Brave New World

“Prior to the industrial revolution Mercantilist corporations focused on trade. The Mercantile principle is that land is the source of all economic power, therefore the only way to grow value faster than your land holdings permit is to trade on advantageous terms. Mercantilist thinking is a fundamentally zero-sum way of viewing the world – you take and somehow else loses.

Then along came the Schumpeterian corporation and the industrial revolution. Innovation & ideas powered by essentially limitless fossil-fuel energy. The equation was simple; energy and ideas turned into products and services could be used to buy time. Specifically, energy and ideas could be used to shrink autonomously-owned individual time and grow a space of corporate-owned time, to be divided between production and consumption.

Two phrases were invented to name the phenomenon: productivity meant shrinking autonomously-owned time. Increased standard of living through time-saving devices became code for the fact that the “freed up” time through “labor saving” devices was actually the de facto property of corporations (e.g. through viewing of TV and magazines).”*

However we are close to Peak Attention. The ROI on developing new technologies that mine an individual’s time (which is finite) is getting pretty low. In essence we wandering into another zero-sum game.

As a corollary, you can also feel the affect of Peak Attention in business; the life-cycle of a new product is short due to competitive pressures (too many companies chasing the same opportunities). The ROI on innovation usually only makes sense when you lie to yourself and your shareholders. Even IP protection doesn’t help; the mountain of prior art has white-anted that angle too.

So what happens next?

I suspect that businesses simply won’t be able to employ all the people that they do today. In fact the corporate sector will shrink in size, both as a fraction of GDP and in the percentage of the population it employs.

Governments will therefore  step in and be the leaders in creating employment, whether that is directly or indirectly. This employment will have the sole purpose of keeping common people (the gammas) occupied for as much of the time as possible so that they remain vaguely satisfied and also such that their consumption is controlled. The precursor to this is the Nanny State where government mandated services create value-destroying employment.

In this process, some power will transfer from the corporate sector to the government sector. However the corporate sector will hang on to much power by controlling the dwindling physical resources. Governments will let this happen because it represents the best retirement plan for politicians. The corporates will essentially be wealth banks for a small fraction of the population, the alphas, that will consume much more than the rest.

A small fraction of the population (the betas) will freelance and not be captive to the unproductive services sector. These people will have the capacity to exploit the eddies in the flows of wealth created by all that government effort at near full employment.The beta’s existence will be for their own benefit only; the system will not depend on them because it will not need their incremental productivity gains.

Renewable energy will become essentially limitless unlike physical resources. This will favour the adoption of technologies that use up people’s “free” time with IT and not the consumption of physical resources.

The gammas will start to enter the Matrix. The alphas and betas will have the privilege of not doing so, if they so wish.

I didn’t need deltas or epsilons in this model.

* lifted from http://bit.ly/1fVTX8f – this author couldn’t imagine the brave new world