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The Red Queen

I posit that connectivity will subject the network economy to the Red Queen Effect. The game metaphor comes from Lewis Carroll’s Through the Looking-Glass where Alice, after running with the Red Queen, finds herself in the same place where they began. She complains that in her country you would get somewhere when you ran fast, to which the Queen replies, “Now, here, you see, it takes all the running you can do, to keep in the same place” [126]. Ian Morris interprets the Red Queen Effect as a feedback process as

species that evolve to fit better with their environment simultaneously transform that environment [so that] the race between values and environments is played out in billions of little cultural competitions, as individuals decide what is the right thing to do [127].

Red Queen competition, according to Bill Barnett, is the process of organizations adapting to and learning from challenges posed by their rivals and the environment, as all firms cope with scarce resources in a survival game [128]. In response to perceived threats, economic units, which are firms and consumers, enhance their capabilities, which sow the seeds for further challenges, eliciting renewed creativity and so on in a virtuous cycle.

The unique perspective to the Red Queen Effect in a digital world is that competition transcends the survival game, as information sharing or pooling of resources in a cooperative world generates higher survival probabilities. The whole is more than the sum of the parts so firms cooperate to transform the environment or enlarge the size of the pie instead of merely competing over its subdivision. For instance, the consumptions space has altered as individuals prefer human connections over material possessions, as in temporary ownership and instant access through rental contracts and streaming entertainment.

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