We find ourselves in the midst of a huge transition, from the analogue world of today to the digital world of the future.
The institutions that worked in the past are losing their relevance in an accelerating and rapidly changing world economy. This change is more radical than that during the transition from a primarily agricultural to an industrial economy.
To be sure, agriculture and industry will continue to form the basic substrate upon which any economy rests. But they are not sufficient for meeting all the current and future demands of a modern economy. The post-industrial information economy produces and consumes products that embody knowledge. Economic success will increasingly depend on the ability to competitively produce knowledge goods.
The future is not what it used to be. As we humans become more powerful in controlling our present, the future becomes less predictable. The boundaries of our ignorance and the range of uncertainties expand beyond human cognition. Our “unknowledge” of the future is unbounded.
It took thousands of years to go from the invention of the wheel to powered flight; it took only an additional 65 years for humans to walk on the moon. Just 50 years ago, IBM’s 5MB disc drive was state of the art. It cost (in today’s dollars) approximately $250,000 and was as big as a fridge. Today 5GB—a thousandfold more storage—costs a dollar. Each year, more information is created than was created in the entire history of humanity.
Technological advancement can no longer be plotted on linear graphs; they require logarithmic scales. This implies that no individual is capable of comprehending the entire technology, leave alone controlling it in any meaningful sense. Nobody knows how to build, say, a modern commercial jetliner. One may know a bit about avionics, another may know a bit about jet turbines, and yet another about advanced composite materials, and so on. But no one knows it all.
Human ignorance manifests itself in three other dimensions in the production of goods and services. First, no one knows what the future goods and services will be. Second, no one knows who will produce those. And finally, what their impact on human society will be is a mystery. Take the Internet. Could anyone have predicted any of the services we take for granted today even 25 years ago? Could anyone have picked the winners? Young people are doing jobs today that did not exist when they were born.