11: A THOUSAND POINTS OF WEALTH

Second, as the ease and price of transactions drop,...

...the spread of ownership becomes fine-grained and ever wider. Smaller and smaller investments into more and more varieties of endeavors are possible. Several banks are following the lead of the Grameen Bank of Bangladesh and offering microloans. These loans amount to U.S. $100 or less, and are made to third-worlders who use the money to buy a cow, purchase some yarn, or begin some other microentrepreneurial dream. The payback rate is around 95%, making these almost as risk-free as bonds. As one banking report says, "Lending to poor people in the shanty towns of La Paz may be safer for banks than lending to the government of Bolivia itself." Large commercial banks have noticed the U.S. $7 billion already lent to 13 million people around the world, and are bringing "microfinance" into the mainstream of banking. The low cost of tracking large numbers of fast-circulating payments means that network technology can accelerate the velocity of money in such decentralized, microfinance programs. It is easy to imagine a high-yielding mutual fund based on hundreds of thousand of up-and-coming third world microentrepreneurs.

11: A THOUSAND POINTS OF WEALTH

First, the spread of ownership is becoming global,...

...just as the economy itself is. In the last few years, Europe has suddenly sent a mind-boggling infusion of money into the stock markets. Europeans discovered equity culture and overnight invested hundreds of billions of dollars of their old wealth into the network of ownership. At the same time, hungry investors are pouring billions into the coffers of Asian and Latin American "emerging markets." Today, almost any investor in mutual funds, whether he knows it or not, has a stake in a company operating in a nation outside his own.

11: A THOUSAND POINTS OF WEALTH

This network equity is made possible by...

...the same network technology--shrinking chips and expanding communications--that creates wealth in the first place. The tracking, accounting, and transmission of each person's wealth and slivers of ownership can happen only because computation and telecommunication have reduced the cost of a transaction to insignificance. Today there are 7,000 mutual funds--7,000 ways to divvy up the equity of wealth creation. And there are a similar number of publicly traded companies that have, in effect, divvied up their wealth to many owners.

There are several trends in this emerging equity culture, each one amplified by pervasive network technology.

11: A THOUSAND POINTS OF WEALTH

Networks promote this equity culture.

The ownership of organizations is distributed and decentralized into a thousand points. The transactional costs of owning a tiny share of someone's else's dreams and ambitions continues to drop so that it becomes feasible to possess, directly and indirectly, small parts of many companies. When you invest in a mutual fund, you invest in hundreds of thousands of other people's work. You use the wealth that your own ambition has generated to seed the generation of prosperity by others. You may own only some minuscule portion of an enterprise, but you can easily own parts of many firms, and each firm is owned by millions of individuals. This is network equity.

Out of this distributed ownership a portrait of a network emerges. Millions of lines of investment crisscross the landscape. A few individuals own a lot, but the majority of nodes are dispersed into small bank accounts in small towns. The bulk of stocks in the United States are controlled by the pension funds of ordinary citizens--by millions of individuals in the aggregate. The workers of America really do collectively own the means of production.

11: A THOUSAND POINTS OF WEALTH

The sources of capital, which in the industrial age...

...were once consolidated in a few banks and individual "capitalists," are now fragmenting into millions of networked bank accounts, mutual funds, and private investments throughout society. Elite, centralized banks used to have a monopoly on capital--the engine of capitalism. Bankers loaned their assets as debt, and from this debt, industry rose. But with increased knowledge and communication, investors realized that partnerships--or investments where the investor shares risk--yield significantly more wealth in the long run. Technology has accelerated the migration from making loans to making investments. The ease of computerized accounting allows almost anyone with as little as $100 to plug into the network of equity. Despite the rise of a few gigantic global banks, increasing amounts of the wealth are now held in equity, and not in debt. Today, for instance, 28% of U.S. household assets are kept in equities--more than is kept in banks--and 44% of U.S. households own stock.

11: A THOUSAND POINTS OF WEALTH

The network economy will unleash opportunities...

...on a scale never seen before on Earth. But the network economy is not utopia. It is a unique phase of economic development much like adolescence--a thrilling, disorienting, and never-to-be repeated time. The planet can progress only once through the stage when it is first completely wrapped by networks of thought and interaction. We are now at that moment when a cloak of glass fibers and a halo of satellites are closing themselves around the globe to bring forth a seamless economic culture.

This new global economic culture is characterized by decentralized ownership and equity, by pools of knowledge instead of pools of capital, by an emphasis on an open society, and, most important, by a widespread reliance on economic values as the basis for making decisions in all walks of life.