IT is obvious to a blind man that our global economic system is in trouble and today’s economic models do not work. To be clear, I don’t mean to infer that established economic thinking is in error by a small amount; I mean it is in error in a big way. Believe me: economic predictions are always wrong. And it starts from a basic premise of finite markets, infinite resources, and the use of single ‘prime’ variables.
The theoretical basis looks even worse when you consider that we need to take into account the ecology and impact on society and not markets. But it gets worse. Every economic theory is a ‘point function of simplicity’ with bounded conditions in well-behaved environments. That is not the way it is. Economies are non-linear and chaotic, and I think we can safely assume that no one understands economics.
So when I see economic reports declaring that IT has not improved business or benefited society and, indeed, that not a single invention since 1970 has been worth a dime compared to the great advances up to that time, I’m rather sceptical. It all smacks of ‘incompleteness’ and, worse, a less than full understanding of what is happening.
The introduction of electricity, gas, water and waste disposal was a great advantage to everyone, but the world population was smaller and energy and materials appeared limitless, while depressions and crashes still demonstrated that economic thinking didn’t work. Fast forward to today. You cannot compare employment, aircraft, food or any of the appliances and devices we enjoy today to anything in the 1970s and earlier. What we now have is superior in every respect due to IT, and enjoyed by more people.
IT and automation have allowed us to produce and deliver far more to a growing population at better quality than anyone could have imagined, at a continually falling cost. More people are employed and living longer, better lives due to IT and machines than ever before.
Don’t believe me? Consider what would happen if we switched it all off. Unreliable vehicles at high prices; no MRI scans or body monitoring in hospitals; no understanding of the genome or proteins; low-quality food, clothing and housing; expensive flights and transport; luxuries for the few and not the many; ailing human populations; a paucity of information and access; telephone calls, TVs, radios that cost a fortune and consume vast amounts of power and material, delivering poor and unreliable performance. Need I go on?
How about a slowdown of R&D, with projects spanning ten years instead of ten months or ten days? Just imagine the impact – there is no end to the damage it would do to society and the planet. And instead of supporting seven billion people, we would be looking at a global population of less than six billion. So how do economists manage to be so wrong? By looking at the world through a soda straw, assembling incomplete pictures, and analysing the wrong numbers to death?
In their defence, they may well have a bigger problem than trying to predict the weather or trying to map the heavens. Economies are far less stable and changing at a far higher rate. Even when I attended my last formal course in economics during the mid-1970s, cracks where beginning to appear. Theories were either failing or limited in every field of application. And while that era saw engineers and technologists worried about costs, ROI, NPV, the impact on society and change, they also got on top of reliability, resilience, utility and, best of all, new technologies.
Gordon Moore’s law of transistor density is mostly misquoted, but it translates to exponentially more for exponentially less at a continually falling price. More computing power for less silicon and less energy at a lower price year on year. The wonder of this is that this law now applies to almost everything. But the most exciting aspect is this: The IT revolution has hardly started, and we still haven’t figured how to get the hand brake off. ?
Peter Cochrane is an IT consultant and the former chief technologist at BT
Social shifts, globalisation and rapid advances in digital tech will bring big changes. EY's Hywel Ball explores how CFOs can stay relevant
Exec boards not doing enough to mitigate cyber risk, according to results from first ever survey covering the full FTSE 100, from Deloitte
Getting compliance ready should be viewed as a strategic move that will affect and benefit the business. It is the start of the race, not the end
How advanced technologies can help finance executives prepare for the next generation of corporate real estate regulation
Thack Brown of SAP discusses the three critical steps that must be taken for CFOs to ensure they are prepared to face new challenges relating to corporate real estate