Anthropic Capitalism and the New Gimmick Economy (2016)

Human labor is not obsolete. Take the old trope that the infrastructure in the U.S. is crumbling--is it crumbling because we've run out of bricks, or because we don't want to pay anyone to do the work?

There is tons of work for people to do. The real problem is twofold:

1. Global trade makes unskilled labor in wealthy countries compete with laborers in developing countries. This pushes their wages to converge, which is really ugly for the people on the developed world side.

2. Utility is hard to measure in skilled labor positions, and companies are clumsy, so offices end up with a lot of bullshit jobs, and bullshit jobs are about signaling, not productivity. As more people work in cubicles, this gets worse.

There are too many unskilled or weakly skilled jobs left undone for the cause of our current economic ills to be human beings becoming obsolete.

While I am not a fan of this style of writing at all (to me it seems overcomplicated when it could make its main points much more simply and clearly), I definitely agreed with this point:

> In short, what today’s flexible software is threatening is to “free” us from the drudgery of all repetitive tasks rather than those of lowest value, pushing us away from expertise (A) which we know how to impart, toward ingenious Rube Goldberg like opportunities (B) unsupported by any proven educational model.

I've been arguing for some time that people who think that new technology, while killing some current jobs, will also open up a host of new jobs, are really missing the point with what kinds of new jobs are being created. More and more, the types of jobs that add value are the types of jobs where really only the best add much value: think sports stars, actors, Instagram influencers, but also graphic designers, writers, and even programmers to an extent. In those jobs, the very best take the vast lion's share of income because what the best produce is valued so much more highly than everyone else. Meanwhile, all kinds of "repetitive" jobs, even current high value jobs like radiologists or pathologists, are at risk of being automated away.

The problem is you can't really run an economic system where only a very few percent of people take all the gains, at least not one that is socially stable or resembles liberal free market capitalism of the past 100 years.

While I usually have a strong aversion to articles hinting at anti-market sentiment, I found this to be quite good. I really liked the point about the growing prominence of information technology growing the share of the economic value contributed by public goods.

This however is wrong:

>>We have strong growth without wage increases.

Economic growth is still strongly correlated with wage growth. Much of the supposed decoupling between productivity and wage growth is a result of different standards of inflation being used for the two, and the two standards diverging over time.

The majority of the decline in the rate of wage growth in the developed world is due to a decline in the rate of GDP growth.

The world as a whole has seen the largest gain in wage growth and largest decline in poverty in human history over the last 20 years.

I'm extremely wary of trends being stated as if they're inevitable, rather than due to explicit choices. The entire field of popular economics is rife with this, obscuring overt state policies as if they are scientific fact.

> Using Orwellian terms like "Quantitative Easing" or "Troubled Asset Relief", central banks print money and transfer wealth to avoid the market’s verdict.

We're getting closer here. But overall it's not to avoid the market's "verdict" when things come to a head, but something much more persistent and plain.

What's failing about capitalism is the capital part. Obviously not those ever-concentrating pools bidding up every possible investment to avoid being left behind. But rather that capital isn't permitted to remain distributed throughout the economy (which would enable individuals to shoulder their own risks), but instead is trickled upwards through the old playbook of inflation.

This is an explicit choice being made, while its proponents pretend it's unquestionable. We're in an era of unprecedented technological deflation, doing things more efficiently every day, yet the cost of living is still expected to continually rise?!

We're automating away ever more jobs, while simultaneously asserting that employment must remain high. And when it doesn't remain high the alchemists' prescription is to further debase wages and middle class savings, as if the only thing keeping displaced workers unemployed is simply not having the screws turned on them hard enough!

We've had over four decades of steady deflation of computing technology itself. And not simply that a given model would be cheaper tomorrow, but that tomorrow's computer will be able to do things today's literally cannot. Yet we still bought new computers throughout this period, even knowing they would be obsolete on a timescale of several years.

The deflation bogeyman was born out of an era where slow price signals were necessary to negotiate demand. We now have cheap communication, predictive models, and straight up abundance. People will not starve themselves simply because they know food will be less expensive next month.

>A next problem is that software replaces physical objects by small computer files. Such files have the twin attributes of what economists call public goods:

>The good must be inexhaustible (my use doesn’t preclude your use or reuse).

>The good must be non-excludable (the existence of the good means that everyone can benefit from it even if they do not pay for it).

Software may not be inexhaustible, but it generally does require regular maintenance and updates, as well as support for the end-user. For me, these facts weaken the value of the thought experiment tremendously.

(1) >Economic theory, like the physics on which it is based

(2) >Price is nearly equal to value except in rare edge cases of market failure

The first quote is more controversial than the author suggests.

Then he continues that while economics cannot make accurate models of the world, it's still 'just like physics in using accurate heuristics.'

Then one such heuristic, quoted (2), is, to someone with economic training, an obvious and perfect example that economics is based on the social science of people, psychology, and moddeling human behavior relies on subjective understanding. In fact, here is the Subjective Theory of Value. It states people define value in markets by marginal utility, which is a psychological phenomenon. Diamonds are valued more than water because of our psychology, not because of any physical laws dictating how much aggregate value is added to humans and their civilizations from either water or diamonds. This was even a very famoud paradox in economics, the Diamond-Water paradox.

Here is what I mean in other words: I find it frustratint that Economics is conveniently absolved from rigor and responsibility of the scientific method as the experimentation step is practically impossible. But despite that, economists cite their maths prowess and claim they're 'fundamentally an extension of physics.' Finally, they conclude that while they don't have accurate models, they do have some great tools (then point to theories formulated in social psychology).

If anyone's interested, Eric Weinsten was the guest on the latest episode of Lex Fridman's AI Podcast[1]. I'd listened to it last evening and he mentions this article on the show and I'd added to my reading list. I'm pleasantly surprised to find a discussion around the article on HN, just before I was about to read it.

[1]: https://lexfridman.com/eric-weinstein/

My impression is the author is stating that traditional market forces of capitalism break down under the weight of things like software and the future of disintermediated manufacture via 3d printing and similar DIY manufacture. In short, he posits a post scarcity economy. Maybe we'll get there, some day, but we're far, far away. Even zero-cost marginal production is insufficient for this. Also, he laments the lack of something to replace free market capitalism while lampooning as gimmicks some of the actual mechanisms that have evolved to address the failure modes of free market capitalism, like monetary policy (quantitative easing), that take us towards a model, even if the term is Orwellian in what it obscures.

This should have a 2016 in the title.

>Price is nearly equal to value except in rare edge cases of market failure

this is just wrong on the face of it

The article describes the marginal cost reduction, as expected in laissez faire capitalism, but it points to government regulated markets as an example. What or ruining is the central bank and politically based market, while the digital and decentralized market is arising. This new model (pure capitalism) have many characteristics that communists have pursuit, like goods sharing and lower "surplus", this it's the result of increase of goods availability and market competition.

Too many words. Didn’t understand.

This article falls prey to a myopic view of capitalist vs communist 'econ'. The reality is that the 19th and early 20th centuries were abuzz with economic tinkering and innovation. Rather than a simple left/right dichotomy, there is a whole color palette of possibilities, if only only we can remember them, and then imagine them in a modern context.

Proudhon early on imagined a world without capitalist ownership, but with a free market. He expounded the idea of Mutualism, building from earlier writers like John Gray. This libertarian-socialist vision has little in common with either the state socialism of the USSR, or the internationally-corporate world we live in today. Socialism as social ownership of the means of production, either by workers (agricultural or factory coops), communities (in our time, municipal fiber), or users/consumers (credit unions are a descendant of mutualist credit systems).

Later socialists argued over the recompense owed to individual labor vs the community as a whole (Bakunin v Marx), over the methods to reach their aims (through socialist parties, or revolution and establishment of a proletarian state, or through direct expropriation as the syndicalists and anarchocommunists did in Spain).

Later writers and revolutionists fought against imperialism, against racism and apartheid, for feminism and LGBT rights, and now for the rights of animals and the environment.

We have always allowed some few to take the lion's share of our collective efforts. To run our mutual efforts like their private fiefdoms. We tolerate in privately-held companies what we never would in public democracy.

And now, now that the world has been globalized and new markets exhausted, they look to privatize our public lands, our schools, prisons, thoroughfares, and every other system held in common.

Programmers are waking up to their exploitation. There is more talk of forming coops and unionizing than I have ever heard. However, I hope you all (and we) keep in mind that our affluence, now or future, also rests on the inherited exploitation of others in our past and around the world. Let's not be like the white American socialists who were exclusionary towards others' struggles (and whose efforts were broken when the capitalists brought in those they excluded as scabs). Let's not repeat the mistakes of the past. But to do that, we need to know them.