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Welcome to the age of the platform nationWelcome to the age of the platform nation
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Since the First Industrial Revolution, growth and welfare have depended upon increasing the efficiency of production.
Specialization, manufacturing, electricity and the computer all increased productivity, GDP – and thereby wages and national welfare.
Some gained more than others, creating persistent inter-generational inequality; but, in absolute terms, economic means were enhanced across all major population segments.
This relationship – between productive efficiency and economic growth and wages – is now breaking down in the Fourth Industrial Revolution (4IR).
Digital technology is creating digital societies; mass services are replacing mass manufacturing as the source of welfare enhancement; and shared assets are supplanting exclusive asset ownership.
The sharing economy, meanwhile, means previously under-utilized assets are being more productive.
When India’s economy hits $5 trillion (perhaps five-to-seven years from now), it will at most have about 50 cars per 1,000 private individuals (it is 22 cars today).
In the 20th century, mass assembly-line production created efficient producers with consequently higher incomes – a feature of what came to be called “Fordism”.
In the 21st century, individuals and economies are reaping welfare gains from being more efficient consumers.
Consumption efficiency is replacing production efficiency – a trend we can call “Uberism”.
The more efficient use of assets, the shift from traditional manufacturing to innovative mass services, or the provision of greater utility through fewer goods and less physical activity, may appear on the national accounts as value destruction or stagnation rather than as GDP growth.
Yet welfare gains in the future are likely to do just that: appear, when observed through the economic frameworks of the past, like slower and lower growth
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