Things Fall Apart: Edge Economics And Crisis

Things Fall Apart: Edge Economics And Crisis: I’ve had a notion that the current economic crisis is more than a mere downturn for a while now. That notion has been and continues to be fed by people like Stowe Boyd. In this post he assesses our current situation in simple yet powerfully effective terms: things are falling apart.

Traditional cyclical downturns are weathered. The basic structure and principles that guided the economy at the outset of the recession are primarily preserved at the end of it. If you had enough cash to ride out the storm you would most certainly live to fight another day.

This time around things are different. There are undercurrents and shifts in the very nature of the economy that make it unlikely that this storm can simply be waited out. Institutions that grew strong on the centralized, master-servant, control oriented industrial model are being destroyed by a rapid shift to a decentralized, networked, peer oriented social technology model. We are speedily moving away from an economy dominated by a small group of big companies to one dominated by a big group of small companies.

The problem with this is that public policy isn’t working with the natural flow of things. Plans, programs, and policies are being written as attempts to preserve the dying model. Ultimately this will make the transition much rougher than it needs to be. It is this response – this urge to preserve the old order – that will most quickly lead to a more socialistic phase. As unemployment skyrockets and old model firms fail the government will have no choice but to provide emergency support to the millions not yet over their institutional dependency.

There is no doubt that the friction of fundamentally different ages grinding against each other is going to be painful no matter what route we take. And in the end, only time will tell how this all turns out – but if public policy can shift to an emphasis on helping individuals take advantage of the new rules – shift to policy that makes it easier for them to create the new small business economy – shift away from the emphasis on keeping corporate yachts afloat – then we might just yet see a better day.

UPDATE/BONUS LINK: Jeff Jarvis has a good, detailed post at his blog. The Great Restructuring was also linked to from Stowe’s post, but it’s good enough (even if he does over-plug his book) that I wanted to call your attention to it once more.