The Hindu Business Line : Towards a ‘weightless’ world

The world today is characterised by intangible forms of power, bound up in bundles of information and knowledge. The physical products, which were hitherto a measure of wealth, are dematerialising.

R. Devarajan

In the contemporary scenario, the physical economy is shrinking. The world today is characterised by intangible forms of power, bound up in bundles of information and knowledge. The physical products — which were hitherto a measure of wealth — are dematerialising.

Until recently, countries exporting goods were measuring their exports against imports based only on weight. Incredibly, the British government was using weight as a parameter to measure the value of exports versus imports as late as 1985. Even imported computers were assessed by weight.

Today, the idea of measuring the value of computers based on weight would be considered daffy, when even a birthday card with a microchip contains countless computing power.

In fact, computers are in the frontline among the numerous physical items that are dematerialising and sprinting towards weightlessness. The original IBM personal computer, introduced in 1981, weighed more than 44 pounds. By contrast, the various versions of contemporary PCs are lightweight.

Space is shrinking too

Products are not the only things dematerialising in the new weightless world of electronic commerce. Real-estate is also shrinking. In offices, private space is disappearing. The idea of enclosed industrial offices walled off from fellow workers went well with the traditional type of organisation. In the new network environment, private space gives over to social space.

Corporate teams working together — continually sharing information, knowledge, experience, and expertise — need open areas that facilitate face-to-face communication.

Money, too, is dematerialising in the weightless world. The cyberspace economy is creating the technology for a cash-free society. ATM machines, smart cards, and digital cash are rewriting the rules of the monetary economy.

The dematerialisation of money has gone hand-in-hand with the decline in savings and the rise in personal debt. Property in the form of personal savings is fast becoming an anachronism in an era of ever accelerating economic activity where quick turnover, not accumulation, is the prevailing ethos.

Credit cards have revolutionised the way consumers relate to the marketplace.

Outsourcing is the route

In an age of shorter product cycles, quicker product turnovers, and more diverse product lines, the consumer continues to spend beyond his income, thanks to the credit card syndrome. Physical capital in industries such as tools, machines, equipment, and shop floor space are also no longer owned. Companies borrow the physical capital they need in the form of a long lease, and charge it as a short-term expense, and as a cost of doing business. The main reason why companies prefer leasing is that it allows them to be flexible in the fast-changing markets — especially when confronted with constant technological obsolescence.

Companies in every field and across every industry are racing to divest themselves of assets that are beyond the boundary of their core missions. If an asset or process is not an essential adjunct to advancing the primary goals of the corporation, it is better to turn it over to an outside agency. Outsourcing is the route to resolve this issue. Outsourcing is nothing but giving away ownership of non-core functions to an external agency. In the emerging network economy, outsourcing is becoming a near religion.

The market-oriented, private property regime, on account of its structural constraints, organises economic activity into mine and thine. This pattern is becoming irrelevant in the cyberspace economy, where commercial success is controlled by the concept, “What is mine is yours, and what is yours is mine.” It is this sharing of economic activity that is the defining dimension of the electronic commerce.

(The author is a Chennai-based freelance writer.)