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 / Winter 2006 / Issue 45(originally published by Booz & Company)


Alvin Toffler: The Thought Leader Interview

Heidi and I are not the first people to think about these things. Gary Becker did so back in 1965 [“A Theory of the Allocation of Time,” Economic Journal, September 1965, reprinted in his 1976 book, The Economic Approach to Human Behavior (University of Chicago Press)]. “Nonworking time may now be more important to economic welfare than working time,” he wrote. “Yet the attention paid by economists to the latter dwarfs any paid to the former.”

In Revolutionary Wealth we identify many of the linkages through which prosumer activities, from creating blogs and open source software to volunteering in a hospital or performing do-it-yourself projects, frequently add significant value to the money economy.

And that, as we say in the book, is a marvelous “free lunch” flowing into the money economy.

S+B: Economists commonly say there is no free lunch.
Exactly. Many also still think of the money economy as a closed system. But the growing importance of knowledge and prosuming in the wealth system make the closed model obsolete.

There are all these channels between what people do without money and what goes on inside the money economy. I think they are going to multiply as the money economy creates more and more technologies that people can use to do things for themselves. For example, if you’re of a certain age, you probably remember that when you wanted to get photos developed and printed, you took them to a drugstore, they sent them to Kodak in Rochester, N.Y., Kodak sent them back, and then you paid the drugstore, and took your prints home.

Now you do all that in the palm of your hand, because you have the digital camera technology that makes that possible. As a result, the market for printing and developing film is disappearing. It is moving from the money economy into the nonmoney economy.

S+B: How is that different from the grand American tradition of do-it-yourself, like changing your own oil or having a darkroom in the house?
It is in that same tradition, but on an immensely larger scale. What’s new these days is the cyberstructure that allows prosumers to create value and rapidly disseminate it across the globe, where others find ways to commercialize it.

This transformation that we think of as the “new” economy actually started in the 1950s and is far deeper and more complex than most people suspect. The under lying pattern is the breakdown of Industrial Age civilization, fed by the replacement of Industrial Age technologies and sweeping cultural changes, as well.

The nature of the emergent wealth system is changing our civilization. But the reverse is also true, and to understand how these affect each other, you have to synthesize observations across all traditional academic borders, the boundaries that separate economics from sociology, from history, and so on.

Measuring Unmeasurables

S+B: You use the term prosumer for things that seem like very disparate activities: doing your own photo printing, using an ATM rather than seeing a bank teller, volunteer work. How can those all add up to a single concept like the prosumer?
How do you lump finance, manufacturing, services, and countless other activities under the term economy? The link is that they are all monetized. The term prosumer deals with activities that are not monetized.

Although they are very different activities, they have a powerful aggregate impact on the money economy. In fact, their very disparity points to how widespread prosumerism is, and how important it is.

Our argument to economists, and to those measuring progress and prosperity, is: Don’t underestimate it. Identify it; recognize its existence; recognize that it can take activities out of the market, the way Napster took music out of the money economy and transferred it into the nonmoney economy. Then iTunes used the Web to move music downloading back into the money economy, creating a very viable business that did not exist before.

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