3.2.8 Facilities and Infrastructure
Wealth creation almost always requires facilities and infrastructure, such as buildings, equipment, communications, and a transport network
Such investments enable businesses to operate. They differ from materials and supplies (3.2.6), in that they are not consumed in the products and services that are delivered to customers. They are treated as capital investments in normal accounting practice. The following is a typical list of requirements:
● Most companies with several employees need land, buildings, and office equipment – though some of these may be rented from other companies which had previously invested.
● Almost every form of wealth creation can now benefit from information technology.
● Manufacturing businesses and some specialist service providers also need machines and tools of the trade.
● The infrastructure which supports businesses includes the Internet and payment systems, which are mostly supplied by private companies – although a government might fund increased broadband access as part of a national effort to increase productivity.
● It also includes a transport network for people to get to work, and for customers to have access to the goods and services on offer; this infrastructure is almost always a government responsibility, but typically the transport operators can be a combination of government and private organisations.
These investments in facilities and infrastructure must be maintained and updated. The supply, rental and maintenance of them provide further wealth creation opportunities to other companies.
They are not merely enablers to wealth creation: they play an important part in the competitive advantage enjoyed by one business compared to another, and in the competitiveness of the entire economy compared to other countries. Britain’s industrial revolution in the 18th century created enormous wealth and power by mechanising repetitive manual tasks to reduce manufacturing costs. This started a trend of increasing automation which has spread and continued:
Robots can automate increasingly sophisticated manual tasks. An OECD report answers the question Why accelerate the development and deployment of robots?:
“Robots are an iconic technology of the digital era, whose sophistication and diversity are growing rapidly. Autonomous vehicles, drones and automated vacuum cleaners are all widely known. Laboratory robots; collaborative industrial robots; ocean-going, space-faring, search-and-rescue robots; and robot surgeons, among many others, are less widely known. Progress in robotics is essential to make life easier, cleaner, healthier and richer.”
Artificial intelligence (AI), in the form of machine learning and data analysis, can revolutionise white collar jobs. The UK Research and Innovation (UKRI) organisation reported that:
“Technologies such as AI and data analytics are having a profound impact on the legal, accounting and insurance sectors. It’s clear that automating activities with the use of AI and related technologies enables them to be completed much more efficiently and effectively, but this is only a small portion of the opportunity.
By combining technology with service innovation, new markets and services will be unlocked.”
Businesses must modernise to survive. Private investors provide most of the finance for investment in a capitalist economy, but the government can play a role in encouraging them, as described previously (3.2.3.2).
This page is intended to form part of Edition 4 of the Patterns of Power series of books. An archived copy of it is held at https://www.patternsofpower.org/edition04/328e.htm