Tag: financial instruments

We have posted a few articles about the Deep Web and presented an emerging technology project that promises to provide a database of databases for the next great development of Internet Search. This short post considers the significance of one aspect of Deep Web Search.

Economics is the science of incentives

Google Search has provided a set of incentives that drives people to document their world by blogging, developing social media, and creating seemingly infinite video content. The ability to see and be seen is the essence of market economics.

While the promise of searching a huge store of databases may not sound like Saturday social night at the local drive in burger joint, it does by extension, introduce new incentives. The new technology will drive people to build databases. A new generation of entrepreneurs will collect, organize, analyze and create – not information – but data.

Database of databases of databases

The first things entrepreneurs will organize are human knowledge data – starting with their own, then relating it to others. Not unlike the human genome project, the vast human knowledge reservoir will be mapped. Entrepreneurs will enter their communities (on line, neighborhood, work, school, church, social networks) and create a database for what other people know and parse the data in any number of important and useful databases.

The reason for this is simple; data are collections of human observations.This is the only thing people are willing to pay for. Markets cannot and do not get any more fundamental than that.

Old News is Bad News

Anyone who follows the news, social media, or some of the tech blogs may have noticed a lot of rehashing of old data – every blog has a posts about how social media will “really catch on”. New media isn’t so new anymore. The only thing that makes money is is the disclosure or new data – followed by weeks of rehashing of the data all the way down the rankings.

Next Economic Paradigm

All Financial instruments are characterized in terms of a quantity and a quality. Real news, real insight, and real productivity results from new and reliable data, qualified interpretation of data, and relevant analysis of data – relative to time. The value of money is directly associated with the quantity and quality of the data representing money – relative to time.

Summary: Going to the source

Data alone are useless. People must process data into information – the backbone of all economics. Human knowledge and productivity is the source of all information – derived from data. Therefore, the only things people are willing to pay for are, in fact, data. Monetization of social media may be the deep dive into the data. Do the math. That’s big news.

Economics of Innovation

By Admin

On September 16, 2008

In General Information

Every time humans invent better ways of doing things, the economy gets a little bigger. This is a simple idea. The cave dwellers discovered that they did not have to travel as much hunting and gathering if they could sharpen a rock enough to chop a tree down for firewood or for spearing animals. That same tool helped them to dig holes to plant seeds. By growing food and domestication animals, they could stay in one place and conserve energy. By living in cities, the division of labor led to more efficiency as the farmer, metal smith and rancher bartered their services. Enough surpluses were created so that a leisure class was free to develop philosophical thought leading to early scientific principals.

After a while, the invention of the printing press greatly advanced the availability of formal education. In the Early 1800’s, Eli Whitney stunned the world first with the cotton gin and then with his concept of “interchangeable parts” where he disassembled ten working muskets, scramble the parts and reassembled ten working muskets. What seems trivial today lead to great advances in the industrial revolution, becoming further refined in the manufacturing economy. Computers then ushered in the Era of Information followed by the knowledge economy that we live in today.

At each stage, there was a quantum leap in human productivity and financial wealth. Obviously the two are related.

If we look at this history from the big picture, we notice that each level of human development was derived from the prior level by integrating the tools of that prior level. As such, the knowledge economy was derived from the information era by integrating the computer tools leading to the Internet. The agrarian economy was derived from the hunter-gatherer tribes by integrating the wheel, wedge, and lever into agriculture and livestock. The industrial revolution integrated scientific principles from the Renaissance. This is fairly consistent.

If we look at this history from a microscopic view, we see that no single idea drove human development, rather, billions upon billions of little ideas from many diverse sources combined in unique ways to form larger ideas which then combined to form even larger advances eventually leading to those big innovations that we see as the milestones above.

Also, we notice that the over time, rate of change at which these ideas have been combining is getting faster and faster. The hunter-gatherer phase lasted 2 million years, The agrarian age lasted about 40,000 years. The scientific revolution lasted 1500 years. The knowledge economy is barely a single generation in play.

These are important concepts because later, when we build a mathematical model for the next economic paradigm, we will use a few tricks of calculus called the “derivative” and the “integral” to describe how things change over time so that we can measure and analyze productivity and wealth creation in the new economy.

Finally, we ask, what comes after the knowledge economy? There are two things that we can be certain of. The next great leap in economic development will be derived from the knowledge economy by integrating the tools that we developed in this knowledge economy. I strongly suspect that computer enabled society – or social networking will have something to do with it.

Welcome to the Innovation economy.

The Next Economic Paradigm