“World After Capital” Summary

When a Venture Capitalist writes a book “World after Capital“, it might be worth paying attention. If he happens to be a partner at Union Square Ventures in New York, you know it’s going to be good.

Here are my notes about his draft book which is available for under a Creative Commons License in a variety of formats at worldaftercapital.org.

In summary: you definitely want to read this, but perhaps wait until he’s worked it over a few more times. It is still very much in the first draft stage — intentionally, so that people like me can blog about it and Albert can learn from the feedback he’s soliciting.

First, my notes about the salient points of the book, and below specific feedback for Albert in case he’s so inclined to take it. I agree with many of this points, could be persuaded by others with more data to back them up, and completely disagree on a small number, such as his views on privacy. In other words: just as expected.

The book’s salient points in bullet form

  •  We are at a non-linear transition “which renders … predictions … based on extrapolation useless“, only comparable to 1) transition from foraging into agriculture, and 2) into enlightenment which enabled the industrial age
  • Critical resource was land (agricultural age), then capital (industrial age) and will be attention going forward. Reason: digital technologies
  • Need to invest in three freedoms, rooted in humanism:
    • economic freedom through a universal basic income. Everybody must be able to meet basic needs without holding a job.
    • informational freedom through less censorship, less copyright/patents and more internet access. remove boundaries to learning knowledge. Create and share new  knowledge.
    • psychological freedom through what he calls better self-regulation. Culture of critical inquiry is essential. Free ourselves from scarcity thinking and fears.
  • Key idea: more and more “products” can and will be produced at zero marginal cost. This breaks everything we know about economics. It’s the economic singularity.
  • Zero-marginal-cost products bring natural, global monopolies with them.
  • Society benefits if everybody has access to all zero-marginal-cost products at zero cost. So we should find a system in which consumption of such goods is free, and in which producers do not need to set up pay walls. It’s a net loss to society if somebody gets cut off from the knowledge by charging a price they cannot afford, while cost is zero at the margin.
  • These good things can only happen with proper (political) regulation. The free market will not provide them on its own. However, also very strong anti-central planning.
  • Says there’s more capital in the world available than needed as productive capital. We’d rather not have excessive, financial, speculative capital. (Great to hear that from a VC, particularly one based in New York!) We can meet everybody’s basic needs, but are unable to distribute suitably so far.
  • Best quote so far: “Financial capital ultimately serves no purpose in and of itself other than possibly the gratification of ego.” (I would love to hear how the next fundraising meeting goes with the money types :-P)
  • Filtering water for one person per year costs only $50. (I will keep that in mind next time I go to REI to get a hiking filter replacement!). World Bank says that world-wide access to water, sanitation and hygiene costs about $28 billion a year. That’s nothing! (compared, to, say, a single war)
  • Thinks healthcare can be made much more efficient through higher use of capital.
  • How are we going to deal with production processes that require no labor at all? Everything automated, and we are getting there in places. If there’s less demand for labor due to automation of goods and services production, there’s less income for everybody. Which will depress the available market for those goods and services.
  • “Job Loop” used to work very well: people sell their labor by having a job, use wages to buy stuff, which allows others to get their labor paid. Problem: leverage works up-economy and down-economy.
  • “Great decoupling”: labor as share of GDP was about constant till 1980. Then labor remained flat while GDP kept growing. Thinks it’s technology’s impact.
  • “Lump of Labor Fallacy” so far has always been a fallacy. But now? Could humans become as superflous to the economy as horses became when automobiles came along? Can all humans compete against a “universal machine at zero marginal cost”?
  • Counter-argument: we simply haven’t thought of new ways to employ people yet, calls it “Magic Employment Fallacy”: just because it has always been that way, does not mean it will also in the future
  • Critical measure: clearing price for labor might be below what’s needed to cover basic needs.
  • Fear of automation and depressed wages might inhibit otherwise beneficial automation. E.g. automatic cars could be safer and cheaper. Need to embrace automation without a collapse in aggregate demand while getting away from the idea that works is the source of human dignity.
  • Available attention is limited, and peaking with peak population, while available content is growing exponentially.
  • For the first time, people are being exposed to opinions and behaviors that diverge from their own core beliefs. Leading to large-scale identity crisis. Ripe for populist leaders who assure.
  • Collectively, we are not spending enough attention on tail risks, or advancing knowledge. One reason: spending too much time working.
  • Capitalism not helpful here, reasons:
    • missing prices for many activities e.g. due to 1) zero marginal costs. Society is better off if all knowledge is distributed as widely as possible. 2) extreme uncertainty around many events. 3) pricing of new knowledge impossible beforehand, so unclear what ROI should be
    • power laws due to economies of scale. Digital tech causes power laws in many more areas due to network effects with zero marginal costs. Also, how to regulate digital networks? Anti-trust is problematic because there are societal benefits of large networks.
    • Inertia.
  • Defines knowledge as all information that’s recorded outside of our brains
  • “Knowledge loop”: learn something, use it to create something new, share it. Critial enablers: information sharing technology (language, writing, telecommunications, internet)
  • Society is running a legacy OS optimized around the job loop and locking up information and selling it like industrial products.
  • Advocates for Universal Basic Income (UBI), unconditional, not means tested
  • UBI would allow people to move where’s it’s cheap to live, even if there are no jobs there
  • Thinks food production can have huge gains: indoor and vertical farming, precise delivery of light and plant food, produce close to consumption so reduce transport
  • All the free teaching content on Youtube et al proves that education can be much cheaper. Similar for healthcare.
  • Examples for how GDP and societal benefit are less and less related. E.g. if healthcare and education were dramatically cheaper, GDP would be lower, but people would be much better off. Making people better off does not necessarily mean increasing production.
  • Proposes $1000/month/adult and less for kids
  • Proposes to tax things with externalities, e.g. pollution
  • If people have UBI, they can walk away from bad jobs, and a better market clearing price will emerge as people aren’t forced to take whatever is on offer. Enables more volunteering
  • Informational freedom: the freedom to access all information ever recorded, ideally for free. This requires internet access for everyone, no governmental restrictions of content, network neutrality by ISPs and no restrictions on copyright. (He sounds like a card-carrying member of the Pirate Party)
  • Thinks people will have “bots” that mediate their interaction with websites. Example: re-arrange the way Facebook does things. Possible on the open web, not in closed apps. Would have great benefits for the user (not such much for the service, e.g makes it easier for new entrants to compete at lower prices).
  • Ad-blocking is a good thing, and the “renaissance” of “the open web”.
  • “The way to help end users is not to have government smash big tech companies, but rather for government to empower individuals to have code that executes on their behalf”. Do by requiring companies like Uber, Google, Facebook, to expose all functionality through APIs. Could be done by local government (say New York City in case of Uber).
  • Wants to be able to have a bot legally represent a person
  • Expects this to hurt large companies and allow innovation currently not possible by small companies. Thinks that Uber would still be a worthwhile investment, although smaller.
  • “It is never socially optimal to prevent someone from listening to a song or watch a baseball game.”
  • Automatic copyright should be limited to attribution. Stronger forms of copyright should still be available, but only with registration and for a recurring fee. That way $100m Hollywood Blockbusters will still be made. Different levels modeled after Creative Commons.
  • Can be implemented in a decentralized fashion using block chains. And with registration, sites like Youtube could easily and automatically check content for copyright limitations.
  • Some of the arguments for copyrights and patents fall away if there is Universal Basic Income: no more starving artists.
  • Patents should be harder to get; utility and design patents should be abolished. Universities that get public funding should not be allowed to patent. Prizes and competitions are another way of rewarding investors.
  • Stop using the number of patents as a measure how innovative you are. They may be a necessary evil, but should not be the measure.
  • Thnks that “someday all information should be public, including everyone’s financial and health records” on the grounds that if the information is available publicly, there’s a benefit to society. E.g. you could do automatic X-ray diagnoses if enough were available for algorithms to learn from. Would dramatically increase speed of innovation in healthcare.
  • “We should work to protect people, not information, allowing information to become public but sheltering infividuals from the potential consequences.”
  • “I challenge anyone to create a coherent vision of the future where individuals, not governments or large corporations (such as Apple) control technology and where privacy or confidentiality remain secure.”
  • The transition from industrial into knowledge society makes life more stressful. We have to give up a lot of attitudes and behaviors and insecurities.
  • “The present-day education system was built to support the industrial economy. … tends to suppress rather than encourage curiosity.”
  • “Must have” school knowledge less relevant if there is Universal Basic Income.
  • Browser plugin could provide “opposing view” to any article.
  • Encourages to create and to share, and not be afraid of negative feedback. Requires all of us to be emphatic.
  • “A possibility exists that we may some day become immortal”. So far, the contribution to the knowledge loop that we make may
  • A political process is required to get to the increased freedoms described. Democracy is only system of government compatible with centrality of knowledge: try out new things, and have peaceful transition if it does not work.
  • Must limit influence of money in politics. Need for experiment with new forms of democracy. Advocates increased specialization and delegated voting to subject matter experts I choose.
  • Starting point is self-regulation. Need to stop yelling on-line or attacking in the real world, start participating in knowledge loop. Foundation is knowledge, not nation or gender etc.
  • Need to take collective action on climate change and other challenges like that.

Specific feedback on the current draft

Top-level comments:

  • What is this book?
    1. A prediction of the future?
    2. A polemic advocating for a particular future?
    3. A step-by-step guide how to get to a particular future? (probably not that)
    4. A description of “inevitabilities” or “laws of (a changing) nature/society”?
    5. A brain dump?
  • Because the former is unclear, it’s unclear who you want the reader to be, and what you want them to do. I suggest you identify your target audience and reconstruct the book from the back starting with the call to action.

Detailed comments:

  • Not sure why “the universality of digital computation” a la Turing machine is so prominent. Perhaps it needs to be brought down to earth: computers can do anything, from replacing books to replacing brains. The chapter on computing is more a popular-science intro to computing than focused on the points that need to be made for this book. Why does this matter here?
  • Why do we need to take the detour through finite state machines?
  • The idea that the universe is a giant computer is not commonly agreed-upon :-) but regardless, there is no need to agree with that theory to believe the rest of the argument. Remove?
  • Not articulated why zero-marginal-cost products cause natural monopolies (they probably do, but not explained in the draft). Should also argue then how to regulate them.
  • Very early on when talking about zero marginal cost, should deal with the objection “but the lower the marginal cost, the higher the fixed cost, and how is anybody going to recoup those? Otherwise none of this is going to happen”.
  • Broaden examples from outside IT proper. For example, genetics has great promise and these days it’s essentially an information management/processing problem. So it will also become a zero-marginal-cost discipline.
  • “More than enough capital in the world” Is an unusual claim, and needs unusual proof. The later chapters sort of attempt that, but it does not come across as a comprehensive proof, more like a lose collection of factlets.
  • I seem to distinctly remember that most agricultural yield improvements since the 1950s came from the “green revolution” at the beginning of that period, and that yield in recent years has essentially been flat. I do not have a data series handy, but it is worth investigating this, otherwise the claim that “we have enough food” very clearly isn’t true. (Wikipedia has a graph that agrees with flattening.)
  • “Rate of technical progress is continuing to accelerate (positive second derivative)”. While this is commonly claimed, is there any hard evidence for this? How do you define a measurement of “technical progress” for which that would be true? This needs backup.
  • In a time of less resource usage (e.g. playing chess on an iPad rather than a physical board for which lots of wood and fuel needed to be spent), what impact does this have on “physical capital, such as machines and buildings”? It seems to me that the amount of capital needed for a certain benefit, by and large, is shrinking?
  • Reducing “human capital” to just “knowledge” might be short-changing it. What about values, relationships, or the way a community functions and gets stuff done while emotionally supporting each other?
  • I am not certain that “pollution … is a solved problem technologically.” While Europe, for example, recycles a lot, it seems an awful lot of that supposed reycled material ends up in the 3rd world or the bottom of the ocean. It would be worthwhile to back up the thesis with hard numbers.
  • Indoor farming. While it’s nice it uses (directly) less land and water, what about energy? Also, to make this a just comparison, the resource comparison of all the inputs should be taken into account, such as the contraption that houses and feeds and lights the plants.
  • The amount of space for “information needs” is out of proportion. I know we are geeks and all, but much of what most people are doing with it (cat pictures, Facebook) is clearly in the Wants not the Needs category.
  • The RPi Zero is at $5.
  • IMHO, the fact that oil prices are currently very low has more to do with Central Bank policies than with available supply. Also, we know very little about long-term viability/cost of the newer sources (e.g. fracking vs earthquakes).
  • Unless you add the costs of producing the energy plants (e.g. nat gas vs solar cells) a number like 30% of renewables means very little. Same thing for batteries.
  • There’s a pony in here somewhere about how scarcity of attention supersedes scarcity of capital, but I’m not sure exactly where that pony is and how it looks like. Today, it can easily be argued that the reason for attention scarcity is too much TV and too many cat pictures and porn on the internet.
  • Production processes without labor: an example would be an automated coffee machine. It transforms input (water, coffee, milk etc.) into a higher-valued product (coffee) without requiring labor in proportion to the output.
  •  I’m having difficulties wrapping my mind around a hypothetical society in which everybody has “inherited wealth or sufficient income from capital”. That income from capital would presumably be spent on goods and services produced without needing labor by other people whose “income from capital” it would be. This does sound more like a mathematical singularity than a system in some kind of stable equilibrium to me. And there is of course always the “labor” (very skilled labor but nevertheless work spent) where the owner figures out how to rearrange their productive assets as to maximize results, be it reconfiguring the (automated) production line, or researching which new markets to enter.
  • Individual identity crisis doesn’t really belong in a chapter on “individual attention scarcity” (which doesn’t actually talk about it, the section before does)
  • Agree we spend too much time watching cat videos, but there must be a reason for why we do that, and why we apparently prefer that over studying statistical mechanics or whatever?
  • Side note on the Fermi paradox distracts. Remove.
  • Call it “inertia” instead of “self conservation”?
  • Better Youtube example: if you spend 8 hours a day watching videos, 45 years of your life (i.e. your entire working life), or your life’s entire waking hours,…
  • “Psychological freedom” is a loaded term. It has a lot of connotations in that field that do not seem to apply here. Pick a different term?
  • Agree with “no competitive market for Internet access exists” in the US, but note that this is not true in many other places outside the US. (Would be nice to know where and how bad/good  it is where, and what that does to the equivalent of the US net neutrality discussion)
  • IMHO highly unlikely that Facebook would let a substantial number of people rearrange their Facebook experience: the first thing they’d do is get rid of the ads. Interfers with business and they won’t allow it. Same thing for Uber and Lyft. The reason those are closed apps is in order to prevent exactly what you are advocating.
  • What would your platform portfolio companies say if you asked them about being required to make all they functionality available via APIs? Why would shareholders agree to this instead of fighting it hard?
  • True about profiting from recorded music, but before that, as a creating musician profited from selling printed, copyrighted sheet music. Same model. That started when around the time of the French Revolution patronage of the arts by the nobility declined.
  • In your vision for phasing out privacy, what do you say to the battered woman or the abused child? To the political dissident? I would want to return the challenge:
  • “I challenge anyone to create a coherent vision of the future where governments and large corporations (such as Apple) control technology, where there is no privacy or confidentiality, and which does not end in totalitarianism and the opposite of the advocated psychological freedom.”
  • The point is well taken that more and more people can monitor us more and more. That doesn’t mean, however, we should therefore declare a lack of privacy a desirable future. Just because more and more people have access to hardware stores does not imply that we should give up on property because it will all be stolen from our houses anyway.

In short, it’s an important book which makes many points that are clearly true from my point of view, and which I have not yet seen discussed everywhere. It needs more work — but then, of course, that’s where Albert puts his actions where his philosophy is, and invites us all to participate in his Knowledge Loop. Here is my contribution, just as rough! Hope it is useful.