The world is on the threshold of a new era, denying the traditional economy. And it will be less predictable than the former
Coming out of the 2008-2009 crisis, the world economy grows for the seventh consecutive year, but its growth remains anemic and is supported by unprecedented low interest rates, without which, according to most experts, developed countries today will not survive.
This assumption is very realistic, but only under the assumption of the traditional understanding of economic growth. It is known, based on the account that you added during the year cost, and summarizes the concept of gross domestic product. It is believed that the more you increase this value, the better the economy.
However, in my opinion, all criticism was focused on the private aspects, leaving aside the two fundamental circumstances.The concept of the GDP, formed in the mid-twentieth century, was criticized by many. Often pointed to the fact that the indicator turn on even obviously harmful activities (for example, GDP is growing in the case of large disasters, the overcoming of which consumes extra effort, or, for example, in the production of a greater number of tobacco products that cause disease and death, but leads to economic growth “throughout the chain — from agriculture to health). It was proposed and alternatives — in the form of indexes of welfare (ISEW) or the level of happiness (HPI).
All economic theory is based on the hypothesis of a relatively constant environment. To produce a new unit of the product takes about the same labor, materials and capital, how much and for the release of the previous. In order to Refine its consumer properties, need additional investment, and therefore the more complex the product will be more expensive. Hence, nominal price growth (the average car in the US today costs $33 500 vs $345, which was estimated T Ford in 1916), inflation, the possibility of positive interest rates, the expansion of demand for labour and other resources.
This model assumes a limited role of technological progress, a cameo appearance of qualitatively new products and retribution for the acquisition of economic benefits. However, these conditions are violated today more and more radical.
The development of technology has brought to life a number of industries, the reproduction of which is not subject to the same laws. Computers over the last 20 years have increased their speed of 40-60 times the volume of hard drives has increased to 80-130 times, appeared previously unknown function, but the price of the average laptop, even at current prices fell by almost six times. The revolution in digital media killed the whole industry, for example, the production of photographs and even magnetic films, reducing the consumption of this segment is 6 to 11 times. New technologies of communication have reduced the average tariff on telephone service more than 20 times in a quarter century and has created mobile phones, competing with cameras, music players and computers. Finally, the Internet is close to becoming a new public good, opening a way to totally free utilities.
This all means the appearance of a sphere, where the extension of consumer properties of products goes in parallel with a decrease in its price. Increased consumption can occur with stagnant or decreasing the amount of added value. The fundamental basis of percent preference to these benefits the benefits of the future — disappears, since future goods are better and cheaper. And segment, revolutionizing the economy, is not marginal: it determines the shape the world of tomorrow and now provides more than 15% of employment in the leading countries of the world.
This is the first problem. The country’s GDP may decrease, although the level and quality of life of its citizens will grow.
Progressive restructuring of the economy seems counterproductive, if we evaluate it in the same category, but without it, any country would remain an outsider. Occurs previously unthinkable paradox: negative percentage becomes a natural for the sector of new technologies, and at the same time it discourages investment in traditional industries. The economy is divided in two: the advanced sector to increase production at declining value added and pre-existing show minimal growth with increasing prices. This allows finding a temporary balance but does not eliminate the problem of GDP as an indicator is meaningless in a new environment, focus on it sets a false choice.
On the other hand, the new economy creates new motives. GDP as a key indicator occurred in the industrial society, when the measure of value added was important primarily because it was in aggregate wages, profits and investment potential. But today, firstly, the most important investment in person — and they are often indistinguishable from consumption (and therefore the “knowledge economy” can grow, even at zero rate of accumulation); secondly, the profit as a source of income of the company owner increasingly replaced by the increase of its value (shares the same Amazon from may 1997 to December 1999 increased almost 60 times, despite the fact that the company was operationally unprofitable); thirdly, an increasing number of highly skilled professionals work primarily for self-realization and self-affirmation and then for earnings. It turns out that wealth is not necessarily associated with value added, as it was before. And that Apple can shift all their production to Asian countries, but for almost 10 years, every year to increase its market capitalization to the sum reaches 0.5% of the GDP of the United States.
Radical changes in the world economy lead to the fact that people in industrial society reasonably hoped for decent wages today are making it less and less, and those who are able to Express their individuality in almost any field, get unimaginable profits are, in fact, not exploiting others (a very wide range of people — from athletes and pop stars to programmers, lawyers and speculators). In our eyes, a system that does not obey the economic laws of the time of Ricardo and Marx, but we are still trying to assess through the categories adequately describes the reality of a hundred years ago.
What will happen next? In my opinion, the world is on the threshold of a new era, denying the traditional economy. This era carries a lot of challenges, and the question of how to calculate economic growth is the most important. Life after the GDP” we will face more difficult questions. What will be the financial sector, if prices start to steadily decline, not increase? Can banks survive a decade of negative rates? As will be rethought the very idea of accumulation? What would happen if the added cost really ceases to be a primary source of wealth? What incentives can a society influence on individuals who are not seeking to increase the material well-being? What will the new inequality and how to fight it?
Life after GDP probably will, it seems, will be much less predictable than the former. And think about is, what are its contours and what are the implications of the changes, is now — at least in that part of the world where this abbreviation means the measure of the measure of social wealth and not something else…
