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The Service Economy

The evolution of an economy from one dominated by agriculture and extractive industries, through industrialisation, to one dominated by service industries is one of the most remarked upon events of our age. Our economy is moving from one that prospers by doing things to stuff to one in which we do stuff to each other. Not only does everybody believe this is happening, it really is happening. For example, walk through any major city in the US and observe that there are four banks on every street corner. If this were not a service economy, there would be, say, four machine shops.

As numerous pundits have pointed out, this evolution is natural and is not a cause for concern. We will all become so rich selling innovative financial services, fast food, and overnight delivery services to each other that we will be able to buy all the computers from Japan, televisions from Korea, and steel from Bulgaria that we need. That makes sense, right?

Editor: John Walker