Laws of the New Economy from Kevin Kelly of Wired Magazine
1
The Law of Connection
• The collapsing microcosm of chips and the expanding telecosm of connections tear the old laws of wealth apart and make way for the new economy. • A trillion dumb chips connected into a hive mind with tides of signals.
2
The Law of Plenitude
• As the number of nodes in a network increases arithmetically, the value of the network increases exponentially. In the Network Economy, more gives more. • When the expense of reproducing another copy becomes trivial, the value of standards and the network booms.
3 The Law of Exponential Value • For the first time in history we are witnessing biological growth patterns in technological systems. • Value explodes exponentially with membership.
4
The Law of Tipping Points
• Success becomes a runaway event. Smaller initial pools can lead to runaway dominance. • In the past, an innovation’s momentum indicated significance; now in the network environment, significance precedes momentum.
5 The Law of Increasing Returns • The network economy works on compound interest compared with the industrial economy that operates mostly on piggy banks. • Networked increasing returns are created and shared by the entire network. People will tolerate those who make disproportionate profits in the network economy because the collective has also made its riches.
6 The Law of Inverse Pricing • The very best gets cheaper every year. It is the function per dollar that continues to drop. • As one product or service becomes free, it opens a space for innovation where people will pay a premium to support the new, before it too becomes ubiquitous and free.
7
The Law of Generosity
• Value appreciates in proportion to abundance; a flood of copies increases the value of all copies. Because the more value that the copies accrue, the more desirable they become; and the spread of the product becomes self-fulfilling. • “Free” is a design goal for pricing • While one product is free, another is positioned to be valuable • Giving stuff away garners human attention, or mind share, that leads to market share
8
The Law of the Allegiance
• In a network there is no clear centre and no clear outer boundaries. However, one is either on the network or off. Thus users are voting to maximize the value of the network itself. • For maximum prosperity, feed the web first.
9
The Law of Devolution
• The tightly linked nature of the New Economy makes it behave ecologically. Turbulence is the norm. There is no sense in becoming the world expert on a deadend technology. • The biological nature of the era means that the sudden disintegration of established domains will be as certain as the appearance of the new. Therefore there can be no expertise in innovation unless there is also expertise in demolishing the ensconsed.
10 The Law of Displacement • There is a gradual displacement in the New Economy of materials by information. Cars get lighter and perform better. This takes weightless high-tech know-how. • Mass will be subjugated by the overwhelming amount of knowledge and information flowing through it; and in economic terms, objects will behave as if they had no mass at all. In this way, they migrate to the New Economy.
11 The Law of Churn • The sustained vitality of a complex network requires that the Net keep provoking itself out of balance. If the system settles into harmony and equilibrium, it will eventually stagnate and die. • Constant innovation is a perpetual disruption: poising on the edge of chaos to find life-giving renewal and rebirth. • There is a dark side to Churn because on one hand, there is the danger of extinction if the system becomes chaotic; and on the other hand, the churn may prime the self-making newness as a violent environment to live in.
12 The Law of Inefficiencies •
Productivity is for robots. In the Industrial Age, each worker was asked how to make the job better: that’s productivity. In the New Economy, each worker is asked “what is the right job to do?”. Doing something new & different is invisible to benchmarks that focus on the productivity of “more of the same”.
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The bottleneck in the New Economy is lack of imagination in seizing opportunities rather than trying to optimize solutions. “Don’t solve problems; seek opportunities”.
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The New Economy plays into human strengths. Repetition, sequels, copies and automation all tend toward the free; while the innovative, original and imaginative all soar in value.