“Everything is connected to everything else.”
- – Leonardo da Vinci, Notebooks
We live in the physical economy. We go to a store to buy things, we hand over our money, and walk out with our physical goods. Or we pay somebody to render a service, such as cutting our hair or repairing our automobile. All of this is readily apparent to our senses, so we think of the market economy in terms of a network of tangible transactions.
The information age digital economy adds a layer of abstraction to this conception. Let us take the graphic above that shows an interconnected “network” of people. Each person individually is a node – the distinct platform they are standing or sitting on. They are connected to the nodes of people around them. Each connection represents a “transaction” in the physical meaning of the word. Thus we focus on the costs and prices of each transaction in order to value that transaction. The sum of all transactions (profits and losses) equals the product of the economy.
But we can see the value of the information economy is reflected in the fact that everybody on the grid is connected to everyone else and they are exchanging information and data as well as transacting. This is a two-dimensional representation of an information network, just try imagine an infinite number of dimensions. (You can’t “see” this in your mind, so don’t really try. You have to conceive of it in the abstract or theoretical sense, but it’s real.)
So, what’s the value of the digital information economy? All the transactions value plus the added value created by the data network. The value of the data network is a function of the number of nodes, the volume of data or information that flows between the nodes, and the qualitative value of that data. So posting photos of your cat playing with yarn is value for Facebook that they can sell to advertisers, which is why they want you to post as much nonsense as possible. But it’s nowhere near as valuable as a post that drives thousands of sales to some retailer.
Understanding the network data value is crucial, especially if you can control the portal that links information data to transactions in the real goods economy. This is what Google, Facebook, etc. do and why they are some of the richest entities in the world today.
What is notable today is that consumers don’t seem to appreciate the value they are giving away with their personal data. In exchange for that data they get a free browser or a free social media site, but their data is worth considerably more than that. In fact, the value of personal data in the Information Age rivals the profits and rents associated with previous ages of feudalism and industrial capitalism.
tuka is an attempt to create and mine that data to distribute primarily to its users, who actually generate it by creating, sharing, and connecting on the tuka network. Sounds like a cool idea, no?
519 thoughts on “The New Digital Economy”
Comments are closed.