The Rise of Technology-based Capitalism

by Ryan Conolley
(Electrical Engineering major)

The rise of the Internet in the last decade has brought about a new form of business that has revolutionized the way in which the companies of today operate. There are many possible explanations for the rise of this form of business in society, and all of these explanations are debatable. The rise of digital information and information technology has created a powerful tool that mutually enables consumers and companies to bring about the transformation of traditional capitalism. Companies such as eBay, an online auction site, have created a virtual marketplace for the collectivity of buyers and sellers, improving the dynamics of capitalism. These companies leverage the accessibility, efficiency and information-richness of electronic commerce using the Internet as a tool for the transmission of information. The capitalistic system remains constant in the traditional physical market place, as well as on the Internet; the difference lies in the efficiency of information transmission.

The Internet contains a wealth of information, allowing consumers to gain otherwise unattainable knowledge that is necessary to make informed decisions, thereby using and interpreting digital information to create a virtual capitalistic marketplace. Having access to information about products and services in the commercial marketplace is a main concern and a primary goal for many consumers. The Better Business Bureau states that "the best consumer is the best-informed consumer" (BBBOline). The United States Department of Consumer Affairs reemphasizes this observation on their web site by stating, "Gather information about products or services before shopping. Information may be available from people who have used the product or service at the local library, or through on-line consumer information, product-rating magazines, money-management magazines and books, and government agency publications" (ConsumerAffairs). It is clear that information is a crucial weapon for any consumer, and that the Internet constructs a clear path to this weapon. Innumerable web sites dispatch consumer information, which was inaccessible by previous technologies. In this way the Internet is a new conduit for the process of capitalism, although the traditional mechanisms for capitalism remain intact. The auction site eBay is an excellent example of an effective information instrument. EBay has transformed the classified ad into a super-charged high-speed marketplace. Consumers are equipped with visual information and a print description of an item for sale, and the vast resources of other consumers online to research, browse and buy anything imaginable. Not only can a consumer find all relevant information regarding a particular item for sale, but also the prospective buyer can chat with thousands of similar consumers with similar interests around the world. On eBay's web site consumers are given a virtual environment where recommendations and advice are exchanged and valuable information regarding a product can be researched all within the comfort of one's home. Meg Whitman, CEO of eBay, comments on the transformation of traditional commerce by stating, "…we are enabling a kind of commerce that didn't exist to any extent before, and that's person-to-person commerce"(Levy). The success of this new form of commerce can easily be seen, implying its increasing importance in today's marketplace. EBay has tremendous success with its Internet site. In the last year alone the company has seen an increase of 642% in revenue (TechWeb). Many other electronic commerce companies have seen similar profits prompting an influx of new business into the virtual marketplace. The number of electronic commerce companies has doubled in the last year creating almost one million jobs (Emarketer). The Global electronic commerce revenue has increased from under 1 billion dollars in 1996 to a projected value of 30 billion by the end of 1999 (Newsweek). This indicates that the success of electronic commerce and digital information is enormous.

Electronic commerce provides consumers a highly efficient pathway for information current to flow, thus improving the exchange of both concrete products and digital information. This type of commerce relies on the same capitalistic mode of functioning as traditional physical markets, but it is available on an individual level, allowing exchange from consumer to consumer as well as seller to buyer. The Internet is a tool for this exchange, a pipeline for the exchange of anything everything imaginable. In virtual capitalism, information is the true currency driving this exchange as it is continually transferred between consumers and virtual companies.

Notes

BBBOnline. Accessed November 4, 1999. http://www.bbbonline.com/consumers/tips.html.

ConsumerAffairs. Accessed November 5, 1999. http://www.dca.ca.gov/r_r/ecommerce.pdf.

Emarketer, "New Report on Internet Economy." Accessed November 7, 1999 http://www.emarketer.com/estats/110499_intecon.html.

Levy, Steven. "Wired for the bottom line". Newsweek (September 20, 1999)

TechWeb. Accessed November 2, 1999 http://www.internetwk.com/news0199/news012799-5.htm.

"wiredville, U.S.A". Newsweek (September 20, 1999)