Evonomics – Wealth power productivity

Why Wealth Is Determined More by Power Than Productivity

Everything in this article is true enough, in a sense, yet not sufficient to understand the existential level dangers present in our current economic and political systems.

To begin to see the scope and scale of the risks present, one has to dig a little deeper into several ideas, starting with the notion of value captured by markets and embodied in the myth of money.

What markets measure, and embody in “money”, is a set of instantaneous measures of value in exchange. The value markets measure requires a scarcity component. By definition, anything universally abundant has no value – like oxygen in the air – extremely important to each and every one of us, yet of no market value.

In a time when most things were genuinely scarce, and most things made involved human labour, that was arguably a sensible thing.

We are no longer in that time.

Now we have an ability to fully automate any process that can be defined, any game that has definable rules.
As someone who has owned and operated a software business for over 30 years, I have watched the cost of processor cycles and memory drop continuously. All that computation is now so cheap, it is almost free (not quite yet, but a close approximation).

Is it really true that computation has almost no value to humanity (as the market tells us)?

Markets only measure the unmet aspect of demand.
Markets put no value on demands that are met.
There is no market value in everyone having all their needs met.

Creating demand (via things like advertising and “fashion”) is one of the ways that the modern economic system has continued into the age of automation.
The other major mechanism keep markets alive is artificial barriers to abundance, laws like copyright and patent, much of our laws around “health and safety”, most of the requirements for “qualifications” seem clearly to be much more about keeping the economic system going than they are what they claim to be.

From the perspective of the economic system they make sense.

From the perspective of delivering needed goods and services to all human beings with minimal environmental impact, they make no sense at all.

The old idea that people could use their computational ability, or their labour, to create value for others, is now becoming obsolete; in so far as automated systems can now produce goods and services for a small fraction of the cost of having humans do so.

As the impact of such automation spreads through the “landscape” of the complexity of tasks, the economic system is concentrating wealth into fewer hands, and creating a big pool of people at the bottom with little or nothing.
Economically that is inevitable.
Socially it dangerous.
The expectations that generations had, of things getting better, no longer exists.
There is no security or hope for most people.

That is extremely dangerous.

We have the technical ability to deliver a high standard of living to every person on the planet, but not with a market based model of value.

The age of scarcity is ending, and markets demand scarcity to function, but so many of our systems are deeply embedded in markets and money that it seems to many impossible to disentangle them.

It isn’t.
And creating all those levels of replacement systems is a big job.

We need to start doing that job before the systems collapse causing cascade failures across multiple levels of systems (many of which are essential for life).

A UBI (Universal Basic Income) might be a useful transition strategy, to get us through the next 20 years, but isn’t really a long term solution.

[followed by]

Hi Ishi,

There are many things that capitalism has done reasonably well, and perhaps prime among them is decentralisation of decision making (at least to the degree that it does).
In a capitalist system, we each get to make choices about how we spend our time and money (and money is closely related to time, to the degree that it allows us to use the very productive time of other specialists or machines, rather than develop the skills ourselves to produce the good or service we buy).

So to that extent, and to the degree that it encouraged distribution of risk, and systemic redundancy, it was much better than any of the offered centralised alternatives.

I am not in favour of any centralised system, except to the extent that those systems can reliably and efficiently deliver key services (like the supply of water, roads, power, communications, sewage disposal, etc; and even there we need alternatives – as the earthquake here in Kaikoura clearly demonstrated 2 years ago – and there are many sources of disruption that are equivalent to earthquakes, that are not earthquakes – so no out by saying you live in a seismically stable part of the planet).

So it is not a simple or trivial set of issues; it is about as profoundly complex as it gets; and there are some key enabling technologies that are rapidly approaching, that will either enable total central control, or will be decentralised to enable security for all. What I am clearly saying, is that these new technologies do not obey the old economic laws, and are not decentralised by markets – markets actually tend to centralise them – and therein lies the existential level risk.

And the simple option of saying lets not go down that technological road is not an option, because we need those technologies to deal with all the existing existential level risks of pollution and global warming etc that we have created with our current set of technologies.

So we have to go forward.
We have to develop and implement technology.

And we need to do so with eyes open to all the many levels of risk present, and some of them are deep, way deeper than any university course I have seen even begins to approach.

The key thing in my view is to update the general understanding of evolution.

The idea that evolution is all about competition needs to be revised (thrown out).
It is not true.

A modern understanding of the deep complexities of complex evolved systems is that, to a good first order approximation, all new levels of complex systems are the result of new levels of cooperation.

And that is not a simple thing, because all naive cooperative systems are vulnerable to exploitation, and require an ever expanding set of attendant strategies to detect and remove “cheating” or “exploitative” strategies (and as Ostrom clearly demonstrated, that can mean removing only the strategy, and leaving the player that was using the strategy in the game in a new state).

And at every level that set of secondary strategies rapidly becomes a complex ecosystem in itself.

There do seem to exist, right now, human beings that embody at least 20 levels of cooperative systems with all their attendant strategic ecosystems.

To a good first order approximation, our current financial systems can be accurately characterised as a cancer on the human cooperative. Surgery is not an option, the cancer is too far advanced, and the patient would die.
We need far more advanced therapies, that target individuals, and the ways they operate in the world.

So – interesting times ahead.

How we handle the transition coming at around 2032 will probably define our survival probabilities (both individually and collectively).

I am all for individual life and individual liberty, and both of those things demand responsible action in both social and ecological contexts.
Liberty so defined is a very long way from following whims.
The other side of the liberty coin (responsibility) is clearly present.

Arohanui

About Ted Howard NZ

Seems like I might be a cancer survivor. Thinking about the systemic incentives within the world we find ourselves in, and how we might adjust them to provide an environment that supports everyone (no exceptions) - see www.tedhowardnz.com/money
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