I get asked a lot about the state of capitalism
and I think that for those members of society
of a certain age we think of capitalism as
being locked in an ideological battle with
socialism perhaps or even communism.But we
never really saw that capitalism might be
defeated by its own child – technology.
And I think that what we find is that even
the most diehard free market economists usually
save place for what they call market failure.
That is, markets really only work when the
value of something and the price of that object
or service coincide.
So the key question is: what causes value
and price to get out of alignment?
And, in fact, every government on earth has
a form of levying taxes of some form, because
at some level there are certain things that
need to be paid for that cannot, in fact,
be priced where they must be valued.
So, for example, raising a standing army is
tough because if somebody chooses not to pay
for it it’s very difficult to exclude them
from the protection of that army.
So that in general—what we find is that
these market failures are found in every economy,
but they are also hopefully a small portion
of the economic activity so that we can deal
with them as a special edge case.
Now the problem with this is that technology
appears to do something about figuring out
the size of that small slice and making it
rather large.
So, for example, if I record a piece of music,
once upon a time if you wanted a high quality
version of that music you had to go to the
folks who actually pressed the record albums.
But now I can record music with arbitrary
fidelity and share it as a small file.
And my having a copy of that file doesn’t
preclude anyone else from copying the file
and using it themselves.
There’s no question that the number of times
I use that file doesn’t really degrade the
file because it’s, in fact, digital.
So in that situation musicians were among
the first to feel the earth crumble beneath
their feet and they had to find new business
models because, in fact, they found that they
had gone from producing a private good where
price and value coincided to producing a public
good.
And the idea of taxing people to pay for both
an army and their diet of jazz and rock n’
roll probably didn’t make a lot of sense.
So the danger is that more and more things
are being turned into small files, and that
means that the portion of the pie that is
private goods is likely to shrink.
This is one of several different forces.
Another one that I talked about in an essay
called Anthropic Capitalism is that software
has some very peculiar features.
Traditionally technology has moved us from
low value occupations into higher value occupations.
So while we always decry the loss of jobs
we usually create new jobs which are more
fulfilling and less taxing.
And therefore those who have cried wolf when
they’ve seen technology laying waste to
the previous occupations, those people have
usually just been wrong.
The problem with software is that software
spends most of its time in loops.
Almost all code can be broken into two kinds
of code.
Code that runs once and never repeats and
code that loops over and over and over.
Unfortunately what jobs are is usually some
form of a loop where somebody goes to work
and does some version of whatever it is they’ve
been trained to do every day.
Now the danger of that is that what we didn’t
realize is that our technical training for
occupations maneuvers the entire population
into the crosshairs of software.
It’s not just a question in this case of
being moved from lower value repetitive behaviors
into higher ones.
But the problem is is that all repetitive
behaviors are in the crosshairs of software.
So it’s not that there’s nowhere to go;
we still have the Rube Goldberg sections of
code, where something will happen only once.
You know: a company will be founded, never
to be repeated.
A poem will be composed that will never need
to be recomposed.
But the problem here is that most people don’t
see themselves as opportunists in this positive
sense, right.
They don’t see themselves as capable of
doing these one off acts of inspiration, which
will probably always be fairly highly rewarded.
They see themselves as needing a repetitive
behavior on which they can build their families,
their hopes and their dreams.
And in general that may be coming to a close.
Even if that’s always been false in the
past I think that there’s excellent reason
to think that the era may have changed.
When we lost the ability to beat computers
at chess we immediately thought of Go as being
a deeper game.
But that bought us a very small respite from
the power of the computer.
And I don’t even know of anyone searching
for new games more human-friendly than Go
to maintain our edge.
So I think it’s really important to understand
that where we are is that we may need a hybrid
model in the future which is paradoxically
more capitalistic than our capitalism of today
and perhaps even more socialistic than our
communism of yesteryear, because so many souls
will require respect and hope and freedom
and choice who may not be able to defend themselves
in the market as our machines and our software
gets better and better.
And this is one of the reasons why something
like universal basic income comes out of a
place fiercely capitalistic like Silicon Valley,
because despite the fact that many view the
technologists as mercenary megalomaniacs,
in fact, these are the folks who are closest
to seeing the destruction that their work
may visit upon the population.
And I don’t know I think of any 9, 10 or
11-figure individual at the moment that I’m
familiar with who isn’t worrying about what
we’re going to do to take care of those
who may not be able to meet their expectations
with training and jobs as in previous models.
Whether it’s truck and car-driving is one
of the largest employers of working age men
threatened by self-driving vehicles or any
of the other examples.
For example: computers that are capable of
writing sports stories from the scores alone.
So in all of these cases I think the technology
is actually forcing those who are most familiar
with it to become most compassionate.
And whether or not we are going to leaven
our capitalism with some communism or start
from some sort of socialist ideal and realize
that if we don’t find a way to grow our
pie very aggressively with the tiny number
of individuals who are capable of taking over
operations of great complexity, I think that
we are going to have some kind of a hybrid
system.
I wish I could tell you what it was going
to look like but the fact is nobody knows.
Universal basic income is very interesting
but is clearly a first step and I would say
really a first draft of a part of a theory
that we just don’t have yet.
It’s hard to say whether I’m optimistic
about the future.
I’m very confused as to why our government
is still populated with so many soft – let
me try it again.
Honestly I’m rather confused about whether
to be optimistic or pessimistic.
One of the things that I find most perplexing
is that our government is still populated
by people who come from sort of softer disciplines
if you will.
Whether that’s law, whether these people
come from poly-sci, very few people in government
come from a hard core technical background.
There are very few senators who could solve
a partial differential equation or representatives
who could program a computer.
And I think that this is really a terrible
inversion of what should be happening.
As the world becomes more technically demanding
it’s important that the children of engineers,
mathematicians and scientists grow up with
the children of politicians or executives.
And what we’ve seen is we’ve seen this
terrible economic stratification where the
technical professions were turned into support
roles for this different leadership class.
Now during the 50s, for example, we would
have university presidents who might come
from a physics background such as we had at
the University of Pennsylvania.
The atomic bomb came out of World War II,
as did radar.
We came to understand the incredible power
of computers like ENIAC and during that period
of time there was a tremendous vogue for thinking
of a technical intellectual elite that could,
in fact, lead us into a more hopeful and technological
scientific tomorrow.
Somewhere along the line that got lost and
I’m very concerned that we have the technical
talent to build an optimistic future, but
that what for whatever reason we’re so terrified
now of those technical folks that we keep
attempting to subordinate them, to keep them
on a leash, to make sure that they are not
the ones in the know with power, with decision-making
abilities.
And I think that if you look at a society
like China’s, China’s certainly not falling
for this trap and they are proceeding along
a very different path.
So I think whether or not we understand where
we are and we make the correct decisions for
the optimistic future depends as to whether
we have the right leadership class.
Do we view our technical people as support
staff for the true decision-makers or do we
realize that, in fact, these are the people
who should have been making the decisions
all along?
I think if you think about, for example, the
Challenger disaster it was the management
class that didn’t understand the real risks.
The engineers knew just how much risk was
being taken.
And I think that, in fact, if we could just
invert that relationship we’d have a much
better chance at an optimistic outcome.
