intrust

It is generally agreed that Adam Smith, when he suggested that the division of labour leads to inventions because workmen engaged in specialised routine operations come to see better ways of accomplishing the same results, missed the main point. The important thing, of course, is that with the division of labour a group of complex processes is transformed into a succession of simpler processes, some of which, at least, lend themselves to the use of machinery.

Little could the economist Allyn Young, in writing the above in 1928, have dreamed to what extent "simpler processes" would come to dominate industry. Nor that one particular simple process - digitalization would permeate throughout all economic endeavor.

Information Technology thrives on an unparalleled commonalization of human effort. The common denominator, the simplest of all processes, is the bit, the material expression of what is logically true or false. In the IT world everything is cached, counted, carried and consumed in the form of digital bits: Chinese opera recordings, hip bone x-rays, customs declarations, pictures of nude people in compromising poses, building plans, court orders, Shrek II, barometric pressure at the North Pole, the simultaneous chatting of tens of millions of teenagers, the nerve system of your automobile.

Since so much enterprise and activity virtually share the same laboratories, production plants, and distribution channels, the efforts of each are to the benefit of all - one for all and all for one.

Long before the invention of the transistor Young wrote:

Every important advance in the organization of production, regardless of whether it is based upon anything which, in a narrow or technical sense, would be called a new "invention," or involves a fresh application of the fruits of scientific progress to industry, alters the conditions of industrial activity and initiates responses elsewhere in the industrial structure which in turn have a further unsettling effect. Thus change becomes progressive and propagates itself in a cumulative way.

Increasing Returns and Economic Progress The Economic Journal, volume 38 (1928), pp. 527-42




Economists speak of network effects or path dependencies.¹ If one person takes a particular route through a field it will be easier for those that follow to take the same path, and the more that take the path, the wider it becomes for those that follow².


Classic examples of path dependencies in technology are the QWERTY keyboard and the VHS player/recorder³. Whether the network effects of these two solutions shut out technically supperior competitors, or not, is still contentious, but regardless, their scope is limited by the singularity of thier utility and purpose.

The path of digitalization is unbounded, compounding and self-reinforcing – the bit is a path, the computer is a path of paths, the digital network is a path of paths of...

As the advantages of digitally encoded music relegate analogue encoding and fossil-fuel-powered distribution to our museums of engineering, consumers, producers, distributors and equipment manufactures will all, in their assessments and expectations of each other choices, collectively supercharge this changeover. Producers choose digital because buyers choose digital – buyers choose digital because producers do so. This is a network effect.

But when the photographic industry takes the same digital path as the music industry and countless other industries, then all sectors collectively will supercharge that path. At the moment we are witnessing the technological commonalization of telecommunications, broadcast entertainment and data networks – as telephones become mobile computers and computers work as telephones, televisions become computers and computers become televisions⁴.

addendum and errata