THE ECONOMIC REPERCUSSIONS OF INFORMATION TECHNOLOGY


  • Add Comments
  • Print
  • Add to Favorites
RKSM Sennaya Swamy Naickar | Bachelors in Economics

Economic classes has moved through many stages –from kings  and  subjects, slaves and masters, feudal lords and peasants, labor and capitalists and presently , investor and consumer. These transformations were only due to the change in science and technology through time. Information technology strives to solve the problems faced by distances and time. We are reaching an age where world is divided in geography; but united in knowledge, wealth and technology. The wealthy (gambling capitalists) do not have a nationality and the working class does not work a lot as they did before. There is wealth which does not have real value and everyone can enjoy luxuries irrespective of their ability to afford them. Information technology strives to centralize everything from production, distribution to consumption .Economics today is more of a definite science than ever before or is it the other way around?
Macro all the way
Information technology (IT) has been a very important tool in promoting macroeconomic thought.  The present technological advancements have enabled thoughts of Marxian and Keynesian theories to be  experimented efficiently. IT has enabled mass data collection, processing and manipulation which gave macroeconomic principles more power and promoted industrialization and automation of all production of goods. This macroeconomic sync with current technology has increased velocity of trade and finance the world over. This has enabled the governments of the world to practice modern forms of mercantilism and also diverted policies from populous to making incentives  for trade and finance. It has also enabled the emergence of central banking institutions as the prime controllers   of the economy . In many developed economies the increase in credit creation has fueled the growth in unearned consumption among the people. This is energized through circulation of fiat currency. It has also created consuming capacity, which is very high compared to the level of produced goods and services which results in increase in prices and causes economic mismanagement.
Mass and misused propaganda
IT has provided an industrialized economy in the hands of the government. It has enabled monitoring and implementing of policies by the rulers and thereby facilitating a police state. It has also given powers of representation of views and making collective bargaining easier. On the other hand, it has also enabled destabilization of a social structure through orchestrated and sometimes aggravated and exaggerated propaganda using the means of social media and internet which leads to riots and protests. Social media has been misused to propagate false and sensationalize information. This can lead to the instability of political and social system. IT has become a tool for some to disrupt and destabilize social structures of various countries. We can see it happening in the cases of protests in Egypt, India ,Tunisia, Libya which has destabilized government and social institutions.
Centralization of economic powers and the tool for neo-colonialism
Communication technology, have always been used as a colonial tool by industrially developed countries. Like the telegraph, which was used to maintain the colonial rule of Europe over far away Asian and African economics. Now after majority of the Asian and African countries attained independence ,the advent of information technology involving communication still acts as an economic colonial instrument for first world countries to exploit  and plunder the wealth of poor countries.
The capital market which has now entered the information technology age has attained many powers. Information technology is used as a tool to inform the price level of commodities in need by the local population. With the increase in world trade every commodity from rice , wheat ,onions ,tomatoes to crude oil  has come under the scrutiny of media and information agencies who determine prices of these commodities  sold internationally. This facility has only been a bane to many people in poor countries as the rise and fall of prices have become erratic due to involvement of economic and social conditions of many countries.
Presently ,economic conditions of developed economies affect the economic conditions of third world countries as well ,due to their involvement in trade between each other. These drastic changes which occur in these advanced markets , create repercussion in economic conditions of poor countries. These underdeveloped economies have no say in this. The people of these countries face the resultant economic problems. It has rendered the governments of poor countries powerless and act as puppets to the decisions made by the wealthy controllers. Hence, world trade and finance have always benefitted the developed countries .The centralization of capital accumulation and monopoly and cartelization practiced in key industries such as iron, steel, gold, silver, crude oil, rare earth metal etc has marginalized the powers of decision making to certain countries. This centralized decision making were only feasible with the use of information technology. The decisions on where to produce, how to produce and how much to produce is in the hands of certain powerful, capital rich economies and not rationally done through coordinated decisions of countries which have demand and supply for these commodities.
Eradication of  unskilled labor
IT sector has increased the need for skilled labor due to mandatory need for educated and technical personnel to implement the needs of the industry. On the other hand, it has destroyed the unskilled labour involvement in many industries. This eventually puts much more stress on the need for education for employment generation.
The growth in e-commerce has invariably connected the producer and consumer directly, there by denying employment to many local unorganized low capital ventures which were earlier required  to satisfy local needs. The loss of unskilled labour has further added need for educated and specialization of labour. E-commerce has reduced the need for a physical exhibition for products which not only occupied unnecessary spaces but also employed unskilled labour and workmen who were able to fare well economically without any skilled knowledge to be invested in them. In poor economies, where there is low revenue and capital accumulation; these unskilled labour were beneficial to the economic structure, as they did not require the capital invested in education and training to get employment.
In recent years, developing countries who have embraced liberalization and privatization in industries of information technology garnered high investment from MNCs .They make use of cheap and educated labor for outsourcing services to clients in developed economies .These industries thrive due to lack of need of transportation of their products (software) and by easy data transfer through networking. IT has increased income inequality due to the additive income earned by those working in these industries through foreign exchange variations of invested income from foreign developed economies. This has caused a serious disparity between domestic income groups and internationally funded IT industries. This results in maladies of inflation, instability of demand and supply factors.
Capitalism reaching new heights Information technology has not only increased the use of capital in means of production but most importantly centralized capital structure by infusing effective technology in banking. It has also increased capital accumulation by increasing participants in banking, taxation, capital markets and all other means of capital accumulation. It has also increased the dependence over credit and banking for creation of competitive products in the market. Infusion of information technology has reduced labour participation in production and thereby reduced cost of production. These results in disruption of small producers of unorganized sectors to compete in the market against industrial high capital intensive industries .Small producers are forced to become subsidiaries for these industrial bigwigs due to unavailability of capital and collateral to cope with credit.
Capital markets have now become the pinnacle form of capitalism using the means of information technology. Shares, stock, bonds of domestic and international origin are easily traded instantly from any part of world using internet trading software. With the increased adoption of State capitalism and LPG policies by many governments the world over, information technology has enabled creation of capital monopolies whose powers could capture means of production and consumption in any part of the world for profit and exit once they have accomplished the same. It has indirectly destroyed the sovereignty of the people of many economies mostly situated in Africa and East Asia.
State capitalism has been enforced and strengthened by this technology. Macroeconomic and monetary controls held by institutions of government and central banks have become efficient and speedy. Monetary controls, labour wage determination, reduction of production costs by controlling prices, controlling amount of production for maximum profitability and determination of statistic data for estimation of economic growth have become accurate and current due to information technology. Many economies that practice state capitalism such as China, Venezuela, Bolivia, Russia etc have made high strides in global market by channeling and exploiting their respective people’s  hard and cheap labour to capture world market share through means of dumping and deliberate losses. They enter the international market backed by their government wealth and do not care about losses but only to destroy the  market they venture into.
The Age of Warlords
IT industry has revolutionized war front and reduced loss of lives to ones using them. It has also handed the power of destruction in the hands of those who do not directly engage in the conflict. Gone are the days for the need to have a strong and able army to go to war. The introduction of technology driven guns and projectile weapons like drones and Artificial intelligence has enabled  anyone and everyone who have knowledge on how to control these machinery to initiate a war. War has become less of freedom and principles and more of power and money making. This can be dangerous as the same mechanism can be used by anti social elements and terrorists to conduct destruction and havoc equal to a powerful institution such as a government.
An insecure future
Science and technology has been a catalyst to change. The changes in technology and science of the industrial world are so drastic and absolute that there is a clear reflection of those changes on the lifestyle of human being in a short period of time. Information technology has further intensified centralization and accumulation of economic factors. Men are lesser involved in direct production and more involved in consumption. Over dependence on technology and machinery for production only creates over dependence on mining resource and capital accumulation for running a sustainable economic system. This points towards a future of more automation in production, distribution and consumption through use of artificial intelligence and advanced communication. We are moving towards a world where there will be no democracy and economic independence of production, consumption and distribution which was indeed available to us before the advent of industrial thinking.
Economic circles are becoming larger and larger through internationalization of trade and finance. Contingencies that are to occur in a large economic system has a possibility to result in failure of the whole economic system inside the economic circle. We have already witnessed the primitive form of such happenings in the year 2008 when the industrial economic system spanning many countries failed due to a problem which originated in the United States of America. Over privatization and increased trade of commodities of sustenance (basic foods) in the future, such effects can lead not only to a financial but a social failure. As such effects can lead to sudden poverty, artificial drought and economic and other  social failures. Therefore, there  is a serious decision to be made to save our economic system.

No related posts.

No Comments to “THE ECONOMIC REPERCUSSIONS OF INFORMATION TECHNOLOGY”

add a comment.

Leave a Reply