When we hear about most successful companies today, what are the first names which come to our minds ? Google, Facebook, Oracle, Microsoft ...
What do they all have in common ? Well, they all produce software products, places where coding geeks work. Close answer, but still not it! They all produce services to people and none of them producing (manufacturing) anything material !!
Service industry is having a good time at the expense of the manufacturing industries!
Let's take a seemingly counter example. Apple. Apple do provide many services like iTunes, App Store, Mac OS, iPhone OS and SDK etc However, they are more widely known for their gadget devices. iPhone, iPod, iPad, MacBook Air, iMac etc all cool gadgets! What do they all have in common ? They all have replaced the need of few additional devices we have to carry on with ourselves! They all have made us free from additional stuff by bundling many of them together and into a much smaller size as well. In effect, these gadgets have indeed reduced the total manufacturing which would have otherwise happen if they were not there! Just think about it.. MP3 players, laptops, phones, digital cameras, video game players, FM radios, Video CAM coders, GPS devices, alarm clocks, voice recorders.... we don't have to use all these devices anymore. It's not just that the digital divergence making progress, it is also a sign how much people like (naturally ) to be free from stuff!
When we use Facebook, Gmail, Skype or yahoo to communicate with our friends and build online communities, or use wordpress or blogspot to express ourselves and be accessible to others, or use wikipedia to learn something, Not only we are use way less paper, ink and so many other things! We actually psychologically moving away from consumerism since we adopt new goals and interests in life which does not involve buying, owning and keeping things. Naturally human beings are geared towards having a simple free life without having to hold on to so many properties (stuff).
I think stuff has started to get into us in a big after the industrial revolution. first we marveled at the ability of technology to make our lives easy by providing us with handy tools for everything. Of course after a certain limit, holding on to stuff just becomes a plain burden. It put strain into world's resources, adds onto produced waste, emit more CO2 and take up more energy. Once we trap in a consumption and purchasing lifestyle, things we buy no longer are the ones we absolutely need. We become prisoners beside a mountain of stuff we need to clean, arrange, move and maintain. When Paul Graham says "I'll take services over goods any day." he echos sentiments of most of future men.
Bypassing the safe and sane limits, buying and owning things have now become a goal and a drive in itself. Owning things become so important that it tends to even define us, and people (not to mention countries) compete with each other to own more! once it get to that level as it has now, of course it becomes nothing but a shallow activity, a bad habit (and a dangerous one for the ECO system) we need to drop!
People are indeed doing that unconscionably. Until now they didn't have an alternative avenue to put there passions in. To compete with others, to find a meaning to life. No let out to concentrate their efforts into. Hence purchasing, owning and collecting stuff became a life goal. Not anymore! With the advancement of information technology, people have finally found and finding alternative let outs for enjoyment, achievement, entertainment, expression, communication and lot more other things. Services we mentioned above are empowering people to lead satisfied lives without making them slaves of manufacturing industries and advertisements.
Now then, like manufacturing produced guns and weapons, Services too will produce negative things like ... (insert your list in here). Or people could chose to get lost in endless procrastination and loose sense of reality. In everything, there will be a choice for us to use it in a good way or in a disastrous way. However, in services there are few most noticeable benefits for all. Services do not take up natural resources to build them. Services do not produce waste. Services do not ruin environment. Services do not load us with stuff which we have to maintain and carry with us like a burden. Good services make us save our time, reduce stress. More importantly Services help us develop our real important skills such as communication, learning, gather knowledge, appreciating art, self expression...
Improvements in service industry may help usher in the next phase of human evolution. Industrial revolution helped us giving more tools and equipment and brought about materialist, consumerism age. Similarly the revolution of information technology and services in general (Let's call it the Revolution of Services) will bring about the age of knowledge and skill improvements. Human beings will value knowledge and the processes of acquiring it more and more instead of owning and collecting material stuff. Gaining soft skills like communication, analytical thinking, IQ, general knowledge will replace the crave for gaining more goods, owning property and even earning money, who knows! Service don;t cost much so the need for money will get reduced and that will replace by the need for intelligence, knowledge and other mental faculties... are we day dreaming? But look at it logically, once we are not so keen in buying and collecting stuff and more interested in internet, games, communication, education, self expression etc and when most of those come either free or very cheaply via new services, our need for money has to go bit down.
There are other implications as well. What will happen to Adam Smiths theories on Supply and Demand ? Take a popular service like Gmail, Facebook, Wikepedia, Ubuntu or just even an online free game server. What happens to the supply ? that parameter doesn't seem to exist in that world! Well, unlike physical goods which get produced by limited resources (raw materials like minerals, fossil fuels, wood etc) a software product (for instance) does not take additional resources to reproduce. Once you build it first time, you can just distribute many copies for no additional cost! This is even more so for services like Gmail or Facebook. Those services can be made available for millions more without much of additional cost so the supply is no constraint. This is one reason why those services can be made available for free as they are now!
Now let's think about the implication of this. Supply and Demand which defined so many things in manufacturing based economies will get increasingly meaningless in a service based economy. With the supply and Demand goes out, one will need to have new theories to define free market etc. May be the equivalent of that in services is Open Source. Now for old fashioned economists that might introduce more questions than answers! Without a price how can we measure wealth, progress, development etc... Well, not only soft skills a person has can not be measured by GDP, it is far more important and a valuable asset/indication than GDP. In other words our definitions of development, progress, economy all will need changes.
We can have an easy answer for all these. Google earning big money from advertisement aren't they ? so they can still be included in current economical practices, definitions and paradigms. Well may be. However, this is how old guards always tried to save their existing system, somehow trying to sneak in anomalies into the old system ignoring the fact that they don't really match nicely in it. For someone who takes the existing system as the bible, there is no other solution than to understand everything through the eyes and ears of the existing system, simply because for him, it is the only system there can ever be! However, to a open minded person, slight anomalies which highlights gaps in an established system just work as an opportunity to invent something new!
Future economists will invent new paradigms and theories to properly include service oriented economies with concepts like Open Source and 'free' which at the same does not adhere into Supply, Demand in a world where money and the importance of earning it is diminished. This will be a vastly different environment than the current but we can already see a glimpse of it and judge how things might span out in future. Old concepts such as Capitalism, Socialism, Supply and Demand etc will either become outdated or will have redefined meanings in such a world. Which is good, for our priority is properly understanding, evaluating and modeling new events and phenomena rather than safe guarding old systems and outdated concepts!
Services will rescue human race from over consumption of environment. Services will help humans to find more challenging goals to achieve and self improvement. Above all, services will help us break free from consumerism and help save the world! At least this seems to be the best bet we have for the moment!!
Images : http://img268.imageshack.us/img268/1824/30573932.jpg, http://www.wikipedia.org