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What's New About the New Economy?
What's New About the New Economy?
By Macreena A. DoyleWhether you're caught up in it or feeling left out of it, discussion of the "new economy" is everywhere. Entire enterprises have sprung up -- from round-the-clock CNBC on TV to stock-tracking capabilities of hand-held wireless computers -- to fill the seemingly unending need for speed in the "information age."
But is the "new economy" really new? What are the opportunities and challenges it presents? And how do we prepare students not only to participate in it, but also be leaders?
According to Associate Professor of Economics Steven Horwitz, "The 'newness' of the economy is a matter of degree rather than a difference in kind. Usually people say it's an 'information' or 'knowledge' economy. However, markets have always been about the discovery and use of knowledge. Even producing old-fashioned material things involves bringing together dispersed and often tacit knowledge in one place, in order to engage in production, not to mention the roles that economic institutions such as prices, property rights and contracts play as knowledge-conveying shorthands. And more fundamentally, all acts of physical production are simply rearranging molecules in ways that better match what people value. Knowledge and information have always been central to markets."
Michael Martinez '93, associate editor of the Washington, D.C.-based Kiplinger's Personal Finance Magazine, disagrees. "There is a new economy," Martinez says. "It's a service-based economy that uses the Internet to reach consumers, whether via the computer, handheld interactive TV or cell phone. These services can be anything from simple news reports all the way to a complete suite of organizational and productivity services."