Capitalism will be dead. So will all the other isms that we subscribe to when it comes to economic models.
Technology is changing everything, something that most are ill-prepared for. We cannot truly grasp what is happening since it is something that society never witnessed.
It is likely the next decade sees a complete altering of society. At the core of this is the economic foundations we came to rely upon. We are seeing the potential of the entire spectrum of economic thought disrupted.
In other words, everything we think is true today will no longer be relevant.
How this will look, exactly, is hard to surmise. What we do know is society needs to ready itself for disruption on a scale never seen before.
In this article we will dive into some of the technological advancements and what it could mean.
We have to start the conversation with the two forces of AI and robotics. These are operating as two separate fields but are closely tied.
Tesla made news with its entry into the humanoid robot field. It joins the likes of Boston Dynamics in the effort to bring out robots that can replicate much of the work humans do. This will differ from machines in the ability for them to handle a wide variety of tasks. To achieve this, balance, dexterity, and an assortment of other characteristics must be worked out. However, once this is completed, we will see a massive economic shift.
What happens to the value of labor when it can be mass produced? This is an important component to all economic theory. Economists have this as a central premise in most of their thesis because, up to now, it was such a large part of society.
If we get companies that are able to produce tens of millions of robots per year, how does that affect the structure of society? What do people do with their time? How do they sustain themselves?
All of this gets disrupted.
Compounding this issue, in my view, is artificial intelligence. We see the potential for knowledge work to be disrupted even quicker than manual labor. AI is obviously going to be tied to the robots. With knowledge work, no robot is required. This means we are dealing with just software and the cloud.
Futurists like to claim that "technology always creates more jobs than it destroys". I think the statistics over the last 25 years proves a different point which means that, as technology gets more powerful, the job destruction expands at a pace greater than creation.
Therefore, whatever economic systems we are accustomed to might be useless in a couple decades.
Before embarking upon some "what ifs", let us look at what we do know.
Historically, we saw technology result in neither utopia or dystopia. Some like to claim technology will make society ideal in X number of years. This never happens. The flip side are those who espouse how technology is the end. We know this is not the likely outcome.
We tend to end up in the middle with some massive advancements that do come with drawbacks.
This will be no different. I guess a major part of the problem is that humans are still involved. We are far from perfect and tend to waffle, collectively, between the two extremes.
What we can predict is that abundance is before us. Anything tied to artificial intelligence and robots is, at its core, information technology. Here is where we see the exponentials people so often discuss.
We are watching another digital revolution. Again, we can extract some lessons from history.
Whenever something is digitized, a few things happen:
If we look at video, communications, music, and information, we see how this is the case. Now, with AI and robotics, software is going to affect healthcare, energy, material sciences, and a host of other industries.
At the core of this is the scale of production. If we just focus upon the manufacturing aspect of things, if a company has the ability to buy 250K robots for $20K each, that is a fraction of a worker's annual salary. Presuming these bots are good for a few years, we could be looking at an annual rate of $5K-$6K.
Do you see how labor costs just dropped by 90%?
Plus we have to consider it takes roughly 2 decades to produce a worker. Most enter the workforce, full time, in their early 20s. Robots, once the process is established, will be stamped out in a few hours.
Each year we see roughly 1.3 billion smartphones sold. This is in addition to 300M personal computers. Can you imagine if robotics comes anywhere near this?
Production will skyrocket as the robots far outpace humans. We will have a lot more output, creating the abundance.
We know the impact of automation. This only requires looking at areas where manufacturing was replaced by machines. If we take this on a much broader scale, what kind of economic system are we left with?
Many feel the solution might be the government and some form of UBI. Bill Gates says tax the robots. The problem here is that, much of the government is going to be automated out also. Jobs that are paid by these institutions will be replaced too. Web3 is already experimenting with different governance systems. This will likely spread as networks become more abundant.
How does society deal with an economic model where the labor component is mostly automated? This is something that few are discussing because many are still holding onto the notion that jobs will be created. The problem with this is the presumption these jobs will be filled by humans.
To me, a part of the solution comes down to tokenization. This is a key going forward. It is likely capital income will still be viable. However, labor income, for most people, will decline (if not go away completely). What do they do? Here is where I believe staking income is going to fill the void. Networks will provide some resources in this form as the core of digitalization grows in value.
Here is where we see the distribution of economic output changed. A nation's economic productivity is owned by individual companies. This means the beneficiaries, financially, are those who are tied to those entities.
As stated in past articles, there is no way to capture the entire value created. Tokenization does provide this. Ai and robotics are going to be tied to networks. That is where we see the value arising.
To me, this is a central premise of the next economic model that we embark upon.
It will be an interesting couple of decades.
