Knowledge Era : Version 3.0

Knowledge Era : Version 3.0

After challenging many of the long standing facts, beliefs and theories, will Covid be opening  the flood gates for the next knowledge era after Religion and Science ? 

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A typical heated debate between my CA and MBA friends would end up with the CA side saying that CAs talk about facts and MBAs only about perceptions. The MBAs side would argue that CAs are inward looking whereas MBAs have a broader outlook. 

Debates do not end. And it is good that they don’t. Unfinished debates remain the seed for continued growth of knowledge. However, a recent zoom call between me, Chintan, Chirag (both CAs) , and Manav & Mihir (both MBAs) had a different flavour. Excerpts from the call :

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Manav : While “new normal” is the latest buzzword but for me change is an ongoing process of life. Therefore, “Life will change” does not bother me. My bigger worry is that  going forward “Facts will change”.

Me : By saying that ‘facts’ will change, aren’t you giving Chintan and Chirag – the fact lovers, a readymade manna  for debate.

Mihir : Even at the cost of strong disagreement from my CA friends, I would concur with Manav. Take my personal example. Theory of Finance teaches us that equity carries more risk than debt. But in today’s difficult times, many debt funds have made more losses than equity funds. So I agree facts are indeed changing. The term ‘Risk’ clearly seems to be getting redefined.

Chintan : True. Risk is getting a new definition. Organisations are turning to lower fixed costs structure and therefore reduced risks. One of our ITES clients is now evaluating a structure wherein employees not only work from home but also on the machines purchased by the employees.  This means minimal fixed cost and therefore significantly lower risk for the company.  

Seeing an unexpected support from CA Chintan, Mihir built upon the argument and said “Classical Economics mandates Land, Labour and Capital as the key ‘factors of production’. But by knocking off Land and Capital, your ITES client will actually pose a challenge to theories of Classical Economics” 

Manav :  And why Classical Economics, even Accounting is facing challenges. Accounting theory would suggest that after delivering the goods,  Seller should debit the Purchaser’s account. But the novel phenomenon of negative price of goods has meant that after delivering the goods, seller will have to credit Purchaser’s account. 

Me (with a last ditch effort for a dissent ) : Chirag, would you like to differ with Manav’s thoughts on Accounting? 

Chirag : I actually agree with him. Another novel phenomenon deflation would make Real GDP  (inflation adjusted GDP)  more than nominal GDP,  which means nightmares for statisticians, economists, CEOs and even for politicians.  I concur, facts are truly changing.

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“Dissent leads to innovation.”……. And zero dissent  leads to ? ? ?

When adversaries agree, to me it’s the first sign of Knowledge Stagnation.

It is so true that Covid has brought human knowledge to a point where humans realize that the facts, the axioms and the theories that humans have believed in for years no more remain the tools for knowledge or for success. The stagnation in human knowledge is more palpable than ever before.

The success in the industrial revolution anchored around the principle of Economies of Scale. Large production required demand to be created through a culture of consumerism. Large consumption led to larger incomes which drove large investment. Larger investment propelled even larger production and the growth continued.

But post-Covid, consumption is sure to come down. With focus on localisation, Economies of Scale too will take a new meaning. This will bring about a fundamental challenge to the levers that have remained our long term drivers of growth in the industrial era. Will ever expanding consumption be possible ? Will consumption alone be capable of driving the economy ? 

With facts, theories and axioms of the past losing their relevance, it is time to bring  about by a radical shift in our beliefs and in our thought processes. 

A radical shift in human beliefs of this scale was last seen in 16^th century. Before 16^th century, for finding answers to miseries like famine, climate, illness etc., the world’s source of knowledge was religion. Religious beliefs were then treated as axioms. At that juncture, Asia was far more advanced and developed than Europe. And then came a new knowledge stream called Science. Science dissented with religious beliefs and solved a plethora of human problems and ultimately led the industrial revolution. Europe embraced the new belief system ; Asia stuck to religion. The result was left for historians to record. 

Today, human kind needs to identify that dissenting stream of knowledge which will take organisations, nations and human kind into the next era. 

If the Religious era was driven by Community and Cult and the Science era by Competence and Consumerism, will the era of Knowledge : Version 3.0 be driven by Cooperation and Compassion. 

The seed to the correct answer probably lies in debates and dissent happening in some part of the world.

- DEEPESH SALGIA