June 1, 2006

What are we Heading For?

ďAll fixed, fast, frozen relations, with their train of ancient and venerable prejudices and opinions are swept away, all new-formed ones become antiquated before they can ossifyÖ.In the place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nationsĒ

The world is changing, and itís changing very quickly. The above quote seems to perfectly describe todayís world, especially todayís business world. Virtually anything can be digitized and sent around the world for next to nothing. Individuals and companies alike can collaborate with other individuals or companies anywhere in the world. Barriers are being knocked down daily. Weíre moving toward a world where all inefficiencies have been cut out, where everything is streamlined as much as possible. Things will cost consumers less because they will cost the companies less to make. Access to any information will be instantaneous and free. Communication will be possible with anyone, at any time, anywhere in the world, at negligible cost.

However, with all change comes both good and bad. There are so many questions that need to be addressed: If everything is digital and electronic, where to people fit in? If all barriers are gone, how are individuals to be protected from exploitation and crime? Where is governmentís place in all of this? These are just a few questions that will have to be answered.

At this point, if things keep progressing like they have been, it seems possible to imagine that global corporations will (if they donít already) have significantly more impact on our lives than government or any other entity. For the majority of people, life revolves around a cycle of working and then using the money they earn to purchase things they want or need. For people to get the most out of their money, they look for the cheapest price. Wal-Mart is an excellent example of a company trimming the fat, and lowering their costs as much as possible, and passing those savings on to customers.

As consumers, we benefit from all of this streamlining. Our hard-earned money goes further, allowing us to live more comfortable lives. However, the impact seems more negative for us as laborers. As work can be done cheaper in other parts of the world, it is outsourced. As companies relentlessly strive for the lowest price, an easy way to lower costs is to pay lower wages and offer fewer benefits. We seem to arrive at a question of where our loyalties lie. How much are we as consumers willing to spend out of our fixed income so that we as workers have better salary and benefits? Furthermore, since more and more of our money is invested into various markets, how much are we as investors willing to lose when a company pays its workers more, thereby lowering profits?

The increasingly global presence of companies also brings into question the interaction between these corporations and governments. As corporations transcend borders, under what jurisdiction do they fall? A single government becomes less and less able to oversee corporations that span the globe. Eventually, it seems conceivable that individual governments will no longer be relevant to society as everything is privatized and done by the lowest cost provider, eliminating inefficiencies. What then?

As for the quote I began with, it seems like it could have been said anytime in the past few years, describing the nature of todayís world. However, thatís not the case. It is from the Communist Manifesto by Karl Marx and Friedrich Engels, and was published in 1848. They saw capitalism as inexorably marching toward a system marked by those traits. The next step, for them, was a realization by the workers of their exploitation at the hands of companies in the wake of the destruction of national barriers, and a subsequent proletarian revolution. The end of the Cold War, at the time, seemed to be a nail in the coffin of Marxís political ideas. Perhaps he was more ahead of his time than we know. Perhaps he knew the answers way back then, though itís hard to imagine that he ever foresaw the exact mechanisms that have shaped todayís world.

In fact, in the face of the awesome speed with which the world is changing, it is very difficult for us, even today, to see the next step. However, one thing seems certain: the course of our future depends on our ability to answer these questions as they arise, and the sooner we can definitively answer them, the better.

This post was heavily influenced by The World is Flat: A Brief History of the Twenty-First Century by Thomas Friedman. If any of this piques your interest, go read it. Itís excellent.

Posted by chupathingy on June, 1, 2006 at 8:25 PM | Comments (0)