The financial world is going through a storm. The balance of economy is shifting. What was not a problem before (sovereign debt) is a problem now. Developed economies are in turmoil. Manufacturing and utility companies suffer. Stock markets undergo shock after shock. Still, the companies that embody the Fourth Revolution, those companies of the internet, do not seem to suffer. They continue to grow.
An interesting similar situation happened in the 19th century when the development of railroad redefined the economy and value chain for many products. Many startups were created, that contributed to a fantastic development of the railroad network.
And the stock market suffered shock after shock as the economy adjusted to the new, tremendous value brought by speedy transportation. There were regular crisis, there were regular financial panics, in all developed countries like the US, UK or France. New and old companies collapsed.
Still the railroad networks continued to develop through the successive crisis and the economy really took all the benefit of the economies of scale brought by the Industrial Age.
The fact that the stock market suffers crisis is not just the result of speculation. It is a sure sign that the economy is trying to adjust to a significant shift of the value chain creation.
Like it happened in the 19th century, it happens again today. The pictures of the financial crisis of the 19th century remind us of those pictures of today.
The world struggles to adjust to a new balance of value creation, the value brought by the Fourth Revolution. It removes borders; it accelerates exchange of goods and ideas; it changes significantly the value chain by diminishing the relative value of extractive and manufacturing industries.
The current economic crisis is another precursor of the Fourth Revolution. We can help minimize its impact by recognizing that it is an effect of the Fourth Revolution. By leaning into it instead of adopting defensive positions.
Are you ready to shift to the Fourth Revolution value production and diffusion system?
Our current tax base will soon be obsolete. It needs to be replaced by taxation of our new collaborative capabilities.
During the Agricultural Age, tax was based on a share of the crops. When the Third Revolution came – which would eventually lead to the Industrial Revolution, a new value system was created that soon dwarfed Agricultural value: Industry. The governments which had relied since centuries on agricultural tax became weaker and weaker. They had to get money lent to them by the new ‘bourgeois’, who created value by trade or industry. The system became less and less stable as the traditional governing elite became relatively poorer and poorer, as industrial value increased orders of magnitude above agricultural value.
Today in developed countries, agriculture represents 2 to 3% of the GDP. Even if it was taxed entirely it would not represent much of the 30-50% which is swallowed by taxes and social security payments!
Today, we are again in the same situation. Our tax system is mostly based on Industrial Age value. A new value production system has been created with the Fourth Revolution that is expanding and that will eventually dwarf the Industrial Age value. The only way to get out of this conundrum is to change our tax base to effectively tax the Collaborative Age value! This is going to be difficult immediately because our accounting systems which date from the Industrial Age do not account for it.
The Agricultural Age example also reminds us that tax is not necessarily only money, it can also be in kind, including the time of people doing certain activities for the public good.
The solution is thus not to increase tax the Industrial Age way. It is to create new ways of deriving a share of the tremendous value created by collaboration for the public good. Because collaborative value is not linked to geography, countries will find it difficult to create such new taxes on their own. The solution needs to be internationally agreed. But that is the only possible way forward to avoid our governments to become relatively poorer and poorer.
The challenge is huge but so important for the stability of our societies that it should be taken upfront. Do you have ideas on the matter?
Human civilization is gone through 3 Revolutions since 100,000 years.
How do we know that there are only 3 Revolutions, and that these Revolutions have really changed the world? That’s easy. Just look at the world population estimates over time.
That cannot be more clear. Each Revolution brought a significant change in the value production system. Many more humans could be sustained. Overall population increased by more than 100 times as each Revolution spread over the planet.
Our physical environment got modified by each Revolution: agricultural farmland, industrial and transportation facilities…
The new value production system of the Fourth Revolution will dwarf the Industrial Age production system. It will change our living environment and the world. Are you ready for the transformation?
Slavery is unethical. It is a terrible mistake of humanity, an example of the dark side of man.
Or at least that’s what our mindset of the Industrial Age tells us.
But in the Agricultural Age, slavery was a perfectly acceptable institution. It was an economical need. The surplus of manpower could not ask for more than subsistence.
Slaves were a significant part of the population in all ancient empires: Babylon, China, Egypt, Rome. When it is not pure slavery, it is exploitation of the peasants, the “serf” of the Middle-Ages.
In the Agricultural Age, slavery is a real, useful institution. And nobody finds anything to say against it!
Suddenly at the onset of the Industrial Revolution, this institution suddenly becomes inappropriate. It gets forbidden by the European powers. Is it because suddenly they realize that it is unethical? No, it is just that slavery is not needed any more in the Industrial Age production system. Workers need to be literate and educated. They need to earn money to become consumers.
Only after will people find higher order justifications on the moral level and try to impose it to the rest of the world.
We are now at the onset of a new Revolution. The value production system will change drastically.
Which of our current institutions will become inappropriate and unethical in the Collaborative Age?
The Revolution that happened in the 18th century is commonly named Industrial Revolution.
But Industry is just the result of a deeper Revolution, the Third Revolution: the Revolution of Broadcasting.
Broadcasting is sending out ideas to the world, in numerous and cheap copies. The first technique was mobile-font printing.
Broadcasting leads to literacy. Literacy leads to many more inventors, explorers and scientists.
The inventors of the Industrial Revolution were not from the rich aristocratic class. James Watt was just an instrument maker.
Because they could benefit from the ideas of Broadcasting, they took initiative and created the tools that revolutionized the world.
From Age to Age, from Revolution to Revolution, specialization has increased.
Hunter-gatherers were mainly specialized between men (hunters) and women (gatherers and children-raisers)
In the Agricultural Age, priests, soldiers and specialist artisans were the specialists that did not produce their food.
In the Industrial Age, a multitude of specialist trades developed that did not produce their food and only contributed a small part of the production process.
Specialization cannot develop without trade. Specialists spend their time on their specialty and cannot get what they need to live without trade. Specialists need trade to develop to exchange their production and get what they don’t produce.
Beyond the Fourth Revolution, specialization will further increase. Even maybe to the point where each individual will be recognized as an individual specialist in it’s own self. In any case trade will also necessarily further increase.