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The foundation of the Smart Age

economics

(Michael Hrenka) #1

Lately, I’ve been thinking about a framework I’m calling the “civilization systems progression” which I’ve started working on about 2 years ago. It’s a framework that I take as basis of the progession of civilization in the fictional Fractal Cosmos universe, and it’s briefly sketched in the thread.

I’ve come to change the names of those systems over time and merely call them system 1, system 2, system 3, system 4, system 5, and system 6 respectively. The civilization systems follow a “natural progression” from simple systems to increasingly complex systems. We are currently living at the end of system 3, the industrial civilization system that started with the industrial revolution.

So, the next question is: What is system 4 and what characterizes it? System 4 is what I now call the “smart civilization system”. To understand what characterizes system 4, we need to consider the previous transitions of civilization systems and what characterized those.

My current thinking is that these systems are mainly defined by the rate of economic growth, or perhaps even more fittingly, the rate of growth of knowledge.

Let’s start with system 1, the civilization that consists of nomadic forager tribes living in a subsistence economy. Their economic growth rate is very close to zero, for various reasons.

With the rise of agriculture during the neolithic revolution, humans could become sessil and formed system 2. In system 2 almost everyone is a poor farmer and only a small minority does something else. Still, this small minority at least had the opportunity to contribute to the expansion of knowledge, which was stored by the ingenious invention of writing. On average, the annual growth rate in system 2 was far below 1%, but that was still significantly more than the almost zero of system 1. Over millennia, the accumulated growth of system 2 cultures translated to an incredible difference in wealth between the wealthy parts of those cultures and the wealthiest members of any system 1 culture. The difference between the wealth of a king during the renaissance and even the wealthiest tribe chief is truly astounding. This difference has been made possible by the accumulated difference in growth rates of those two different civilization systems 1.

Now let’s review the next civilization system transition, that from system 2 to system 3. What was remarkable about the industrial revolution was that it increased growth rates dramatically, mostly to levels far exceeding 1%. Under this kind of growth regime, the wealth of later generations could be double that of an older generation, which truly brought remarkable changes with it. We are currently enjoying the late fruits of this transition. Our technologies enable us to do things that the kings during the renaissance couldn’t even dream of. And this is the result of mere 200 years of annual growth rates exceeding 1%.

So, what characterized the transitions between civilization systems was a rapid and massive increase in the annual growth rate. With this in mind, a transition to a system with global growth rates of 10% and possible much more would suffice to speak of another transition to a new civilization system: System 4.

How could a shift to an economy with an annual growth rate of 10% or much more be achieved? The simple answer is artificial intelligence. Yes, artificial intelligence with be a big boon for the economy, but there is a more systemic key to a massively accelerated growth of the economy and our global knowledge base: Digital abundance, which I define as follows:

Digital abundance is a situation in which nearly all digital goods are available for free.

Or phrased in simpler terms: Almost all knowledge is free. And knowledge here includes anything that can be stored digitally, be it books, patents, blueprints for products, and all software! Even if we restrict our attention to the last item, software, the implications cannot be underestimated. Imagine everyone had free und unrestricted access (ideally open source access) to the best software available on the planet. This change alone would radically change how the economy operates.

How so? Let’s simplify this a bit and consider a single organization, for example a profit oriented company. Let’s say that it can operate at a profit margin of about 4% with average quality software. Now, if that company used the best software in existence it could achieve a profit margin of 8%, or even 12% or more. If on average the profit margins double, this translates to a doubling of economic growth as cumulative effect. Perhaps that on its own might not already be enough to increase the growth rate to more than 10%, but if we combine that with the acceleration coming from AI and other massively transformative innovations, we are clearly facing a total transformation of the economy.

But how can digital abundance be achieved? Why should people give away software for free? Well, since people could have done that already since the beginning of the internet and even earlier, this is a good question, since there is indeed a lot of free open source software, but also a lot of proprietary software. Idealism hasn’t won this fight. Programmers want to see money for their work, and a lot. This could have been solved with a functioning donation based economy, but it hasn’t. Let’s assume that programmers want to have two things:

  1. The certainty that they will be able to live comfortably.
  2. The chance to get recognition for good software.

There are very good solutions to those disparate needs that aren’t in place already:

  1. is solved by a universal basic income.
  2. is solved with a reputation economy (or more precisely a reputation income economy).

With these two components in place, programmers can focus their time and energy on open source projects entirely, since their basic needs are fulfilled by the basic income, and their work can be recognized effectively by the reputation economy that rewards great open source software greatly. Therefore, the attractiveness of working for companies that produce restrictive and heavily guarded proprietary software is diminished significantly and idealism can finally win, because it’s aligned with economic incentives and human needs.

This constitutes the very basis of what I call the smart economy, an economy that uses digital abundance to boost growth rates and enables fast innovations on a global and massive scale.


#2

Sorry but i would question this.

The growth of one company doesnt translate in the growth of the whole economy. right now we are all more or less used to shitty microsoft software and microsoft uses their monopoly to gather a hughe profit. they couldnt make such a big profit, if they hadnt this monopoly.

So there are companys which would grow and others that would shrink with free knowledge.

edit: im not against your ideas, i only doubt you can connect ideas like a UBI or a reputation economy with the demand on growth of economy unless you define growth as something else, as it is defined right now.


(Tim Groß) #3

Die Irrtümer gehen weit in die Tiefe. Die Fehlannahmen.


#4

please talk english in the english forum.

If you think something in the OP is wrong than you should try to correct it instead of just saying that it is wrong.


(Tim Groß) #5

That depends.


#6

I’m somewhat puzzled that there was no mention of an important common factor in all these system transitions. Namely that they all involved significant improvements in communications and knowledge/skill exchange.

System 1, nomadic tribes, communication was mostly limited to within the individual tribe and very little or effective communication with other tribes. Perhaps best characterized with the lack of permanent contact with other tribes.

System 2 differs from system 1 mainly in that tribes started settling down and having lasting relationships with other tribes. This necessitated breakthroughs in diplomacy (as in intertribe communication) which then brought about more widespread cooperation between tribes. Writing is probably the key innovation which made System 2 possible.

System 3 … this is where actually explaining things starts feeling like a big task. But suffice to say, there are pretty many inventions made during this system that all improve communications and knowledge exchange. Perhaps lumping them all into one system doesn’t actually make sense.

System 4 … well, basically, internet and computers. This is probably the end of the road for how much we can improve things based on just writing. We’re not far from ubiquitous direct mind to mind links anymore or perhaps even memory sharing.

Unfortunately, I don’t have time to revise this any further since I really should head to bed. If I had the time, I’d probably have spent at least a few hours revising this into a more in depth writing. So far it feels like I’m just scratching the surface, but perhaps there’s some value in that too. Feels like there’s enough to talk about for a whole series of books on this subject.