Wednesday, August 24, 2011

Our economy is based on The Wealth of Nations, and it’s out of date…

This is a post I’ve been meaning to write for some time, and have never got around to as it’s just too big a thing to get straight in my head. I’m writing something now (and it’s little more than the title) just because I think I should lay down a marker. Apologies in advance to anyone who was looking for something more insightful.

The summary is this: The Wealth of Nations by Adam Smith is the de facto bible of western economics, and its core tenet is the Division of Labour, which he studied through the prism of industrialisation and specifically the manufacture of pins.

Problem is, we’re moving beyond a classic industrial society – possibly to something identified as the Information Age. And in this age, classical economics no longer apply. This is most clearly seen in my own industry – software development, which works in precisely the opposite fashion: productivity increases as work is consolidated into a smaller group of more talented (and expensive) developers. The Division of Labour is not only unproductive, but positively destructive, as anyone who has scrambled through an offshore project can attest.

This paradox undermines many well-meaning corporate initiatives, and until we have a clear, and open, debate on this we are, frankly, a bit f*ked.

More to follow.

[1] Notwithstanding the “Invisible Hand”, which is the other core message.

1 comment:

Colm said...

One of the big flaws with the Adam Smith approach and most of traditional economics is that it makes one very wrong assumption as an axiom. That people always make the right decision. People are far from rational and we have many holes in our reasoning ability before you even begin factoring in emotional or social factors.