machinery question

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Andreesen At Bay

The machine makers are restless!

There’s quite a debate going on about something called “techno-optimism” which roughly translates as anything technological is good and will, inevitably, make us all much better off.  That it makes fortunes for its owners is of secondary importance.

The debate has emerged as a result of the publication of Marc Andreesen’s ‘Techno-Optimist Manifesto’, a strange and rather long paean to the many virtues of technology and the much more abundant vices of the dullards like you and me who do not innovate or break things on a regular basis.  We are, apparently, a bunch of softies incapable of moving civilization forward and we thus rely on the virility of our superiors like Andreesen and Peter Thiel who have, collectively, saved us from the endless drudgery implied by life in a low-tech world.

Andreesen we might recall was the inventor of Netscape.  More recently he has become a financier.  So he no longer innovates — he simply pays for other people to do the inventing.  That this might move him out of the virile crowd and in amongst us softies appears lost on him.

We don’t need to spend much time on what Andreesen actually says.  None of it is novel.  It is a mash-up of Ayn Rand, Milton Friedman, and other heroes of the far right.  The point being that those of us with a slightly more cautious attitude to the onslaught of technology have become a blockage against the march of humanity towards a technology mediated utopia.  What is striking is how right wing economics with its single-minded reliance on markets, facilitates and enables the extremism of people like Andreesen.  Indeed, the two lines of thought, technology as inevitably good, and markets as inevitably correct and efficient, share the same fatal flaws of deliberate naivety and an obdurate unwillingness to engage society as a whole.

To a modern ear the manifesto sounds distinctly dated.  Nowhere is there a mention of the many downsides of technology that we currently struggle to overcome.  Indeed, the manifesto sweeps gloriously and rapidly past such problems.  They are, apparently, signs of weakness and exist only in the minds of “stagnationists” or de-growth advocates.  Anyone who wants to slow the heady advances of technology are all swept into one big bucket of inconsequential naysayers.

I am aware of the oddity of suggesting that Andreesen, who regards himself as cutting edge, might sound rather dated.  He seems not to have lived through the transition of the Internet from those early days into its present version dominated by rent-seeking behemoths like Google and Meta who, far from being the plucky market price takers posited by Andreesen, give their primary products away in order to create advertising opportunities from which they profit mightily.  He seems not to be aware of the downsides of social media.  He ignores the abundance of nonsense, lies, and general chaos that permeates platforms like Facebook.  And he steadfastly scorns anyone mentioning climate change.

He might think he is educated in market theory, but like many of his ilk, he has a difficulty grasping what an actual, real-world, market looks like.  The simplicity of his vision sits well, I am sure, with right wing economists who equally blindly dwell back in the days of personal exchange between bakers, brewers, and farmers in quaint village life.  Models of society built upon such simple lives all ignore the triumph that they applaud:  the relentless march of technology has made the world, and hence the economy, vastly more complex with interconnections too many to compute, and interdependencies too many to enumerate.  In other words the very success Andreesen wants to maintain into the future has rendered obsolete his worldview.  This contradiction also appears lost on him.

It is ironic, is it not?  The most ardent advocates of technological progress and the wonderful future it will bestow upon us all, live firmly in the past when they rely upon models of the economy that don’t recognize the consequences of the layers of complexity accumulated  since the modern technological age burst on to the scene.  We all know that economics as a profession suffers from this same irony.  It too sought to simplify as the world became more complex.  The result is the same in both contexts.  A disconnect from reality that borders on a pathologically deliberate denial of the world as it is in order to ponder the quaintness of a past as if it were the present.

As an aside: this inability to keep pace with the complexities of modern economies was what produced the embarrassment called “total factor productivity”— aptly called a measure of ignorance — in economics.  Rather than engage complexity by revising the core of their theories economists swept onward, accepted their ignorance, and, worse, started to write scholarly papers describing in graphic detail this ignorance as if it were knowledge.

But back to the machines, none of this is a denial of the obvious benefits of technology.  We all live in a world that would be impossible to envisage or maintain without the technology that surrounds us.

Because of this I too am a techno-optimist.  I believe there are still things to be discovered and developed that will add to humanity’s welfare, pleasure, and comfort.  But I am also an advocate of care.  Society has to be more involved into the trajectory of technology.  This is especially true now as artificial intelligence is ever more deployed throughout society.

In this context, the odd behavior of the AI community many of whom are raising the alarm, is truly bizarre.  These are the same people who are rushing headlong to reap the profits from what they are, simultaneously, describing as extremely dangerous.  The moral equivocation in this stance is stunning.  They are offloading the moral decision making onto the shoulders of society whilst at theme time resisting the urge to slow down.  

This is a perfect example of the gap opened up between moral judgment and consequent behavior or accountability enabled by purist market thinking.  Once we accept the marketplace as the ultimate arbiter of progress, as extremists such as Andreesen advocate and as far too many economists teach, we remove other sources of judgement and we forgo our capacity to progress along a more morally certain route.  Instead, we are forever backfilling and correcting the past mistakes of innovators who sought to profit rather than proceed more carefully. 

This can scarcely be called efficient in any true and rich sense of that word, although it might satisfy the cramped and narrow definition economists prefer. 

In any case, Andreesen has done us a service by illustrating in detail how threadbare the underlying philosophy of Silicon Valley is.  Further, he has shown us how naive and ignorant he and his ilk are. This knowledge ought shake us sufficiently to consider re-arranging our relationship with the so-called innovators who constantly impose their decisions upon us.  “Move fast and break things” or it is “better to seek forgiveness than permission” probably sound great in an old college dorm or in a bar in Silicon Valley, but they are destructive childish vanities rather than socially acceptable behavior when they become the underpinning of business behavior.  These people need to grow up and to stop living in the past.  Perhaps then they can help lead us into the future.

The machinery question marches on …

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Machine Age musings on algorithmic growth theory

Don’t mind me.  I am just thinking out aloud…

That we live in a Machine Age is indisputable.  Our lifestyles depend entirely upon the mediation of machines.  Without them modernity collapses back to whatever existed in the prior ages and we surrender most of what we currently cherish.

And it is important to use the phrase “machine age” because other phrases such as Industrial Age and so on limit us.  Some say we are now entering a Digital Age, but this too is a mistake.  All that is changing is the nature of our machines.  The Machine Age lives on.

So what is a machine?

It is a piece of information that allows us to channel energy and concentrate it such that we amplify the output we expect from that application of energy.  In this case the information is embodied in a plan, design, or layout of a particular physical structure through which we harness the energy.  The nature of that information has changed mightily throughout the Machine Age, ranging from the design of steam engines at one end to the design of supercomputers at the other.  At its core, though, the notion remains the same.  The application of information to the harnessing of energy is the basis of economic activity.  We might even say that we don’t simply harness energy through the use of machines: we also harvest it.  Or, at least, we use that aspect of energy available to do work.  And an economy is simply the totality of work we need to do to provide whatever it is we feel we want — whether those “wants” are essential or luxurious is irrelevant to this discussion.  That’s a moral not a machinery question.

Viewed this way a design is, of course, simply an algorithm we apply to energy to accomplish our goals.  So we might as easily argue that we live in an algorithmic age.  But all designs of all tools are algorithmic.  Using information to structure some physical substrate for the purposes of improving our productivity is a timeless phenomenon in human history.  We need a more specific appellation to divide modern society from prior ages, and, using the phrase Machine Age provides that specificity. 

Economists have been trapped in their old nomenclature and thus unable to renovate their theories to accommodate the change in machinery.  The original machinery question, which arrived in its modern form in chapter 31 of the third edition Ricardo’s “Principles” focused on the social impact of the arrival of modern machinery.  The obvious question concerned the displacement of laborers from the work that was now presumed to be done by machines.  The differentiation between “work” and “labor” was essential to discussions of what became to be known as technological unemployment.  And, a few years later, as the deleterious effects on living standards of the laboring class became obvious other, more political, issues added themselves to the overall Machinery Question.  

These political questions so intruded into the discussions that whenever economists theorized about the impact of machinery and discussed growth they referred to combinations of capital and labor as if they were the inputs to the process of economic work.  Neither is.  Information and energy are.  Labor and capital are political labels used to enable a debate about control of the way in which work is done.  They are not inputs, however, to the actual work being done.  A laborer possesses a variety of attributes necessary to the accomplishment of economic work.  Muscle power was always the dominant throughout the early millennia of human existence.  And that was augmented by various skills learned along the way to amplify the amount of work that the muscle power could produce.  So labor is a melange of inputs, not a single, input.  Using it as if it were homogenous is an error that continues to echo throughout economic theories of growth — notably in the existence of something called ”total factor productivity” which is a vague veil drawn over the ignorance produced by not using the correct input categories to start with.  

A re-creation of economics without the categories of “labor” and “capital” would open up discussion useful to moving our understanding of the future of economic work forward.  Those categories can then be applied in the subsequent political discussions of how the produced of that work is distributed, which is where class based categories, which is what they are, provide the necessary framework for such discussions.

One example of why going down this path is helpful is in the current debate over the apparent slowing of growth.

When we conceive of all machines as algorithms, and when we consequently look at growth as the product of an ever larger set of algorithms being applied to our environment in order to extract ever greater volumes of produce, we can examine the nature of the algorithms themselves as a potential source of a slowdown in growth.  Put differently, we can theorize that algorithms range in their inherent complexity and that those of a more simple nature are those first exploited.  Simple machines doing simple tasks are invented before their more complex successors,  This, in turn, implies that our exploration of the entire set of algorithms — those discovered and those awaiting discovery — moves along a frontier of increasing complexity.  Each step deeper into the set produces greater value because of the denser combination of information and energy available as a result of that greater complexity.  

However, it is the capability or complexity our existing machinery that provides both the tools necessary to explore the set of algorithms more deeply, and which also limits the speed of our progress.  I suggest that the current apparent slow down in discovery, in growth, and in productivity is due to our having arrived, at least temporarily, at a point where the limitations of our contemporary machinery outweigh the exploratory value it has.  Recent advances in the use of supercomputers to delve into protein designs is a good example of this phenomenon.  The enormous cost of assembling the supercomputers needed to push us further into the set of algorithms suggests that, for now, further exploration will be much more difficult than before.  We should therefore expect growth to slow down until we find new ways of building the machines we need to accelerate exploration once again.

This is a simple example of why we need to look at economic work differently.  I would, as an addendum, suggest that it is the role of business to exploit the newly discovered algorithms in order to bring the value within them to the consuming public.  Business does this by standardizing, organizing, and replicating the energy/information combinations of those algorithms.

One last note: the first great stage of the Machine Age was focused on the physical consequences of the application of algorithms.  It was heavily material and dominated by the harvesting and use of energy.  The next great stage will see the emphasis shift towards the other input to economic work.  Information, rather than energy, will be the source of greater value.  In which case the overall material content of growth will diminish in favor of a greater informational or experiential content.  

Unless economists change their understanding of the inputs into economic work — along the lines laid out above — we will underestimate the wealth being created.  We will mis-measure what we are produce simply because we mis-measure what we put into the production of that output.  Measurements and theories are contextual. With the shift in emphasis underway from energy to information as being more important, older measures need updating. 

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The Missing Magic

I read this morning that Tim Berners-Lee is going to auction the original code he wrote when he invented the world-wide-web.  The code will be packaged up in a non-fungible token and sold, no doubt to one of the egregiously wealthy folk who have ridden his invention to enormous fortune.  Berners-Lee is surely one of the least rewarded pioneers of our modern economy.  After all his creation, now used by an estimated four billion people a day, is absolutely central to the functioning of the digital world.  Unlike the more heralded and less deserving pioneers of our age he never derived an income directly from his invention, instead it was put into the public domain by CERN, his employer at the time.

The auction of an NFT seems an entirely appropriate way for Berners-Lee to gain from his invention, but it brings to mind just how lacking in mystery or magic the current digital revolution is when compared with its industrial predecessor.  NFTs are simply bits of data locked up with a unique identifier and stored on a blockchain.  They are artifacts only tangible when realized in some other medium.  The code has to be made manifest for us to “see” them.  Whilst the official purpose of locking up data in an NFT is to establish provenance, the real-world purpose is to create collectibles.

In an intangible world where information reins supreme and where physical “stuff” is less important, establishing value is truly difficult.  Anyone who can access data can use it.  It doesn’t deteriorate with use.  It can be copied.  It can multiply endlessly.  It defies the basics of traditional value-creation by doing all this.  Pinning it down and tagging it as unique is a slippery problem.  Collecting data as something of unique value is hopeless unless you can put it in a box where no one but you can access it.  In which case it largely loses its purpose.  Hence NFTs.  The data is tagged.  We will always know that this particular piece of code in the Berners-Lee NFT is original.  The billions of copies of it that might exist are, well, merely copies.  They might appear identical.  They might produce precisely the same result.  But they will each have less value.

This sleight of hand is necessary because of the features of our digital world.  We need to work hard to stand out.  Intangibility is abstract.  It is elusive.  It slips through our fingers.  This is not the world of industry.  The belching steam and smoke of the industrial revolution is nowhere to be found.  The great machines that inspired and bewildered us in the past are rusting away somewhere.  The magic of the machine with its awesome power working in front of us is replaced by the low hum and occasional blinking light of a computer doing … something.  Who knows what?

In the days of the original machines we didn’t have to work hard to establish their authenticity.  Their brute existence was sufficient.  We knew them because they stood before us.  The great houses of industry we called factories became hives of activity.  Workers endlessly feeding the machines became the battleground between capitalism and democracy.  There was a front line.  There was a demarcation between us and them.  The owners and their machines on one side.  Us on the other.  There was a clarity in this confrontation.  Beyond which was an understanding that these machines were the engines, literally, that pulled us out of the horror of the Malthusian immiseration that had bedeviled humanity since its origins.

The sheer brutality of the great engines of industry inspired both fear and awe.  We came to associate them with our escape from dearth.  They became iconic in our struggle to rid ourselves of the tragedy of scarcity.  They symbolized progress.  They begat change.  They revolutionized civilization.  But they did it with such a tangible physical presence that none of us could avoid.  Machines set us free.  Perhaps none more than the steam and internal combustion engines.  Our world became mechanical and we were absorbed and motivated by it.

Even the gentler electrical revolution brought a swathe of machinery doing work that we could easily understand.  The washing machine stands out.  It reduced hours of drudgery to almost nothing.  It set in motion a revolution within what we call the family.  It was a step along the path to the breakdown of traditional allocations of domestic work.  The products of this electrical revolution still had a tangible presence.  Our homes became filled with them.  We still lived in a world of manufacturing and “stuff”.

But now?

Our digital world is experiential.  It is infused not with stuff but data.  It is entertainment rather than production.  We are asked to imagine it rather than dwell in its physicality.  It is invasive rather than intrusive.  It cannot be escaped by leaving the factory or driving to the country because we take it with us..  Rather than challenging us with its brutality it insinuates itself invisibly everywhere.  We radiate information into its insatiable maw and become a product ourselves to be bought and sold without our knowledge.  It, in this sense, owns us rather than us owning it.  There is no magic in a machine that coldly communicates your every thought with its peers around the world.  There is no magic in that soft hum or the various lights that blink to alert you to its surveillance of your life.  There is simply a sinister presence.

We may now realize the environmental limits on our production of stuff, but the magic of the power manifest on those old industrial machines surely overwhelms anything on offer in our digital age.

I suppose any period of revolutionary change can unsteady the nerves.  Who knows what will happen next?  The message of those original machines was lost in the confusion and social upheaval they brought along with them.  Alienation became the watchword of the critics of the time.  Alienation from what?  Destitution and scarcity?  From an imagined bucolic past that was permanently one step away from starvation?  The magic of machines ended that.  If that is alienation, then all well and good.

And now?

As the harnessing and harvesting of information dominates and replaces the harnessing and harvesting of energy as the motive force of economic progress we are adrift in a different alienation.  Where once machines substituted for the effort needed to break the economic problem, now their successors are substituting for thought.  They are not distant.  They are not practical.  They are not mechanic.  They are imminent, abstract, and, worse, intangible.  The margin between us and them is eroding.  Gone is our ability to revel in awe at the power or to wonder at the work being done.   That is the past.  The work has been done.  Now it is the thinking is being done.

What is left for us?

There is no magic in having nothing to do.

 

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Chapter Thirty-One

There’s a story about Richard Feynman who is reputed to have said that anyone who claims to understand quantum physics almost certainly does not.  This coming from someone who almost certainly did.  I have much the same reaction to anyone who claims to have understood Ricardo on their first read through his work.  Then again, perhaps it’s just my own struggle: every time I grapple with Ricardo it takes me a while to understand where he’s going.  It’s a case of knowing the plot, but failing to follow the details.

In any case, here we are towards the end of the pandemic-induced economic downturn and minds are turning back to the many longer term issues we were all discussing before the shutdown curtailed conversation and re-focused our minds on shorter term issues.  The march of technology and inequality have always loomed large in my mind so it to those that I am now returning.

One conundrum that interests me is that we are constantly being told to regret the loss of “good paying” factory jobs and their replacement by lesser paying service sector jobs.  Looking back to the beginnings of industrialization those same factory jobs were hardly welcomed.  The threat to traditional ways of life, however much a struggle that life might have been, loomed large in contemporary discussions about the march of technology, the arrival of machinery, and the shift from domestic to factory production.

There are echoes of that early controversy in our current efforts to come to terms with the arrival of things like artificial intelligence and other digital technologies that appear, at least anecdotally, to be altering not just the workplace but deeper aspects of society such as the balance of power between the key factions in the economy.

Technological unemployment is back on the agenda.

Which is why Ricardo is worth recalling.  That enigmatic chapter thirty-one, tucked away as it was at the end of the third edition of his “Principles” seems to betray his entire prior thought process.  He, in this chapter, opened the door to the possibility of technological unemployment, which came as a huge shock to his supporters and critics alike.  It isn’t worth getting into the details of Ricardo’s argument other than to reinforce the point that it appears to contradict his more conventional positions on political economy.  Such was the impact of the shift he made that a veritable industry emerged around the effort to understand why he changed his mind, what the importance of the change of mind was, or, indeed, whether he had changed his mind at all.

The fact remains that chapter thirty-one lays out how, in Ricardo’s mind, the steady rise in the use of machinery and the necessary investment of resources to create that machinery, can affect employment.  His conclusion that, at least in the short run, the uptake of technology can create unemployment shocked his contemporaries most of whom were strenuously engaged in the defense of the use of more and more machinery.

It is the very nature of the argument that intrigues me most: the discipline of political economy was developed in that early era of industrialization precisely to explain the changes going on in the economy and consequently in society at large.  The charged resistance to machinery amongst some elements of the workforce, which rose to various levels of violence at times, was seen as a threat to political stability.  Understanding and explaining the shifting economy was seen as a vital part of establishing the necessary authority to enforce laws protecting the rise of industry from its opponents.  The new economy and the political environment were inextricably linked.  Ricardo was often the go-to intellectual key witness in political discussions, debates, and controversies. He appeared to be a reliable supporter of free trade and all other forms of modernization.

And yet here he was arguing that machinery might not, after all, be such a good thing.  Or, more precisely, he argued that opposition by workers to the uptake of machinery by industry was not a blind or poorly conceived reaction.  It was, according to chapter thirty-one, a highly sensible and reasonable one.

Despite all the theorizing in the interim, economists even today slide too easily into the glib defense of automation by assuring that the implied rise in productivity will, inevitably, provide greater prosperity for all.  Maybe it does.  But is the distribution of that prosperity also, inevitably, to the benefit of the people who, per Ricardo’s chapter thirty-one, might suffer in the short term?  Economists tend to overlook the power struggle that it took to ensure industrialization was a broad based success.  That power struggle was not a short term one.  It lasted a century or more.  Certainly rising productivity added enormously to wealth.  To get that wealth shared more equably was not a shoe-in, and those who suffered in the early years never saw their reward.  Only later generations did.

Are we in a similar position today?  Will the rise of digital technologies render the same thorough-going re-organization of society?  And will the benefits accrue across all society or only to a few — the owners of the digital “machines”?

Paul Krugman, in a column in today’s New York Times, argues that job-loss to automation is not obvious in current data.  He uses the typical equipment of an economist to back up his argument: were labor being displaced by technology we should see a shift in the pace of productivity growth.  We see no such shift.  Therefore upset over the loss of jobs to robots etc is simply anecdotal and not supported empirically.

Is Krugman looking in the right place?

One of the first major effects of the original wave of machinery back in early industrialization was not so much to cause unemployment, although that happened, but to change the nature of employment.  It was as much a social impact as its as an economic impact.  And it rippled out from there to become a political problem.  Simply looking at productivity statistics does not capture such a “first wave” impact.  A gig economy worker is still employed.  But their experience of employment is radically different from that of someone still employed in a more traditional format.

And it is this experience of change that matters because it influences people’s reactions, attitudes, and behaviors.  Major technological shifts manifest themselves as equally significant social shifts.  Experiences and attitudes change.  Only after those social and cultural effects are fully absorbed can we start to understand the longer term economic impact.  We can, for instance, come to regret losing the very factory jobs that our ancestors resisted being created in the first place.

Then, of course there’s that chapter thirty-one.  And Ricardo who said this:

“That the opinion entertained by the laboring class, that the employment machinery is frequently detrimental to their interests, is not founded on prejudice and error, but is conformable to the correct principles of political economy.”

So there can be technological unemployment.  Under-employment too.  It’s that short term versus long term thing again.  And we all know about the long term.

What to do?