Book Review: Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger and Thomas Ramge
Source details
- Canonical URL
- Book Review: Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger and Thomas Ramge
Other formats
Bibliographic details
- Authors: MICHAEL D SCHRAGE
- Published: March 1, 2018
Overview
- Reviewer: MICHAEL D. SCHRAGE, research fellow, MIT Sloan School Initiative on the Digital Economy.
- Publication: F&D Magazine, March 2018.
- Reviewed work: Viktor Mayer-Schönberger and Thomas Ramge, Reinventing Capitalism in the Age of Big Data, Basic Books, New York, 2018, 288 pp., $28.
- Tone: Smoothly written and provocative; a pop future book that engages fundamental economics and Nobel-caliber insights.
Core arguments and findings
- Data as capital:
- Data are not the new oil but "a form of capital much like human, social, and intellectual capital."
- Authors see data "becoming the dominant organizing principle for wealth creation."
- Shift from money to data:
- Claim: "the data’s rise means money’s decline, that meaningful economic growth overwhelmingly depends on data innovation, and that regulating market competition requires rethinking data access."
- Quotation: “In data-rich markets, participants no longer use price as the primary conveyor of information...one of the central tasks that money has played in the economy will be gone.”
- Quotation: “(r)ather than equating markets with money and the economy with finance capitalism in which money rules supreme, markets will be understood to surge because of rich data flows (not money). Finance capitalism will be as old-fashioned as Flower Power.”
- Market and organizational transformation:
- Markets evolve into platforms enabling new data-rich products, services, and experiences.
- Fintech is predicted to supersede traditional finance.
- Classical market signals like price are described as descending "into anachronism."
- Big data accelerates creative destruction: as data volumes reach petabyte proportions and processing powers continue their exponential rise, Nobel Prize–winning research inspires disruptions.
- Reduced transaction and coordination costs (Coase) will lead to new organizational forms.
- Machine-learned matching and recommendation algorithms (drawing on Alvin Roth) will deliver superior investment and consumption outcomes.
- Algorithmic management can address human limitations of "bounded rationality" (Herbert Simon) and behavioral biases (Daniel Kahneman).
- Optimistic outlook:
- The authors present an upbeat vision: "rich data should lead to richer—and more efficient—societies."
- Reviewer notes: "The authors’ vision is more upbeat than cautionary: this book was not written to depress."
Policy implications and regulatory proposals
- Regulatory focus:
- Central question: "How should data be shared to stimulate greater competition, innovation, and entrepreneurship?"
- Related: "Can greater transparency be structured to facilitate greater accountability?"
- The book offers "thoughtful" proposals for regulating data-dominant oligopolies.
- Anticipated dynamic: dominant platforms (the "world’s Amazons and Googles") will face pressure to answer these regulatory questions, or regulators/legislators will intervene.
- Governance preference:
- Authors champion "governance over government" and celebrate markets: “Eliminate the decentralized market and the empowering quality of data vanishes.”
- They frame the shift as "a revival of the market instead of the rise of artificial intelligence or the advent of Big Data."
Criticisms and limitations highlighted by the reviewer
- Geographic/ontological bias:
- The book exhibits an "overweening Western bias."
- Chinese, Indian, and African ontologies receive only perfunctory review.
- Reviewer concern: "Possible—even probable—global clashes of big data’s economic and commercial culture are unexplored."
- Consequence: "These omissions undermine the authors’ optimism and cheat the serious reader."
- Unexplored rivalry:
- If future wealth and growth depend on "data-ism," reviewer argues it "will surely be as much a source of rivalry and competition as collaboration and trade."
Key quotations preserved exactly
- “In data-rich markets,” they write, “participants no longer use price as the primary conveyor of information...one of the central tasks that money has played in the economy will be gone.”
- “(r)ather than equating markets with money and the economy with finance capitalism in which money rules supreme, markets will be understood to surge because of rich data flows (not money). Finance capitalism will be as old-fashioned as Flower Power.”
- “Eliminate the decentralized market and the empowering quality of data vanishes,” they declare. “That is why we call the shift from money to data a revival of the market instead of the rise of artificial intelligence or the advent of Big Data.”
Michael D. Schrage, F&D Magazine, March 2018.
Content in this bundle
- Notes de lecture
- From Money to Data
- Del dinero a los datos ● Ejercicio de equilibrio ● Finanzas y Desarrollo ● Marzo de 2018
- Notes de lecture
- Книжное обозрение – Финансы и развитие – март 2018 года
- Книжное обозрение – Финансы и развитие – март 2018 года