have had too many arguments with commodities traders to make the assumption that everyone agrees with that.)
Now here’s where my click-bait-ish title comes in.
Allowing any Informational economy to hit Extraction or Dependence is a surefire way to destabilize the geography where it is used. It doesn't matter where you are, it matters where your customers are.
Would there be any conversation around Facebook’s targeting marketing towards children or Twitter’s ability to destabilize a government if either of them didn’t have to increase user-engagement to a level that advertisers wanted? Would we be talking about the impact of GDPR on web searches if Google didn’t survive off ad revenue?
Fossil fuels? Well, we could have phased them out a long time ago but they’ve been heavily subsidized (Industrial Dependence)
Stock market volatility? Again, Industrial Dependence. (Federal Reserve hemorrhaging money into helping mismanaged banks from collapsing and taking everything down with it)
The possibility that misinformation has radically destabilized the ability of the general populace to recognize validated fact? Informational Dependence on advertising and algorithms polarizing the populace with clickbait and emotional triggers.
And so on, so on…
It would be the absolute peak of hubris if I claimed to have solved anything here. It would be myopic and a disservice to anyone reading this. All I can hope is that maybe, just maybe, this helps someone else the way it’s helped me.
Take a deep breath, folks. 2022's just getting started.