If a question is asked about the most valuable commodity in the world, what would you say? Panther Diamond? Charles Hollander Chess set made of jewels? Gold plated Ferrari? Maybe.
If the analysis is based on extrinsic value, these choices will prove good. However, in order to understand the larger benefits of the commodity, the valuation should be done in terms of intrinsic value. In this valuation, most of the above choices will be out of the league as they possess little intrinsic value. For instance, if one keeps away the extrinsic value attached to diamonds, then they become mere pieces of material carbon which can conduct light. Then what would be the most valuable commodity that is available to us in this 21st century? It is knowledge. Essentially, the future economy would be a knowledge economy.
Now, how is knowledge going to rule the world? How exactly would knowledge operate and be traded in an economy?
World’s first economy came into existence when the early humans decided to give up hunting and gathering for agricultural activities. Men and women settled at a permanent place and produced agricultural output for their subsistence. Since they could not produce each and everything that their household needed, they started trading different commodities through mutual exchanges. This was the beginning of the barter system. With the introduction of money in the form of early coins, economic activities became formal and organized. From the initial years of human settlement till the early 18th century, agricultural activities became the primary occupation of the masses with agro-products becoming the primary and the most important commodities of transaction. Later, agriculture gave way to the industrialization and industrial products started dominating the world economy. This trend continued for two more centuries till the end of WWII.
The new world order which followed after the Second World War was that of the service sector. Even United Kingdom, the cradle of European industrialization, gave way to the service sector. A large part of the economy dedicated itself to the service sector and allied activities. This was the case for several underdeveloped as well as developing countries like India where the tertiary or the service sector is the single largest contributor towards economic income generation.
But that’s in the past. Knowledge would be the future of the economy that we are experiencing today. It would be the knowledge that is going to determine the destiny of the global economy in the coming years.
If we look around us, we may observe that there is one thing that holds true for all 195 nations. In all these nations, the highest paid jobs are mostly those that require individuals to ideate and innovate. Since machines can automate most manual labour, it is knowledge and information that is going to rule the world in the coming future. In this regard, it is also worth mentioning that, in fact, knowledge is that unique commodity that can violate the fundamentals of all economics that we know of. For instance, economists believe that every resource around us is scarce is quantity and often our needs goes unmatched with this limited nature of resources. However, if we look at this issue with knowledge as the resource, we may see that in fact knowledge is the one and only commodity that violates this fundamental principle of economics.
In the near future, investors are not going to invest in gold, options, futures, swaps or share markets. They may continue investing but a larger share of their investments will be used for knowledge-creation. In this regard, India has a lot to do. Being home to one of the world’s largest, vibrant and young repository of human capital, it must now think about how well it can infuse knowledge into the human capital that is available to it today, how well India can spend its resources to impart knowledge to them.
Converting human capital into valuable assets will prove critical for India’s progress. It is time for policy makers as well as the general public to push for this shift. For the progress and development to happen in the coming centuries, what India essentially requires is the creation and distribution of knowledge among the masses.
– Contributed by Jiss Palelil
Picture Credits: ghost.io