“Going back is not a viable option. It never has been. We did not remain foragers after inventing agriculture. We did not remain farmers having invented industrial machines. We will not remain laborers having invented digital technologies.”
Wenger’s Hypothesis: we are in the midst of a transition that is as major as that which occurred when we went from the Agrarian Age to the Industrial Age.
Wenger identifies three major shifts in human history that he calls “non-linearities”.
The next age, and the subject of Wenger’s book, is the Knowledge Age and it is driven by the rise of digital technologies.
Each of these shifts are accompanied by a change in a scarce resource.
“I deliberately use the term Knowledge Age, instead of Information Age. We are drowning in information, which spews forth endlessly from our computers and phones. Knowledge, by contrast, are the scientific explanations and the works of art and literature that have withstood the test of time and have been refined through the process of critical inquiry. Knowledge is what makes human life possible and worthwhile.”
Why does this transition from Industrial Age to Knowledge Age matter?
“Getting this right is critical for humanity, as the two previous transitions were marked by massive turmoil and upheaval—including two World Wars to get from the Agrarian Age to the Industrial Age. Already, we are seeing signs of increasing conflict within societies and among belief systems across the world.”
How can we solve this transition? Increasing individual freedoms. This will allow people to focus more on knowledge. Specifically:
Technology has increased the scale and impact of all things, good and bad. This broadens what Wenger calls the “space of the possible”.
For example: we can use technology to give everyone access to free education, but we can also use it to share hate speech with the world. This phenomena occurs with many human advancements. Fire allowed us to stay warm, but also to burn down the homes of our enemies. Advancements can be both powerful and destructive.
Technology accomplishes this in two ways: by lowering marginal costs to zero and because computers are universal machines.
The internet lowers the marginal cost of producing an nth good to zero.
Consider a pizza shop. Each additional pizza created has a marginal cost: the cost of flour, cook’s time, etc. Growing the business is about increasing the gap between your marginal cost and your revenue—the wider the gap, the more you profit.
So what is the ideal situation? You can only increase revenues as much as you can increase price, and the market largely determines that. So you need to lower marginal cost. And the ideal would be zero. If your marginal costs were zero, every pizza sold is pure profit (after your fixed costs are accounted for).
The internet accomplishes this. Something is written and published once — whether it is writing on a blog, code for an app, etc. — and then reproducible at zero marginal cost.
“We are not used to zero marginal cost. Most of economics assumes non-zero marginal cost. You can think of zero marginal cost as an economic singularity: dividing by zero is undefined, and as you approach zero marginal cost, strange things happen. We are already observing these strange things in the world today, including digital near monopolies and a power law distribution of income and wealth. We are now rapidly approaching this zero marginal cost singularity in many industries, including finance and education.”
Our computers are universal machines. With enough time and computing power, anything that can be calculated in the universe can be calculated with a computer.
“With digital technology, we have finally made a series of breakthroughs, which have taken us from essentially no machine intelligence to machines outperforming humans on many different tasks, including reading handwriting and recognizing faces.”
Further, once we make initial headway into a particular field, progress is rapid. Consider self-driving vehicles. Decades of computing yielded nothing. The DARPA challenge in 2004 had no cars go beyond 7 miles on the 150 mile course. And now, 15 years later, we’ve made massive progress. The progress curve here is a “hockey stick”. And this same curve applies in many technological fields.
Universality of computation, rapid progress, and increasingly powerful computers all but ensure that machines will be able to do more and more of what humans are capable of doing.
His thesis ties all of these parts together.
We are experiencing a technological non-linearity, which renders many of the existing predictions about society based on extrapolation useless. The space of the possible for humanity is expanding rapidly due to the extraordinary power of digital technologies, which deliver universality of computation at zero marginal cost.
Wenger outlines a few principles for leveraging digital technologies.
First is that it is reasonable to be optimistic about the future. Humans are good at solving problems, so it is safe to assume that even big ones can be solved.
Second is that regulation is necessary to put guard rails on tech. Not all regulation will be good. But in order to prevent the formation of natural monopolies, regulation will be necessary. He likes them to “rules of the road” — we need some operating rules to have a strong digital foundation.
“The history of technological progress is one of changes in social norms and political regulations. For instance, at the moment much of the world gets around by driving cars. The car was an important technological innovation in that it allowed for individual mobility. But it would have been impossible to have widespread adoption of cars without regulation. We needed to agree on rules of the road and we also needed to build roads. Neither of these could have been accomplished based solely on individual choices. Roads and their rules are examples of natural monopolies: you don’t want to have multiple disjointed road networks or different sets of rules of the road (imagine some people driving on the left side and others on the right). Natural monopolies are classic examples of market failure that require regulation.”
Third is self-regulation. To best leverage digital technology, we must regulate ourselves. This is in order to have rational dialogue and clear decision-making with what to do with our new digital powers.
These values are based on Humanism.
Humanism is the belief that humanity as a species has a privileged position. Wenger believe this to be objectively true because of humans’ ability to externally store and transfer knowledge. Someone alive today can read the ideas and experiences of someone from a different place and time. Critical theory allows us to question the status quo and introduce and experiment with new ideas. Critical theory and knowledge combined allow us to progress as a species at a rate significantly faster than evolution.
Further, humans have a monopolyon knowledge. No other species can reliably share complex information across space and time.
These qualities give humans a privileged position as knowledge is extremely powerful.
Wenger uses a different definition of scarcity than that which is commonly used.
The common definition can be extended to argue that anything with property rights is scarce. Under that definition, land and capital are still scarce, as there are associated property rights and as such a cost to acquiring them.
I will use a different meaning of scarcity that is not based on price. Something is scarce when there is less of it than we need to meet our basic needs. If people are starving then food is scarce.
Wenger’s definition is more… colloquial? It’s hand-wavy – almost annoyingly so. My gut response is that millions are still starving (food scarcity), homeless or non-landowning (land scarcity), and oppressively poor – unable to reliably move up in the world (capital scarcity). But Wenger quickly explains his definition in the individual context of each shift and is far more convincing.
The primary way to accumulate power has evolved from managing food scarcity to managing land scarcity then to managing capital scarcity. This does not mean that when ruling elites shifted attention from food to land that everyone in their society had equal access to sufficient food; it instead means that a tipping point had been reached where acquiring land for agricultural use was a better way to accumulate power, and thus a higher concern.
In Wenger’s own words…
The first shift of Forager Age (food scarcity) to Agrarian Age (land scarcity):
With agriculture, scarcity shifted from food to land (of course land had been a proxy for food to some degree but now the scarcity was land directly). Agriculture increased the food density of land by at least an order of magnitude. That was enough for a meaningful surplus to be produced, which meant that a social hierarchy could be created. Rulers commanded armies. The more land a ruler controlled the bigger an army the ruler could afford, which brought us several thousand years of empire building among agricultural societies. The transition into the Agricultural Age was extremely violent with most forager societies wiped out altogether.
The second shift, from Agrarian Age to Industrial Age (capital scarcity):
Then sometime in the 18th century a new set of technological advances began to emerge that together gave us industry, including steam/electrical power, chemistry, and mechanical machines. With these, scarcity shifted from land to capital. Why was land no longer scarce? Because the use of machines in harvesting and the increasing knowledge of fertilizers dramatically increased crop yields.
The third shift, away from Industrial Age to Knowledge Age (attention scarcity):
Capital these days is frequently mistaken for wealth or financial capital, but what really matters is productive capital in the form of machines, inventories of goods, buildings. Financial capital is an intermediary step that allows for the formation of physical capital but it does not add to the production of goods and services directly (machines are not made of dollar bills)… We have sufficient productive capital to meet our needs for housing, clothing, transportation, education and healthcare. This is not a claim that productive capital or access to it are adequately distributed around the world… It is simply the claim that productive capital is sufficient for meeting humanity’s basic needs.
Each of the transitions also comes with a transition of power and associated violence. The previously powerful parties – those who had more food, land, or capital, depending on the era – are threatened by parties emerging with new power. Knowing that the transition will come and to be prepared for it is important to prevent similar chaos.
Thomas Malthus was famously pessimistic about human population growth, predicting mass starvation and poverty. Since his time, population has exploded from 1B to 7B people, yet his predictions have not come true.
Why? Malthus couldn’t foresee in the rate of technological progress which enabled such a large population’s survival. The land required to produce the same output of food has declined by 68% over the last 50 years.
Capital is sufficient. And because population growth is decelerating, while technological progress is accelerating (due to digital technology), capital will no longer be the binding constraint for humanity going forward.
Financial capital is a means to an end, and the end is usually physical capital. Physical capital has real world use and value. You can’t use a dollar bill as a smartphone. But you can use a dollar bill to buy a smartphone.
All of this is to say that we should never lose sight of the fact that financial capital ultimately serves no purpose in and of itself, other than possibly the gratification of ego. As a great illustration of that imagine a Spanish Galleon full of raided gold sinking in a storm. The sailors aboard had ample access to financial capital, but what they really needed to survive was more knowledge and better physical capital.
Capital is no longer a constraint on fulfilling individual human needs. The human needs Wenger outlines are:
Aside 1: Wenger also touches on clothing and shelter here, but doesn’t substantiate how they are not constraints by capital. I don’t really buy his claims on these. These aren’t as clearly constrainted by geopolitical issues and shortages – especially housing – are definitely the result of constraints of physical capital.
Aside 2: Harari makes a similar argument to this in Homo Deus, where he explains that we’ve solved humanities largest problems of famine, disease, and war. The modern day failures in each of these categories is merely the result fo human failure, not a lack of knowledge or ability.
Wenger also explains how capital is not a constraint on collective human needs, such as (1) motivation, (2) reproduction, (3) coordination, and (4) knowledge transfer. Capital was never a constraint for 1 and 2, but it was for coordination and knowledge transfer. But we now have advanced tools for instant, rich communication, and knowledge transfer, thanks to the internet, is orders of magnitude cheaper and accessible compared to the original printing presses.
Wenger has another category of items he calls enablers. These are energy, resources, transformation, and transportation. These enablers have benefitted greatly from technological advances and have allowed us to produce more physical capital..
The problem instead is not capital. It is one of capital allocation. The capital exists – but it is distributed poorly.
For most of the industrial era, the job market followed the job loop. People would work for a living and then spend their money buying goods and services. The money they spent would enable others to work for a living, and they would, in turn, spend and keep the economy going.
Technology introduces the risk of automating away the need for human labor, which would disrupt the job loop. This disruption would be especially bad in developing nations which have yet to enjoy the benefits of an economy that is growing rapidly thanks to the job loop.
Economists traditionally call this the Lump of Labor Fallacy. They argue instead that human who get automated out of one part of the economy will find gainful employment elsewhere.
Wenger argues that this is no longer necessarily the case, given that computers can increasingly do things that we used to think only humans could do. Further, even if humans could find new employment, they would have to find employment that could pay them enough to sustain themselves. And this is looking increasingly bleak.
Wenger rebrands the Lump of Labor Fallacy as the Magic Employment Fallacy: “just because we found new employment in the past doesn’t mean we will in the future.”
On the flip side: one of the great benefits of technology is it allows us to leave the job loop. Instead of trading time for money, you can create something once and distribute it for zero marginal cost. This allows you to exit the job loop and still sustain yourself.
Wenger then broaches a whole new topic: that jobs are a source of human dignity. And he does it in an alarmingly callous way, merely saying that we need to “get away from the idea that a job is the source of human dignity.”
Our attention to our most basic need, the existential need to make sense of the world as an individual by finding a purpose that makes our life meaningful, is scarce.
The internet — specifically news, social media, and video streaming services — have bombarded us with information. Instead of allocating our attention to important existential questions, we watch cat videos and meaningless ephemeral content.
One can leverage technology to exit the job loop and dedicate our attention towards existential questions such as discovering your individual purpose.
We also have a collective attention scarcity as humans. Wenger identifies three species-level threats to humans: (1) climate change, (2) “death from above”, like asteroids, and (3) pandemics. And as far as species-level opportunities, he identifies (1) environmental cleanup, (2) free educational resources, and (3) investment in research. Wenger argues that our collective attentional deficit is preventing us from truly investing on any these issues.
Wenger then proposes an interesting addendum to the Fermi Paradox.
I am proposing this as a (possibly new) explanation for the Fermi Paradox, which famously asks why we have not yet detected any signs of intelligent life elsewhere in our rather large universe. We now even know that there are plenty of goldilocks planets available that could harbor life forms similar to those on Earth. Maybe what happens is that all civilizations get far enough to where they generate huge amounts of information, but then they get done in by attention scarcity. They collectively take their eye off the ball of progress and are not prepared when something really bad happens such as a global pandemic.
Capitalism is great for using markets to determine price, and thus it solved the problem of scarcity of capital. But it cannot solve the problem of scarcity of attention. We need a system that can handle this problem.
“We are bad, individually and collectively, at allocating attention. For example, how much attention are you paying to your friends and family, or to the existential question of the meaning and purpose of your life? How much attention are we paying, as humanity, to the great challenges and opportunities of our time, such as climate change and space travel? Capitalism cannot address these attention allocation problems because prices do not, and cannot, exist for many of the activities that we should be paying attention to.”
The lack of a market for individual attention is pretty obvious. But for collective attention its pretty interesting. Wenger explains:
There are events that are so rare or have not occurred at all yet that we have essentially no information on their frequency or severity. This is especially true around the kind of societal event horizon that we are currently dealing with. Nassim Taleb’s work on tail risk is highly relevant here. The price mechanism cannot work when forecast error is infinite. For instance, large asteroid impacts on Earth occur millions of years apart. There is no price that can help us allocate attention to detecting such asteroids and building systems for deflecting them. As a result we are currently paying a trivial amount of attention to this problem relative to the potential damage to humanity from an impact.
Knowledge is not created in a vacuum. It emerges from the Knowledge Loop: (1) someone learns something, (2) uses it to create something new, (3) shares that thing, which (1) someone else uses to learn, (2) to create something new, and (3) share… and so on.
Digital technology makes the Knowledge Loop even more powerful by increasing access to knowledge and reducing the marginal cost of spreading knowledge to zero.
But digital technology is content agnostic—so it improves access to good and bad content alike.
The promise of the Digital Knowledge Loop is broad access to a rapidly improving body of knowledge. The peril is a fragmented post-truth society constantly in conflict. Both of these possibilities are enabled by the same fundamental characteristics of digital technologies.
Because digital technology is agnostic, we need to regulate it and self-regulate our use of it, otherwise we risk its perils overtaking the benefits.
What is at stake here?
What is at stake is nothing short of the survival of the human species. We are facing problems, such as climate change, that can only be surmounted if we make the Digital Knowledge Loop work for us. We must reap its promise and limit its perils. In order to accomplish the necessary transition into the Knowledge Age, we need to make dramatic changes in regulation and self-regulation.
The challenge is to overcome the limits of capitalism, by moving past a society centered on the Job Loop towards one embracing the Knowledge Loop.
Wenger has three suggestions for regulation and self-regulation to smooth out the transition from the Industrial Age, where capital is scarce and having capital means having power, and the Knowledge Age, where attention is scarce.
Aside: I found there to be a myriad of issues with this section of the book, so worth clarifying that these are just notes and not my personal take.
Everyone must be able to meet their basic needs, with or without a job. If you are not economically free, you can not take advantage of and contribute to the Digital Knowledge Loop.
How will we give everyone economic freedom? By providing them with Universal Basic Income. Wenger proposes $1000/mo for everyone over the age of 18, $400/mo for ages 12-17, and $200/mo for ages 0-11. He contends that while $1000/mo isn’t much, it is only meant to cover for basic needs: housing, sustenance, and internet.
The numbers are smaller for children for two reasons: (1) their costs are lower and (2) Wenger wants to incentivize having fewer children. If children were to also receive $1000/mo, then, Wenger argues, parents may be inclined to have more children in order to skim their income.
UBI breaks the connection between location and job. People can live further from expensive cities, in cheaper locations where UBI will cover their basic needs.
And since technology makes the cost of durables and food cheaper over time, UBI will be able to buy more and more as time goes on.
For financing UBI, Wenger makes the following suggestions. The first is to redirect half of the $6 trillion collected in annual tax revenue towards UBI. Second is to cut out banks as middle-men and set up a system of full reserve banking which would simply print new money to finance UBI.
Wenger then responds to various criticisms of UBI.
Criticism: printing new money will lead to runaway inflation.
Wenger: new money creation would be fixed and known in advance. Technology is a deflationary force that will lower prices. Third, money can be removed from the economy later via negative interest rates on bank deposits above a certain amount.
Criticism: UBI will bankrupt the country.
Wenger: UBI is entirely affordable, especially as you phase out other government assistance programs and their associated overhead costs.
Criticism: UBI will cause the labor market to collapse as people stop working.
Wenger: No, people will want to add to their UBI money by continuing to work. This beats existing government assistance programs that totally shut off when you return to work — in fact, the existing system incentivizes leaving the labor force, not UBI.
Wenger makes one final huge, hand-wavy claim here, such as how UBI will increase people volunteering to save the environment and will encourage people to donate more. Further, arguing that the masses will have a UBI-complementary job at all contradicts his premise that (1) UBI is a response to mass unemployment and (2) the monthly UBI amounts are small amounts specifically intended to only cover basic needs.
We must remove barriers to accessing the Digital Knowledge Loop and make it easier to share knowledge. There are four ways to remove barriers and increase access to the Digital Knowledge Loop.
Wenger then goes on a tirade against copyright laws, arguing that creators should have to pay to have copyright enforced for their content. He cites as evidence the many thousands of years that humans created music despite there being no copyright laws. He instead suggests that copyright law be attribution only; meaning that as long as someone attributes any reproduction of your work to you, they may listen, watch, read, and reproduce or remix your work as they please.
“Now, what if you’re Taylor Swift and you don’t want others to be able to use your music without paying you? Well, then you are asking for your music to be removed from the Knowledge Loop, thus reducing the benefits that loop confers upon society. Therefore you should be paying for that right, which not only represents a loss to society, but will also be costly to enforce. I don’t know how big the registration fee should be — that’s something that will require further work — but it should be a monthly or annual fee, and when you stop paying it, your work should revert back to possessing attribution-only rights… Critics might object that the registration I’m proposing imposes a financial burden on creators. It is important to remember the converse: Removing content from the Knowledge Loop imposes a cost on society. And enforcing this removal, for instance by finding people who are infringing and penalizing them, incurs additional costs for society. For these reasons, asking creators to pay is fair, especially if creators’ economic freedom is already assured by a Universal Basic Income (UBI).”
Wenger also suggests replacing some patents (temporary monopolies) with “public prizes” and a mix of patent reforms, such as making it easier to invalidate existing patents and harder to get new ones.
Wenger then suggests we “Get Over Privacy”, arguing that “privacy is incompatible with technological progress”. His case is:
While economic and informational freedom suggest collection action, Wenger’s suggestions for psychological freedom focus on the individual.
The four tenets he outlines are freedom from want, freedom to learn, freedom to create, and freedom to share.
Freedom from Want: Much of our current consumption is unnecessary – “therapuetic”, or status-seeking. Instead of seeking increased income and consumption, Wenger advocates for individuals to desire less and to pursue “freedom from wanting”.
We’re stuck on the hedonic treadmill:
“When your brain gets accustomed to certain levels of dopamine (having a new car), you inadvertently boost the levels of dopamine required in the future to produce the same feeling of happiness. You’ll have to raise your expectations for an even more expensive or faster car to get that initial kick of dopamine again.”
Freedom to Learn: Humans are naturally curious. We should promote freedom of learning and curiousity so that people can explore, discover, and contribute to the Knowledge Loop.
We must also fight our basic tendencies to seek confirmation (confirmation bias) or to form conclusions based on limited evidence.
“Fundamentally though, each and everyone of us has to actively work on engaging what Kahnemann calls System 2, which is the part of our brain that requires real effort but lets us think independently and rationally. Having some kind of mindfulness practice is a key enabler for overcoming biases and freeing ourselves to learn.”
Freedom to Create: we must be less distracted and more willing to invest effort and create new things.
Freedom to Share: we must be more kind and empathetic so people feel comfortable sharing what they create.
Finally, Wenger advocates for reforms to the education system. Today’s system is designed for the Industrial Age. We need one that is designed for the Knowledge Age.
“We will need to substantially change the education system in most countries to help people be psychologically free. Today’s system was developed to support the Industrial Age. Its goal is to mass produce people qualified for participating in the Job Loop. Jobs are seen as the ultimate goal and knowledge as important only to the extent that it provides a qualification for a job. We will need a new system instead that celebrates knowledge (as broadly defined here) for its own sake, allows students to discover their individual interests and deepen those into a purpose, and educates them about techniques for being psychologically free. Put differently, we need to put Humanism at the center of education and learning.”
Autocracy is tempting to accelerate progress, but democracy is the only system compatible with the values of the Knowledge Age.
Our short attention spans are what give money so much power in politics.
“Going further, though, we should experiment with new forms of democracy. Given the complexity of the modern world, I am partial to the idea of increased specialization and delegated voting. It doesn’t seem to make a lot of sense to have every representative vote on every bill, and even less so if most of the voting is simply along party lines. Instead, we should explore forms of democracy in which I can delegate my vote to people I trust on a specific set of issues, such as say energy policy. These delegates, in turn, would then elect a leader for the energy agency based on that leader’s proposed policies.”
Wenger also advocates for a more localized system of governing, which will allow for more experimentation and faster progress.
“Pushing decisions to the lowest level at which they can be made is especially important at a time of great change. For instance, what is possible in education and learning is changing rapidly due to digital technology. That means we should allow experimentation at the local level instead of trying to have a national education policy. By running many experiments we can figure out much faster what works well, or even what works at all, rather than running a single large experiment.”
The transition into the Knowledge Age puts the stability of our society at risk. Great change awaits thanks to increasingly powerful technology; it can be good or bad, depending on how we harness it. Figuring out this transition is of utmost urgency for our species.