Standing on the Sun. Christopher Meyer
me, ‘By taxi.’ So they are already paying—they need these services.” It is always difficult to measure demand for services that haven't existed before, but that doesn't mean it isn't there.
In some ways, entrepreneurs are the same the world over, but Mangal and her colleagues strike us as a new force to be reckoned with. Whose hands have firmly held the reins of capitalism until now? It has been not only the capitalists of developed Western nations but also, within them, a certain cohort of people. The baby boom that followed the Second World War created an unprecedented bulge in the demographic tables. Baby boomers have dominated not only the markets served by consumer goods companies but also the boardrooms and managerial ranks of businesses of every kind.
That can't last forever. The exploding markets for concierge medical care and designer half-glasses tell you that the boomers aren't immortal. And the next cohort of capitalists looks quite different. Increasingly non-Western and less moneyed, on average, they are a new generation whose attitudes and aptitudes differ markedly from their parents'. Recall our earlier observation that the generation now sliding into the driver's seat of capitalism is the first digital-native generation.
Alan Kay, inventor of the mouse and much of the rest of the computer interface even the elderly now take for granted, once offered the following definition of technology: it is anything invented after you were born. (Presumably even for Kay, then, the touch screen is pretty whiz-bang.) None of us thinks of cars, let alone trains, as technology, but they were certainly newfangled in their day. Now consider this: if someone is younger than twenty-five, is the World Wide Web something she thinks of as technology? Or is it only an accepted part of the world, the existing foundation on which one builds? Doug Adams offered this answer in a short 1999 article for the Sunday Times: “We no longer think of chairs as technology, we just think of them as chairs. But there was a time when we hadn't worked out how many legs chairs should have, how tall they should be, and they would often ‘crash’ when we tried to use them. Before long, computers will be as trivial and plentiful as chairs (and a couple of decades or so after that, as sheets of paper or grains of sand) and we will cease to be aware of the things.”
Putting business into the hands of those born into the connected economy has implications at three levels at least. First, of course, is the facility, efficiency, and thus enhanced capability displayed by digital natives in using the information vehicles of the global economy; for example, we've seen many imaginative uses of mobile phones spawned in Africa. Second, business practices and capabilities will change even more rapidly than in the past as the method of making changes in systems evolves from the titanic corporate project of the pre-ERP 1980s to the continual downloading of new widgets of the post-ERP 2010s.8 These changes in operations will seem natural to a generation raised on the Web.
Third, the environment of the Web seems to be raising a worldwide generation whose personality has been influenced by social media and the economics of information. Don Tapscott, who prefers to call that group “Net Geners,” claims they live by new norms, learned in their online lives and transported to their offline ones: freedom, customization, scrutiny, integrity, collaboration, entertainment, speed, and innovation. John Palfrey and Urs Gasser, who lead research on digital natives at the Berkman Center for Internet & Society, say the differences run even deeper—as deep as identity formation. In people who came of age on social media, that process involves experimentation and reinvention, as well as different modes of expression. “It would be too simple to say that the Internet age represents only an amplification of the trends that began to emerge in the industrial age,” Palfrey and Gasser argue in their book Born Digital. “In fact, something quite new is happening: The use of new technologies by Digital Natives—the most sophisticated of wired young people—is leading to changes in our understanding of identity.”
Here's a story that could never have happened to a boomer—in part because the technology didn't exist, and in part because no one born in the 1950s could conceive of it. It's just … too weird. Kyle MacDonald, a twenty-six-year-old blogger (in 2006, when this happened), set out to trade a paper clip for a house. (Why?) He started off on Craigslist, announcing his intent in the Barter section, and promptly found someone who was willing to give him a fish-shaped pen for it. Posting that in turn, he was rewarded with a ceramic garden gnome. The incremental trading up continued through a camping stove, a generator, a beer keg … all the way, one year later, to an eleven-hundred-square-foot home in Kipling, Saskatchewan.9 Along the way, MacDonald departed from the physical barter model; as the Internet discovered his quest, the established media seized on it, putting him on Good Morning America and equivalent shows in Canada and Japan. At one point he was trading a year's rent in Phoenix for an afternoon with rocker Alice Cooper.
Here's the point: if you're a blogger, for whom the open source development of Linux or other software, the free provision of Web-based apps in exchange for a little attention to ads, and the media culture in which an item gets picked up and amplified by the media the way a planetary probe gets slingshotted around Jupiter to get to Saturn are all just part of life, why not try to trade a paper clip for a house? There are implications here for capitalism on a larger scale. It shows how social capital can be fungible with financial capital. That the marginal cost of trading is so low that Ronald Coase's assertion of the fundamental reason for the existence of the firm needs a new look. That the “gift economy” concept spawned by free value available on the Net may be a real economic phenomenon that changes our ideas of trade. In sum, digital natives will see possibilities for reorganizing economic activity that wouldn't occur to the previous generations.
Again, the youth story turns out to be tightly bound up with the emerging-economies story, because the populations of the fastest-growing economies are on average younger that those of the industrialized world. If it's significant that capitalism will increasingly reside in the hands of digital natives, then it's significant which nations are richest in that resource. Let's think about the part of the global population that is less than fifteen years old. Going back to Alan Kay, by the time this cohort was born, the first graphical Web browser had been released for a couple of years, so the Web doesn't count as technology for them.10 That group, in India, made up 31 percent of the population in 2007. In the euro area, it represented only 15 percent. The United States and China are both at 20 percent. The average age of the population of the G7 countries was forty-two years in 2009; of the emerging economies, only twenty-eight. And although we're not ready to write the book about the not-yet-emerging economies, it's worth noting that if we rank all nations according to this metric of youth, thirteen of the top fifteen are in Africa.11 And now let's think about the population over sixty, for whom stereophonic LPs count as technology. That group represents 7 percent of India and 12 percent of China, but 18 percent of the United States and 24 percent of the European Union. (Japan? Ichiban, at 30 percent.)
It's predictable, then, where nations will first become dominated by their digital natives. So what happens when some parts of the world have digital native societies?
Built on New Machinery
On May 6, 2010, Jack Ablin, a Chicago-based investor, sat stunned as he watched the price of his Procter & Gamble holdings drop more than 40 percent within half an hour, from the mid-$60s to $39.97. It was part of a larger event that came to be known as the flash crash; in those same few minutes, the Dow Jones Industrial Average plunged almost 1,000 points, losing nearly one-tenth of its value. Ablin told a reporter he quite literally fell out of his chair; it was not only the biggest drop he'd ever seen during a trading day, but it was also the biggest one (in absolute terms) the Dow had ever experienced. Even more amazing, no one seemed able to determine exactly why it had happened. Early theories centered on the possibility that a trader who meant to sell $16 million worth of futures made a typographical error and placed the order at $16 billion. In any event, something kicked the sell-off into motion, and, as automated orders were activated, it quickly snowballed.
For us it was a dramatic reminder of another way that capitalism's environment has changed. It is now situated in an electronic world of ubiquitous, fast-moving information, increasing transparency, and strong feedback effects.12 Technology is always advancing, of course, and that doesn't usually spell fundamental changes for capitalism. But sometimes,