The Internet, a disruptive factor

In preparing this volume, the issues we have just mentioned have resurfaced; it is indeed agents of the current new economy that we felt it necessary to concentrate first; at the same time, we thought it useful to describe other characteristics of the Internet era: a frank renewal of the paradigm of exchange that tends to replace traditional intermediaries of commerce (wholesale, semi-wholesale and retail) by forms of distribution, whose platforms are the most visible gimmick today.

The contributions collected in this volume illustrate the variety of these intermediaries who often organize a cross-border offer (bookshops, second-hand sales, shared transport, flea markets, home services, rentals, property sales, etc.). The wider the trading area of the platforms (virtual, of course!), the greater the number of exchanges that can take place between third parties, in addition to being more appreciated as they are more accessible to everyone. The impact of these intermediaries, of a previously unknown kind, is significant: in less than 20 years, a significant proportion of our economic activities have already suffered, in one way or another, from the Internet effect. This effect, which can sometimes be brutal, becomes revolutionary when it threatens entire sections of the previous activity: this is the case of urban taxis that face offers combining a platform (Uber or Lyft) with the smartphone that nearly 100% of contemporary adults keep in their hands or in their pockets, from dusk until dawn². This is a radically different offer from that of taxis, which, as daily experience proves in all latitudes, destabilizes the public service hitherto delegated to taxis whose drivers fear their demise, in the more or less short term.

Other disruptions are manifesting themselves in a less immediate or less direct form, all the while being perfectly real: thus, distance-selling platforms do not have an immediately disruptive effect on mass distribution, which still seems to be partly protected against this new commercial offer, both by the established habits of consumers and by the attractiveness of certain commercial areas frequented in towns or on the outskirts of cities. Whatever the case, Internet intermediation integrates the commercial or financial landscape. Caution is therefore required in all matters, wherever the Internet is accessible to a mobile, solvent and available population.

Another disruption is that of the advertising market: after having been linked to the media for a long time, one that we considered stable 20 years ago (billboards, newspapers, magazines, radio and television), advertisers and advertising agencies are now forced not only to introduce another medium into their range of services (advertising on the web), but to confront themselves with the direct advertising agencies that certain operators such as Google and Facebook have already integrated into their platforms. In this particular case, the disruption concerns the media as well as the intermediaries and advertisers, because the direct web agencies drain a significant proportion of budgets, to the detriment of media like the press and television, whose revenues are cut by these new media that are interactive and international, despite traditional councils and agencies!

A disruptive economy

The first part of this volume illustrates this disruptive offer, intended for anyone who has both a device designed for the Internet and a network that is accessible in public or even private space. The first three chapters of the book illustrate the variety of this offer and its ubiquity. We will find the conditions which revise the business paradigm (Chapter 1) that is gathered and commented on, which reconfigure the media universe for which the notions of producer and consumer are inextricably intertwined (Chapter 2); and lastly, the importance of an above-ground intermediation which upsets our relationship to the territory and the behaviors to which we were accustomed to until now (Chapter 3).

Dealing with the French economy, in Chapter 1 Godefroy Dang N’Guyen extends the analysis he had already developed in the work cited above [DAN 01]; he summarizes the main changes brought about by digital technology in companies, the important resource that can constitute gathered and processed massive data constitutes, in order to provide significant information for the conduct of companies, in the face of consumers, competitors or emulators. In response to the risks of disruption or disturbance that the Internet facilitates, the author identifies opportunities specific to that which is digital, opportunities that imaginative and well-informed entrepreneurs can seize. He underlines the managerial challenge put forward by this constantly changing universe: management must remain attentive to the transformation of market conditions in order to exploit its chances of success on the network of networks.

Chapter 2 highlights the multiple disruptions that constantly disturb the information and entertainment media (cinema, audiovisual, books, games, music, etc.). Jean-Paul Simon, who himself has had experience in this field for many years, places particular emphasis on phenomena that seem to characterize digital transformation in this sector. The redistribution of tasks blurs the scope of most professions and the distinction between consumers and producers becomes porous, while the established professional categories are called into question. The author also emphasizes the importance of what he calls self-production: these behaviors have changed the division of tasks and functions over the past 15 years, in music production, in video and for certain categories of reporting, for example.

Intermediation services – also referred to as Internet platforms – are the main topic addressed by Stéphane Grumbach in Chapter 3. This attentive observer of the Internet, global computing and telecommunications indicates that linking providers with a customer segment – or linking users with a free service such as Google – is the main purpose of platforms. It highlights the very particular character of these service providers, who simultaneously address two distinct but complementary sides of the market, two subsets of agents that the platform links by taking advantage of what it knows about them, about the available offer or about the potential demand (provider of a service on the one hand; demand for the same service on the other), just as BlaBlaCar does for car journeys; Le Bon Coin does for the flea market, leasing and bargain; and Yahoo! and Google search engines do to feed their advertising agencies. These web operators are certainly useful; but their intermediation jostles the established order that they deeply disrupt, as the author concludes.

New perspectives

The second part of this volume examines some of the prospects seem that not only feasible for the near future, but in line with the long-term movement stimulated by the Internet. This includes the transformation of economic relations, the growing importance of cross-border transactions and the strong valuation of web intermediaries which, widely acclaimed by the international public, attract investors who invest a significant part of their assets in these companies (institutional portfolios and private investments). The gradual conversion of the strictly industrial economy into a post-industrial economy is thus confirmed by numerous examples, some of which are described in the following chapters. Chapter 4 continues and brings the old cooperative tradition up to date, of which there remain whole sections in certain European countries such as Germany, France and Switzerland. Traditionally established in the distribution, banking and insurance sectors, this form of cooperation has found a new field of practice on the Internet. Continuing the communitarian habits established in California for over half a century, collaborative action is in vogue among some Internet users; platforms dedicated to community services are partly in line with consumer cooperatives; we are also witnessing the emergence of a “peer-to-peer” collaboration around technical and commercial platforms that are dedicated either to exchange or blockchains, the most visible of which to date administer monetary signs such as bitcoin, ethereum, tezy and litecoin, which are comparable to private currencies³. Bringing together savings and voluntary contributions, in kind or in hard currency, a dispersed crowd can thus come together in an intelligent and discreet manner in a unifying project that responds to the common interest or passions of its members: financing a film or a show, supporting their personal projects⁴ or financing an innovation or a company in the making⁵. Godefroy Dang N’Guyen devotes his second contribution to the present volume to describing and ordering the flourishing, living universe that is in perpetual renewal of the collaborative economy.

As the third industrial revolution after machinism and electricity, computerization continues its breakthrough and intertwining with all human activities; the result is numerous market disruptions, as already mentioned above; it is obviously important to characterize these disruptions that transform behavior, because the fabric of the society essentially bears the scars. To the extent that the Internet thus expands its grip on morals, it is likely that the economic exchanges concluded through it will become more and more significant in the coming years; in any case, they will be much more numerous than those we observe today. It is therefore possible that the volume of cybercommerce will soon reach or exceed the volume of retail trade, or even traditional wholesale trade. This multiform transformation lends itself very well to the neologism iconomy [VOL 14]. Michel Volle’s contribution (Chapter 5) gives a synthetic vision of the economy, companies and market mechanisms which have been “revisited by a computerized intermediation” that is omnipresent and omnipotent. This development, already mentioned in other publications by the same author, will, as he points out at the end of a convincing panorama, be one of the lasting characteristics of the digital era⁶.

It is only through abuse of language that some of the most eminent sociologists have got used to naming our era post-industrial⁷. In reality, the digital era, like all modern times, still is fundamentally industrial. The electronic components (Chapter 6) are a perfect illustration of this. It is not the disappearance of industry that characterizes our era, but its profound mutation that was truly disruptive, notably with the discovery of transistors and printed circuits. Electronics really marks our time since everything more or less depends on it. Exploiting enormous technical knowledge, the production of these components – electronic chips – is highly concentrated; it involves considerable capital and is organized on a global scale, but employs few people. Electronic chips, the active element of electronics, are wonders of precision; designed at the limits of corpuscular physics, they are manufactured in highly automated factories worth billions of dollars and only last a few years; but nothing that we have, particularly networks and Internet services, would have existed without this industrial branch, which is the deus ex machina of the digital era. Conceived by Gérard Dréan, whose professional life has been largely dedicated to this industry, Chapter 6 perfectly complements the previous contributions⁸: he explains the organization of this industry whose products are indispensable to everyone today. He reveals the technical, economic, commercial and financial order that is very particular to this branch, guided by the laws of Moore and Rock. He describes how and why these laws that guide the extraordinary progress of these tiny components that animate our electronic companions continue. Lastly, he proves that this industry escapes the models described in the economics and management manuals: the corporations that succeed in this field are essentially gigantic, international and, ultimately, few in number.

In contrast with this manufacturing industry, Internet providers produce almost nothing on their own; they stimulate transactions that are mostly intangible and they inform or connect third parties, which are all services that are hardly reducible to a product, in the literal sense. Nevertheless, the Internet fuels an economic activity of great value, embodied by thousands of operators and by a vast international catchment, which is expressed in at least a hundred languages and idioms; certain corporations, such as search engines or exchange and auction platforms, have become some of the most important global companies in less than 15 years. The metric system designed for the industrial economy of the 20th Century is ill-suited to it; our measurement and assessment methods must therefore adapt to the new world, which approaches the value and volume of activity differently than we do for an agricultural, manufacturing or extractive activity. We devote Chapter 7 to this subject, the outline of which is not simple, and nor is it easy to determine the outcome. Firstly, this is because measuring scattered wealth in a very international economy is not the object of the national accounting that has been developed to assess the respective wealth of nations; and secondly, it is because econometrics applies a uniform production function to very different activities, while some of these activities are incompatible with the industrial model that still inspires national accounting, which is incidentally only recent⁹.

Towards a less productive approach?

For two centuries, manufacturing has been the ideal type of productive agent: the workshop produces objects from various supplies; a human group coordinates the strength of machines with the work of men and mobilizes the necessary capital to undertake this production. This productive scheme was in conformity with the practical philosophy of René Descartes, expressed in 1637 by the following words which only lacked the evocation of the capital invested to define the ideal type of industry: “Knowing the power and the actions of fire, water, air, the stars, the heavens and all the other bodies in our environment as clearly as we know the various crafts of our artisans, we could (like artisans) put these bodies to use in all the appropriate ways, and thus make ourselves the masters and (as it were) owners of Nature”¹⁰. This Cartesian vision has certainly kept its relevance in describing a production that can be summarized as a “black box” in which materials, partly extracted from nature, are transformed into goods that are useful to humankind.

The economic activities of our era cannot all be reduced to this single scheme¹¹. Econometrics has indeed attempted to integrate this important fact; human and material resources allow statistical institutes to adjust data to take account, for example, of seasonal variations in production or consumption; or to suggest, by analogy or calculation, a correspondence between observed parameters (such as the physical volume of a production) and its monetary value at a given time, even in the absence of direct information on the revenues that such production would have generated in a market exchange. However, this subtle sophistication cannot conceal the fact that calculating the national product of modern nations is a heavy feat, given that the manufacturing sector, which was still predominant in our developed countries around 1960, represents less than a quarter of employment, and that tertiary activities are not only dominant in terms of employment (about 3/4 of employment in France), but the majority in terms of trade (2/3 of added value in France). Intellectual services and intermediation organize cooperation or relationships between agents, whose actions often have nothing to do with any transformation of either the subject or the universe (financing, health, insurance, organization, programming, relaxation, leisure, etc.). As a result, a disparate set of activities (market and non-market such as training, education or care) has developed in modern countries that no longer have anything to do with an industrial paradigm. These activities, which are mainly tertiary, are frequently found on a global scale. This evolution is well understood by practitioners who are not only freeing themselves from industrial references in order to administer these service activities, but developing them on an international scale. However, this conversion to a highly tertiary economic model has not yet led to a real overhaul of their economic values.

Let us put it another way. The econometric approach is still based on a production-driven and territorial scheme which can be summarized as follows: resulting from a material transformation, production is measured by the number of manufactured objects (automobiles or computers), by the flow of a continuous production (such as a refinery) or by the tonnage of goods produced in bulk (such as cement or wheat). Sales in a given territory add value to this production. However, for activities that are not reducible to the productive scheme, this approach blurs ideas: assimilating them to a productive flow betrays their nature and explains neither their usefulness, nor their success¹². More by obligation than by reason, deception was therefore necessary in order to add the production of services to that of the industry¹³.

Imagining new metrics?

The ad hoc hypotheses that are necessary to summarize the economic reality by national aggregates more or less consciously disguise tertiary activities; it is at this cost that services are integrated into national accounting and that an overall productivity is calculated; unfortunately, this estimate of the national product poorly accounts for a large part of the economy (i.e. mainly services) at the cost of caricatured hypotheses! Problematic since the 1980s, this has given rise to criticisms, of which records can be found in specialized literature.

The assessment of the productivity and product of contemporary economies, which are increasingly marked by the tertiary sector, hence remain problematic. Today, the breakthrough of the Internet and the considerable importance of platform services are enhancing the need to better account and properly measure these activities, which are no longer industrial in nature and are becoming organized – just like industrial groups – on a transnational scale. Intermediation platforms, developed on the web with the worldwide success that we know, offer a rich and vast field of experiences that could feed econometrics and allow it to spring back. Since these new-look providers are obviously not part of the industrial paradigm, the majority of them are not associated with any tangible delivery¹⁴. They only have weak territorial ties. Lastly, their income rarely comes from the final customer; for example, the income of Facebook, Yahoo! and Google is made up of multinational advertising budgets, and it thus escapes the criteria of traditional domiciliation of economic activities. This puts them in conflict with the taxation of countries in which a part of their clientele resides, who often benefit from the services without any grant, that is to say, without any revenue appearing on a particular territory!

This results in unprecedented situations: many providers deliver a service practically free of charge to an international public; their services, without any sensitive local value, escape taxation and economic statistics in most of the countries where they are received. These service providers sign advertising agreements with advertisers in various parts of the world who are also located elsewhere than where the advertising messages are targeted. In short: advertisers are global, their messages are international in scope (soft drinks, cars, perfumes, cosmetics, telephones, watches, sports articles, etc.) and they therefore address media that reach a broad international target. The list of sponsors contributing to major sporting events such as the Olympic Games, tennis tournaments or major automobile prizes is a perfect illustration of this. It is therefore very difficult for the authorities of any country in which the population consults the platforms to define an indisputable local added value; the operators of the “network of networks” and their auxiliaries who imagine how to develop fruitful relations around the platforms are praised year after year by Internet users. Would the service, which is mechanical and interactive and which allows people to communicate and trade remotely, be miraculously out of reach of the tax levies that seize almost all other economic activities?

Asking such questions is not too difficult; establishing a mechanism that can reconcile extraterritorial operators with divergent claims and the interests of nation-states is much more delicate, and resolving this seemingly intractable dilemma seems beyond the reach of a book like this. Moreover, who would we be to propose reviewing a long-established mechanism from top to bottom, practiced by unbridled minds who have long been working on the mysteries of political economy? As a sign of reverence for the great elders and their followers today, let us stand under the august banner of the Sète poet and philosopher who died in 1945, the first year of the “Thirty Glorious Years” baptized by Fourastié, which we mention several times in this book: we aspire here only to be auxiliaries of progress, “those secondary beings whose role is perhaps necessary in the development of great men”¹⁵. We hope that some of them will take up the challenge of designing and implementing a metric and observations on which a resourced political economy could be based, and finally tuned to describe, more precisely and more finely than today, the content, value and scope of the cross-border exchanges that characterize our era!

Bibliography

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[DAN 16] DANIEL J.M., Trois controverses de la pensée économique, Odile Jacob, Paris, 2016.

[DRÉ 96] DRÉAN G., L’industrie informatique, structures, économie, perspectives, Masson, Paris, 1996.

[PET 98] PETIT P. (ed.), L’économie de l’information, enseignements des théories économiques, La Découverte, Paris, 1998.

[SAU 84] SAUVY A., HIRSCH A., Histore économique de la France entre les deux guerres, Economica, Paris, 1984.

[VOL 14] VOLLE M., L’iconomie, Xerfi, Paris, 2014.