Digital economy

1. Digital Economy

2. • According to Where is Technology Taking the Economy?, in
McKinsey Quarterly, the digital revolution passed through the
following three eras:
Where is Technology Taking
the Economy?

3. The first era of computational assistance:
• Semiconductor technologies during the 1970s and 1980s
• Use of Information Technologies (IT) in a wide variety of
applications, from financial services and oil exploration, to
computer-aided design and office systems.
Digital Revolution: Phase 1

4. The second era of interconnected machines:
• The advances in technology in 1990s and 2000s
• Sharing of information on a global scale due to the linked
computers which gave rise to the virtual economy
Digital Revolution: Phase 2

5. The third era of associative intelligence:
• The rise of smartphones, ubiquitous sensors, Internet of Things
(IoT) devices in the 2010s
• Searching for patterns and doing something with the results,
including computer vision, natural-language processing, language
translation, face recognition and digital assistants.
Digital Revolution: Phase 3

6. • Intelligence in this context doesn’t mean conscious thought or
deductive reasoning or understanding.
• Associative intelligence- the ability to make appropriate
associations in order to make sense of a situation- arises from the
constant interactions among machines, software and processes.
Meaning of Intelligence

7. • With the invention of the printing press by Johannes Gutenberg,
information was no longer stored in hand-written manuscripts, as it
became possible to externalize all that information.
• Similarly, everything that was previously electrified will now be
cognitized thanks to the advances in the field of Artificial
Intelligence (AI).
From Electrification to
Cognizitation

8. • English economist Keynes mentioned back in 1930s that the
unemployment because of the means of commercialising the use
of labour would outpace new uses for labour. Keynes referred to
this new disease as technological unemployment. According to
Keynes, the standard of living in advanced economies would be
so much higher in 2030 that human-beings would not know how to
spend their free time.
Technological Unemployment

9. • This new economic ear will no longer be about production, but
about distribution so that individuals receive a reasonable share of
what’s being produced. This new distributive economy era will
necessitate everything from trade policies to government projects
to commercial regulations to be evaluated by distribution.
New Distributive Economic Era

10. • The changing criteria for policy assessment: While the
previous economy based on production valued anything that
helped economic growth, the distributive economy would value
anything as long as it creates jobs.
Policy Changes

11. • The changing criteria for measuring the economy: As the GDP
does not entail virtual services, it results in unmeasured benefits
for the user while its costs are unpriced. So replacing priced
physical services with free virtual ones will result in a lower GDP.
Eventually, productivity (GDP per worker) will also get reduced.
Policy Changes

12. • The difficulty of supporting free-market philosophy; Although
unregulated market behavior may lead to efficiencies, in the new
era, this will no longer be justifiable as it creates whole classes of
people who lose.
Policy Changes

13. • The political nature of the new era: While the production of
more goods is an economic and engineering problem, its
distribution access is a political problem. So, better access to the
economy should be resolved based on political grounds.
Policy Changes

14. • In order to develop a reasonable path forward access to economic
output is a must!
• How will we find meaning in a society where jobs are scarce?
• How will we deal with privacy in a society where our movements
are tracked?
• Do we really want some of our daily decisions on such as how to
drive our cars or even what to eat outsource to some other
external sources?
Reasonable Path Ahead?

15. Final Remarks
• “Indeed, Allah enjoins justice, and the doing of
good to others; and giving like kindred; and
forbids indecency, and manifest evil, and wrongful
transgression. He admonished you that you may
take heed.” (Al Quran 16:91)