Jeremy Costin's weblawg.net

I’m reading “Business @ the Speed of Thought,” by Bill Gates.  (Chapters-Indigo Link Here)  He wrote it ten years ago, which allows me the critical distance I prefer when reading a book that prognosticates.

Say what you will about MS Windows, Mr. Gates knows business.  So I figured his views on business in the post-industrial age would be at least interesting if not wholly prescient or doctrinal.

Actually, I would suggest that we are now post-post-industrial.  I’m going to digress for a bit.  I’m not sure I will come back.  You’re probably not all that surprised.  During the industrial age, money was used to trade industrial output.  For a brief period, beginning with the expansion and deregulation of derivative markets and ending with the financial swan-dive-with-a-jet-pack-and-a-small-nuclear-device this past autumn, money was used to trade mathematical shadows of money.  Money became more than an instrument of trade, but the seed of massive abstracts that themselves became a primary good of the world economy.  What is interesting about that short era is that during the industrial age, as currency was used to evaluate and trade industrial output, it was still indexed to gold as that currency; during the money economy, the gold standard was removed.  During the industrial age, money was seen as abstract, and thus it required a tie to tangible gold.  Once money was no longer seen as an abstraction, the ties to gold seemed superfluous dead weight being dragged behind an explosive global economy.  With the ties severed, we had two forms of money defining the economy: currency and its derivatives.  Which of them was the post-industrial good and which was the post-gold standard?  Derivatives are not money; they are data and theories and probabilities about money.  But they were being bought and sold.  It would seem they were the good.  The deregulation of derivative markets, however, allowed them to be used as the currency for those trades.  It would seem that they were currency then, which as we’ve seen is an abstraction of a standard, which would in turn indicate that the standard was money itself, which is not a standard, but a metric indicating value.  Both derivatives and money are, themselves, information.  The markets have deflated, swallowing (by some measures) decades of economic growth.  But the existence of those derivative markets was symptomatic of the development of a new economic era wherein information underpins the economy. Continue reading →