By Simon Bond

Technology and ideology are shaking the foundations of twenty-first-century capitalism.

So how will middlemen survive in the future? They will have to add value to their work and provide the one commodity that robots cannot deliver: common sense. Eventually people will cherish a new commodity: wisdom.

What is replacing commodity capitalism is intellectual capitalism.

As MIT economist Lester Thurow has said, “Today, knowledge and skills now stand alone as the only source of comparative advantage. … Silicon Valley and Route 128 are where they are, simply because that is where the brainpower is. They have nothing else going for them.”

Why is this historic transition rocking the foundation of capitalism?

Quite simply, the human brain cannot be mass-produced. While hardware can be mass-produced and sold by the ton, the human brain cannot, meaning that common sense will be the currency of the future. Unlike with commodities, to create intellectual capital you have to nurture, cultivate, and educate a human being, which takes decades of individual effort. As Thurow says, “With everything else dropping out of the competitive equation, knowledge has become the only source of long-run sustainable competitive advantage.”

This shift from commodity capitalism to intellectual capitalism is a gradual one, starting in the last century, but it is accelerating every decade. MIT economist Thurow writes, “After correcting for general inflation, natural resource prices have fallen almost 60% from the mid-1970s to mid-1990s.” This chart says so much.

 

Unfortunately, many nations do not grasp this fundamental fact and do not prepare their citizens for the future, relying instead mainly on commodities. This means that many nations that are rich in natural resources and do not understand this principle may sink into poverty in the future.

The transition of tomorrow

Intellectual capitalism does not mean jobs only for software programmers and scientists but in a broad spectrum of activities that involve creativity, artistic ability, innovation, leadership, and analysis—i.e., common sense. The workforce has to be educated to meet the challenges of the twenty-first century, not to duck them. In particular, science curricula have to be overhauled and teachers have to be retrained to become relevant for the technological society of the future.

As MIT economist Lester Thurow has said, “Success or failure depends upon whether a country is making a successful transition to the man-made brainpower industries of the future—not on the size of any particular sector.”

This means creating a new wave of innovative entrepreneurs who will create new industries and new wealth from these technological innovations. The energy and vitality of these people must be unleashed. They must be allowed to inject new leadership into the marketplace. 

We are currently in the third wave, where wealth is generated from information. The wealth of nations is now measured by electrons circulating around the world on fiber-optic cables and satellites, eventually dancing across computer screens on Wall Street and other financial capitals. Science, commerce, and entertainment travel at the speed of light, giving us limitless information anytime, anywhere.

Statistics highlight that on the Internet, 29% of visitors log on in English, followed by 22% in Chinese, 8% in Spanish, 6% in Japanese, and 5% in French. English is already the de facto planetary language of science, finance, business, and entertainment. English is the number-one second language on the planet. No matter where I travel, I find that English has emerged as the lingua franca. In Asia, for example, when Vietnamese, Japanese, and Chinese are in a meeting, they use English to communicate. Currently, there are about 6,000 languages being spoken on earth, and 90% of them are expected to become extinct in the coming decades, according to Michael E. Krauss, formerly of the University of Alaska’s Native Language Center.

The telecommunications revolution is accelerating this process, as people living in even the most remote regions of the earth are exposed to English. This will also accelerate economic development as their societies are further integrated into the world economy, thereby raising living standards and economic activity.

The fall in the price of oil is a major tax cut for so many global citizens and the countries that are net fuel importers. Lets hope the opportunities to rid the world of the despots and dictators that are now presenting themselves are not wasted.

Bring on 2015 and all it's opportunities.