Wednesday, August 20, 2014

What exactly is an economy?

"There can't be such a thing as an economy based on the poems and paintings"

Is a phrase I caught in the video Humans Need Not Apply as I followed up the following tweet by Elon Musk. To spoil my punchline from the start: I think we very much need to establish an economy based on poems and paintings. I also think it can be done.

Let's Start At The Beginning

The video above is well worth your time because it illustrates the next step in the automation revolution and how disruptive it will be to our current way of earning money to sustain and improve our participation and rank in society.

Modern western societies tend to be organized around some kind of market that includes human work force. Value is based on scarcity of the type of work needed to produce stuff. The rise of productivity reduces the necessity to assign work on producing food and provides the luxury of producing stuff that is less and less essential to primitive needs moving our demand profile up the Markov Pyramid day by day.

Coming from a long history of hunters, gatherers, merchants, workers and capitalists we can't avoid to structure our view of the world along the lines of scarcity for something. This is true despite of abundance of food and goods due to increased productivity and despite of minimized margin costs for the duplication of digital goods.

Let's Look At The Current State Of Economy

What we end up with is a set of rules that fails to distribute wealth derived from the abundance we achieved. Instead there is a happy few who end up living in the process of getting rich beyond measure. There is the decreasing part of the population doing the rat race to succeed in life. And there is those that have been dropped from or never were in the position of participating in the game of money and career.

This won't work as Nick Hanauer states in his Pitchfork Talk at TED. 

Let's Step Back And Rethink

As this is a bog and not politics it should be easy to start organizing things from scratch. Put aside greed generated by fear generated by thinking in terms of scarcity. Have a look at people you meet. They are interested, they want to participate and share. They want to earn positive feedback by involving them with others. From their day of birth they explore and try to make sense of why they are here and how to contribute so that in the end they may look back and see that it was a good life they lived. Not easy, not without risk, not without hardship but with curiosity, engagement, purpose and warmth.

Most of the time people are nice, motivated and trying to do the right thing.

Let's Organize Abundance

So how about building on all those people motivated to participate and move things along. Economy is a set of rules we come up with to organize ourselves. To organize us in a way that improves the fitness of our population given a set of circumstances. The circumstances have changed dramatically so we have to rethink the rules we established. The new set of rules needs to take into account that there is a link between individual welfare and the success of a population that is essential and absolutely non trivial. Personal welfare for all should align with being successful as a population inhabiting a planet with limited resources.

A lot of thought needs to go into that so increasing participation is a good idea.

Let's Define And Implement The Right Set Of Rules

The right set of rules needs to focus on what makes us human. Deriving a set of rules while having this in mind will enable us to have an economy that implements what is good for people and not the other way around.

Sharing poems and paintings seems like a good point to start. These are products that are very personal and human. Which is what we all crave for.

The rise of global social interaction is proof that an economy of abundance is possible.

Let's Reframe Our Point Of View

Human work won't be needed to keep up the economy of scarcity. We won't be able to compete with smart machines. But being and living as a human being is not restricted to working for the economy. We are free to come up with rules for an economy to try and help everyone of us to pursue his or her human potential. This is true even for an economy based on the use of smart machines.

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