MOSCOW – I was recently posed the following question: “The most important way in which the Internet and online social media are changing our world is [fill in the blank].” My standard answer is that it changes the balance of power between individuals and institutions. But this was a sophisticated audience of economists and students, gathered for the 20th anniversary of Moscow’s New Economic School. I needed new material.
So I challenged the audience to consider the following: For much of human history, there was no economy based on trade and fungible goods. People operated in small groups and fended for themselves. Scarcity was self-limiting: If you could not grow or catch your own food, you died (or moved). Specialization, trade, and pricing – not to mention religions and (economically) unproductive religious institutions, mass production, mass media, and big government – are all recent developments.