"The social inefficiency of capitalism is going to clash at some point with the technological innovations capitalism engenders, and it is out of that contradiction that a more efficient way of organizing production and distribution and culture will emerge." —Yanis Varufakis
The current economic system distributes wealth in a very focused manner that prevents a vast majority of humans from being adequately rewarded by the technologically advanced civilization. These factors undoubtedly condemn today’s system of suboptimal economics to the realm of classical models of history as a result of impending obsolescence. In brief, the current faltering economic model is suboptimal, hinders economic growth, and is not sustainable going forward.
Our existing economic operating system may work with “alternating success” for some time, but ultimately capitalism will mutate and will be gradually replaced with IT-based shared economy. Many labels were tentatively given to this post-scarcity, post-capitalist model. In his 2018 book, Superminds, Thomas W. Malone, MIT’s director of the Center for Collective Intelligence, describes a hypothetical model he calls ‘Cybersocialism’, other names like ‘Fully Automated Luxury Communism’ were mentioned in the press. We’ll use the broad term ‘Post-capitalism’ here to refer to any subsequent economic model.
Make a note that I don’t advocate for any particular model, I’m only saying that we are quickly outgrowing the classic form of capitalism. I believe economic evolution is akin to any other natural process of unfolding patterns, so it would apply to economic development as well. Economic evolution doesn’t end with capitalism. By mid-century, geo-post-capitalism will likely combine market economy, socialist elements and even AI-engineered central planning amid decentralized backdrop of its global components. Evolutionary utilitarianism — ensuring the greater good for the greatest number — seems like an obvious eventuality.
Overall, we have been on the right track, nonetheless. Many aspects of life on Earth are getting dramatically better. Extreme poverty has fallen by half since 1990, and life expectancy is increasing by leaps and bounds in developing countries. Studies consistently show that most people in developed countries have no clue that the world has taken a happier turn in recent decades because media, and humans in general, have a strong negativity bias. Bad economic news gets more coverage than good news. Negative experiences affect people more, and for longer, than positive ones, and many people think things are getting worse, in part because that’s actually an evolutionary adaptation: It’s been crucial for our survival to be sensitive to bad news, so people are genetically conditioned to pay about ten times more attention to negativity than positivity.
As long as the costs of communications and computation continue to drop due to exponential advances in technology, communication networks become global and ubiquitous, and as the networks proliferate, they gradually replace matter with mind, i.e., networked intelligence. Access is becoming more important than ownership. It would be more economically optimal in some situations to rent than to own, in other situations to share and generate passive income.
If the premise of the current sharing economy is that you can turn your car into a cab or your house into a hotel, the premise of the next phase of the IT-based shared economy is that you can turn anything into a productive asset. All you have to do is set your price and other criteria, and AI will take care of the rest. The blockchain “smart contracts” could make a lot of things sharable. Electronic “gig economy” can distribute creative and enjoyable mini-tasks, and “digital twins” can earn you additional income. Our AI future is almost unimaginable: AI will destroy and create jobs, invent new industries, accelerate innovation to a new level and fundamentally change the way business is done across the board.
Some epicenters of innovation, such as Silicon Valley, revered as America’s technology capital, where I’m fortunate to live, has an outsized influence on the world’s economy, stock markets and culture. This small stretch of land from San Jose to San Francisco is home to three of the world’s five most valuable companies. Tech giants such as Apple, Facebook, Google, Intel and Oracle all claim Silicon Valley as their birthplace and home. San Francisco Bay Area has the 19th-largest economy in the world, ranking above Switzerland and Saudi Arabia. And California is now the 5th largest economy, surpassing the U.K. in 2018.
Across the Pacific Ocean, collectivistic China rivals the U.S. in terms of Big Data generation. Moreover, China seems to put more emphasis on developing robotics — empathic machines — to integrate robots, and consequently, AGIs into the fabric of society, while the focus of the U.S. has been disembodied AI, thus far. China might be closer to the realization of the Global Brain, epitomized in the Internet of Things, Internet of NanoThings, Quantum Internet and Virtual Metaverse than most countries. But at the same time, none of it will really matter — by mid-century nation-states will fade away, anyway, just like the feudal city walls are now no more than a historic peculiarity.
Nation-states evolved to regulate human beings — the main intellectual and physical resource in the past few centuries — while blockchains, and similar systems that could be called “virtual states” are evolving to regulate information technology. In the future, nation-states will have ever more limited ability to reach into cyberspace to regulate information technology. Not only the world around us is rapidly shifting to a truly digital economy, but one that will become economically borderless. Just like medieval city walls later were either demolished or reduced to historic curiosity, over time, nation-states will, too, play a quickly diminishing role in our lives, giving way to one global stronghold without borders.
The United Nations’ Global Sustainable Development Report 2019 suggests we seriously need to consider making drastic changes to our economic systems. “[T]he economic models which inform political decision-making in rich countries almost completely disregard the energetic and material dimensions of the economy,” the researchers wrote in the report. “Economies have used up the capacity of planetary ecosystems to handle the waste generated by energy and material use.” In summary, maybe it’s time to accept we can’t somehow maintain endless economic growth on a finite planet.
But what if with the new wave of technologies, such as nanotechnology which would enable us to reprogram matter at a molecular level, we can overcome scarcity once and for all? Design would then become the most important part from start to end product which can be freely shared or have a premium in the marketplace. At any rate, this will dismantle the current social, economic, and political system, because it will become irrelevant; every institution, every value system, every aspect of our lives have been governed by scarcity: the problem of distributing a finite amount of “stuff.” There will be no need for any of the today’s social institutions. In other words, when nanotech and ultra-realistic VR are commonplace, the system built on scarcity will crumble and that would herald the forthcoming “economic singularity.”