Foresight Update 8
page 3
A publication of the Foresight Institute
 The
Economics of Rapidly Changing Technology
 (Part II)
Opinion by Jeffrey C. MacGillivray
[See Part
I in Update 7.]
What might serve as a medium of exchange in a nanotechnological
society?
The need for a medium of exchange will not disappear; bartering
labor becomes very inconvenient in multi-party transactions, and
there needs to be a unit of account for land transactions.
The medium of exchange cannot be the traditional gold or silver,
since their special value as materials will disappear when
superior new materials can be constructed out of common building
blocks such as carbon atoms, and their rarity will disappear when
the cost of separating them from seawater or other
low-concentration sources becomes negligible.
The most likely medium of exchange would be based on land, the
only remaining physical item of enduring value. Shares in
collections of rented land could be kept in checking accounts and
checks written against them, or certificates could be issued for
use as cash. Land will always be rented, due to the persistent
demand for transient lodging, especially with increased time and
resources available for travel.
The concept is little different from writing a check against a
money market fund balance today. Indeed, a checking account
balance in today's society could feasibly be denominated in
something other than dollars--another national currency, grams of
gold, shares of corporate stock, or shares of a group of
corporations. Multiple units of exchange can easily coexist
provided that all units are conveniently divisible and mutually
convertible. A simple mechanism for converting paper assets to
direct ownership of some of the land would eliminate the current
problems of closed-end mutual funds trading at a discount to
asset value.
I will not attempt to predict the relative values of land and
labor in a nanotechnological society.
The birth rate in a nanotechnological society is likely to
decrease. Time will be of value to people who are not bored, and
children will generally be viewed as a burden by those whose
purpose in life is to alleviate boredom. Only people with a
strong desire to spend their time bringing up children will
continue to reproduce. The desire for children will not be solely
due to religion; some will look upon child rearing as an
esthetic, artistic challenge.
Many of today's remaining economic incentives to have children
will disappear. There will still be psychological pressure from
parents to produce grandchildren, but many people will choose to
ignore such pressure once economic incentives such as current
financial help or future inheritance become less tempting, and
the transportation costs of moving further away from relatives
decrease.
The rapid decrease of the death rate--to near zero--will produce
more sociological problems than economic effects. People today
have trouble accepting the evolution of relationships with people
as their circumstances change. People form a mindset of their
relationship with a particular person-- especially a perceived
inferior--and don't willingly or lightly change it. Older
relatives often find it difficult to accept mature relationships
with younger relatives whom they knew as infants. More
experienced colleagues in business or leisure activities often
find it difficult to accept the rise past them of a person
previously lower in the pecking order.
All of these problems will be aggravated in duration, and
increased in frequency, by increased longevity--and in
particular, by increased longevity in prime condition. People in
uncomfortable positions in such relationships may find it easier
to move elsewhere and start over.
 Space
settlement will occur, spurred by such pressures as increasing
population, the urge for adventure, and a desire to get away from
past personal relationships. Space settlements will not destroy
the value of land; land will be of value on all planets, and not
everyone will want to move off any particular planet. Even if the
population of a single planet were to decrease, land would not
lose all of its value.
Before nanotechnology or another technological advance makes
space travel really inexpensive, space settlements might become
less free than Earth. If the cost of emigration to space is high,
requiring years of saving, and the cost of emigrating again is
high enough to restrict individual choice, tyranny could
flourish. The advent of nanotechnology will drastically reduce
the cost of space travel, restoring the individual option of
repeated migrations, and drastically reducing the likelihood of
such tyranny.
One side effect of space settlement will be the end of the brief
era during which instantaneous communication with any other
member of the human race has been possible. As Arthur Clarke
pointed out in a 1976 speech, ours is the only generation for
which this instantaneous communication will exist.
However, space settlement will still occur. Some people will not
mind the loss of instantaneous communication; others will
actively seek to lose it. The human race will regain some of the
diversity that it has lost in the last 50 years, especially after
interstellar settlement occurs.
Interstellar settlement will not be stopped by the fear that
separation is permanent. Some will seek such separation; others
will accept it, just as emigrants leaving Europe for America 100
years ago did. Finally, increased longevity will make separation
less likely to be permanent.
Such a nanotechnological society will be very different
economically from today's society. But many of its economic
changes are already well under way as a result of technological
advances already achieved.
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Accelerating technological change
results in a shorter-term
economic horizon |
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Accelerating technological change results in a shorter term
economic horizon--for sound economic reasons. Production-oriented
capital equipment can always become technologically obsolete,
reducing its value. This can occur either because new technology
performs a task better, or (more dramatically) eliminates the
need for the task. Since the value of such equipment is tied to
the value of the future production to which it contributes,
accelerating technological change implies accelerating
technological obsolescence. As an example, a computer need not be
very old before its annual operating costs exceed the purchase
price of a more capable machine. Therefore, equipment need not be
built to last as long as it was 50 years ago.
Similarly, any human production skill--any type of production
labor--eventually becomes technologically obsolete. Any person
who does not continually learn new skills should expect to see a
decline in relative standard of living, unlike the clerks of 100
years ago who had a fairly high relative standard of living with
very little change in skills during their careers. The increasing
ability to automate repetitive manual labor and, more recently,
repetitive mental labor, reduces not only the value of such
labor, but also the quantity required.
An increasing average level of education will cause the gap in
value between the most educated labor and the least educated
labor to narrow, not widen. This economic turnaround will occur
when the number of people who are not well educated decreases
faster than the number of people still needed to do undesirable
jobs which have not yet been automated; this appears to be
occurring in Japan today. However, the decreasing gap in rewards
between educated and uneducated labor in the US is a political
artifact, not an economic effect.
Information becomes less valuable when people value appearance,
conformity, and other people's opinions more than quality.
Capitalizing snob appeal--often, in effect, past advertising
expense--becomes more important than capitalizing production
technology. As an example, consider the balance sheet of a beer
producer. Economies of scale in production are far less important
than economies of scale in advertising. The "goodwill"
referred to in corporate takeovers is a reflection of the
capitalized value of past advertising which will sell more beer
tomorrow.
Entertainment labor which can contribute to sales of
anything--even more entertainment--becomes relatively more
valuable, and production labor, relatively less valuable.
Thus, with or without nanotechnology, accelerating technological
change will encourage the movement from an information society to
an entertainment society. Most of these current trends in value
are simply results of advancing technology in general. While some
have been exaggerated by political forces, the direction of
change is likely to continue with future advances in technology.
The most stunning specific effects of nanotechnology will be the
magnitude of the changes, and the near disappearance of value of
physical goods.
Unfortunately, not all of the effects of nanotechnology will be
purely economic. Humans are not only economic animals, they are
also political animals. They will attempt to acquire by means
other than fair exchange. Political systems distort values, and
produce distributions of wealth and income other than what one
would expect from a purely economic analysis; these distortions
will affect relative values in a nanotechnological society.
Some human wants are political, not economic. Too many humans
have a desire to control others, without paying for the privilege
by economic exchange. They wish to control others not to advise
them of what might be in their best interest, but to force them
to behave for the benefit of the controller.
Unfortunately, there will be no end to the religious and ethical
disputes which have plagued the human race throughout history:
religious practices, abortion, and mind-altering drugs. However,
some political control will be more difficult once such drugs can
be produced in individuals' basements; an improvement in
surveillance technology will not completely compensate for this.
Fanatics will still want to stamp out these "evils"
everywhere, even when they take place entirely in individual
homes; and fanatics will continue feuds to death over religious
and racial differences.
Another form of political want is the desire for relative status,
as opposed to absolute economic affluence. The vast increase in
the standard of living will not make some people happy as long as
any member of the human race has more income or wealth than them.
One form of this want is the desire of some members of the upper
class in a society to stay on top, even at the expense of
foregoing absolute improvements in their own standard of living;
this phenomenon explains the persistence of both "Mercedes
Marxists" and anti-technology Luddites among this class. The
proportion of such people seems to have increased, not decreased,
in the last two centuries even as affluence has grown to
unprecedented levels. We should not expect it to disappear.
One effect of political forces will be to decrease the value of
land relative to labor. It is easier to confiscate land than
labor, and coercively obtained land is much more valuable than
uncooperative coercively obtained labor. This skewing of values
will be strongest where the ethics of governments are weakest.
Individual desires to control others will also lead to the
formation of groups to control others. Governments have attempted
to control the masses, for the benefit of the rulers, over most
of the planet for most of history. Technological advances will
make monumental repression more practical. Before the
introduction of large-scale agricultural technology in the last
150 years, the lack of technology limited government repression.
If the government killed a sizeable fraction of the peasantry,
less food would be produced, and the bureaucrats in the cities
would starve.
With no need for any production labor, a tyrannical government in
a nanotechnological society could proceed to kill off a very
large fraction of its population. A pessimist would argue that
only the desire of the rulers to have an audience of slaves left
to admire their handiwork would keep the level of slaughter below
100 percent.
In the unlikely event that all of the means of production of
nanotechnology were in the hands of a small percentage of the
planet's population, there would still be a large demand for
labor. After all, one percent of billions of people is still tens
of millions, and ten million people have a large quantity and
variety of needs. People would still be able to acquire a very
high standard of living compared to today in exchange for very
little of their time. However, this would not be true if the
number of people in control of the technology were extremely
small--tens or hundreds of people--as it might be if governments
control the technology.
Another disturbing possibility is that nanotechnology will likely
shift the balance of power between attackers and individual
defenders from the defense to the offense--a shift which
traditionally has benefited the state at the expense of the
individual. Between 1000 and 1400, the offense prevailed--an
armored knight on horseback could attack a random individual,
with no significant likelihood of the individual inflicting any
damage in return. Individuals were forced by this into seeking
protection from other armored knights, and a feudal society
resulted. Between 1500 and 1900, the bow, the musket, and the
rifle gave the individual a chance of inflicting damage in
return. When raids on individuals were no longer riskless
propositions, they became less frequent.
The enormous advantage which nanotechnology appears to give to
the attacker should not lead us to expect the revival of a feudal
society. A group defensive effort does not appear to be more
likely to prevail against nanotechnological attack than
individual efforts; thus the protection motivation for the
rebirth of a feudal society appears to be absent.
To evade attack, some people may leave the planet--and the solar
system. The most successful defense may be to simply spread
across the galaxy, thinly enough to avoid detection, without
leaving records of where one went. After all, technology places
limits on the size of an empire. The Roman and Chinese empires of
antiquity never exceeded a size that could be spanned by
communication in weeks, or by transportation of troops in months.
Empires larger than this would be too likely to successfully
rebel. Thus planetary-system empires, with communication measured
in hours and transportation in days, would be very possible, but
interstellar empires are implausible in the absence of
faster-than-light travel and communications.
Should one be optimistic or pessimistic? Well, if the human
political animal does not prevent it, the human economic animal
will enjoy life in such a technologically advanced society.
Dr. MacGillivray is a member of the MIT Nanotechnology Study
Group with a background in physics.
Thanks
In a past issue we requested help with quantum chemistry
calculations; thanks to Prof. Peter Lykos of the Illinois
Institute of Technology Dept. of Chemistry for offering
assistance.
For arranging lectures on nanotechnology in Switzerland we thank
Prof. H.-J. Güntherodt (University of Basel), Heinrich Rohrer
(IBM Zurich), and Thomas Rauschenbach (World Economic Forum). For
arranging lectures in Japan, we thank Prof. Naomasa Nakajima of
the University of Tokyo.
We appreciate receiving technical news and other information from
Jim Conyngham, Jerry Fass, W.C. Gaines, Marie-Louise Kagan,
Leonard Micko, Ed Niehaus, Anthony Oberley, Mark Reiners,
Frederick Reynolds, E. Clayton Teague, and Michael Weber. Thanks
to Chris Fry for recommending the book Molecular Machinery.
Thanks to all those who commented on our last issue; many felt it
was the best so far. Especially favorable comments were received
on Jeff MacGillivray's piece on economics (completed in this
issue) and Dan Shafer's profile of Marvin Minsky. Russ Mills's
technical column continues to be a favorite feature.
FI
Wish List
In setting up a new office, FI finds itself in need of the
following equipment, new or used: a small photocopier, two fax
machines, and a second Laserwriter printer. Note that donations
of equipment or funds are tax-deductible as charitable
contributions. If you can help, call our office at 415-324-2490.
Also needed are volunteers to translate a small number of German
and Italian news articles on nanotechnology.
From Foresight Update 8, originally
published 15 March 1990.
Foresight thanks Dave Kilbridge for converting Update 8 to
html for this web page.
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