He who measures out oil, gets his hands greasy

The question most often posed about the Internet is, who makes money out of it? Sometimes it comes endorsed by such reputable high priests as The Economist, The Wall Street Journal or The Financial Times, or no less prestigious denominations such as Harvard or Yale. What we still haven’t found is not just the answer to this question, but any kind of discussion as to whether this is the right question to be asking at this moment in time. It is clear that the way economic activity evolves in the Net is a question of fundamental importance, but this does not necessarily mean that it defines the economy of the Net or, to use Manuel Castells‘ term, the Net-Economy. Even if we come across little corners of the Net that we can select as paradigmatic of economic success in the digital era, we will almost certainly not have said very much about the economy sustained by the nets on the whole. Although my comparison might be a bit far-fetched, it’s a little like taking the case of a textile manufacturer in York as an example of what was happening at the dawn of the Industrial Revolution. They would have given a rather poor indication of what was happening unless we also looked at the formation of the labour market, river and/or rail transport, commercial networks, the colonies etc. Only within the context of this combination of factors, would we be able to get some kind of perspective on the newly emerging economic system.

The situation is not much different at the moment. Nevertheless, research centres and think tanks are bent on discovering the magic formula that explains the economic phenomenon of the nets. As the solution is not immediately obvious, what we are doing during this interim period is constructing metaphors with sufficient explanatory content before things gel into what our friend Cornella with great foresight dubbed as infonomy. Because it is precisely in this area that one of the key questions of the matter lies.

We are quite clearly witnessing how an era in which education, the organisation of the labour market, business administration and policies of alliances based on physical, or fundamentally physical, commodities, is fading away. And also right before our eyes, an era based on the interchange of goods such as information and knowledge is emerging. As the French endocrinologist and thinker Marcel Sendrail would say, every civilisation has a pathological style that defines it, just as it has a literary or monumental one. And the civilisation of the Information Society is no exception. However, as yet the broad outlines of this pathological style of networked societies have not appeared, whether they are real or virtual.

If we try to apply formulas of economic models to what has evolved so far, their shortcomings immediately become apparent. Education, the labour market, business administration and policies of alliances are undergoing tremendous upheavals at present. We are in the middle of a transition from an education system which is compartmentalised according to age, based on teaching from a “corpus” of knowledge, to a situation where education is continuous, based on learning and where individuals extract a substantial part of their knowledge from their own experience of sharing a pool of knowledge contributed by the rest of the community.

The labour market is beginning to be made up of a growing proportion of people who, either on their own or in groups, operate like businesses in an economy whose strong point is its functioning within networks, thus enabling them to exploit the new educational potential and, at the same time, enjoy a flexible organisation based on knowledge. This is the third thing seriously affecting business organisations as we have known them up until now. Their hierarchical structure, strongly impregnated with the idea of vertical authority, puts them at a disadvantage when confronted with the multitude of new companies in which the participants’ knowledge and experience is the intellectual capital that defines them within this new economic framework. These days, more brains are being bought than businesses…

Finally, the policies of alliances have changed radically too. Networks in the real economy could arm itself against intruders and even quosh innovations much more powerful and efficient than the existing ones. In virtual economic networks (which, logically enough, participate to a great extent of the former) these alliances are not enough to stop intruders. In fact, quite the opposite, they multiply in a breeding ground more and more densely populated with new businesses and businesspeople –sometimes allied to one another, at other times competitors and frequently both things simultaneously–, dedicated to the “manufacturing” of information and knowledge goods. The close relationships amongst them are changing the rules of the game: where before competition was a factor which tested survival in the marketplace, now co-operation is seen as an equally important value and its potential and importance in the new economy has hardly been truly weighed up yet.

The differences between the two worlds are so evident, that our first question (who makes money on the Net?) should really be the last of a series of questions to help us do an in depth probe into the economy of the Information Society. In an environment where group work, shared intelligence and alliances determined by the networks in which one chooses to operate are the order of the day, we do not yet have a model which sufficiently explains this new social organisation as it evolves. The Net favours hybridisation and a mixture of very different ways of behaving not just in the field of economics, although in the end one has to go back to this. For this reason, the future of the digital society does not rest in those free market formulas that reach us from California attempting to explain what is going on in cyberspace, nor in the form of the direct democracy which arose in the wake of the French May ’68 as an alternative to the alienation which the capitalist system inflicted on its subjects. Somewhere between the two, lies cyberspace, a new market with a dynamic determined, on the one hand, by knowledge, influence and communication and, on the other, by the role that in all this individual strategies play, the management capacity of those involved and the alliances they are able to forge at each stage. In this context, the illusion of control is a recipe for disaster, although it’s been quite the contrary for the bastions of the economy up until now.

Translation: Bridget King.