Tuesday, March 22, 2016

Technology in Economic Space Time

Any regular or irregular reader of this blog will realise that one of the goals of this blog is to explore non traditional concepts and language for describing the economy and the relationship with technology. The dominant language at present is 'innovation' and the academic discipline is 'innovation studies. This is I believe to greater or lesser extent fostering confusion about the topic. Technology remains in my view a problematic entity in society and economics. Treating it like land, labour or capital I believe is not helpful because technology conditions and transforms the others. It is not simply a production variable nor something meaningful to count as X% of firms launched new products last year.

My principle concern is that there is a great deal of muddled language where technology and innovation are almost used interchangeably. Further, technology has been subsumed within economic growth studies and impact but surely it does more that grow the economy it bends its shape.

Technology is more than just one thing - it is many things simultaneously. It is our creation and therefore it can be studied like we do with nature - biology and ecology, as a single organism, with DNA - heritage and history. It can be studied in 'food webs' in relation to economic structure - supply chains and so forth. It can be studied within the ecosystem of other technologies of greater and lesser scale, scope and dimensionality. Back here http://econscapes.blogspot.ca/2013/08/macro-innovation-1-introduction.html I explored the idea that technology should be seen as an ecosystem that is interdependent and modifies the 'environment' ie. the linkages between other systems around it. That is one image of technology - but at the macroeconomic level it is not simple enough.

The idea of 'general purpose technologies" exists but has never really taken off, and there is Keven Kelly - technium which hasn't caught on either.

It is interesting that at this moment when 'technology and economics are now almost synonymous there may just be the start of a movement to go back to rethink technology.

Beyond Innovation: Technology, Institution, and Change as Categories for Social Analysis. By Thomas Kaiserfeld. New York: Palgrave Macmillan, 2015.
Pp. 174. $67.50.Technology and Culture, Volume 57, Number 1, January 2016, pp.
244-245 Reviewed by Benoit Godin.

So onto this blog.
The latest concept has been playing in my head for a long time but received some impetus with the first measured gravity waves.

So here is another way to conceptise technology - as 'mass' in economic space time.

Space Time

I found this great youtube video of the space time concept.  https://www.youtube.com/watch?v=MTY1Kje0yLg Dan Burns explains his space-time warping demo at a PTSOS workshop at Los Gatos High School, on March 10, 2012.>

So what is Economic Space Time

Imagine if could measure all the dimensions that are important for understanding the dynamics of economies. Economies are not singularities that move through time - always essentially the same. What is made (incl services - everything), where it is made and how it is made changes radically across time - this we could call economic space time.

Naturally to understand economic space time we need to measure tot just income, but how people make their money, the production systems etc etc ... In short we would be able to then approximate the underlying 'technology' of the economy at particular points in time. But could we simplify this by looking at the 'waves' generated by new technologies.

Economic Space Time circa 1960

Put your mind back to the 1960s the US manufacturing economy was at its zenith - thousands of people were employed in factories. The big companies - resources and manufacturing employed many thousands of employees. I actually went looking for the numbers but they are hard to determine. If I can calculate some I will put them on this blog.

Economic Space Time circa 2016

So what about today. The top companies ( http://fortune.com/fortune500  ) are Walmart, Exxon Mobile, Chevron, Berkshire Hathaway and then Apple.

If we pick on Apple as the first company that makes products - yes I know petroleum is a product but not in the same way.

Apple has nearly 100,000 employees and an un-numbered 000s in its elongated supply chain which is a part of the modern economy. We also don't know how many people do contract work for Apple.

To make the point about supply chains even stronger, General Motors is no 6 on the list. Is has just more than twice the number of employees than Apple.

Amazon one of the born digital companies has 154000 employees.

JP Morgan Chase Institute recently released a fascinating report on income volatility and other information using big data analytics of JP Morgan Chase bank accounts. The most interesting reading relates to the platform economy participation.

Although 1 percent of adults earned income from the Online Platform Economy in a given month, more than 4 percent participated over the three-year period.

The Online Platform Economy was a secondary source of income, and participants did not increase their reliance on platform earnings over time. Labor platform participants were active 56% of the time. While active, platform earnings equated to 33% of total income


Paychecks, Paydays, and the Online Platform Economy February 2016

So at this point you are thinking - 1/3 of the income for 1 percent of adults, that not much in the scheme of things is it. And that was the view of The Economist

Such reforms, though, would be relevant to only a tiny fraction of the workforce. JPM’s data suggest that most ondemand workers use apps to supplement their income, rather than as a replacement for a fulltime job. On average, labour platforms provided only one third of ondemand workers’ incomes. And their participation was often sporadic; almost half of those who start working on a labour platform stop within a month. Earnings from Uber and the like are strongly correlated with negative shocks to incomes from other sources (capital platforms are used much more consistently). That suggests people use
apps to smooth bumps in their earnings, which are frequent: more than half of JPM’s customers have seen their incomes swing by at least 30% in a month. Volatility in pay is largely responsible. Perhaps conventional jobs are not so great after all.

But just a moment

Just how significant is one percent of the labour force? Well.... As I have been reading through the report by JP Morgan Chase Institute I realise I need to read it much more closely as it refers to 'adults'. That is is a very much larger pool of people than conventional statistics of workforce.

For comparison in Canada 1.6 percent of employment by industry is in agriculture. A further 1.6 are employed in Mining. As a percentage of adult population that may drop a bit and we get closer to the 1 percent.

So when you hear only 1 percent are employed in the 'gig' or 'task' just keep in mind that number is bigger than you think.

So what is the point: 'technology waves'

When the steam engine was invented, enabling power and the factory system it changed the economy - not just grew output and productivity.

Today with the growing digitalisation it is obvious the economy is change shape again. This is not new it is in the papers everyday.

The point is no single way of understanding those changes not single language is powerful enough to capture the scale scope and significance of change and we should give up trying.  Lets be heterodox is our rich descriptions of change.

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