Value(s) in future economy
Risto Linturi
During prehistoric and historic times man has not changed biologically. Human society has however changed and continues to change in a quickening pace. It seems that also wealth requires different values now.
When society stabilized enough to limit the use of violence, the best way to aquire great wealth was trade. Information flow was slow and erratic and trading empires actually controlled the information flow and also largest part of transport. Investments concentrated into these activities all through Ceasars time to Napoleons time. Only after public communication routes were opened and public transport became available the rules changed.
Manufacturing gained importance and became better means to make profit than trade. Humankind turned its attention to studying better manufacturing methods and products and power shifted to cultures whose customs and communications methods were better suited to investments in industrialization than trade.
Now again our communication system has evolved much beyond any expectations. Corporations are mainly valued by their expected future earnings and wealth is aquired by interpreting early warning signals and changes in those future expectations. Globalization, standardization, increasing co-oparation between networked companies and fierce competition have decreased profits in manufacturing.
Simultaneously this development has lead to increasing demand for efficient and open communication networks which operate across hierarchies. This again favours some human cultural patterns. Just think about many cultures where it is very difficult to call your boss because the organization and initiatives are supposed to work the other way.
How can that sort of behaviour patterns survive in competitive networked society where exeptions are the most important information and where rumours spread information more efficiently than most marketing campaigns. Fukuyama spoke in his recent book “The Great Disruption” of “Homo Hierarchicus”. You must all know such people who love power more than profit. They will be dinosaur.
Let us concentrate briefly on a few spesific innovations. Already we pay with our mobile phones. Soon they will replace our keys, all other displays and remote monitoring and control devices. The future brings us a small mobile phone which is implanted in our head. The microphone can be replaced by a sensor in our vocal chords and loudspeaker connected to our ear.
This would in all practical sense mean that we have invented telepathy and as you all must realize - there are numerous books that illustrate how telepathy would change the workings of our society. And if you think carefully, most of the changes are taking place just now in all those countries where mobile phones are kept always open and numbers made public. Soon these phones will tape everything your ears can hear and use speech recognition to index all of it to allow perfect recollection just like searching the internet.
All these networks and information appliances have made it easy to aquire information and employ experts. More and more of the value of products has also turned out to be bits. Manufacturing cost and distribution cost of these bits approaches zero. This means that only the best one gets profit. Creativity will become one of the key success factors - creativity and sensitivity to the needs of others.
Change has already started. Just look at how the movie industry has restructured, look at Lucas who gave his movie distributor a lousy 15% - earlier he used to get only 15% himself. Look at the finnish Nokia - they are mostly only a design house and not an industrial giant. They buy much of their manufacturing and distribution very cheap from their subcontractors and they make huge profits themselves.
Power has shifted to those who create. Information has started to lose its competitive value alongside with ownership of the distribution channel and manufacturing. Organizational creativity and sensitivity seems to rule. Cultures with rigid symbol structures and communication hierarchies and hierarchical initiative patterns have to face this change and give way to more creative behaviour patterns. Otherwise they must wither and lose their competitive positions.
Many of the changes will be social innovations and strong hierarchies will fight against change because change very seldom favours those individuals in power.
Nokia allows their customers to decide what ringing tone and what cover art and even what features they would prefer. You can even compose your own tunes. Nokia phones almost resemble the other famous Finnish originated phenomenon, Linux, which allows you to design your own operating system features to be included in the next global release for everyone to share. This is very different culture to the previous careful product designs where nobody was allowed to tamper with the grand designs. In this new culture everyones creativity and individual identity is appreciated.
It is almost tautological claim to say that information storage and retrieval tools combined with networks speed up all development. Networks naturally favour individual and community traits that take advantage from these new tools. Let us now study the concepts of trust, honour and openness in this sense. Toffler showed us how the industrial society required a change in values. People had to easily immerse in new communities. Previous concepts of responsibility and honour to your old community had to be transferred to concepts of privacy and lawful responsibility to the state who then would take care of your previous responsibilities like the elders and punishment for debts and crime.
Internet is often referred to as a global village. It is easy to find new business aquintancies and start co-oparating with them. This fast paced networked business model seems to be extremely efficient but it requires a similar model of nonhierarchical trust that existed before the industrial revolution. If you are a bully I will easily find it out from others in internet. If you are a good guy I can trust you and do business with you without long contractual negotiations with international lawyers.
It seems that there was not enough positive feedback for trust and honour in the western industrial society and for that reason we shifted towards hedonistic values and selfish behaviour patterns. This suited the industrial society but it does not match the needs of the networked era.
Francis Fukuyama has collected statistics which show that crime has increased over tenfold during the last decades and in US even fiftyfold. Also other societal norms have been breaking in breath taking speed.
I claim like the author of “Transparent Society” David Brin that future technology might cure us. The forthcoming transparent society may bring us back to many of the values in earlier small villages. We will respect others and we will know how they behave and they will know how we behave if we just yield to change. Internet is a very fast channel for all sorts of rumours. All shops are side by side in internet and all customers can talk with each other - and they even find each other easily.
As Fukuyama pointed out rumors make it much easier for the society to self organize and for people to get in direct contact with others who have first hand experience on the same issues we need to evaluate. In this transparent society we might leave the doors unlocked and we might again trust people to keep their word. Various cultures will naturally try different paths but as the internet is global it will basically be a global change and a global challange. Some will actually cope better with this change and some will fail. And trust will make economy work better. Jus look at Sicily and Russia and you understand what I mean.
But I am afraid we will resist this change if corporations and the state will not open up and if they will collect our information and abuse it to maintain hierarchies. Luckily for us the current approach of EU is very much better than that of US and we might get onwards with this transparent society much faster than they. EU bureocracy is not nearly open enough but corporations in EU are not allowed to abuse our information opposed to what is possible in US.
But let us leave this subject for a while.
Virtual reality technologies will enable us to see what we wish whether based on physical reality or not. This will give us better methods to control and be informed of our physical surroundings. We may install video cameras inside all our gadgets. With these extra eyes and communications links we may remotely see what is the situation in our summer cottage, in our fridge or our office. Transport robots, Satellite positioning and new electronic tags will make logistics more efficient.
We may get rid of all traffic signs because they can all be viewed virtually from future mobile phones and electronic windshields. A mechanician can see in his augmented reality glasses where he is supposed to put his hands next. All this information and computerized expertize in useful form enables us to handle our surroundings.
Simultaneously all this virtual reality technology gives us pleasant virtual friends and environment which tries to lure us away from the reality. Tamagotchi and daily soap operas show how easily we can get addicted to imaginery reality. Drugs show the ill side effects of such addiction. Future society will be devided between those living in physical reality and those mainly concentrated in imaginary, perhaps addicted to individual computer created environments. Mick Farren described already in the 70´s how an actor might tape 24 hours per day of her luxorious life and all the sensory input would be replayed to millions of viewers permanently stored in cyber caskets or virtual coffins.
We are in crossroads and our future may lead to more and more mass entertainment where less and less people contribute in any meaningful way. Computers with all their cameras can be used to create interactive environments where viewers are rewarded always when they respond in a suitable way. These behavioral computers can easily train us in useful skills but as easily they can condition and addict us to follow the paths laid by their creators. But as I mentioned, we are in crossroads.
The other path leads to an open society where hierarchies are low and communication routes are symmetrical. In this open society everybody is expected to contribute and take part in creating content. In this other path content is created for smaller groups and financed by mutual interest and very seldom financed by advertizements. This path resembles current internet development. Mass market and advertizement syncronized production belongs to the dinosaur and we should study critically all regulations that still support this old but still powerful second wave.
Let us get onwards,
Many power structures may fall in spite of all regulations supporting them. It is easy to realize that there was a communist system in eastern Europe and it fell down. It is more difficult to realize that we also have a system and it is not called free market. Even a liberal democracy is a state - a power structure which is financed by collecting taxes from exhanges inside the state boarders. Future bit realm will be economically and politically very important but it will not know any physical state boarders. It is outside all current states in most practical aspects. Just imagine how easy it would be to search for remote work in internet.
If I found some job waiting for me in internet I could work for a few hours and then if everything was okay I would receive payment for what I managed to accomplish. I would not necessarily have any idea on where my employer is located and they would not know who I was or what was my nationality. If I spent the just earned bit-money in internet then no outsider knew that anything at all had happened.
There are strong signs indicating that states are losing their capability to independently finance their operation or enforce their desicions. Simultaneously as the boarders are becoming meaningless there have to be rules that are enforcable globally. This will lead to weakening of states and creation of a world bank, a world police and other international regulatory bodies getting more and more power.
It seems that we are drifting towards a world state. In the meantime bit realm will resemble a strange mixture of wild west and feodal age structures with virtual disney worlds in every corner. In this wild west criminals enjoy great freedom because the “big brother” metaphor requires that networks support complete anonymity for everybody. Similar requirements in the real world would mean “no licence plates”, “no numbers in money” and “no finger prints”. This non traceability leads to spy agencies requiring authority to listen in to everything.
Another issue that fosters great expectations and great fear is genetic technology. Milton Friedman recently said that technology has always helped the poor. Emperors never had a need for running water, they had running slaves. Genetic technology will most propably help to produce cheaper food and medicine. Starvation would not kill so many.
Tecnology may also produce trees that emit light and electricity or eyes that let us see in the dark and skin that conducts electrical signals. Milton Friedman may well be right in almost every case but the most fundamental question may prove his assumption wrong.
If as it now seems even our nerve cells can be regrown and we could live practically forever this would pose grave problems to the concepts of equality. Lengthened life cannot be enjoyed by everybody because of scarceness of resources and population pressures. Inequality will follow.
Many of us will use it anyway. It is difficult to believe that a global ban of these technologies would come about. There is so much in human nature that yearns to genetic modifications especially if the technology can be applied to ourselves and not only to the next generation.
In Scandinavia we might use some retrovirus to change genes in our skin to produce more pigment to our skin if the ozone layer still gets thinner. We most certainly would use genetic readers to find out whether we should take a voluntary life insurance or a larger pension. And if you had the option to lengthen the healthy span of your life with money, would you decline? All these issues will greatly affect our everyday lifes, values and goals and it will not happen without various crisis and potential catastrophes.
During all this turmoil we will be immersed in information and ever increasing number of gadgets which talk pleasantly with us, which continuously listen and watch how we behave and react. These will not always differ very much from our old time helpers, the dogs and horses. Many new inventions will give us new possibilities to express ourselves and to establish ourselves as members of selected groups.
These might include digital tattoos which move and change colour or they might be specially modified ear lobes. It is certain however that the new decorations will more fundamental and shocking than many todays decorations have been even when they first appeared. New tools will be applied to searching a suitable partners as well. Think about a telephone which automatically connects a telephone call if you are a walking distance away from your dream mate.
Many of the devices also help to clean our house, monitor our garbage to order new items when something has been used up.
I recently saw a lengthy report of a flying car which carries four persons, uses 15 liters of gasoline per every 100 kilometers with speeds over 600 kilometers per hour and a requirement for ten meters of street to get airborne. The price is supposed to be 60 thousand dollars in mass production. You do not believe - I do not blame you. But this was reported by CNN, BBC, ABC and Reuters with references to Pentagon.
This reported innovation would fundamentally change all geography and further eliminate boarders and protective walls. And I see that you still do not believe - there are many stories about people who did not believe in technological advance. The chairman of the Royal Astronomical Union said in 1957 that space flight is impossible. Other unbelievers have caused greater catastrophes. But lets move on.
New sensors store the smell of our kids and follow them in the forest just like some dogs can follow smells. Mirrors can show our image with new clothes from someones web-page. Digital persons in web pages can sense our interest and dicker about the prices. Standard pricing used to be efficient but if dickering can be done by computers then the rules change again and we pay as the arabs do - based on our need and not on production cost.
It is certain that all this change from automation, virtual reality addiction, enhanced and altered humans and cyber terror will put a major part of humans in front of fundamental questions. Answers will be searched from religions, philosophies, group movements and personal relationships.
Many will loose themselves but increasingly many will find that we are here for each other - not just for ourselves and our machines. I feel this way because all systems search for a stable state. Human society is such that a joint effort gives better results than solitary efforts. Joint effort is more propable when people value each other. And I cannot avoid thinking a story about some Japanese young men who have fallen in love with virtual girl friends. The only positive thing here is that this tendency towards virtual love does not inherit. In the long run we will leave those generations behind where virtual delights were valued over the physical world but it may be that we have much suffering to do before we find a new equilibrium. We are heading to an unprecented turmoil.
Looking at many internet companies I think that even one of the most fundamental things about trade has changed. It used to be that you had to buy cheap and sell with profit to aquire wealth. Now it seems that quickest way to get rich is to give things away for free. This is called the law of increasing return. Many thanks for your attention.