We Need A 'Third' Economy For The Future
The existing platforms of for-profit cartels/monopolies and the central state are no longer able to provide enough paid work and high-touch services for everyone.
We all know that automation is eating its way up the human-labor food chain at an increasing clip. Yet there is remarkably little insight into this process.
Let’s see if we can’t connect two insightful essays on this topic, one from musician-essayist David Byrne and the second on the business model of Amazon.com:
Eliminating the Human (via GFB). Here is an excerpt:
“We’re a social species–we benefit from passing discoveries on, and we benefit from our tendency to cooperate to achieve what we cannot alone. In his book, Sapiens, Yuval Harari claims this is what allowed us to be so successful. He also claims that this cooperation was often facilitated by a possibility to believe in ‘fictions’ such as nations, money, religions and legal institutions.
Machines don’t believe in fictions, or not yet anyway. That’s not to say they won’t surpass us, but if machines are designed to be mainly self-interested, they may hit a roadblock. If less human interaction enables us to forget how to cooperate, then we lose our advantage.
I’m wondering what we’re left with when there are fewer and fewer human interactions. Remove humans from the equation and we are less complete as people or as a society. ‘We’ do not exist as isolated individuals–we as individuals are inhabitants of networks, we are relationships. That is how we prosper and thrive.”
Why Amazon is eating the world. Here is an excerpt:
“I believe that Amazon is the most defensible company on earth, and we haven’t even begun to grasp the scale of its dominance over competitors. Amazon’s lead will only grow over the coming decade, and I don’t think there is much that any other retailer can do to stop it.
…each piece of Amazon is being built with a service-oriented architecture, and Amazon is using that architecture to successively turn every single piece of the company into a separate platform — and thus opening each piece to outside competition.”
There is much more of interest in each piece, but these short excerpts offer a taste of each.
Byrne is commenting on our built-in need for human connection and cooperation, not just for emotional-social reasons but as a competitive, adaptive advantage.
Zack Kanter (author of the essay on Amazon) explains how Amazon’s model avoids the flaws of vertical integration (i.e. each division becoming bloated, inefficient and ineffective due to lack of outside competition).
Correspondent GFB observed that Kanter did not describe a major component of Amazon’s success: the consumer’s willingness to buy commodity-goods without actually seeing the product on the shelves, trying it on, etc.
The unifying thread here is high-touch, low-touch, a concept I covered in my book Get a Job, Build a Real Career and Defy a Bewildering Economy. I was endeavoring to explain why certain kinds of labor are easily automated and other kinds are more immune to automation.
Low-touch transactions / interactions don’t offer much value, connectedness or cooperation. A common example is ordering a fast-food meal or checking out at a market. Our interaction with the human being behind the counter is brief and not something valuable enough that the company can charge extra for being served by a human rather than a machine.
The vast majority of consumers would be OK with (or actually prefer) having a low-touch transaction served by a robot or automated system. Rather than wait in line, many of us prefer to use the self-checkout or airport ticket kiosk. Most of us would be delighted to bypass the entire time-wasting hassle of renewing our licenses at the Dept. of Motor Vehicles and many other low-touch interactions.
In effect, Amazon is automating many ordinary low-touch transactions, and few consumers miss what’s been lost in the move to home/office delivery of commodity (i.e. basically interchangeable) goods and services.
The kinds of connections Byrne is referencing are high-touch: transactions and connections that require communication, sharing, cooperation, and all the other bonds of human relationships.
If ordering a fast-food meal is low-touch, dining at a swank bistro is high-touch. Most people would hesitate to pay a lot of money for food delivered by a robot to a bland sound-proof booth. In other words, we’re paying not just for the food but for a high-touch environment: a knowledgeable wait-person, a sommelier, an atmosphere of conversation, people-watching, etc.
As goods and services become commoditized, the cost of low-touch interactions declines and the cost of high-touch interactions rises.
For example, it’s easy to order a commodity set of house plans for $150 off the Internet. Hiring an architect with whom you establish a professional relationship will cost 10 times more for some consulting and 100 times more for a customized set of architectural plans and specs.
There are many other examples of the difference. Consider the future of medical care. Many observers expect robots to perform many routine care tasks such as visiting patients and making sure they are taking their prescribed medications. This is a low-touch interaction.
While ill people won’t mind interacting with a helpful robot, what they really want is a human being to stop in and express some interest and concern for their condition. This is the high-touch connection we all want as a human birthright.
A great many of the current jobs in our economies are low-touch, and these will relentlessly be automated, as the value of the human interaction is not worth enough to consumers to pay extra for. If consumers will pay significantly extra for a human taxi driver rather than an automated taxi, then human-driven taxis will be available. But if consumers aren’t willing to shoulder the higher costs of humans performing low-touch tasks, human labor in low-touch environments will disappear as a financial necessity.
One of my concerns is that high-touch interactions and connections may well become too costly for many people to afford.
This may not matter much, as most high-touch connections are not monetary–we communicate, share, and cooperate with friends, family members, neighbors, etc., and there is no direct financial facet to these transactions.
It seems obvious to me that we need a new organizational structure to enable high-touch transactions and connections that aren’t necessarily for-profit or personal (friends/family). This is the foundation of my proposed CLIME system: community labor integrated money economy— that I outline in my book A Radically Beneficial World: Automation, Technology & Creating Jobs for All.
CLIME is a non-corporate, non-state platform for a high-touch, high-value-creating community economy.
Within the high-low-touch spectrum, clearly there is much middle ground between for-profit commoditized home delivery of goods (low-touch) and personal relationships (high-touch). This middle is what appears to be at risk of disappearing as automation eats up all the low-touch human labor.
This is not a recent trend. Labor’s share of the nation’s output (GDP) has been declining for decades:
The existing platforms of for-profit cartels/monopolies and the central state (government) are no longer able to provide enough paid work and high-touch services for everyone. We need a Third Economy— what I call The Community Economy, with its own platform, network and non-state, non-central-bank-controlled currency.