A fascinating view of America’s economic evolution since the industrial revolution, abridged from Paul Saffo’s “Get ready for a new economic era.” It is long for a blog post, but worth the read.
1900: The Rise Of The Producer Economy
The producer economy harnessed manufacturing to meet the material needs of a newly prosperous working class and emergent middle class. This economy introduced the great brands of the 20th century and created a dizzying array of conveniences from dishwashers and phonographs to cameras and cars. The producer economy, however, became a casualty of its own success, when production outpaced demand.
1950: The Consumer Economy Begins
The consumer economy began when supply was abundant and corporations shifted resources to finding new ways to sell products. The consumer replaced the worker as the economy’s central actor, resulting in dramatic power shifts. Within companies power migrated from manufacturing to sales and marketing as corporations sought to generate ever-greater demand for what they produced.
Television was crucial in this transition. TV created category-dominating superbrands such as Tide, and it helped to create entirely new products that could never have been sold without TV. Swayed by the messages of mass media, consumers discovered that, suddenly, their lives were incomplete without products they had never even known existed—things such as Saran Wrap, tail fins, TV dinners, transistor radios, and, of course, the hula hoop. Mass media turned consumer economy products into totems of aspiration. Consumers no longer waited until an appliance broke to buy a replacement; they upgraded because the color was no longer fashionable.
The consumer economy reversed attitudes towards debt, from a producer-era vice to a consumer-era virtue. US household debt rose from $20 billion in 1950 to $2.8 trillion in 2008. Debt was the key to the consumer economy’s growth in the same way that manufacturing efficiency drove the producer economy.
The more people had, the more they wanted; forces that drove the consumer economy’s success now began to lead to its end, which came with the financial meltdown of 2008. The collective debt had become so large that even the US consumer was incapable of spending the world out of its financial hole. Just as the producer economy was brought to a close by overproduction, the consumer economy was dragged to its end by overconsumption.
2008: The Creator Economy Beckons
Now we are entering a third age in which the central economic actor is someone who both produces and consumes in the same act. I like the term “creator,” as this new kind of actor is doing something more fundamental than the mere sum of their simultaneous production and consumption. Creators are ordinary people whose everyday actions create value.
Just as the mass media were essential to the rise of the consumer economy, today’s emergent personal media platforms are making the creator society possible. The quintessential example is Google search – with creative value flowing in both directions at the same instant. Other examples of creator transactions abound—think of YouTube and Wikipedia. Interactivity is the common thread, which makes sense because interactivity is what defines the creator economy.
The rise of interactivity is no more exotic than the 1950s notion of ordinary consumers being able to purchase items that had been luxuries just a few decades earlier. Now, everyone will create as they go about their daily lives. These transactions may not be art or deathless prose, but they create value. Thus, just as the time clock symbolized the producer economy and the credit card the consumer economy, the computer mouse is the symbol of the emerging creator economy.
Not everything in the creator economy will require interaction, any more than manufacturing disappeared during the consumer economy. But the most successful companies will be the ones that harness creator instincts, and the biggest winners will be the companies who harness the smallest creative acts.