Wetware companies that sell DNA, enzymes, proteins and cells, and software companies that make exclusive tools, like Photoshop, but for biology, and hardware manufacturers that make assemblers and synthesising machines, will be at the forefront of edited life in the next industrial revolution. A revolution that intertwines the internet, living supply chains, and digital tools.
A 2020 McKinsey publication dated 13th May, titled “The Bio Revolution”, analyzed four hundred existing synthetic biology innovations in the pipeline. McKinsey determined that these advances could not only transform economies and societies but could yield about $4 trillion between 2022 and 2040 – each year. This $4 trillion does not account for what Harvard Professor Clayton Christensen identifies as the sum of the total knock-on financial impacts that will be created by adjacent products and jobs of the future.
The Internet of Things (IoT) is a small segment of the total internet. The “value network” here includes autonomous vehicles, industrial wearables, software, interfaces, robotics, cybersecurity, healthcare, and innumerable subclasses of these businesses working symbiotically to make life more equitable and liveable.
In the trailblazing 1997 book, “The Innovators Dilemma”, Professor Christensen examined the knock-on effects of the vast networks of ancillary businesses needed to establish a “value network”. He defines the “value network” as the knock-on impacts of a vigorous ecosystem of businesses, players, and companies that create products. But measuring the economic impact or “net benefits” of the ecosystem is not simple.
This problem remains particularly thorny. In 2019 a study established that eighty-four per cent of consumers abandon a transaction if they discover that the site does not have an SSL certificate. The green padlock icon next to the URL in the search bar gives browsers a sense of security to conclude the clickwrap contract. The padlock makes the SSLeigh bells ring for Christmas.
Speed is second only to security. The fastest websites have an average loading speed of first-page ranked sites coming in at two seconds or under. Increasing loading time from eight to two seconds can increase conversion rates by seventy-four per cent. Google has now included a new signal in their search ranking algorithms: site speed. Site speed reflects the speed at which a website responds to queries. When a site responds slowly, visitors leave. But site speed does not only improve user experience. Santa site speed reduces operating costs.
It is easier to calculate the losses which Netflix inflicted on Blockbuster LLC than the benefits it has brought to users. This is an age-old problem in economics. GDP measures monetary transactions, not welfare. The amount of internet activity that actually shows up in GDP—Google’s ad sales, for instance—considerably understates its contribution to welfare by excluding the consumer surplus that accrues to Google’s users. Consumer surplus turns on the assumption that utility or consumer satisfaction is measurable, and that marginal utility or the additional satisfaction derived from purchasing additional units of a product decreases with the number of units purchased.
Under the rule of diminishing marginal utility, the total utility of a good would exceed the total market value, since consumers would be willing to pay the market price even at the lowest utility. Any extra utility is considered consumer surplus. Calculating the value created by the internet is knotty, and any attempt to measure it now will be imperfect as it is now a general-purpose technology like electricity. In the 1970s, Vinton Cerf invented the “Transmission Control Protocol”. This protocol acts like a virtual greeting that permits computers to send information back and forth.
This “Cerf protocol” paved the way for Professor Sir Tim Berners-Lee at MIT to propose, in 1991, a decentralized “world wide web” of information. The following year, ingenious students at the University of Illinois developed “Mosaic”. Mosaic was a friendly way to search the nascent WWW that Professor Sir Tim Berners-Lee had invented. Mosaic was ground-breaking. It was an internet web browser that did not require the user to know how to program a computer. Users could simply use clickable links to navigate to other web pages. What followed was the “Commercial Internet”.
With the “Commercial Internet”, web hosts, email platforms, networks, Google, Meta, Apache, Netscape, Etsy, TikTok, Firefox, Waze, Amazon Go convenience stores, eBay, Twitter, Lyft, Airbnb, Online-Only banks like Chime and Marcus by Goldman Sachs, Alibaba, payroll systems, sovereign identity, municipal services, telehealth, and pharmacies like BlinkRx blossomed. The value network flourished unencumbered on an incorporeal infrastructure – an edifice upon which the next industrial revolution will evolve. Several leading thinkers have attempted to calculate the value created by the internet.
Erik Brynjolfsson, who is the Director of the Stanford Digital Economy Lab and the Jerry Yang and Akiko Yamazaki Professor at the Stanford Institute for Human-Centered AI, Austan Goolsbee who is the Robert P. Gwinn Professor of Economics at the University of Chicago’s Booth School of Business, and Pete Klenow, who is Ralph Landau Professor of Economics at Stanford University and the Dong Wei Fellow at the King Center for Economic Development, have all attempted to measure the value created by the internet. For emerging digital economies, this value is in public investment to close the infrastructure gap.