The Corner

‘It’s Time to Create Your Own Economy’

George Mason University’s Tyler Cowen has a very interesting article in Fast Company Magazine this month where he argues that today each on of us can create our own economy online. He writes:

More and more, “production” — that word my fellow economists have worked over for generations — has become interior to the human mind rather than set on a factory floor. A tweet may not look like much, but its value lies in the mental dimension. You use Twitter, Facebook, MySpace, and other Web services to construct a complex meld of stories, images, and feelings in your mind. No single bit seems weighty on its own, but the resulting blend is rich in joy, emotion, and suspense. This is a new form of drama, and it plays out inside us — with technological assistance — rather than on a public stage.

Online, you can literally create your own economy. By that, I mean you can build an ordered set of opportunities for prosperity and pleasure, analogous to a traditional economy but held in your head. There is no obvious monetary transaction, but you’re using your limited resources to get a better deal — the very essence of economics. In fact, “economics” comes from oikonomia, the ancient Greek word for household management, and the modern practice of economics is returning to that idea.

He explains also how a big share of the value created is not yet measured — or even measurable. But it will be one day.

Someday we’ll gain the tools to measure these new benefits. Twitter’s value will lie not in its eventual market cap but in the human connections it creates. My Twitter feed is a virtual meeting room with economists, aid workers, entrepreneurs, housewives, celebrities, and plain old friends. The Web unites millions of diverse individuals, who interact and sometimes even meet up or marry. The world has a lot more of these connections, even if we’ve yet to see all of their implications — including the traditional financial ones of new businesses, employment, and revenue. And it may sound counterintuitive, but the more time you spend staring at your screen, the bigger that human capital dividend will be.

For the whole thing, go here.

Veronique de Rugy — Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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