---
title: "Information replacing physical capital"
subject: "Technology, Environment and Society"
chapter: 1
key: "semester_7/technology_environment_and_society:info-replaced-physical-capital"
source: https://www.bctengineer.com/q/semester_7/technology_environment_and_society/info-replaced-physical-capital
site: BCT Engineering
---

# Information replacing physical capital

Technology, Environment and Society · Chapter 1: Technology

- Asked in: 2083 Bhadra, 4 marks
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/technology_environment_and_society/info-replaced-physical-capital
- Whole chapter: https://www.bctengineer.com/md/semester_7/technology_environment_and_society/chapter-1

## Question

How has information replaced physical capital as a primary source of power and wealth in modern society? Discuss this considering the development from the industrial age to the information age.

## Short answer

In the industrial age, wealth came from physical capital like land, factories and machines. In the information age, information and knowledge are the main sources of power and wealth, because computers and the internet make data cheap, intangible assets dominate, and controlling information gives economic and political advantage.

## Answer

In the **industrial age**, power and wealth came from owning **physical capital**: land, factories, machines, raw materials and energy (coal, oil). In the **information age**, the main source is **information and knowledge**: data, ideas, software, patents and networks.

#### How the shift happened
1. **Computers and the internet** (from the 1970s–90s) made information cheap to store, process and send globally.
2. **Value moved to intangibles:** the richest firms today (Apple, Microsoft, Alphabet, Amazon, Meta) are knowledge and data companies, while old heavy-industry firms have lower value.
3. **Knowledge creates products at near-zero copy cost:** software or a digital service, once made, can be sold to millions without new factories.
4. **Data is used as capital:** platforms earn by analysing user data for advertising and services; Uber and Airbnb own few cars or hotels but control information networks.
5. **Workers' value depends on knowledge:** skilled knowledge workers earn much more than manual workers; education became the main asset.
6. **Power through information:** governments and companies that control information, media and cyber tools gain political and economic power.

| Industrial age | Information age |
|---|---|
| Land, factories, machines | Data, knowledge, software |
| Ownership of raw materials | Ownership of patents and platforms |
| Manual labour | Knowledge workers |
| Power from production capacity | Power from controlling information |

For Nepal, investment in education, IT skills and internet access is now more important for wealth creation than heavy industry alone.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. What was the main source of wealth in the industrial age?
   A. Data and patents
   B. Physical capital: land, factories, machines, raw materials and energy
   C. Knowledge workers
   D. Networks
   Answer: B. Industrial age wealth came from owning physical capital. (Key point: Industrial vs information age resource)

2. Why does knowledge replace physical capital as a source of wealth?
   A. Software can be sold to millions without new factories
   B. Machines became illegal
   C. Land became free
   D. Coal ran out
   Answer: A. Knowledge products have near-zero copy cost. (Key point: Near-zero copy cost)

3. Uber and Airbnb illustrate that:
   A. Owning many cars and hotels is needed
   B. They control information networks while owning few physical assets
   C. They are manufacturers
   D. They depend on land
   Answer: B. Their value comes from information platforms, not physical assets. (Key point: Data as capital)

4. In the information age, a worker's value depends mainly on:
   A. Physical strength
   B. Knowledge and skills
   C. Hours of work
   D. Land owned
   Answer: B. Education became the main asset of workers. (Key point: Worker value)

## Related in Technology, Environment and Society

- [Industrial vs information age; information as wealth](https://www.bctengineer.com/question.md?key=semester_7%2Ftechnology_environment_and_society%3Aindustrial-vs-info-age-wealth) — Technology, Environment and Society, chapter 1, asked 2×
- [Information is wealth and power](https://www.bctengineer.com/question.md?key=semester_7%2Ftechnology_environment_and_society%3Ainformation-wealth-power) — Technology, Environment and Society, chapter 1
- [Compare industrial age and information age](https://www.bctengineer.com/question.md?key=semester_7%2Ftechnology_environment_and_society%3Acompare-industrial-info-age) — Technology, Environment and Society, chapter 1, asked 2×
- [Characteristics of agriculture, industrial and information age](https://www.bctengineer.com/question.md?key=semester_7%2Ftechnology_environment_and_society%3Aagriculture-industrial-info-age) — Technology, Environment and Society, chapter 1
- [Industrial society entering information society](https://www.bctengineer.com/question.md?key=semester_7%2Ftechnology_environment_and_society%3Aindustrial-to-info-society) — Technology, Environment and Society, chapter 3, asked 2×
- [Civilization: agricultural, industrial, information society](https://www.bctengineer.com/question.md?key=semester_7%2Ftechnology_environment_and_society%3Aenlighten-civilization-societies) — Technology, Environment and Society, chapter 3

## Related in other subjects

- [Role of electrical energy in modern society](https://www.bctengineer.com/question.md?key=semester_7%2Futilization_of_electrical_energy%3Arole-electrical-energy-modern-society) — Utilization of Electrical Energy, chapter 1
- [Short note: Society and development](https://www.bctengineer.com/question.md?key=semester_8%2Fengineering_professional_practice%3Asociety-and-development) — Engineering Professional Practice, chapter 1