It seems to me that the “new economy” doesn’t really do much of anything. From my perspective, most of it involves figuring out new ways to sell the products produced by the “old economy”, something which the old economy used to do by itself. When I look in PC magazine, for example, I don’t see any businesses advertising ways to automate factories, but only to sell,sell, and sell.
Now it wouldn’t matter much except that all the people who work in the new economy are supported by the old economy, i.e., they all need houses, cars, food, medical care, entertainment, restaurant meals, vacations, etc. Therefore, there has to be a redistribution of resources to people who really don’t produce much. This is not really new as there have always been such functionaries in the economy (advertising, most banking,sales, and brokers of various kinds) but it adds a whole new dimension. Granted, there are some benefits of the new economy, but it is a question of our return for the enormous resources it drains from the old economy. What do you think?
The “new economy” has parts that are overhyped but it really represents something that is really important.
The goods most of us think of as being the result of economic activity are things like carrots and cars, and the production activity that makes those things as being tilling the soil and welding some bits of metal together respectively.
But this is not really the case. I have seen estimates that 40% of food in pre-industrial countries spoils before it gets to market. Better logistics can then clearly be seen as hugely productive: more food can be produced using the same amount of land and fertiliser and/or many people previously employed in the food industry can now be used to produce other things. The end result is we get a lot more stuff from the same resources.
Cars are the same. Many of the costs of making cars come from finding out what works; what consumers want; co-ordinating orders from parts suppliers; tracking performance of product lines; transport etc etc. To the extent that the “new economy” represents flexible integration and coordination of information relevant to producing things that people like and getting those things to people then the new economy is enormously productive.
The new economy for us is the old economy moving to Asia. And after that Africa. It’s a return to colonial economy, where some countries work and some countries spend their time rearranging the goods. History always records the top tier. We recall the Greek thinkers and Roman engineers and forget that 99% of the people had no philosphy and no running water. They just did all the work.