[...] Consider 'green jobs', for example. Within that category there are occupations that are both high-productivity and scalable, such as work on production lines making wind turbines or solar panels. But, unfortunately, such work is easily automatable. [...]

In a very low-wage world, more people will opt out of work. That will inevitably strain the social-safety net; societies will be ever more clearly divided into those who work and pay for social programmes and those who live off them. Societies will face a reckoning: either they will decide that this dynamic is unavoidable and should be made to work as effectively as possible, or the haves will reduce aid to the have-nots, leading to intense political conflict between those two groups.

That conflict will be shaped and determined by which groups most effectively wield power.

The digital revolution makes it far easier and cheaper to keep an eye on certain sorts of workers and assess their performance. As a result, the boundaries of the typical firm have shifted. [...]

[...] As the information-processing capacity of firms has grown in importance--as culture has come to matter more--those working in successful firms have come to enjoy a critical advantage over those working elsewhere.

[...] A firm's cultural capital lives in all its employees; if one quits, it is not threatened; if most do, it is. When labour is organised, it can appropriate the returns of this cultural capital (as it deserves to do). When it isn't, the returns are most easily appropriated by top executives.

Social capital is not quite as intuitive a concept as plain old capital. Physical capital--buildings and computers et al--shapes the way people behave at work. Social capital--behavioural patterns that live in our heads--do too.

Hopefully, thinking about society in this way allows us to better understand differences in economic performance. Social capital evolves over long periods of time, lives in the heads of those operating within society (but is often embodied in institutions, such as governments or firms), and influences economic behaviour. Some forms of social capital are growth compatible, others are not. In rich countries, norms and institutions encourage the clever application of new ideas to profitable ends, and innovators can take comfort in the belief that their efforts will be fairly judged in the market, and that any returns they earn will not be unjustly seized by others or the state.

[...] social capital can't easily be exported. [...] Social-capital-rich countries can merely try to create conditions that encourage the accumulation of healthy social capital in poorer countries. The European Union is a grand effort to do something very much along those lines: to create the incentives in peripheral European states with weaker social capital to invest in and deepen the sorts of social capital that are conducive to openness, the rule of law and free markets. International trade agreements and institutions such as the World Trade Organization are another way in which states actively seek to nurture social-capital deepening in poorer countries. Countries constantly use the geopolitical leverage available to them to try to improve the behaviour of troublesome neighbours, and these efforts occasionally bear fruit. Yet we should also acknowledge that countries are not, on the whole, very good at encouraging social-capital accumulation in others.

[...] Big, skilled places are good at making workers more productive. Workers in places like Silicon Valley earn a hefty wage premium over similar workers in other cities, but new arrivals don't get the premium all at once. Instead it builds over time: evidence that the city is contributing to the knowledge and employability of the workers within it.

[...] social capital is the indispensable factor. Successful countries have good institutions, such as strong and stable governments committed to protecting personal property rights. Social capital supports the evolution and development of growth-boosting institutions, which in turns support the continued accumulation of social capital.

[...] healthy democracies and market economies cannot be imposed on sociteies that lack the underlying supportive social capital; they are emergent phenomena in countries with the right sort of social capital.

And so, historically, rich countries tend to stay rich while poor countries tend to stay poor. [...]

[...] development of the right sort of social capital is hard. Sadly, social scientists lack a satisfying explanation for how it occurs.

[...] we once devoted most of our household budgets to physical things: food and drink, clothing and furniture. Now we spend vast amounts on things like education and healthcare, or on housing [...]