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In the 1970s, when our best everyday technologies were typewriters and slide rules and snail mail was delivered several times a day, I lived in a boarding house on the Rue Honoré Chevalier, in Paris’s 6th arrondissement, between the Place St-Sulpice and the Jardin du Luxembourg. Other guests occasionally replaced some of the students on the weekends.
One such weekender was a young cinephile, who came in from the provinces to view classic and modern films, as many as a dozen on a single weekend, at the Cinémathèque. He was a quiet fellow. He also puzzled me: was it not odd to sacrifice a social life for an imaginary existence in the fantasy world of movies?
This film buff came to mind recently when I read ‘The fourth revolution: how the infosphere is reshaping human reality’, by Luciano Florida, an Oxford philosophy don. The book is about four historical events that changed how people view themselves and why the rising generations are increasingly absent from what is commonly called “reality”.
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For millennia, western man saw himself as the image of God and the centre of all creation. Genesis 1:26 reads: ‘Then God said: ‘Let us make man in our image, according to our likeness, and let them have in subjection the fish of the sea and the flying creatures of the heavens and the domestic animals and all the earth and every creeping animal that is moving on the earth.’’ Mankind had no problem with his self-esteem. This happy state has been overthrown by four revolutions.
The first revolution was the publication in 1543 of ‘De revolutionibus orbium coloestium’ by Copernicus, which said the earth was not the centre of the universe, nor was man. Man could still take comfort, however, in being the image of God.
The second revolution was initiated by the publication of ‘On the origin of the species by means of natural selection’ in 1859 by Charles Darwin, in which it was argued that we evolved from animals. This was disconcerting, but, no longer the image of God, we could still cling to the knowledge that we were the most evolved animal, endowed with unique self-awareness and rationality.
Freudian slip up
Then came the third revolution, associated with Sigmund Freud, whose books declared that humans are neither fully self-aware nor rational. That left us only our dreams and intelligence. (We now know that dogs also dream and that dolphins may be more intelligent.)
The fourth revolution, the ICT (information and communications technologies) revolution, is now upon us, according to Florida. (In some ways it is a counter-revolution.) These ICTs, with immense computing power and vast data storage (‘Every day,’ he writes, ‘enough new data are being generated to fill all US libraries eight times over’) have allowed man to enter a stage he calls ‘hyperhistory, a time when the animal named homo sapiens frees itself from the coils of so-called reality and enters hyper-reality – a state of far greater importance to self than everyday existence – in the infosphere. For many of us, the infosphere is becoming ‘synonymous with reality itself.’
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What does this mean for investors? You may have noticed that your information- and communications-steeped children do not share your aspirations. They are often not as keen on nice houses, cars, pianos and fine china, nor on children of their own. All these things can be had in greater quality and quantity through the infosphere – they want more access and less ownership: see Uber and Airbnb as examples.
MMORPGs – massively multiplayer online role-playing games such as ‘World of Warcraft’, which had 7.1 million subscribers as of May and had collected more than $12 billion in subscription revenues by July 2012 – allow people to engage in new, more exciting lives. To an increasing degree (8.7% of males and 23.2% of females), the players are having in-game marriages with the avatars of other players and computers. Some compare the bonding and engagement in these games to military units in war zones like Afghanistan. The trailer for the Chinese film ‘Web Junkie’ sports the line: ‘In the real world everybody is fake.’
Florida points out that 70% of G7 GDP already depends on intangible goods rather than material goods, the latter being the output of agriculture or manufacturing processes while the former includes information-intensive services, communications, finance, insurance and entertainment, as well as information-intensive public sectors such as education, administration and healthcare. Will this go to 80%?
The rise of the infosphere is reflected in the revenue growth and stock performance of the S&P Information Technology Sector, which has returned 9.6% compounded over 10 years and 17.6% over five years. There are 68 companies in this index, including Apple, Intel, Facebook and Cisco. One might well expect that the best future investment opportunities will be found among the 68 and their like. That solitary film buff in Paris years ago has turned out to be the man of the future.