In less than 2 decades, post-industrial society has transformed itself into the Information Age. As information becomes a fundamental resource, radical consequences arise not only in the economy, but in the very weave of society.
In the very first chapter of his book, Bernard Lietaer asserts that our most ancient information systems are monetary systems (money was first invented to keep track of financial dealings), so it is no surprise to find money in the vanguard of computerized cyberspace. It is predictable that fundamental changes will arise, not only in systems for payment with conventional money, but in new types of money which arise.
In the forties, IBM's first president, Thomas Watson, apparently predicted that the world would require the construction of perhaps five computers. By 1975 fifty thousand of them were in operation, and in 1997 more than 140 million, in addition to 170 million notebooks, and innumerable computer parts in items of daily use: any automobile had come to include more information processing power than the first spaceship to land on the moon in 1969.
The simple reason for this explosive proliferation was that never before had the price of any industrial product fallen so far, so fast. We had become accustomed to the idea that a $2000 portable computer had more computing power than the largest macro-computers costing millions of dollars twenty years before. If the efficiency and costs of automobiles had followed this trajectory in the US, we would have been driving from one coast to the other on a pint of gasoline at a cost of under a dollar.
When the steam engine replace waterwheels, its initial cost was not much lower than the water wheels: it took sixty years (1790-1850) for its price to fall by half. In the same way, it took from 1890-1930 for the price of electricity to fall by half. Moore's law, named after the president of Intel, is that every 18 months the speed of computing doubles, and the cost falls by half.
The internet is only one facet of this revolution. Bill Gates is quoted as saying that the internet will be even more revolutionary than the PC. Here are some illustrative cost comparisons. To send a 42 page document airmail New York to Tokyo takes 5 days, and costs $7.40. The same document could arrive withing 24 hrs. using a private courier service for $28.85. Email sends the same document in 2 minutes, for 9.5cents, so there is no surprise in the volume of internet traffic doubling every 100 days.
In 1980 copper cables were used for telephone transmission of one page of information per second. A fine filament of fiber-optic cable could transmit 90,000 books per second at the time this book was written. The costs of transmission were falling in parallel with the growth of bandwidth. High speed, high capacity networks create a broad band world in which it becomes cost effective to maintain a permanent connection to the internet both at home and at work.
While it is wise to maintain some skepticism as regards all this development, and volumes are written aboaut it, this book considers the meaning of such an "information revolution" and what opportunities arise thereby for monetary choices in the near future. To this end, this fourth chapter is organized in five sections:
The nature of information
Consequences for the economy and society
Consequences for money
Consequences for banks and financial institutions
A possibility for Wisdom in the Information Age?
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