SFI External Professor W. Brian Arthur argues in the Santa Fe New Mexican, in a reprint of an essay recently published in McKinsey Quarterly, that a deep, slow, and silent transformation of our economy is taking place today as a second digital economy supplants the physical one we know.

Every 60 years or so, he writes, a technological innovation comes along that slowly alters the economy. In the late 19th century it was the railroads linking east and west, goods and labor, and eventually fueling the industrial revolution. 

Information technology is that technology today -- vast, interconnected, and extraordinarily productive. “Processes in the physical economy are being entered into the digital economy, where they are ‘speaking to’ other processes in the digital economy, in a constant conversation among multiple servers and multiple semi-intelligent nodes that are updating things, querying things, checking things off, readjusting things, and eventually connecting back with processes and human in the physical economy.”

Previously, humans were responsible for these processes.

“Physical jobs are disappearing into the second economy, and I believe this effect is dwarfing the much more publicized effect of jobs disappearing to places like India and China,” Arthur writes.

Arthur is the author of The Nature of Technology: What It Is and How It Evolves (Free Press, August 2009)

Read the (abridged) Santa Fe New Mexicanarticle (December 19, 2011)

Read the McKinsey Quarterly essay (October 2011, subscription required)

Watch Arthur's Palo Alto Research Center video presentation (65 minutes)

Read the New York Times article (October 23, 2011)

Read the Financial Times article (December 9, 2011)

Read the Bloomberg Businessweek article (November 25, 2011)

Read the Forbes article (November 9, 2011)

Read the CBS Interactive article I (October 10, 2011)

Read the CBS Interactive article II (October 11, 2011)

Read the Illinois Times article (October 26, 2011)

Read the Smart Data Collective article (October 21, 2011)

Read the Asheville Citizen-Times (N.C.) article (October 23, 2011)