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The Autonomous Revolution
In the years since I joined Ricochet as an almost charter member, I’ve had close to a dozen books published, including one Business Book of the Year. I’ve never really talked about them on Ricochet, preferring instead to mostly comment on other member’s postings — especially on items relating to the arts. However, last week I published a book that I think might be of interest to my fellow members. Here’s the book.
I’m posting this only because in support of the marketing of the book my co-author (the legendary VC Bill Davidow) and I have been writing a series of essays on topics from the book for various publications. One ran a couple weeks ago in Salon. Others will be appearing in other locations in the weeks ahead. Below is the piece that appeared last Saturday as the LinkedIn weekend essay. It drew tremendous response … enough to drive the book to a category #1 best-seller on Amazon. I hope you find it intriguing. I look forward to your comments — and if there is enough interest, I’ll post one or two more.
We’re living in two economies, and they are tearing us apart
By William H. Davidow and Michael S. Malone
Hidden behind the good economic news is a disturbing new phenomenon – one more far-reaching — and disturbing — than the latest up or down of the business cycle. It is that our economy is now increasingly bipolar, with a traditional economy at one end and a virtual one at the other.
We see this most vividly during the holiday shopping season, where Cyber-Monday Web sales increasingly outstrip Black Friday in-store sales three days before. But this is only the most celebrated manifestation of this change in the economy. The reality is far more pervasive — and it portends a massive transformation in modern society. One for which we are unprepared.
It all seems benign; even an improvement over what came before. After all, why fight your way through a crowded store, or burn gasoline driving to a store — only to find the item sold out? It is so much easier to just find the item on Amazon, press the order button and find it at your door in a day or two. Increasingly, even perishables such as groceries are being ordered the same way.
As with much of the digital revolution, a lot of this change has crept up on us quietly. One day it isn’t there and the next it is. Somehow, almost without noticing, we have fully assimilated it into our lives — and can’t imagine (or if we are older, scarcely remember) what life was like before the Internet, smartphones, social networks, digital music, network-only television, analog automobiles, robots. . .and all of the other accepted aspects of 21st century life.
We chalk all of this up to the evolution of technology, and we thank our lucky stars that we live in the era of Moore’s Law, which delivers thrilling new products and services every few years.
We call these changes substitutional equivalences — meaning that we have substituted one technology for another that appears, on its surface, to provide the same experience — only cheaper, faster, smarter and more efficient. And we are the lucky recipients of these changes.
But these substitutional equivalences are not the same as what they have replaced. Indeed, many are fundamentally different — not least because they exist and operate in cyberspace, not in the physical world. And the virtual world is very different place: with a very different purpose, rules and impact on the human brain. Moreover, these virtual products and services increasingly exhibit their own intelligence and autonomy . . .and are getting better at both by the year.
In other words, these products and services are not merely evolutionary improvements over what came before, but revolutionary new creations. Individually, these discrete revolutions are usually so rewarding — Wow! Look at all the new apps for my phone! — that we can easily overlook their often less-than-positive consequences (social isolation, rewiring our kids’ brains, a surveillance state, etc.)
But, put all of these discrete technologies together, and multiply their effects by billions of users, and the result is a massive cultural and civilization shift that is already happening around us. We call this a Social Phase Change: a cultural transformation that is so sweeping that it changes everything — including all the rules we live by. It is an event so profound that it has only happened twice in human history: the agricultural and industrial revolutions. We believe we have now entered the third such transformation: an Autonomous Revolution, in which we increasingly hand over our future to intelligent machines.
These Social Phase Changes are wrenching experiences, presenting enormous challenges to humanity — and often producing vast blood-letting and misery. They also offer the possibility of huge advances in human existence: longer lives, greater wealth and increased happiness. But getting to this better world will mean making our way successfully through a minefield.
We are already in that dangerous zone. And one of the first challenges we face, one that is already upon us, is an increasingly bipolar economy.
What that means is that we have today, having emerged over the last quarter-century, an economy that is characterized by a traditional economy that operates under long-established rules in the real world . . .and a second economy, an Autonomous Economy, with very different rules, that operates in cyberspace — and promises to become even larger than the traditional one. In the process, the two economies are pulling in opposite directions, and doing so, tearing the Old Order apart.
In particular, the traditional economy is biased toward inflation. By comparison, the Autonomous Economy is biased toward deflation. The traditional economy provides us with most of the basic necessities of life — food, shelter, health care, clothing, transportation, and energy. Money spent on these necessities accounts for almost 80 percent of middle-class expenditures. And the costs of all of them are rising.
Conversely, the Autonomous Economy increasingly provides the higher-level options of life: entertainment, education, employment, interpersonal relations, and community. These offerings perpetually improve and grow more valuable to the user, yet simultaneously plummet in price. That solitary transistor of 1956 has become the microprocessor of 2020 containing billions of transistors — for the same price. The $3500 desktop computer is now the $700 laptop computer with 100X the processing power. And most stunning of all, is the growing pervasiveness of freeware, from on-line games to social networks.
The presence of this growing alternative economy may be exciting, but it also disguises the fact that the traditional economy hasn’t really changed — and in that world things are getting worse. The problem is non-monetizable productivity — unlike in the real world, the productivity gains in the Autonomous Economy don’t translate to increased incomes for average folks. That’s why, even as the numbers look may look good in GDP calculations, those gains aren’t reflected in worker’s lives.
In fact, just the opposite is true. Between 2012 and 2014, the median home price rose by 17.3 percent, while weekly wages rose by only 1.3 percent. According to the U.S. Department of Agriculture, food prices rose 31 percent between 2005 and 2014, or about 8 percent more than inflation. The cost of health insurance has risen by more than 54 percent in the past five years.
The middle class, in particular, is mired in this bipolar trough. Real median household income is below the level it was in 2000—$56,671 versus $57,372. Since 2000, the number of lower-income families has increased from 31 percent to 34 percent of the population, while the number of middle-income families has declined from 45 percent to 43 percent. The average weekly hours worked by production employees has declined from 38.8 in the 1960s to 33.7 today. Inflation-adjusted annual earnings for production employees peaked in the 1970s and is down by 14.6 percent.
This situation is only going to get worse as automation and artificial intelligence increasingly assume traditional jobs, not just blue-collar ones, but professions. The estimates of the job losses that are to come are staggering. A study by Frey and Osborne looked at 702 occupations and concluded that 47 percent of American jobs might be automated in the future. Another study, by McKinsey, estimates that 400 to 800 million jobs around the world — and a third of current jobs in the U.S. — will be lost to automation by 2030. Already, human beings are being squeezed out of entire job categories — an estimated 2 million people in the U.S. are displaced every year by productivity improvements.
The future? Imagine that our entire economy looks like Amazon, Google, Facebook, and Netflix, companies that are highly productive thanks to virtualization and intelligent machines. Those companies require $600,000 to $1 million increases in income to create a new job, not the $150,000 we find in the average corporate job today. GDP would have to grow at a rate of between 6.8 percent and 11.3 percent to absorb all those displaced workers. No modern developed economy has ever maintained that level of growth. While those companies may create dozens of billionaires and thousands of millionaires, they cannot save the middle class.
What is particularly disconcerting about this jobs scenario is what is missing compared to the past. Two hundred years ago, when jobs were vanishing in agriculture, they were on the rise in the manufacturing. Then, as the latter area matured, new jobs were created in the service industries.
Eighty percent of the U.S. workforce, 104 million people all-told, now work in services. But as more and more of those jobs are automated, we need a new area of economic growth to absorb those excess workers. Unfortunately, that area appears to be the burgeoning workerless segment – millions of people rendered ZEV’s — Zero Economic Value citizens, who will never find work, no matter their skills.
Will the bread and circuses of consumer technology — wall-sized TV screens, virtual vacations, autonomous vehicles, drone deliveries — make up for radically reduced disposable income and wealth, for lives without the purposefulness of The Good Job? Will they find a meaningful life in another way?
Perhaps jobs created by the new infrastructure that needs to be built, or a new wave of jobs created by entrepreneurs, will forestall this crisis for another generation. But make no mistake: the Autonomous Revolution is coming — and all of the rules are about to change. We need to prepare, now.
If the AI is as smart as Socrates, pretty good to the best. If it isn’t, then pretty bad.
Here is the story, if you haven’t heard it.
My point in bringing up Marx is to point out that it was his reaction and fear of industrialization that was the problem. Not the industrialization itself. Can there be a bad reaction to this Social Phase Change? Yes, but that will be brought about by people’s irrational need for control of a self organizing system. The answer is to not panic and worry about the change. Go with the flow rather than struggle against the tide. It is the needless struggle that causes injury. And what is the possible outcome of that struggle? An end to technological and societal progress? Stagnation?
Luckily we don’t have to worry about irrational reactions from anyone these days.
All meaning and purpose in life is self created already. The human condition has not changed and will not change, at least on its fundamental spiritual level. What is the difference between the future life you describe and that of a hunter gatherer? Are they less fulfilled because of their lack of industry. A hundred thousand years of human history would argue otherwise. People will have no more or less capacity to find meaning in a world of comfort than they did in a world of subsistence living.
If people today are unhappy it is because people are always unhappy. If people today are suffering it is because people have always suffered. Our choice is between suffering in a world of material want or one of material plenty. Why not take the latter all things being equal?
There are and have been those who choose the former, and why not?
They are called “Socialists” and their choices lead to actual rivers of blood.
Most of those I have in mind are about as far from socialists as you can get.
The Amish are choosing to adopt new technologies all the time, but are extremely careful about it, weighing each new change against what it will do to family, social, and spiritual life. They are pacifists.
The Hutterites (another Anabaptist group) live in communes, but are great adopters of technology to make their material lives better. I wouldn’t call them socialists in a political sense. They, too, are pacifists. Some people, e.g. during the world wars, were hard on both groups for not contributing to the war effort. So if you want to make the case that by being pacifists their choices led to rivers of blood you can go for it, but in that case you’ll have to blame a lot of other things for leading to rivers of blood, too.
Others were Indian captives in North America who refused to go back to their easier, more technologically advanced lives. (Benjamin Franklin made some famous observations about it.) The Native Americans were both more individualistic and more communitarian than their Euro-American conquers, but were less collectivist. So, not socialists. Their lives were more violent, in addition to being less technologically advanced. My personal take on it was that it was the intense person-to-person relationships that attracted them to their lives in a less materially advanced culture. When they had to choose, that’s what they usually chose, although there were a couple of cases of people going back to Euro-American life and its better health care possibilities when they got to be of an older age where they wouldn’t tend to survive as Indians.
There was a romantic strain of Marxism that eschewed material prosperity for the bigger cause, and that sometimes caused rivers of blood when it flared up. But as an overall generalization, no, choosing to walk away from material progress doesn’t cause rivers of blood.
One can always live with less, but to demand that everyone live with less regardless of their personal preference is wicked. Society must advance, if individuals choose to participate it is up to them. I think history clearly demonstrates that most people will chose progress. And that those who would impose stagnation on others can only do so with violence and coercion.
The choice was not one of pacifism, but:
You claim that there are people who choose the former and I called them Socialists. You responded with examples of Amish and Hutterites as choosing to “suffer in a world of material want.”
Yet both the Amish and Hutterites are choosing material plenty, (by your own admission) through the adoption of “new technologies”.
Socialists actually choose material want, because that is where their choices all lead to.
Wicked? That’s a rather moralistic judgment, don’t you think? On what grounds do you make your moral judgments?
And however they form their moral values, progress isn’t necessarily good in most people’s eyes, as people were learning around the time of World War I.
C.S. Lewis pointed out that an egg can progress from edible to odoriferous and rotten.
Yes, but both the Amish forego a lot of material benefits. Both the Amish and Hutterites forego material benefits when they conflict with other values that they find more important. There are differences between them, though.
So we give up fire, metal working, electricity, vaccines, sailing, flying, chemistry, communication satellites, etc. Which of this progress has been bad for us? World War I was the same as any other war. It involved larger numbers because there were more people, it involved modern weapons because they were around. The horror of World War I was incidental to the technological and material progress of the age. Equal horror and mayhem was visited upon people during the 30 Years War, 100 Year’s War, and countless other conflicts. Were those wars less barbaric for their lack of machine guns? Are modern wars more barbaric because of our improved technology as compared to WWI?
I render my moral judgement on the proponents of stagnation based on the evidence of history, and on the fact that human wickedness and sin is uncoupled from material prosperity. Being poor does not make one more saintly, nor does being rich make one more compassionate. That equating the moral character of society to its level of prosperity and advancement is a false judgement. Like linking ones personal health to ones ethical rectitude. Being healthy doesn’t make one more or less moral and ethical, and it is not a choice between being sickly and saintly or healthy and devilish. The two are unlinked, except in so much as one should strive to be maximally healthy and moral. It would be wicked to argue that one should sacrifice personal health and well being for moral health and well being, because the two have nothing to do with each other. So likewise with material progress of society and its moral state. Our society will not be made morally and ethically better off by being materially poorer or technologically less advanced. Like with personal health and morality the goal should be to be maximally both.
A great mistake also happens from the other end to think that technological or material progress in and of itself leads to any kind of moral and ethical progress. It doesn’t.
You’re looking at all of this in terms of humanity as a whole over the long term, but people live individually in the now.
Let’s take a recent example: coal miners losing their jobs were told to “learn to code”. Now say you’re a 58-year-old, been a miner your whole life and have worked your way up the ladder. A lot of people aren’t aware, but coal miners make good money, and you were making six figures which was nice what with your two kids in college. Now sure, you can take a year or two and learn basic coding, and then you’re a sixty year old entry level coder. And if there’ is one thing the market can’t get enough of, it’s sixty year old entry level coders eager to work at a quarter of their previous pay.
Having more coders and fewer coal miners might be great for humanity over the long term, but it sucks for coal miners in the here and now. The more people who are displaced in that manner there are, and the faster it happens, the more blood you will see. And the more loss of hope turning to opioid addiction, and the more failure to launch among young people not nimble enough to adapt.
What you’re pointing at are the lives of the descendants of those who thrived through those previous changes. The people who didn’t thrive also didn’t leave anyone behind. It may look like unalloyed good from hundreds of years of distance, but living through it is different. Particularly if you happen to turn out to be obsolete.
You mean the coal miners that were laid off due to Democrat policies and not due to technological improvements? Those coal miners?
Democrat policies have definitely aggravated the problems of the coal industry, but the industry would have had difficulties even absent these policies–yes, due to technological improvements: low natural gas prices, largely enabled by fracking, combined with efficient combined-cycle gas turbines.
Only for the combined-cycle gas turbine plants, and the US doesn’t have a critical mass of them.
Found this, seems reasonable.
Getting back to your point. While the technology may be on the cusp of displacing coal miners, Democrat policies absolutely do so.
The simple fact is, that the 58 year old miner probably has a 401K and even if laid off will be able to tap into it within 18 months of losing his job, he is not going to produce a river of blood due to technological displacement but he will have to adapt.
The good news is that the real poverty rate in the US is about 2% and he is not likely to fall that far. He could learn to code, or drive a truck, or work overseas as a contractor. The really good news is that the US is experiencing historic low unemployment and he will probably find a job somewhere, if he wants to have one.
And you think the real choice to be had is between the suffering of coal miners and future progress? My argument is that the miners would suffer anyway, and if not them than someone else. What about that 20 year old good at programming who is forced to be a coal miner instead of working at Google? Why condemn him to that instead of the job he wants? What makes the coal miner so much more special than him? If you save the coal miners outdated job, why not the bank tellers? Chimney Sweep? Calculator? or anyone of thousands of jobs and professions that have gone by the economic wayside. It is hard to have the economy shift out from under you at 58, but it is also hard to have the economy not shift for you at 28 also.
I make my argument from the perspective of humanity because humanity is the only thing that endures in the long run. If we only had thought of the here and now why care about anything? In the long run we are all dead? Again, I wish to emphasize that this isn’t an absolute argument by any means, too little attention to the here and now also leads to long term suffering and it is easy to claim insubstantial future gains against substantial current harms. I realize this, but I think history bears me out in this regard. To paraphrase Orwell, we can see the omelet of our past economic dislocations in the here and now. We are currently eating it and it is good.
The Invisible Hand of the Market makes its way through the world and it cuts some down and lifts some up, but it is fair and good because it is unknowing and impartial like Natural Selection. How can one complain that they have been struck down by a force of Nature? What should make them immune to the immutable laws of Nature? We can struggle against Nature, and we have and do, but we have no right to complain or be bitter if and when it overcomes us.
Also on a more specific level of nitpicking. The 58 year old miner has probably already made progeny whose progeny will also benefit from the future world of coding. Do his children, and their children also need to be miners, can they make no life otherwise? I think we can see that many children of small farmers in the early 20th century managed to make a life outside the farm. Lets not give miners less credit in raising adaptable progeny.
You’ve entirely missed my point. I’m not arguing for one or the other. I’m simply saying that these profound and fundamental changes may look great from hundreds or thousands of years of distance, but they suck for a lot of the people who live through them. And you can’t expect that those people will just sit in a corner quietly until they die. They are likely to have something to say about how things are going, and the more displaced people there are, the more trouble you’re likely to see.