How far is the new economy that has supposedly emerged over the past twenty years a result of the introduction of new information technologies?
Essentially, I am looking at how information technology has developed over the last twenty years, in what ways, the large steps taken in IT now being available to virtually all in more economically developed countries, whereas twenty years ago it was quite scarce and how it has been used in business and spread to the home and how new jobs, markets, ways of working and economies have grown from this, to what extent, or if they even exist?
The term ‘new economy’ is banded about a lot these days and is quite general to firmly define but roughly it is the area of new jobs, opportunities, capital and money creation and accumulation that has sprung from the development of information technology. There is an overall consensus today amongst economists that a new economy has developed through the IT industry, in the ways that computers are today, everyday objects, commonly used for work, communication, research, general interest and the buying and selling of goods and services.
“Yesterdays industrial order is giving way to a more complex, dynamic and dispersed economy shaped by information technologies, global markets and new communications networks like the internet” (http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=107&subsecID=196&contentID=865). This website talks about how the new economy was born in America and how it is displacing and replacing the technologies and ways of work that preceded it. This quote indicates that a new economy has indeed been proliferated and that it has been shaped by IT and new ways of working, involving devices like the internet.
Another important, broad term in the question is ‘information technologies’. “Any equipment or interconnected system or subsystem of equipment, that is used in the automatic acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information. The term information technology includes computers, ancillary equipment, software, firmware and similar procedures, services (including support services) and related resources”. (http://www.grc.nasa.gov/WWW/Purchase/Section_508_def.htm) IT encompasses increasingly more as it develops increasingly. This definition is a very formal one and shows how much IT can include incouding computers, how they are used, the hardware and software, the help you get for using them, like technical support and all of the possible equipment that can be supplemented to a computer or electronic data system that stores or sends data like a mobile phone or games consiole or personal data system or telephone.
The question talks about a new economy that has “supposedly” emerged. Today, many have argued that IT has created its own space now though, a world of ‘virtual reality’. “The information age we currently inhibit refers to the preeminence of information as the defining component in many of the economic, social and political actions that shape our lives” (Wilson & Corey – Information Tectonics, p1). This actually states that we are living in an ‘information age’ and establishes IT as one of the biggest factors in our lives today and something that plays a part in basically all of the important, large-scale decisions and factors that go on around us.
A ‘cyberspace’ has been created, through the development of IT, in which there is a new market for trade, work, commerce and consumer confidence. Cyberspace has developed along with the internet and the interconnection of computers around the world. Cyberspace has been described as a “parallel universe” (Benedict – Information Tectonics, p9) and a “multi-media skein of digital networks, which is infusing rapidly into social, cultural and economic life” (Graham – Information Tectonics, p9)
Twenty years ago, the internet as we know it today, was the stuff of dreams. Computer systems were available to purchase to the general public, but it was till seen as unusual or quite rare for an individual to own their own computer. The technology was expensive to make, giving it a very high price on the market and demand also was not all that high, compared to today, as the potential of the computer was not what it is today.
In the last twenty years we have entered into an informstion age and this has altered our way of life, in virutally all aspects. “With the development of modern technology, the proliferation of sattelites, the advance in the computer industry and most recently, with the advent of the internet, new forms of communication were added” (Phfister – Social Dimensions of Information Technology: Issues of the New Millenium, p302).
These modern technologies, as I have shown from my research, have had implications for economic, social, political and cultural spheres, at least. They created new avenues for business to develop through, leading to faster, more efficient modes of work, through faster, more efficient sofware, hardware and methods of communication, meaning that video conferencing could take place, for example, emaning that people did not have to travel to have meetings anymore and with the intenet and email, meaning that workers were able to stay at the desk and get more work done.
Through the late 1980s and early 1990s, IT had been developing at a steady rate, becoming ever more popular in the business world, for the more speedy, profit enhancing reasons that I previously described. Only the relatively affluent population could afford to own a home computer system thuogh and computers, in general, had not caputerd the publics imaginations as they surely would later on. Computers were seen as useful for working at home and the such but as they were only just really being set out into the home market in redent years, there was some technophobia and people did not know how to fully utilise this new technology.
As technology developed, so did the numbers of people looking to purchase home computer systems and use them for a wider rnage of activities. “Almost 35 million americans operated a full or part-time business at home in 1990 (this number increased to 40 million in 1993)” (Rosenberg – The Social Impact of Computers, p593). The late 1980s and early 1990s were the early periods of the home computer system. With the development of more user-freindyl software and overall increased public awareness and knowledge, personal computer (PC) ownership would increase.
This table shows how PC sales have dramatically increased in the past twenty years, both worldwide and in the USA. PC sales revenues increased at a very fast rate from 1985 to 2000, with US revenues rising from $17.2bn in 1985 to $86.9bn in 2000, before declining slightly in 2003, to $78.1bn and then increasing yet agiain, after this date, but not quite reaching the previous 2000 peak levels. Actual PC sales continud to increase through the 2003, revenues decline, which shows that it was the prices, or worth of the PC that was in question.
Worldwide sales and revenues were experienced similarly to US ones with sales increasing rapidly to 2000, before the growth rate slowing down and revenue decreasing, but unlike the US, worldwide revenues had surpassed 2000 peak levels in 2005. The major period of growth was from 1990 to 1995 where PC sales in the US grew from 9.5 million to 21.4 million, a 225% increase. From 21.4 million in 1995 to 46 million in 2000 was then a 214% increase.
It is widely accepted that the vast incline in computer technology was produced by the advancements of Silicon Valley. This created what many coined the ‘internet bubble’, which was the astronomical economic activities stemming from new information technologies, the vast majority of which, from thr Silicon Valley region. Huge stock was placed on software companies, development agencies and websites, who did not actually have any ‘real’ commodities or assets.
Their worth was set in the cyberspace, which I have already talked about. An unprecedented level of investment was put into Silicon Valley researchers, who, it has been said, were unusual in that they were not subject to the social stigma of developmental faliure and simply looked on to develop new ideas, so in essense, lots of money was wasted before evenutally finding a sucessful formula and hoprefully making back their losses from this. As one writer puts it, “silicon valley was the source of changes taking place across the society” (Lewis – The New, New Thing, p13).
“In the second part of the 1990s Silicon Valley had the same centre-of the-universe feel to it as Wall Street had in the mid-1980s” (Lewis – The New, New Thing, p13). Venture capitalists were investing vast sums of money because they knew that at this time, it was all the rage and they virtually guaranteed to suceed. As the market became extremely oversaturated, the least efficient websites and dotcom businesses which ofered the least, were cut away and the internet bubble burst. All of the virtual money that was generated on the Dow Jones stock exchange was wiped off as the speculation market collapsed. Only the intenet businesses that were running efficientl and offered the public something that it wanted, survived (the most competitve firms who could survive on their own).
The question now is whether or not the new economy that was created by the intenet, computer sales and new information technologies in general, still exists. “Billions of dollars were lost during the internet bubble, a substantial fraction of the investment made during this period still has social value” ( Varian – Economics of Information Technology: An Introducation, p9). This shows that there are some positive remnants left over from the new economy. Varian cites the investment and uncovering of human capital as one of the most important remnants. He talks about a ‘whole generation of young adults’ being immersing themselves ito the IT industry, giving themselves valuable skills for the devlopment of the economy in the future, with it being essentail to now have anIT background.
I personally believe that it is clear to see that the new economy still exists to this day. It is smaller then at its growth peak of around 2000, but it is full of more competitve companies who are able to offer better services to the public and the barriers to entry aer now greater as the industy consolidates itself so that it will not collapse so spectacularly as it once did. “It is likely that the web – or its successor – will continue to be used in the decade to come” (Varian – Economics of Information Technology, p10). This is part of the proof of the new economy, with the internet, at present, being at the foremost of society both socioculturally and economicall, these days, coming about through the Silicon Valley boom and the new economy in general. “Sound operations… depend on effective and efficient processes, which are the operational spine of any organisation.
They also require the use of information systems, like the internat which function as the central nervous system of the organisation” (Harmon – Business Process Change: A Manager’s Guide to Improving, Redesigning and Automating Processes, px). This shows that even ‘post-bust’ the internet is more crucial then ever to the effective runnig of a top organisation and now that the public have been given the internet and watched it develop into something which is much safer, easier, useful and very convenient to use, that it is demanded and so there is still a new economy, shown in the upturn of PC sales from the bubble burst and projected upturns, forecast and current economic, consumer and social climate.