Physical vs digital
We live in a time that is often described as “digital-first.” Nearly every aspect of daily life — communication, entertainment, shopping, education, and work — has been reshaped by screens, platforms, and virtual networks. It can be easy to assume that physical products are losing relevance as digital platforms expand. But when we look at how value is created, exchanged, and sustained in the global economy, the opposite is true: physical products remain the foundation upon which the digital world is built.
The digital ecosystem does not replace the physical. It depends on it. Without real-world products, manufacturing, logistics, and physical infrastructure, the digital economy would not only shrink — it would collapse. The relationship between the digital and the physical is not competitive but symbiotic. The digital amplifies, markets, and distributes meaning around physical goods, but the goods themselves remain essential.
Digital products can entertain, inform, distract, and educate — but they cannot satisfy our sensory or emotional need for physical experience. Physical objects offer: weight and presence, an object in your hand is real in a way pixels are not. A digital image of a sweater cannot replace the feeling of fabric. A such people value what they can hold, display, and pass on.
In recent years though, we have seen a cultural resurgence of physical goods previously considered outdated: vinyl records are selling more than CDs again, independent bookstores are growing, not dying, handmade and boutique products are becoming status symbols, analog film cameras have returned among younger generations.
This shift is not nostalgia — it is a response to digital overload. The physical is becoming luxury, authenticity, and meaning.
Even though physical goods still matter, the digital environment has changed how they gain value. Today, value is often determined by visibility: can it be photographed well? Or by story: does it have a narrative or lifestyle attached? Or by community engagement: is there a cultural identity around it? And all this is because our lives are attached to social networks that are increasingly digital in nature and require digital experiences to be shared. Is that why we value digital so much today?
Digital consumption: rooted in physical devices
Yet the most basic reality is the simplest to overlook: the digital world requires “physical access points”. Every interaction we have online happens through tangible objects, such as smartphones, laptops and tablets, headphones and speakers, monitors, televisions, and projectors, routers, cables, and satellites.
The global digital economy is powered by a vast material infrastructure. The “cloud” is not a floating, weightless concept — it is built from steel server racks, silicon chips, power generators, cooling towers, and fiber-optic cables that span oceans.
Even the world most radical recent digital transformation — artificial intelligence — relies on billions of dollars worth of semiconductors, rare minerals, data centers, and specialized machines. There is no purely digital value. Clearly it has a material footprint.
In this sense, every digital experience begins and ends with physical objects.
Social networks and the sale of physical goods
If we look at the economics of the digital services we use daily — TikTok, Instagram, Facebook, YouTube, Google — almost all their revenue comes from one source: advertising. And what does that advertising ultimately promote? Not digital subscriptions, not abstract “attention value.”, but physical products such as: food, clothing, cars, furniture, machinery and applianaces, health and beauty supplements, to name a few.
Even when influencers promote digital experiences (like a subscription or a game), the downstream economy always leads back to material consumption.
No physical products → no need for advertising.
No advertising → no revenue for digital platforms.
This reveals a profound truth: the digital economy is a marketing layer built on top of the physical economy.
the perversity of the digital economy
But what is the underlying perversity of the digital economy? Software scales; physical goods do not. The stock market rewards the promise of infinite scale — growth without proportional cost — rather than the steady value of producing real physical well-being.
Yes, “software is eating the world,” but perhaps in the wrong way. The explosion of the digital economy has created a generation of stay-at-home, no-collar workers who are increasingly detached from the physical world. We have become comfortable outsourcing the production of everything we use — tools, devices, infrastructure — to other countries.
Investors love software precisely because of its near-zero marginal cost and global reach. Digital products can be replicated endlessly without factories, raw materials, or physical labor. As a result, software companies often receive valuations far higher than companies that produce real, tangible goods. This isn’t an illusion — historically, software has delivered faster growth, higher profit margins, and broader scale. And where investment flows, salaries rise, and the cycle reinforces itself.
It becomes a self-fulfilling prophecy.
The digital economy was meant to free us from monotonous, repetitive physical labor — and no one dreams of spending eight hours a day attaching microscopic screws to smartphones. Yet we currently sit in a strange limbo: the physical work we claim “nobody wants to do” is also the work we compensate the least. Until robotics and automation truly mature, society still depends on human hands to build and repair the physical world.
If software cannot build your phone, your plumbing, your home, or your car, should these physical jobs not be valued more, rather than less? Or have we allowed the physical world to be economically and culturally hollowed out by white-collar abstraction?
For years, high software salaries were justified by a genuine shortage of skilled talent. But that scarcity is now eroding. In the past year, programmers have effectively begun to automate themselves. AI-assisted coding can make almost anyone perform like a “10x engineer.” The bottleneck of software skill is dissolving.
And when scarcity shifts, value shifts.
In the coming years, the jobs we once dismissed as tedious or “blue-collar” — plumbers, electricians, mechanics, builders — may become some of the most valuable and respected professions again.
Cultural perception has amplified the imbalance. Tech has been framed as modern, innovative, and aspirational, while manufacturing and skilled trades are portrayed as outdated. Yet the digital world ultimately rests on a physical foundation that we have neglected — perhaps dangerously so.
Should physical products be valued more?
In recent years, there has been an imbalance: digital attention has been overvalued, while physical craftsmanship has been undervalued. Many societies have begun to produce more influencers than engineers, more content than craft, more commentary than creation. We are essentially being eaten by the digital economy, but the digital economyy is only bits, only thin air without its physicall underpinning.
Physical products remain:
- Essential for survival (food, shelter, tools)
- Foundational to infrastructure (transportation, housing, power)
- Economically irreplaceable (manufacturing employs billions worldwide)
A world that focuses too much on digital content risks losing the skills, industries, and knowledge that make life materially possible.
We need people who value building real things.
Not only designers and engineers, but craftspeople, technicians, inventors, and manufacturers, as their work is the substrate of civilization. At least until robots may be able to do more physical work.
Until then, the future of value lies in businesses that combine physical products with digital identity and community:
| Physical Component | Digital Component |
|---|---|
| Manufacturing | Storytelling, branding |
| Real utility | Community, social identity |
| Durability | Online conversation, cultural presence |
| Tangible value | Infinite distribution of meaning |
Successful companies of the next decades will understand this balance: The physical provides substance; the digital provides scale. The two are strongest together
The idea that digital goods will replace physical products misunderstands the nature of human value and the structure of the global economy. Physical products are not relics of a fading era — they are the anchor of reality, the source of meaning, and the basis of economic exchange.
The digital world is expanding rapidly, but it is expanding on top of the physical one — not instead of it. The real revolution is not digital replacing physical, but digital elevating the meaning, storytelling, and cultural resonance of physical products.
As technology continues to evolve, one truth remains unchanged: we live in a physical world, in physical bodies, with physical needs. The objects we create, touch, use, and share are still at the heart of how we live, connect, and understand ourselves. The future belongs not to one world or the other, but to the integration of both.
Can we achieve a balance economy of the physical and virtual? Some say we are, leaving the markets to do what is best. Ripples in the fabric reveal movements, tension, an inner struggle. There is no reason why physical labor cannot be as valued as a software engineering job.
about the author
I have more than 20 years of experience in neural networks in both hardware and software (a rare combination). About me: Medium, webpage, Scholar, LinkedIn.
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