A New Economy Requires New Thinking

While during our first seminar meeting we were able to touch on the role of speech in the digital age, namely 1^st and 4^th Amendment protections, we are yet to explore the revolutionary economic nature of digitization. Indeed, we are in a new “digital age”: the world has shifted from product-oriented businesses to intellectual capital industries. We have shifted from an economy based on raw materials or the circulation of finished goods to an economy built on intangibles.

Quite simply, in the 21^st Century, we are going to need to rethink our traditional assumptions about the economy. For instance, conventional product economies express decreasing returns. However, the internet era and web 2.0 may naturally operate on “increasing returns.” That is, due to a “networking effect,” the benefits of scale may actually be amplified. For an excellent explanation of this, see the Harvard Business Review.

What does all this imply? This means that our prior assumptions and old laws may need to be applied to the new economy. Craigslist and Facebook, for instance, might be “natural monopolies” that merely harness “the network effect.” Alternatively, IBM’s core business may revolve around protecting intangible code rather than producing any material product. And, the line between the “home” and the outside world may be more blurred than ever before.

Of course, all this strikes at the heart of this week’s reading on the relevance of law in cyberspace. In his declaration, John Barlow labels cyberspace a “civilization of the mind.” And yet, while Barlow hopes for near-absolute freedom on the web, merely because it is intangible probably does not mean that all laws not apply.

For instance, Julian Dibbell’s essay on a “cyberrape” by a user named Mr. Bungle in an online game suggests quite the contrary. While an online act may not be material, it may have real-world consequences like “trauma.” Should we prosecute such an act? Perhaps.

The new economy will require new rules. Some, like Tribe did this week, will inevitably suggest that we cannot abandon all of the old rules (i.e. we need to keep the Constitution applicable). But, at the very least, a digitized economy will require modification.

PS The "Digital" Convict