The giants of Silicon Valley are killing capitalism

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What will the UK economy look like when today’s young people have the chance to lead it? According to the polls, the signs are very mixed. Apparently, 83% of young people surveyed said they wanted to be their own boss and start a business.

This is great news, except that in another poll a few months later, two-thirds of respondents aged 16 to 34 expressed a desire to live in a “socialist economic system”. So which one will it be?

May I suggest that unless the new world of giant internet platforms is better understood, a command economy with a big fist of central planning looks much more likely.

The reason is that all belief systems need a powerful mythology to back them up. Communism’s utopian promise of world peace, universal brotherhood and social justice evaporated in the queues. But capitalism also makes a promise, which is that the company can be rewarded, and it is the promise that makes young people dream.

Because without a supply of people willing to share this dream and sacrifice their time, talent and treasure, then the enthusiasm for a market economy also dies. And this mythology is being destroyed by the new synthetic markets of giant technology platforms.

With their ability to control both supply and demand, platforms are an entirely new phenomenon. No company in history, not even the East India Company, has ever wielded such power.

Historically, monopolies like the Company could dominate the supply, and thus control the distribution and price of goods. But what Amazon can do is both subtle and multifaceted: It can manipulate both sides of a market, both supply and demand, due to its unique ability to ration information.

Traditional entrepreneurial skills – those powers of observation and imagination that identify both new trends and real human needs – are no longer needed.

Amazon is leading a ruthless global live experience. The company sends lists of “hot” products or trends that its algorithms have identified to factories in China, which then produce them, while Amazon also takes care of the fulfillment (called “drop shipping”).

It even absorbs the risk of disposing of the unsold inventory, typically by destroying it. This destruction featured in a recent ITV News investigation earlier this year – although TV detectives couldn’t figure out why it was happening.

On the other side of the market, where we the consumers live and click, the platform can take advantage of the fact that so few products are visible at any given time on a digital device.

While a trip through a real physical market or a main street gives you visibility to thousands of products, even if it’s out of the corner of your eye, only a few items can appear on a phone screen at any time. , and Amazon juggles these with the dexterity of a magician performing a three-cup trick.


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