Economic Model for the Singularity
Over on Warrior Class Blog, Will Brown poses a strategy for an economic model of the Singularity. He begins by putting some definition in place around the idea of money.
Money provides a transportable mechanism for assigning value to things under variable circumstance, both in the present and in predicted future circumstance. It offers a mechanism for determining the worth of something under varying circumstance relative to other things. It further creates the means for arriving at a mutually acceptable exchange of things real and ephemeral between disparate people. It also, and here we arrive at an often little recognised consideration, creates the motivation for recording these valuations for future (or distant) consideration. In other words, money gave rise to writing.
Personally, I think money is a means of increasing MEST density. As John Smart explains it:
Life's history has been doing more and more (universal computation) with less and less (physical resources, MEST per standard computation), and we will soon be doing almost everything with virtually nothing. I call this driver MEST (Matter, Energy, Space, and Time) -compression, -efficiency, or -density, and it appears to be an unrealized developmental attractor for all complex systems.
Where Will asserts that money was a driver behind the development of writing, I think John would say that both money and writing are products of this ongoing process of doing more and more with less and less. Writing encodes knowledge so that it need not be memorized and can be shared over time. Writing can encode information related to transactions, while money, as it evolves, comes to encode the transaction itself.
The first transactions that humans engaged in were straightforward bartering. So many bushels of grain equals so many big varieties of fish or some larger number of smaller fish. Barter is awkward and time-consuming. As Will points out, the introduction of coins represented a kind of economic Singularity in its own right -- value was abstracted (encoded), providing a huge leap in the number of transactions that people could engage in.
But that was just the beginning. Let's jump ahead to the Renaissance and the introduction of paper money. The original bank notes allowed a merchant to complete a transaction without actually having to lug chests of gold around. Just as chests of gold were a huge improvement over barter -- a chest of gold is much easier to transport than its equivalent value in cattle or slaves -- bank notes were an enormous improvement over chests of gold coins.
Moving into more recent times, checks represent a MEST compression relative to cash, credit cards a MEST compression relative checks, and PayPal a MEST compression relative to credit cards.
The evolution of commerce parallels the evolution of technology and the ethical evolution of human society, which itself may simply be playing out the script handed to it by this tendency to increase MEST density.
Take slavery. Ultimately, it was abandoned (by the West, anyway, and most of the world) because economic enticements to work and adopting a model of wage slavery were more productive. This struggle was vividly dramatized by the American Civil War. Why did slavery come to an end in the South? Because the slave-powered Confederacy was no match for the industrialized Union. The Yankees had MEST density on their side.
It wasn't just that slavery was wrong and needed to end. That was true, but it wasn't enough. Slavery was just as wrong when Spartacus led his rebellion against the Roman Empire. But in that pre-industrial world, the Romans had the greater MEST density working for them.
We can find parallels in ethical developments such as environmental consciousness and animal rights. Societies tend to adopt these ideas as soon as they can "afford" it; that is, as soon as their implementation would not hinder the ongoing compression of matter, energy, space, and time in overall economic activity.
Because of the increase in MEST density that it represented, industrialization was more productive than pre-industrial individual contribution. Today, post-industrial (even de-industrialized) individual contribution may prove more productive than industrialization ever was. From slave to serf to factory worker to middle manager to freelancer, our freedom has grown not because the world has become nicer, but because the road to niceness and the road to MEST compression appear to be on a parallel course. Let's hope that continues to be the case.
Of course, not every step in the sequence has been a net positive move. A hunter-gatherer may have enjoyed more freedom than his great-great-great grandchild living as a slave in a proto-city-state. And a farm laborer may have lost freedom and quality of life by taking a factory job (although he gained something in the deal, or he probably wouldn't have made the move.) But overall, we seem to be enjoying more liberty as a result of the continuous MEST spiral.
Where does that eventually take us? Will writes:
[I]t seems likely to me that the principal “item” of exchange beyond our physical selves (our interactions with each other) will be the products of our imaginations.
I like the sound of that. But if we buy and sell the products of our imaginations, what currency will we use? Cory Doctorow has provided one possible answer. If reputation and imagination are what drive the future economy, the best advice you can give a young person would be to be creative, be a good person, and be effective at whatever you choose to do.
Interestingly, that's pretty much the advice I would have given anyway.
UPDATE: Will Brown comments:
My basic point, Phil, was that we will continue to need some mechanism for exchange whatever our individual abilities may allow us, at least for as long as we remain recognisably human.
I think I have to dis-agree with John Smart's concept (or at least your presentation of it) as being wrong ways 'round though. MEST is a process that occurs when conditions permit, not that creates conditions themselves (we can argue the metaphysics of the effect of potential, but my position is that percieved benefit is the actual driver and that MEST is simply an expression of refinment of that perception to added, previously unpercieved, benefit). Thus, money gave rise to accounting (record keeping anyway), which gave rise to writing, which together put in place the means for the MEST process to occur.
Your Spartacus example supports this, I believe, since the "slave army" handily defeated several Roman armies in the course of the rebellion. As long as the slaves continued to advance, Rome's MEST density potential couldn't be realised on the field of battle. It was only after Sparticus and company attempted to conquer a part of the republic (to persue the same MEST density potential) that Roman forces defeated them.
I think that something quite like the present e-bay model will become the dominant trade mechanism in the coming years, which will require some form of universally accepted transactional medium like money. Why re-create the wheel? That said, I also think much of what will be traded will be personal services (and those transactions will likely make present-day stock derivitive trades look simplistic by comparison) and the ephemeral "products" of our imaginations, like entertainment, education, consultation and simple advice. I am less concerned by the question of what currency will be used than I am that some form of currency will be used. Given that stipulation, a strategy to transition from the present model to that future model seems useful.
I think my presentation of John Smart's ideas might have been overly brisk. In the piece I linked, he presents a highly controversial idea in his Second Law of Technology:
2. Humans are selective catalysts, not controllers, of technological evolutionary development.
Read that in the contect of his First Law of Development:
1. The universe is an evolutionary developmental system, with both a rigged long-term developmental outcome and an unknowable short-term evolutionary path.
So the perceived benefit may be the apparent driver for any particular instance of progress -- generally represented by an increase in MEST density. We develop things (technology, social structures) that increase MEST density because of the benefits these things bring us, not because we have any particular interest in increasing MEST density. But if we take a broader view, we see that we (human beings) might well be a developmental optimum in a universe that was already hard at work increasing MEST density for billions of years before we existed.