Summary of Reinventing Capitalism in the Age of Big Data

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Reinventing Capitalism in the Age of Big Data book summary
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Rating

8

Qualities

  • Analytical
  • Visionary
  • Concrete Examples

Recommendation

Professor Viktor Mayer-Schönberger and journalist Thomas Ramge develop an overarching theme: big data will bring big change. Their book examines the dynamics of markets, firms and the economy, and describes how data, machine learning and predictive analytics already equip certain markets with more and better data than observers can obtain from price alone. The authors feature companies that compete not on price but on matchmaking in clothes, cars or even love. Soon, they write, data will accelerate firms’ transformation into platforms. Though at times abstract and fond of the argot of the field, this enlightening work is especially rich for economists, financial professionals and long-range corporate planners.

About the Authors

Viktor Mayer-Schönberger teaches at Oxford University, where he serves as chair of internet governance and regulation. Thomas Ramge, winner of a getAbstract International Book Award in 2018, writes for The Economist and brand eins.

 

Summary

An abundance of information analytics shifts the economy toward an emphasis on data over money and on markets over firms.

Markets provide the best-known mechanism for exchanging goods and services, but until recently, a lack of data limited their effectiveness. Price has long stood as the proxy for other factors in investors’ and consumers’ decision making. This causes suboptimal, often unfair exchanges. The use of price as the main criterion can exacerbate financial crises, as in 2007, when brokers bundled junk debt with less risky debt and sold the packages as highly rated securities. 

As big data delivers more and better information beyond price, it promises to make every transaction more transparent through the additional factors of buyer preference and need. Buyers and sellers will come together within intelligent matching systems. This will generate faster, fairer and more frequent deals.

The ingredients for “data-rich marketplaces” exist and are improving. High capacity bandwidth and massive processing power enable better decision making and matchmaking when combined with algorithms...


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