The rapid growth of the internet is not just changing the way we interact and exchange information with our friends and family, it is changing the face of the global economy and the way we do business.
The first of these is readily apparent to the average user: Facebook, in just five years, went from a few thousand college users to more than 800 million users, including major companies who regularly update their pages and share information with the public and shareholders.
We’ve all seen the changes in personal commerce over these past few years: the shuttering of brick and mortar stores such as Circuit City, the closure of many of the leading bookstore chains, the switch to online banking and other consumer-oriented businesses, and the downsizing of newspapers and magazines.
More to Come
Yet these changes, as sweeping as they may seem, are just very recent developments. According to the several scholarly reports, we ain’t seen nothing yet.
Next year, half the world’s population, 3 billion people, will be using the Internet. The Internet economy will reach $4 trillion in the G-20 nations. If this were a national economy, it would be in the top five, behind only the United States, China, Japan, India and ahead of Germany.
The pace of this growth is exponential, not linear, which means it is growing faster as time passes. This is literally true in technology, in the areas of processing speed, data storage and bandwidth. The old Intel 80386 processor, contained 275,000 transistors. Today’s processors hold two and a half billion processors, a two to the 13th power increase.
The Magic of Exponentials
Ray Kurzweil, mentioned many times in my articles, a computer scientist who is now Chief Scientist at Google, explained the power of exponential growth with an old fable, in his book The Age of Spiritual Machines. He tells of a ruler who, wishing to reward a subject who performed a great service to his country, asks him what he would like as reward. The subject said he would like one grain of rice on the first square of a chessboard, then doubling the number on each of the remaining squares. The ruler thinks this a modest request, and grants it. By the time he’s reached the halfway point, the ruler owes the subject 100,000 kilos, a great sum, but manageable.
That second half of the chessboard, however, is where the power of exponential growth asserts itself. Soon, 100,000 becomes 400,000, then 1.6 million, till by the time he reaches the 64th square the ruler owes 461 billion metric tons, more than 4 billion times the total amount on the first half of the board.
We’ve all seen the results of technological growth in our Internet devices in just the last five years. Think back to our Java powered, tiny screen flip phones. Then compare them to today’s quad- or octacore behemoth phones, a literal computer in your pocket. And we’re really into just the fifth square of the chessboard, the fifth year of the rise of the smartphone.
Of course this surge of computing power is evident in our tablets and personal computers as well, the former an entire product category that did not exist five years ago.
A Man, a Plan, a Canal, Panama
Such rapid growth makes it difficult for policymakers and finance regulators to make wise decisions when technology, economies, and user bases are growing exponentially. People simply can’t fathom what the future holds, and decisions made to regulate today’s economy and finance are obsolete within a few months. They can’t formulate policy fast enough to keep up with the economic changes wrought by technology, the greatest since the Industrial Revolution. They turn to computer modeling for a glimpse of the future, which usually fails to accurately predict the outcome of this growth, for one simple reason: the human factor.
For it is not the technology itself that spurs such dramatic change in the consumer market and the wealth of nations, it is still very much shaped by what inventors and visionaries introduce to the marketplace that guides and shapes the future. Steve Jobs, Mark Zuckenburg, Bill Gates, all had this gift for harnessing technology and creating products everyone wants, but which didn’t exist till they dreamed them into existence.
And the same holds true for the wealth of nations. Thousands of nameless innovators across the globe are changing the fundamentals of business, commerce, banking and industry. Among the developed and developing nations, the Internet economy is approaching 10 percent of gross domestic product, and the miracle of exponential growth is sure to facilitate these figures growing into the dominant portion of these nations’ economies.
But futurism is now the province of fools. As humans, when we try to imagine the future, we tend to extrapolate from present conditions and trends. This worked fairly well when one could expect tomorrow to look pretty much like today. But even in the past, individuals could, with an idea, alter the playing field so greatly that it was no longer recognizable, such as Eli Whitney’s cotton gin, which increased productivity so greatly that it altered the economy and the social institutions that supported the industry to that point.
It could be said that the cotton gin, James Watts steam engine, and even Alan Turing’s first digital computer were the first grain of rice on the chessboard. Today’s technology is often described as being somewhere near the first quarter of the chessboard. But this analogy is somewhat inapt, since there is no finite, 64th square of the board in terms of technological growth.
As consumers, we have come to take for granted that each year will see great advances in technology and the tools we use to take advantage of it. Governments are scrambling to formulate policies to maximize its potential boons to business, governing and industry. But technology does not exist in a vacuum. New breakthroughs are achieved everyday by humans working very hard, while the truly savvy and innovative humans are finding new ways to apply this technology.
Future is Governed by Mules
And it’s this human factor which renders prediction a dead letter. Isaac Asimov’s Foundation series introduced a new science, which inventor Hari Seldon called psychohistory. This combined sociology with higher mathematics to foretell the future. His assumption was reasonable, that though the actions of individuals could not be predicted, the states of large populations could be, and thus he could foresee crises arising in the galactic Empire in his future and take steps to mitigate and limit the dark ages which would follow.
This is basically the model today’s futurists follow. But in his Second Foundation installment he introduced the character of the Mule, who could change the thinking of both individuals and large groups of people. He conquers the Empire. He was an unquantifiable factor. There was no place for him in Seldon’s calculations.
Today’s innovators are like Asimov’s Mule. It takes only one person to dream a use for technology that is unforseen by those who attempt to predict the future by following existing trends.
Nobody could foresee how technology would change social, economic and industrial conditions of today. Technological advances and applications arise from today’s Mules.
Today’s trends are yesterday’s fish and chip paper. Nobody can, or will ever be able to, predict what societal and economic and industrial changes technology will wreak in the future. And the exponential growth of technology means that changes will soon be weekly, even daily occurrences.
The only thing we can accurately predict, both on a macro and individual level, is that the future will indeed be a far different environment than today’s.
Look how far we’ve come in just five years. And imagine, if you can, that the next two and a half years will see the same amount of change, one and a quarter years after that.