The Digital Divide and Increasing Returns: Contradictions of Informational Capitalism

The far-reaching advances in information and communications technologies (ICTs) in tandem with the globalization of trade, investment, business regulation, production, and consumption have signaled the rise of “informational capitalism.” This article reflects on the social and economic inequalities of informational capitalism by examining two contradictions of ICTs-led economic development—increasing returns and the digital divide. Two main and interrelated strands of evidence are presented: First, contrary to expectations that rising income per capita will tend to reduce wealth and wage disparities, the distribution of income and wealth both between countries and individuals has sharply skewed in the information age; second, knowledge production is a self-reinforcing cycle that tends to disproportionately reward some and exclude others. The so-called digital divide is as much a symptom and a cause of these broader techno-economic phenomena, and regarding it as a simple issue of connectivity is simplistic and reductive.