Let's take a courier company, company X, as an example. What does it do? It takes items from point A to point B. And why does it do that? Because you don't know anyone who will go from point A to point B and at the same time be willing to transport your letter, sample, book or lamp between the two points. If you knew such a person, you would obviously not need the services of company X.
Naturally, you could look for such people. But you would waste a lot of time - and you wouldn't be guaranteed to find someone eventually. In other words, the transaction costs for spontaneous coordination between individuals are very high.
That's why there are firms, i.e. hierarchies (or bureaucracies) operating in the market. They mediate interactions between individuals and thus lower transaction costs.
In order to do this, they must organise themselves hierarchically and have a predetermined set of services available to customers. It is precisely this predetermined set of services that forces them to organise themselves hierarchically: the production of these services can only be achieved through a hierarchical organisation. The more efficient production is, the more firms gain relative to their competitors.
In short, firms as hierarchical organisations emerged as a solution to the problem of high transaction costs in spontaneous interactions between individuals.
Now, however, for the first time in history, big data makes it possible to spontaneously coordinate between individuals with transaction costs tending towards zero.
To stick with the courier company example, it will (relatively) soon be extremely easy for us to find out who goes from point A to point B, contact them, and send them various items. The Internet of Things (IoT) will become fully operational globally, but even by then we already have the solution of online platforms.
Courier companies will go out of business, you might say, just as today platforms like Uber or Airbnb are putting taxi and travel companies under serious pressure.
Yet this is by far the least interesting consequence of the big data revolution. The most revolutionary consequence (literally) is that firms in general will cease to exist, because big data is a much more efficient solution to the problem of transaction costs than the firm.
Big data makes spontaneous coordination between individuals possible by creating temporary networks.
Many people are already talking about jobs that will disappear in the more or less near future as a result of technological progress. Lists of such jobs are being made, from driving to copywriting.
But no one is yet talking about the biggest change yet: the disappearance of salaried work. Because if companies disappear, as big data drives transaction costs to zero, that means employers disappear. And if there are no more employers, there will be no more wage labour.
Wage labour is one of the defining features of the modern world. Its disappearance will not be a problem for some, but for the vast majority, from company drivers to managers, it will be as serious a problem as can be.
We are certainly moving towards a world without wage earners (or at least one where wage labour will be the exception), where economic interactions between people will be spontaneous and rather unrepeatable. Right now, not many people are mentally prepared for that.
Beyond the very serious problem of adapting to the new type of economic interactions, the disappearance of wage labour also means the disappearance of an important source of revenue to the public purse.
With globalisation, countries have started to have increasing problems with corporate taxation. The disappearance of wage labour will put states in an even more delicate position, with a real risk that they will no longer be able to deliver the public goods and services necessary for the proper functioning of an advanced democracy and a civilised public community.
And in the absence of these goods and services, capitalism itself (understood as the norm of free competition between sellers of private goods and services) will suffer seriously.
In short, in order for states to be able to cope with these twin problems (economic globalisation and the disappearance of wage labour) so that they can continue to deliver the public goods and services typical of an open and pluralist society, they will have to radically reform their tax systems. Otherwise, the double shock will lead to civilisational implosion.
But whatever the case, the biggest challenge of the (relatively) near future will not be the disappearance of some jobs, but the disappearance of wage labour. With this disappearance we will be out of the modern world altogether. And only big data knows what kind of new world we will be stepping into.
