Overview of the ‘Internet of Things’ System
Specialization creates efficiency. Integration increases wealth. In modern societies, specialized “things” — physical objects created by specialized producers — result in the lack of integration among the divided things (and thus leave money on the table). The total wealth in an economy lies in the efficiency boost from specialized producers, which ultimately need to bring their products together through market exchange mechanism. 1
New combinations generate new innovation. Innovation resides in the new linkages or new combinations between exiting things 2. In the digital age, new connections between existing things create new data dimensions, which leads to new cost-saving and value creation opportunities.
Right after new connections among existing things generate stabilized benefits for existing users and producers, the newly integrated system starts to form new sub-systems at higher-level complexities 3. Again, new cost-saving and value-creation opportunities will emerge from the higher-level connections among newly formed sub-systems.
Smith, Adam. The Wealth of Nations: An inquiry into the nature and causes of the Wealth of Nations. Harriman House Limited, 2010.↩
Schumpeter, Joseph A. Capitalism, socialism and democracy. routledge, 2013.↩
Simon, Herbert A. “The architecture of complexity.” Facets of systems science. Springer, Boston, MA, 1991. 457-476.↩