The Digital Economy
The digital economy refers to the wide range of economic activities that use knowledge and digitalized information as the primary production factors. The internet, big data, cloud computing and fintech among other digital technologies are used to analyze, collect, store and share digital information and also to transform interactions between people. Digital technologies drive economic growth, innovation and job opportunities in a country. Therefore, the digitalization of an economy creates many business efficiencies and benefits (Brynjolfsson & Kahin, 2002). Digital economy ensures sociological changes by influencing how business people from different parts of the world interact since it permeates all society aspects.
The Three Pillars of the Digital Economy
The digitalization of an economy is built on three main pillars and the first one is real-time business whereby the pace at which businesses are accelerating is super-fast since the expectations of consumers and suppliers are increasing at a faster rate. Business innovation is the second pillar and this means that businesses must try to innovate new products, new business models and production processes. Business agility is the third pillar whereby businesses have to remain agile, current and responsive. An example is in Asia whereby the digital transformation has brought about a substantial impact on its economy in that about twenty-five percent of e-commerce transactions are those that are between businesses and consumers (Aladdin, 2018). Understanding digital economy, however, remains a challenge due to its complexity. Digital transformation is not only about the digital platform and big data but it is also about how the already advanced technologies can be exploited to maximize opportunities for new business models, production processes, innovation, smart services and products.
The Rise and Importance of the Digital Economy
The rise of the digital economy has essentially transformed the social life and economy of the United States and the world at large. The United States exported about four hundred billion dollars of digitally deliverable services which accounted for over half of service export in 2014. Most innovative companies in the United States are founded by the most imaginative minds in engineering and business and indeed the digital economy thrives when the government works together with stakeholders and therefore the governments must create legal policies and diplomatic environments that are conducive to business competition, creativity, and investment.
The Role of the United States Government
The digital economy and the internet are very critical for the future progress of the wider American economy since they are a source of jobs, global trade and also key to United States’ competitiveness. Estimations by experts indicate that digitalization has the ability to boost the United States Gross Domestic Product by up to over two trillion dollars annually by the year 2025 (U.S. Department of Commerce, 2016). The United States government has come up with policies that support security in the digital economy since the digital ecosystem has presented many security challenges to businesses and consumers online. The Department of Commerce has, therefore, worked to improve security and digital ecosystem resilience in order to sustain a digital environment that encourages innovation, efficiency and economic prosperity while also promoting business confidentiality, consumer confidence, and security. The Department of Commerce has also rolled out Digital Economy Agenda in order to ensure that America’s consumers and businesses thrive at this time of rapid global competition and technological change (Davidson, 2016). This Agenda is specifically deliberate to create a strategic and coordinated department-wide program of work to so that American consumers and the entire business industry is supported and protected from the negative impacts of digital technology and the internet.
Benefits for Consumers, Businesses, and the State
In order to promote digital economy success, the United States government has the responsibility of providing consumers with open and free internet that has minimal barriers to services and the flow of data across the border. In order to thrive in a digitalized global economy, American consumers and businesses need to work as a team, employ skilled workforce and possess faster digital infrastructure. Large and small businesses have adopted a rapid operational culture that allows them to react quickly to new economic trends and to integrate the changing economic technologies into their daily workflow. The digitalized economy has made businesses, the government and consumers to work together under trust and protection policies and governments has the responsibility of making sure that the businesses and digital consumers are safe for the economy to grow (Tapscott, 2014). All of them has to benefit from the digitalized economy with consumers benefiting from efficiencies, businesses from profits and the state from increased Gross Domestic Income.
The Impact on Business-Consumer Relationship
There are many changes in the way businesses influence their prospective customers. From television commercials to print media advertisements, the methods of goods and services delivery have greatly focused on consumers. The strategies that businesses use to attract consumers have become much more engaging and personalized and are now tailored to speak to the needs, habits, and interests of consumers. The complexity of the relationship between consumers and brands have deepened and it has become more important to have a business remain consistent, approachable and available to its audience more than ever (Paunovic, 2018). The digital advancement has greatly affected how consumers go about their buying of goods and services and there is social proof that online reviews are powerful deciders to many customers. Almost eighty-four percent trust online reviews besides personal recommendation while sixty-eight percent of consumers form their opinion after reading just a few online perspectives.
The Role of Design and Consumer Control
Digitalization has made available many brand messaging platforms available for businesses and therefore the messages that are directed towards consumers has to be well crafted and consistent at all times. Businesses have to design their product information in a way that it builds long-term relationship and trust between them and their consumers and they must strive to remain relevant at all times. With the continuous evolution of digital innovations that are targeting consumers ranging from website design to outreach, it is well understood that digital is vital in the cultivation and maintenance of an optimal customer relationship and experience. Contextual and visual elements within websites set the tone for a consumer-business brand relationship and therefore should be designed in alignment with visions of the brand. Businesses need to give consumers control via digital tools and assets they can use to control their empowered relationships.
Overcoming Capitalism's Impact
Open source businesses, for example, know that their customers are not idiots and that is why they encourage their customers to tinker with their products and from this, they are able to improve their products and services by making them better. We are currently in a world where digital technology supports an extremely diverse range of models and production and therefore making the consumer the producer is the exceptional way to make a business move up and be able to flourish in this digital world (Tapscott & Barry, 2009).
The Effects of Capitalism on Technology and Labor
Some people argue that advancement in technology has resulted in unemployment. However, this is only true under capitalism. Capitalism here refers to a system whereby scarce resources are privately owned. Individual capitalist presents technology and also improves productivity so that they can increase their own personal profit without any regard for the needs of society and the standard of living of workers. Capitalism cannot even use the technology and knowledge that are discovered by the society over millennia due to self-centeredness. Initially, capitalism was meant to be a system in which profit motive and competition provided an incentive to invest in technology and new machinery that saw the development and application of steam power and also the development of the industrial revolution. The profit and competition motive that rose from private ownership of production have greatly become a huge barrier to technology and science development and more than ever, there is need to transform the society by overthrowing the rotting social relations of capitalism that has become more evident in the society. There are no motivations for capitalists to invest in technology that is labor-saving since there is plenty of cheap labor around the world.
The Need for Democratic Control of the Economy
The potential of the internet to add to public wealth has only been directed toward increasing private riches. Since the internet was transformed to be a private good in the 1990s, there have been impacts on who accesses the information, the contents to be accessed and the most accessible information. Capitalism’s technological revolution has caused extraordinary disparity, harrowing poverty and unchecked exploitation in the society (Khan, 2018). Technology is currently being used against working people under capitalism since capitalism owns, appropriates and patents new technologies which have eventually impacted on those who are vulnerable economically. The original idea of the founders of Google was to create free access to knowledge and information by computer experts and geeks but it has since become a business with billionaires. Capitalism has made the generous public spirit to become a private adoption of technology by Conglomerates like Amazon, Google, and Apple which are currently monopolizing information technology and are becoming the major corporate cartels in the whole world.
The Challenges and Solutions in the Digitalized Economy
Despite the present technological advances in the economy, capitalism still continues to thrive and is increasing the exploitation of markets and labor besides the stagnating wages and growing inequality between people. For the people who are working, their conditions are spiraling downwards with irregular employment, less part-time work, and contracts. It is only the positions of business owners that are becoming more secure thereby resulting in more oppression. When the new technologies are released in societies by primitive labor contracts, what follows is widespread misery. It is therefore important that the current system is replaced by modes of production and technologies that support humanity and this is only possible via democratic control of the society that is under a socialist economy that is carefully planned.
The Role of Digitally Mediated Labor
Despite the increased productivity in the digitalized economy, waged workers are losing their ground because the capital owners are accumulating wealth which is the main goal of capitalism. So many forms of labor that are digitally mediated are no longer being facilitated as much as they are generating economic value. By digitally mediated labor, I mean casual labor that is short-termly managed through contracts like the Mechanical Turk and Uber business (Qiu, Gregg &Crawford, 2014). As much as their labor is technologically mediated, they earn below the minimum wage, or as much as they are paid more, they take expensive risks of their lives like in the case of Uber drivers who use their vehicles, fuel and also ensure them but do not receive any protections or benefits. The problems lie in how to figure out the way to reconfigure the digitalized economy so that people can be equal (Nardi, 2015). Capitalism has greatly excelled in production, and it is now time to address the problems of distribution.
References
Aladdin, R. (2018). Understanding the Digital Economy: What Is It and How Can It Transform Asia? Asian Development Bank Institute. Retrieved from https://www.adb.org/news/events/understanding-digital-economy-what-it-and-how-can-it-transform-asia
Brynjolfsson, E., & Kahin, B. (Eds.). (2002). Understanding the digital economy: data, tools, and research. MIT press.
Davidson, A. (2016). Commerce Department Digital Economy Agenda. Department of Commerce, United States of America. Retrieved from https://www.nist.gov/sites/default/files/documents/director/vcat/Davidson_VCAT-2-2016_post.pdf.
Khan, L. ( 2018). Technology and Capitalism. Daily Times. Retrieved from https://dailytimes.com.pk/254641/technology-and-capitalism/
Nardi, B. (2015). Inequality and limits. First Monday, 20(8).
Paunovic, G. (2018). The Digital Evolution: Disrupting And Elevating The Relationship Between Brand And Consumer. Forbes. Retrieved from https://www.forbes.com/sites/forbesagencycouncil/2018/04/02/the-digital-evolution-disrupting-and-elevating-the-relationship-between-brand-and-consumer/#1f0e465718bf
Qiu, J. L., Gregg, M., & Crawford, K. (2014). Circuits of labour: A labor theory of the iPhone era. Triple C: Communication, Capitalism & Critique. Open Access Journal for a Global Sustainable Information Society, 12(2), 564-581.
Tapscott, D. (2014). The digital economy. McGraw-Hill Education,
Tapscott, D., & Barry, B. (2009). Grown up digital: How the net generation is changing your world (Vol. 200). New York: McGraw-Hill.
U. S. Department of Commerce. (2016). Enabling Growth and Innovation in the Digital Economy. Department of Commerce, United States of America. Retrieved from https://www.ntia.doc.gov/files/ntia/publications/enabling_growth_innovation_in_the_de_0.pdf
