Is society now focused on market capitalism because it is a fundamental theory, or because we have just lived through the era in which it was possible due to remarkable coincidences?
To begin to see the problem, recall that in previous eras innovations created high value occupations by automating or obviating those of lower value. This led to a heuristic that those who fear innovation do so because of a failure to appreciate newer opportunities. Software, however is different in this regard and the basic issue is familiar to any programmer who has used a debugger. Computer programs, like life itself, can be decomposed into two types of components:
- Loops which repeat with small variations.
- Rube Goldberg like processes which happen once.
If you randomly pause a computer program, you will almost certainly land in the former because the repetitive elements are what gives software its power, by dominating the running time of most all programs. Unfortunately, our skilled labor and professions currently look more like the former than the latter, which puts our educational system in the crosshairs of what software does brilliantly.
In short, what today’s flexible software is threatening is to “free” us from the drudgery of all repetitive tasks rather than those of lowest value, pushing us away from expertise (A) which we know how to impart, toward ingenious Rube Goldberg like opportunities (B) unsupported by any proven educational model. This shift in emphasis from jobs to opportunities is great news for a tiny number of creatives of today, but deeply troubling for a majority who depend on stable and cyclical work to feed families. The opportunities of the future should be many and lavishly rewarded, but it is unlikely that they will ever return in the form of stable jobs.
A next problem is that software replaces physical objects by small computer files. Such files have the twin attributes of what economists call public goods:
- The good must be inexhaustible (my use doesn’t preclude your use or reuse).
- The good must be non-excludable (the existence of the good means that everyone can benefit from it even if they do not pay for it).
Even die-hard proponents of market capitalism will cede that this public sector represents “market failure” where price and value become disconnected. Why should one elect to pay for an army when he will equally benefit from free riding on the payments of others? Thus in a traditional market economy, payment must be secured by threat of force in the form of compulsory taxes.
So long as public goods make up a minority of a market economy, taxes on non-public goods can be used to pay for the exception where price and value gap. But in the modern era, things made of atoms (e.g. vinyl albums) are being replaced by things made of bits (e.g. MP3 files). While 3D printing is still immature, it vividly showcases how the plans for an object will allow us to disintermediate its manufacturer. Hence, the previous edge case of market failure should be expected to claim an increasingly dominant share of the pie.
Assuming that a suite of such anthropic arguments can be made rigorous, what will this mean? In the first place, we should expect that because there is as yet no known alternative to market capitalism, central banks and government agencies publishing official statistics will be under increased pressure to keep up the illusion that market capitalism is recovering by manipulating whatever dials can be turned by law or fiat, giving birth to an interim “gimmick economy”.
If you look at your news feed, you will notice that the economic news no already longer makes much sense in traditional terms. We have strong growth without wage increases. Using Orwellian terms like “Quantitative Easing” or “Troubled Asset Relief”, central banks print money and transfer wealth to avoid the market’s verdict. Advertising and privacy transfer (rather than user fees) have become the business model of last resort for the Internet corporate giants.
Software is non-rivalrous but it is certainly excludable. (Copyright law and DRM are not perfectly enforced, but they exist.) Software is therefore not a public good but a club good.
If software becomes less excludable, the problems the article hints at may become more serious.
(As regards software’s non-rivalrous nature, it may even sometimes be an anti-rivalous good: https://en.wikipedia.org/wiki/Anti-rival_good )
This is not a market failure. In fact, it’s premised on spurious nonsense. That ideas are not properties, however useful, is a physical reality; the idea that they are is a religious conviction premised solely on gangs. Anyway, automation is good and ‘training’ produced conformist idiots who deserve to starve. Surplus-to-requirement people should not reproduce.
It would seem like the convergence of technology (automation in general and advancing AI) and social/political trends is leading us inexorably to a choice between the two ghastly dystopias Isaac Asimov laid out in his robot novels: crowded megacities of essentially “surplus” people living on the public dole or on make-work or both, possibly lorded over by social scientists, or a rival civilization of handfuls of wealthy/savvy elites living alone in far off closed systems served by armies of robots.
It troubled me as a teen when I realized that Asimov thought the former was an ideal society and the latter a dystopia, when most people seemed to think both were dystopias. Now I am troubled that the latter is seen as a Randian paradise by many.
Very few people are genuinely creative, and fewer yet are genuinely creative for more than a short segment of their lives, or even more than once. Asimov’s Spacers kind of suggested that — they amounted to generations of pampered country gentry whose estates happened to be on other worlds, and whose servants were machines. At best, some of their ancestors had been creative. Their society was actually parasitical on its own seed corn.
If the social system of the future is set up to stress creativity, there’s quite a culling coming, and it doesn’t happen only once.
Other questions that would need to be addressed might include:
How are different kinds of creativity prioritized in selecting for production and distribution or even for human reproduction?
How are the various subcategories of basic science, math, applied science and engineering, music, literature, or anything else to be ranked?
Will the members of each creative sub-class have mutual vetoes over one another? Will the computer engineers automatically assume the leadership and devalue all humanities by default?
There will be no “market” of consuming professionals, practitioners, users, scholars, teachers, let alone proletarians, to serve as a referee for the output of the creative. They will all be gone.
Or, before that comes to pass, there is also the more fundamental question when suggesting anyone is surplus to requirements. Whose requirements are those?
“Why should one elect to pay for an army when he will equally benefit from free riding on the payments of others?”
I prefer “because the organization demanding payment HAS AN ARMY” as the answer to this question.
He makes really a similar argument to the one Matthew Crawford makes in Shop Class as Soulcraft: that eventually most jobs will be divided into their smallest possible repetitive parts and then either outsourced to the cheapest labor pool, or done programmatically. If you’re doing white collar work this eventuality is almost certain.
“Why should one elect to pay for an army when he will equally benefit from free riding on the payments of others?”
An army should only defend those that pay.
And anyone should only pay or be part of what they agree with. Let Communist live as Communistas, Social Democrats live as Social Democrats, Libertarians live as Libertarians, etc.
That is the only way to not have violence.
Market capitalism exists since first trade a man did.
I wish to lodge objections to this:
“Software is non-rivalrous but it is certainly excludable. (Copyright law and DRM are not perfectly enforced, but they exist.)”
I object on the first point that you cannot make a good excludable by fiat. Copyright law writers should look first at whether software is an excludable good by nature, and then consider how to design copyright law as a consequence. (Forgive me the optimism.) By analogy, if you order that ships without a proper Looking-At-The-Lighthouse License shall not be allowed to navigate by a lighthouse, you have not made the lighthouse an excludable good, you have made the law an ass. Software likewise makes an ass of such lawmakers, as fiat alone is insufficient, and the law cannot depend on DRM, as I shall get to now.
I object on the second point that DRM works neither in practice nor in principle. Practice you can verify at The Pirate Bay, and in particular with SPORE, which was heavily DRM-”protected” and the more heavily pirated, in part because pirated versions lacked nasty side-effects of the game’s digital restrictions management.
Principle because DRM depends on locking the user out of a segment of his own computer. Since the content the user wants to get at is on the computer, as is the DRM bypass mechanism, and a computer is transparent to inspection and modification, a sufficiently determined user can break arbitrarily strong DRM.
(Perhaps software would become excludable if all end-users only had dumb clients connected to Facebook, and software existed in the form of Facebook apps completely under Facebook’s control and not subject to inspection or modification.)