Productivity Rises When New Capital Is Put to Use

Capital has changed and evolved with the times. In light of capital’s essential attribute—“how much it contributes to creating value in life”—what is the most valuable form of capital today? Without question, the answer is “mobile, big data, and AI (artificial intelligence).”

Once something is recognized as a new form of capital, it goes through a process of accumulation. When capital accumulates, it means it is needed to that extent. Value is created when it is accumulated in large quantities because people need it, and in that process of accumulation, economies of scale emerge.

As times have changed, the industries generating economies of scale have also changed. A new form of business—the platform business—is growing explosively. As more people connect and more people use it, the platform industry has secured unrivaled competitiveness.

Until recently, it was the era of Google and Facebook; now it is the era of YouTube. People now exchange information through video. What is being accumulated is not text-based knowledge, but video-based knowledge. In the process, YouTube has become the world’s standard platform.

Netflix has also joined the ranks of platforms proposing a new standard. As Netflix, as a content platform, released strong works, Disney+ and Apple TV+ joined in.

Competition to secure customers is fierce. Setting aside whether something is right or wrong, good or bad, the method of competition itself is changing. Economies of scale are created and accumulated according to “who satisfies consumers’ desires.”

YouTube may be dominant, but data is being accumulated in various forms across many different fields. Coupang should not be seen simply as an online shopping mall. That is because it also has the characteristics of a big data company that goes beyond the shopping business. As a result, it has achieved major success and come to lead the market.

What platforms and Coupang have in common is that data accumulates. The providers of that data are none other than consumers. Consumer data is capital accumulation, and that capital benefits both consumers and businesses. Therefore, there is no reason to block companies from collecting data.

New markets naturally create new capital. That is because new fields are created by new companies. As new and convenient things accumulate, new capital is formed, and the process by which life becomes increasingly convenient is the process of capital accumulation.

In the course of capital accumulation, large companies are born. We should not view the accumulation of capital negatively by calling it a monopoly. Capital must accumulate in order to evolve into a form better suited to creating value.

Mobile, data, and AI are capital, and the IT industry and computers are the dominant trend. The competitiveness and benefits of riding in automobiles instead of horse-drawn carriages are beyond words. Rather than continuing to use the old as it is, we should use capital that increases convenience, raises value, and is conducive to value creation. In other words, we must enhance value by utilizing capital suited to the times.

Our task is to make good use of the capital of mobile, data, and AI. We must accept this new capital as part of our lives and quickly become familiar with it. Just as we use dishwashers or robot vacuum cleaners to save time, we should make good use of computers and ChatGPT to improve our office productivity.

At present, the United States is by far the strongest in the fields of mobile, data, and AI. The major platform powers—Apple, Microsoft, Amazon, Google, and Facebook—are all American companies. The United States stands out, while Korea, Japan, and Germany are pursuing it.

Since the United States has created the standard for “mobile, data, and AI,” we should make good use of it and continue to develop. Given the strength of our country, which has Samsung semiconductors and K-pop, we should be more than capable of adapting to this new capital and surging ahead.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: 새로운 자본 활용해야 생산성 높아진다

Author: Sung-no Choi

Date: 2023-11-03

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=3&idx=26116