Revolutionary Wealth

From Toffler's book

Re-Globalization

In 1900 the turn of a new century was celebrated in Paris with a Grand Exhibition devoted to progress, and the newspaper Le Figaro, barely able to contain itself, crowed: “How fortunate we are to be living on this first day of the 20th century!” One source of enthusiasm was the world’s advance, as the rich nations saw it, toward global economic integration—a rational process that, by changing spatial and political relationships, would make economies flourish. Sounding much like the true believers in economic globalization today, economists spoke enthusiastically of how more and more of the world was being stitched or bolted together... Within fourteen years of the Grand Exhibition, the “stitches” or “bolts” broke and the slaughter of World War I violently disrupted flows of trade and capital...

In the post–World War II years, America, its industrial base intact and, if anything, strengthened by the war, needed export markets for its goods and, above all, its capital. The world was hungry for American products, often the only products available. Moreover, advancing technology made it cheaper and easier to serve larger-than-national markets. Thus, convinced that global economic reintegration would serve their own purposes while generally advancing world economic growth, American elites undertook to create cross-border markets through which goods, capital, information and skills could once more flow with minimal friction. This, then, took on the form of an ideological crusade for re-globalization...

Because the economic integration today is far more dense, multilayered and complicated, linking so many diverse economies at so many different levels, it requires systematically designed fail-safes, redundancies and other safety devices. Unfortunately, overenthusiastic re-globalizers are constructing a gigantic financial cruise ship lacking the watertight compartments that even Titanic had...

Org Innovation

IBM, Kodak and the NYPD are all large old organizations. But preventing the oncoming implosion requires more than changing in-place institutions It also necessitates creating new types of companies, organizations and institutions, large and small, at every level of society. And that calls for social inventors prepared to face inadequate resources, rivalry, suspicion, cynicism and just plain [idioacy].

Daunting as all that sounds, it helps to remember that none of today's familiar institutions—not IBM, not Kodak, not the United Nations, not the IMF not police forces or post offices-- dropped full-blown out of the heavens.

All our institutions, from central banks to blood banks, factories to fire-houses, art museums to airports were in fact originally conceived by business innovators and social inventors who faced far more entrenched resistance to change than we find in the advanced economies today. And many of their innovations in business and society have been at least as important as those in technology.

We know the names of many of history‘s great technological innovators - Savery and Newcomen and the steam engine, Whitney and the cotton gin, Edison and electric lighting, Morse and the telegraph, Daguere and photography, Marconi and the radio, Bell and the telephone. And we justly celebrate their immense contributions.

Unfortunately -few other than specialists and historians, if indeed they- can name the social inventor who first came up with the concept of a limited-liability corporation. Or the person who wrote it into Gesellschaft mit bescrankter Haftung, the 1892 German law that was the first to embody it. Can anyone imagine what today's world economy and financial system would look like minus limited liability for investors? Was that any less achievement than, say, the telegraph?

The Intangible in the Tangible

Property is the place to start because property is the origin of the capital on which capitalism itself is based. And both are now morphing into something new and strange. Property has often been described, as it still is in one leading English-language dictionary, as “a thing or things belonging to someone.” But dictionaries can be wrong, and property never was just a thing or things. In his groundbreaking book The Mystery of Capital, the brilliant Peruvian economist Hernando de Soto has shown that no matter how thing-like or tangible, property has always had an intangible aspect as well.

A house, a car or a camera isn’t property if it is unprotected by laws and social norms, and if anyone can snatch it away from you at any time and use it for any purpose. In capital-rich countries there is, in addition to protected legal rights and rules of ownership, an immense system in place that helps convert property to investable capital, which, in turn, stimulates economic development and wealth creation. This system consists of a vast, ever-changing knowledge base that lists who owns what, tracks transactions, helps hold people accountable for contracts, provides credit information and is integrated nationally so that users are not limited to doing business locally. This adds to the value of property. No such highly developed information systems are found in capital-poor countries, according to de Soto.

It is, in short, the intangible aspects—not just the physical aspects alone—that define property and give it value.