In today’s controversies over war and peace, we hear a lot about weapons of mass destruction. We hear a lot less about an even more powerful resource and weapon called knowledge—and of its new role in economics and in history. It is the economy of the future that we will discuss here.We make a distinction between “the future of the economy” and “the economy of the future”. When people speak of the “future of the economy”, they presuppose the existence of the existing economy. When we say “the economy of the future”, it emphasises the change rather than the continuation of this process.
This new form of economy with its concomitant social, military and other changes has already had a big impact on the world. The collapse of the Soviet Union had much to do with the rise of the knowledge economy, or rather with the failure of the Soviets to take advantage of it. The knowledge economy has a lot to do with Europe’s high unemployment rate and its mounting hostility towards the United States. It has a lot to do with Japan’s amazing rise and subsequent stagnation. Certainly, it has a lot to do with the rise of China. It is also bringing about striking changes in India.
To understand the economy of the future it may be helpful to use some shorthand. My wife Heidi and I do use it sometimes; many of you are familiar with it. We speak about the spread of agriculture, starting 10,000 years ago, as the first great social transformation or the First Wave of history. We talk about the Industrial Revolution and all the cultural, economic, political, technological and military changes that came with it as the Second Wave of social transformation in history. What we are living through now is the third gigantic historical transformation. It is at least as great and all-transforming as the Industrial Revolution was. The difference is it is now global and far more rapid.
Today’s Third Wave revolution in wealth creation is more deeply rooted than most people imagine. There are over 300 billion computer chips on the planet, with 70 billion more added every year. The Japanese have built a computer with a method of processing power faster than that of its seven fastest rivals combined. It can perform 40,000 billion mathematical operations per second.
INDIATODAY, MARCH 17, 2002