The wonderful news about the network economy is that it plays right into human strengths. Repetition, sequels, copies, and automation all tend toward the free and efficient, while the innovative, original, and imaginative–none of which results in efficiency–soar in value

This ever-extending loop whereby technology generates demand, and then supplies the technology to meet those demands is the origin of progress. But it is only now being viewed as such. In classical economics–based on the workings of the brick and smokestack–technology was a leftover. To explain economic growth, economists tallied up the effects of the traditional economic ingredients such as labor, capital, and inventory. This aggregate became the equation of growth. Whatever growth was not explained by those was attributed to a residual category: technology. Technology was thus defined as outside the economic engine. It was also assumed to be a fixed quantity–something that didn’t really change itself. Then in 1957 Robert Solow, an economist working at MIT, calculated that technology is responsible for about 80% of growth.

We see now, particularly with the advent of the network economy, that technology is not the residual, but the dynamo. In the new order, technology is the Prime Mover.

At one time a useful distinction was made in economics between “primary” needs such as food and clothing, and all other wants and preferences, which were termed “luxuries.” Advertising is undoubtedly guilty, as critics charge, of creating desires. At first these manufactured desires were for luxuries. But the reach of technology is deep. Sophisticated media technology first creates desires for luxuries; then technology transforms those luxuries into primary necessities.

Although at some fundamental level our wants connect to our psyches, and each desire can be traced to some primeval urge, technology creates ever new opportunities for those desires to find outlets and form. Some deep-rooted human desires found expression only when the right technology came along. Think of the ancient urge to fly, for instance.

KLM, the official Dutch airline, sells a million dollars worth of tickets per year to people who fly trips to nowhere. Customers board the plane on whatever international flight KLM has extra seats on, and make an immediate round-trip flight, returning without leaving the airport at the other end. The flight is like a high-tech cruise, where duty-free shopping and simply flying in a 737 at a steep discount is the attraction. Where did this want come from? It was created by technology.

Finance writer Paul Pilzer notes perceptively that “When a merchant sells a consumer a new Sony Walkman for $50, he is in fact creating far more demand than he is satisfying–in this case a continuing and potentially unlimited need for tape cassettes and batteries.” Technology creates our needs faster than it satisfies them.

The Web is being run by 20-year-olds because they can afford to waste the 56 hours it takes to become proficient explorers. While 45-year-old boomers can’t take a vacation without thinking how they’ll justify the trip as being productive in some sense, the young can follow hunches and create seemingly mindless novelties on the web without worrying about whether they are being efficient. Out of these inefficient tinkerings will come the future.