Author: Anthony Labarga
On Feb. 1, Facebook Inc. filed what is known as an S1 document with the Securities and Exchange Commission. Until now, Facebook has been a private corporation, meaning that it had fewer than 500 shareholders and was not required to report its finances to the public to any considerable degree. With Facebook’s initial public offering (IPO) anybody will be able to buy its shares, raising it to the level of other Internet behemoths like Google and eBay. The fact that these companies are becoming as mainstream as American Steel or IBM reflects a deep change in the structure of the American economy. Two centuries ago, we moved from agriculture to goods. Last century, we moved from goods to services. Now, we’re moving from a service-based economy to one based on information, communication and value based on understanding people and their consumer preferences. We’re experiencing the Third Industrial Revolution.
Computers are making this shift technically feasible, but it’s really a change in attitude which is pushing our society to a place beyond telephones and spreadsheets. Technology used to be mainly a matter of convenience; a phone allowed people to have conversations, regardless of distance, and a car allowed for faster travel. In the past few years, however, technology has become an environment that constantly integrates different parts of one’s life. Google gives nearly unlimited access to information to be used in reality, and Facebook digitizes real life into an interactive form to share with friends. The reality is the same as before, but the system is becoming more a part of the background than ever before, such that one can, at will, find an ATM, or the name of the guy who played Cody in “Streets of Fire.”
As companies like Facebook grow and become part of the fabric of the economy, everyday life will continually change. It will soon be the case that a post on Facebook for a lost phone will immediately result in ads for phones. Firms will market products to consumers already in one’s favorite color or style. As communication and data mining become more advanced, it will become possible to own a fraction of everyday goods the way people now own a fraction of a house as a timeshare. Cars, computers and many other expensive items might soon be shared. This process has already begun, starting with ZipCar recently arriving at Occidental. Products like ZipCar weren’t possible 20 years ago because the technology, which required informing consumers in real time of an item’s availability, didn’t exist.
The changes, as with other technical revolutions, will also be social. The Arab Spring was made possible by social networking, and user-generated content will become even more important as time goes on. Mass communication is becoming democratized. News and information are going to become more reliable, as it will become easier to check the reliability of sources via the Internet.
This process is just getting started, but the fact that Facebook, a company that does nothing but connect people, was recently valued at $50 billion gives a sense of how important this network of information really is. It will become critically important in the future, as the world moves toward a place very different from where we were just a few years ago. The Third Industrial Revolution is upon us, where a status update might just be a money maker.
Anthony Labarga is a senior economic major. He can be reached at labarga@oxy.edu.
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