The Second economy

Business processes that once took place among human beings are now being executed electronically. They are taking place in an unseen domain that is strictly digital. On the surface, this shift doesn’t seem particularly consequential—it’s almost something we take for granted. But I believe it is causing a revolution no less important and dramatic than that of the railroads. It is quietly creating a second economy, a digital one.

In fact, I’m beginning to think of this second economy, which is under the surface of the physical economy, as a huge interconnected root system, very much like the root system for aspen trees.

By a rough back-of-the-envelope calculation, in about two decades the digital economy will reach the same size as the physical economy.

This vast global digital network that is sensing, “computing,” and reacting appropriately—is starting to constitute a neural layer for the economy.

With the coming of the Industrial Revolution—roughly from the 1760s, when Watt’s steam engine appeared, through around 1850 and beyond—the economy developed a muscular system in the form of machine power. Now it is developing a neural system. This may sound grandiose, but actually I think the metaphor is valid.


The second economy is creating for us—slowly, quietly, and steadily—a different world.

Physical jobs are disappearing into the second economy.

The main challenge of the economy is shifting from producing prosperity to distributing prosperity.


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