Parts and Labor
By Alex Keith
This October, a report was published by McKinsey estimating that the Internet has contributed more than a fifth of the GDP growth in mature economies over the past five years. That’s remarkable, especially at a time when these economies are struggling to get their populations back to work––producing and consuming the domestic product. So if the Internet is our ace in the hole for economic growth, and you and I are the prospective producers and consumers of the product in question, let’s take a look at the situation in front of us.
Arguably the biggest shift that has dominated the Internet in the past five years has been the move to make production and consumption a socially engaging activity. The consumer’s evolution into the participant dovetailed nicely with blogging and was a logical extension of niche communities that grew out of file-sharing, web forums and even chat rooms. The main difference, however, was that this new consumer/participant hybrid quickly began to feel its own weight when it came to creating external value, being made aware of this socially––not financially––by other people linking to and liking our stuff.
So how does any of this affect GDP? Well, the ideal scenario for a growing GDP is a society in which the producers make an increasing amount of money by creating products for consumers to buy at increasingly higher quantities or prices. Since, on the domestic front, the producer is effectively the same as the consumer (we all buy stuff with the money we get from making stuff to buy), the Internet’s current social dynamic is strikingly lopsided. Producers are perceived as consumers (check), but producers are not being compensated enough—or even at all—to actually become the consumers needed on the other side of the equation. Liking this post would be nice for my social stature, but it won’t literally pay me and therefore motivate me to consume whatever advertising is targeted alongside it.
This actually has serious implications. I’d encourage anyone highlighting income inequality within mature economies to assess the market value of their own production and demand a fare compensation from the social networks currently distributing it. And while that may sound a bit far-fetched today, there are a handful of companies identifying the economic imbalance between producer and consumer in this current climate, and offering their prospective participants a share of the revenue they generate. That should be a relief to all of us congratulating the Internet on its current 20% contribution to the GDP and wishing it many happy returns.
Alex Keith is on our account management team in our WONY office. He is a cofounder of the menswear label General Assembly.
