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A book by Alexander Dolgin

Manifesto of the New Economy

Institutions and Business Models of the Digital Society

Summary

A new book named «Manifesto of the New Economy. Institutions and Business Models of the Digital Society» by Alexander Dolgin, Professor of Moscow State School of Economics, has been published.

As Alexander Dolgin says in his book, a new economy is principally the economy of clubs, i.e. different associations of people founded on base of their interests. In such clubs one can find comfortable social habitat for unique personalities living in the society. A person`s quality of life depends on people around him and the way they deal with each other. From the point of view of the economy, the club allows to produce collective goods with reasonable expenses of production. It gives premise for productive joint activities. This concerns different aspects of life, big or small issues: from the problems of a condominium and economically favourable collective purchases to superior forms of cultural and political activities. That is why the club becomes a key form of society being. A society is as good as it can successfully produce different and accessible clubs. From this point of view the new economy brings great positiveness.

There are a number of outstanding chapters in the book. One of them is named «The evolution of the second hand». The discovery of the principle of operation of the «invisible hand» is a great achievement of economic thought. With the help of this metaphor Adam Smith could explain how markets together with huge fields of human activity are regulated without direct exchange of information among people – through costs and the balance of demand and supply. Until recently nobody has dared to think of any other principle of coordination since communications were inexcusably expensive.

However with IT-industry, e-mail and search systems, those became considerably cheaper. There appeared exchange of views when a private utterance is not delivered from person to person but becomes known once and for all. Due to this, together with Adam Smith`s one, the second invisible hand started operating the full might. The mechanism explained in the book helps to understand a lot in modern life structure. The principle of operation of the second hand is based on monitoring not the prices but who buys and what kind of goods/services and with what effect. Strictly speaking, the second hand always existed but had operated more implicitly than the first one. One should think here of the system of status differences that had ruled people ever since.

The way the second hand operates is product diversity and tempo of its renewal with the help of which people mark their status, taste, as well as group and stratum belonging. Why do they need this? To keep in touch with people they need and enter into relations they need. Thus, the interests operated by the second hand concern both business and private areas of life. The second hand, unlike the first one, operates complex symbols but not prices (although prices could be read through symbols). With their help it builds not only property but cultural-symbolic table of ranks. People choose things according to their taste and paying capacity and also due to signals those things make, thus people get united or dissociated or compete with other people. They see people below their rank, equal people and those whose level they would like to reach. Those high and low levels are simultaneously located in two main coordinates: financial and cultural ones.

Whereas the first, Adam Smith`s hand, operates goods and services circulation, the second hand becomes responsible for clubs and relations regulation. The first hand operates via manufacturers who respond to demand, the second hand operates via consumers who demonstrate their demands for the goods they need to mark their differences.

From Alexander Dolgin`s book one can understand that modern way of life is estimated by the consuming society critics in a wrong way and thus cannot be just. In fact, modern society is humane. It tends to accord with free person`s interests in its best way. A lot of things happen in this society not because of capitalistic thirst for profit, according to popular opinion, but because of natural people`s aspiration for happiness. Economy produces a signal system for people and its effectiveness depends on the speed, work content and plenitude of mutual «transparency». And this influences the quality of the milieu people live in, the number of life scenarios they can choose, the quality of goods and services they consume, the pithiness of communications, and finally the quality of personal time, the quality of life and feeling of happiness. The author does not confine himself to sharing only theory with the readers but sets and solves practical problems, like
  • What is the future business model for entertainment and mass-media industry?
  • What does not Happiness Economics tell us about happiness?
  • What is the link between talent, success and stardom?
  • How can you make money through social networks?
  • How can we measure cultural values?
  • What is person`s subjective time and how can we make it qualitative?
  • What is the club economy?
  • How can we make the efficiency factor of the crowdsourcing higher and turn a
  • crowd into a clever crowd?

These and other questions are going to be discussed during the talk.