Understanding The Networked Economy

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Understanding The Networked Economy is our research paper on the transition of advanced economies into a new form of information based networked model where we provide insight, analysis, and recommendations to help researchers and organizations better understand and respond to current structural changes in the economy driven by information technology and globalization. This paper is primarily focused on understanding the deep structural economic changes that are underway as a function of increased global interconnectivity. In this paper, we go in-depth in our analysis of this overarching process of change as it plays out at an extraordinary pace, looking at the primary stages of the transformation that started in the mid-20th century and trace the primary stages as our economy becomes restructured away from the vertically integrated formal model of the Industrial Age to the emerging distributed networked economy.

In the first section, we lay down the conceptual foundations for understanding the economy as a complex system. We define what exactly an economic system is and the evolution of economic complexity, as we have gone from small tribes to the vast interconnected system of today’s global economy. The second section focuses on the contemporary process of change looking at five major stages that have worked to transform the economy. Starting in the mid-20th century we look at the rise of neoliberalism as an ideology for transferring ownership and decision-making out of the state and into the market; how this feeds through to the development of economic globalization and global supply chains. Next, we focus on the important role financialization has played in transferring resources out of the Industrial Age national economic system and into global networks of finance and trade. We go onto discuss the rise of the platform economy as an initial stage of shifting economic organization to online networks and the extension of this process through the current development of the distributed web and blockchain technology.

In the third section of the paper, we trace the underlining structural transformations that are coming about with these changes. Here we focus on five main drivers; first among these being the shift – that hyperconnectivity brings about – from closed organizations to open networks as the primary mode of value production and exchange. We discuss the rise of the services economy and the very profound, but subtle, ongoing transformation in people’s values. We go on to look at the rise of user-generated systems and the use of platforms to harness the resources of the many within collaborative ecosystems. We discuss the rise of the innovation economy that is brought about by mass automation and the shift to more agile and dynamic systems of organization that place open platforms for enabling innovation at their core.

In the final section of the paper, we discuss how this next stage of distributed web technology and the new economic models that it will enable can be used to respond to the central economic challenges of our time; inequality, globalization, and sustainability. Here we discuss how the blockchain and the token economy can be used to quantify and manage different forms of value through token systems; analyze the workings of this distributed token based economy while exploring existing examples. We go on to look at the new consensus model of distributed platforms, how their service-oriented architecture can enable huge gains in efficiency. Finally, we talk about the workings of innovation platforms for enabling agility, resilience and the evolutionary transformation of organizations that will be required to navigate this age of disruption as we transit into the networked economy.

  • Publish Date: 25-8-2017

  • Length: 115 pages

  • Category: Complexity Economics

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