If company A is producing a half-baked mediocre product and flooding the market to keep company B from gaining market share, is that a good thing? Top down this is a good thing since it shows GDP growth but in reality is it really progress? I think this is where capitalism falls short. Is the pace of innovation tied to economic growth? I think that’s a more interesting question.
This is like Gresham’s law of GDP growth. I don’t think it measures anything except potential tax revenues, which supports the value of of a central bank’s currency in the same way that revenues support the stock of a company. It’s very similar to how web site companies work in that the product is free to produce, and their equity value is based on the amount it gets used.
But ultimately I’d say no; the value of a web site or an economic system is in its efficiency, not the stickiness of its inefficiency. Imagine an alien comparing Wikipedia to Twitter. Both are information services sourced from user contributions. Twitter is just designed to be massively inefficient, and that is how it derives its equity value. Google has also been downranking the most efficient websites for years now due to this valuation convention.
But it’s really only a convention. Wall St, or the Fed could come up with a different measure of value and it would change everything. A more sustainability-oriented web measure might be ratio of information access to creation, implying robust value. You only need to look at AOL instant messenger or MySpace to realize why this would be important. Wikipedia’s total value is probably greater on a long enough timeline.
A more sustainable measure of a economy might be something like exports per natural resource consumed, including human time. A good example is an IP creator like Charlie Chaplin or Antione de Saint-Expury or any of a host of scientists. I’m not sure that consumptive GDP has much relevance to the competitiveness and sustainability of an economy.
