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of Internet and the Digital Division of Labour by Nicola de Liso

of Internet and the Digital Division of Labour by Nicola de Liso

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Published by: Stephanie Lamy on Dec 19, 2011
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10/26/2012

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1
Of Internet and the
 digital 
division of labour
byNicola De Liso
1
 
Abstract
Digital information and communication technologies constitute the backbone of themost advanced economies. They are fundamental in production – both in manufacturingand services – and are more and more used for consumption. Their ubiquity makes itnecessary to try to modernise the Smithian principle of the division of labour whichmust now be preceded by the adjective digital. This paper constitutes an attempt atgoing in this direction. First of all, it considers the early phases of digitisation; thensome data on ICTs is provided; finally, some key components of the digital division of labour are considered, namely hardware, software, ework, the role of institutions andsome idiosyncrasies of the legal foundations of digital capitalism.JEL Classification: O33, O31, L63Key words: division of labour, digitisation, ICTs, technological change
1
University of Lecce, Faculty of Law, Via per Monteroni snc, 73100 Lecce, Italy; e-mail:nicola.deliso@ateneo.unile.it 
 
2
Of internet and the
 digital 
division of labour
1. Introduction
Information and communication technologies (ICTs) and the
digital
basis they sharehave been at centre stage at least since the 1980s. In the mid-1970s clear signs of heavyrestructuring processes became visible in what used to be called industrialised countries.Restructuring meant deindustrialisation-cum-tertiarisation. Structural change wasleading towards a new techno-economic paradigm whose core technologies were thoseof the computer industry, by which we mean hardware, software and the combination of the two which led to the creation of the present networks which include governments,universities, producers and consumers.The transition from the old industrial to the new ICT-dominated tertiarised economy issymbolised by the increasing relative importance of the ICT firms in the
Global 500
 annual report published by the
Financial Times
. Despite more than three years of fallingequity prices, in 2004 one can find five ICT firms among the top sixteen world firms interms of market value. Microsoft – whose stock went public in 1986 – competes withGeneral Electric at the very top of the list (the former was first in 2003 and second in2004). In 2004 105 out of the 500 biggest companies of the world are in the ICTsbusiness.What we have just said would lead one to think that a clear-cut revolution has occurred;indeed a revolution has occurred, but one which was not easy to understand, particularlyin the 1980s and early 1990s. Internet, the computerised economy and ICTs in generalhave put a strain on economists’ categories of thought. In 25 years, we have beenthrough various waves of pessimism and euphoria.The 1980s were characterised by many studies dealing with a crisis in productivity, themantra – usually referred to as Solow’s paradox – being that computers and theconsequences of them being adopted could be seen everywhere except in the field of productivity statistics; restless structural economic dynamics was leading towards moreand more tertiarised economies affected by a
cost disease
– at least that was the vision.Then, by the mid-1990s the climate changed radically at first in the United States,followed by Europe and then the rest of the rich world: the catchword became
neweconomy
. The party had continued for a long time, particularly in the United States –whereas in Europe the Maastricht criteria, aimed at creating the conditions which wouldenable the common currency to be introduced, meant tight fiscal and monetary policies.
 
3But, at least in the United States, productivity and overall economic growth wereincreasing and could match the golden age of the 1960s; inflation was no longer anissue, while employment in the service sector was growing continuously. With regard tothe latter, 12 million jobs were created in the United States between 1990 and 2000, andnearly 10 million in Europe in the six-year period 1995-2000.Then, in 2000 things started to go wrong; the turning point was the downfall of all of the world stock exchanges; people realised that no profits were earned by the largemajority of dot.coms, many of which went bust. Americans, in particular, foundthemselves much worse off than expected. The worldwide spending spree on ICTs, andin general the long honeymoon with the new economy, was over.In 2003 and 2004 the picture we have is blurred. European economies are experiencinga period of stagnation, with rates of growth close to zero; on the other hand, the UnitedStates shows a different trend.Chips, computers and networks are now everywhere, and have thus become part of ourordinary life. Two more introductory data, on Internet and e-commerce, may serve tounderline this point: according to ITU (2004) in the United States there are 190 millionInternet users out of a population of 288.3 million; in Italy 19.9 out of a population of 56.4; in Sweden 5.1m out of 8.9m total population (data refer to 2002) – we havechosen three countries which differ widely between themselves; according to the UnitedStates Department of Commerce (USDC, 2004), retail e-commerce sales in 2003, in theUnited States, amounted to 55.9 bn US$ which represents nearly 1.7% of total retailsales (1.9% in the last quarter).I believe that all of this makes it sufficiently clear that the pervasiveness of digitaltechnologies means that we must modernise one of the most celebrated principles of economics, i.e. the Smithian principle of the division of labour, which must be updatedand be preceded by the adjective
digital
. The paper is organised as follows: the nextsection reconsiders the evolution of the digitisation of our economies; section 3considers some EU and US data on ICTs and tertiarisation; sections 4 and 5 areconcerned with the different dimensions of the digital division of labour; the sixthsection contains the conclusions.

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