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Embedding Law in the “Second Economy” — Implications for Legal Practice
March 20, 2013 8:36 pm / 1 Comment on Embedding Law in the “Second Economy” — Implications for Legal Practice
Brian Arthur is one of the leading economists studying complexity science and economies, particularly in the context of technological change. In a 2011 article in McKinsey Quarterly, The Second Economy, Arthur opens with the observation that “every so often–every 60 years or so–a body of technology comes along and over several decades, quietly, almost unnoticeably, transforms the economy: it brings new social classes to the fore and creates a different world for business.” He offers as an example the rise of railroads in the 1800s, which propelled the American economy from small potatoes just before the Civil War to the world’s largest 40 years later.
Arthur believes we are in the early stages of such a transformation, but it is not so easily seen as is a freight train. This emerging “second economy” lurks below the physical economy, acting as the new neural system. It it “vast, silent, connected, unseen, and autonomous.” It controls many corners of economic and social activity, from supply chain management to banking transactions to airport security checks. It is “remotely executing and global, always on,…self-configuring,…and increasingly self-organizing, self-architecting, and self-healing.” It is, of course, the expansive network of computer servers set up to process billions of digital transactions and decisions on a 24/7 basis.
OK, we’re a long way from the Matrix, but Arthur’s article spurred tremendous interest in the implications for our economic future. The main concern Arthur raised is that, while a lot of good comes out of the work of the second economy, a lot of that work used to be done by humans. And with its virtually unlimited buildout potential, Arthur predicts there is more of that to come. The industries most likely affected, moreover, are not going to be the manufacturing sectors, where robots have already replaced humans; rather, the second economy strikes at the heart of service industries.
Law is a service industry. What are the implications of the second economy for lawyers? (more…)