Fewer middlemen, fewer poor
© Copyright 1994-2002, Rishab Aiyer Ghosh. All rights reserved.
Electric Dreams #55

The information revolution could see a complete change in the relation of the rich to the poor. Not, as many predict, a widening imbalance of wealth and knowledge that separates them; instead, a distance fast reducing, urged on by the almost subversive equalizing power of information. This change could occur because never before, whether in distributed agricultural economies or centralized industrial ones, has the position been so diminished of the trader, the broker, the ever-wealthy middleman.

The middleman has always held a preferred place in society. In pre-industrial times, when economies (and hence society) were essentially decentralized, local production was locally consumed, benefitting the relatively poor. Goods traded between regions were non- essential, their novelty increasing with distance and bringing great profits to those who ventured to act as intermediaries in their distribution. That these traders did not always become immensely wealthy from earning without producing was because of the considerable difficulties they faced of transportation, and because inter-regional trade is a relatively small part of a purely agricultural society.

Such trade is critical to industrial society, which depends on the wide distribution of centrally produced goods, and where what are considered essential commodities tend not to be made locally. An army of middlemen arrive to lubricate the tall hierarchy of industry, profiting at every step up the ladder of production and down that of consumption. When the poor are at the bottom of one or both of these processes, producing for buyers many levels above and consuming goods from many levels below, the benefit to them is minimal.

Information society is quite different. Like agriculture, it is inherently decentralized. Like agriculture, it favours local economies. The difference is that thanks to technology the whole world is local - so markets can form between buyers and sellers anywhere, as in an industrial economy, but without the need for middlemen to straddle geographical distances. Not only does this lead to freer global trade, reducing artificial barriers of nationality that greatly help all intermediaries, this also goes some way towards eradicating poverty. In the developing world, where the rural poor are already familiar with the decentralized economy of agriculture, knowledge markets could sprout for potential knowledge exists in every human brain. But the decline of the middlemen could also benefit the poor trading in more conventional goods, as the processes of production and consumption flatten, bringing closer all buyers and sellers regardless of their wealth.

If the information age provides new opportunities to reduce the gap between the rich and poor, it is only because the latter will be able to enter it. It makes sense to invest in infrastructure to reach them, for if that investment can, in the long term, make them far richer, then it will also, in the long term, bring very large returns. When the benefits of global free trade come down to the poor not in a trickle, siphoned off by layers of absorbent intermediaries, but directly, as in a flood, the builders of the pipeline can only prosper.

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