As Madonna famously noted, we live in a material world. But given the nature of the lines of code, proprietary molecules, and ineffably small microchips that underpin today’s economy, it doesn’t always feel that way.
In fact, you might have heard a fancy name for this phenomenon: ‘dematerialisation’. To economists, this is the process of making the same (or more) amount of goods with less physical material. Consider, in one anodyne example, what is required to be a retail investor today: an email address, internet connection and an online bank account. A century ago, the whole process required share certificates, trips to bank and broker offices, and piles of written correspondence.
Of course, it’s questionable just how much the economy has dematerialised. For one, much of the primary production essential to our lives has simply been transferred well out of sight (and to other countries or continents). Second, many of the raw materials we rely on involve ever-greater amounts of energy and waste. Third, as AI chip manufacturer Nvidia (US:NVDA) is proving, some of the highest technological barriers to entry remain in the physical hardware that allows our apparently ‘invisible’ software to function.