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Exponential Technology, Exponential Economy

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  • John Smart
    ... Bravo Wayne! Thanks for that insightful analysis. These observations can be extended even further, as I present in my book. Any good history of technology
    Message 1 of 5 , Jun 1, 2002
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      > In fact, if you look at the graph in Kurzweil's book, where
      > he plots technological growth on 5 different substrates,
      > you can see that it did not change EVEN during World War
      > II. Even something as catastrophic as World War II has NO
      > IMPACT on the rate of technological change!

      Bravo Wayne! Thanks for that insightful analysis. These observations can be
      extended even further, as I present in my book. Any good history of
      technology text, in the West or East, shows that technological advances have
      stayed on a very smooth exponential acceleration over all recorded history.
      We've seen countless collapses of *civilizations* (Egyptian, Roman, Minoan,
      Greek) but looking closely at any of them, you discover that the
      technologies rapidly filtered out into surrounding environments, were
      parallel invented, rediscovered, were usefully mutated, etc. Same is true
      with written literature. The burning of the Library of Alexandria, if you
      look into it, was a myth. There were a number of ransacks of that place,
      over many years, and several scholars have proposed that a lot of the books
      made it out. If we charted the number of written characters since the start
      of writing I'd also expect to see a smooth exponential acceleration.

      I think we see this because, while human social systems may be desirable or
      undesirable, technological advances have broad positive feedback loops
      within any society. Technology apparently solves deep human problems, in an
      incremental manner. We stay on that acceleration because human creativity
      doesn't flag. And catastrophes, whether war or depression, will accelerate
      certain types of innovation, even as they dampen others. ("Necessity and
      invention").

      In ancient times, you can look at the number of humans on the planet, take
      an average creativity function independent of social factors, and get your
      exponential, when tracking technology. But it gets even better than that
      once you've moved to written records of technology development, because then
      you can rediscover with a fraction of previous effort, and you can start
      moving into numeric human independence in tech development (growth in
      technological autonomy, a process which will be completed within this
      century). Algorithms become the new keys to the kingdom.

      Of course it's difficult to get clean definitions for all this, but you can
      take multiple metrics and follow them over thousands of years with current
      records and see what falls out. Computation per dollar is one. Number of
      printed words is another. Average communication (verbal and technological)
      is another. Energy density of your machinery is yet another, and my current
      favorite (read Chaisson, Cosmic Evolution).

      Unfortunately, though, I don't think this necessarily translates into market
      capitalization. Because we've moved to an intangibles economy, what I call
      an Algorithmic Economy, we are mostly ascribing relative psychological value
      to algorithmic intangibles. Book value has been steadily losing its meaning
      over the last century, so now market cap represents primarily a social
      variable that tracks the mass manic-depressiveness of the population's
      psychological impressions of the system, to use your Warren Buffet quote. I
      could easily see a ten year average recession, for example, if we felt we
      deserved self-imposition of that kind of correction (guilt for the excesses
      of Kosmo and Sock Puppets? :), though I'm sure there would also be some
      exponential winners over that time. To look at some of the possible winners,
      I'd read all the articles on the "Exponential Economy" concept at Nathan
      Mhyrvold's site below:

      http://www.intellectualventures.com/RecentNews/

      Mhyrvold really gets it, and is doing some good singularity metrics. He sees
      that biotech is poised for a computationally-driven phase of exponential
      growth, and this will create amazing value for human society. As Murphy and
      Topel have estimated in their book, Exceptional Returns, eliminating all
      deaths from heart disease would increase national wealth by $48 trillion.
      Eliminating cancer would generate another $47 trillion. A hundred trillion
      infusion into the economy just two domains, is the order of effect of
      technological acceleration we can expect over the next 30-50 years as we
      slide into the high end of the exponential economy, just prior to
      singularity.

      Best,

      JS

      http://www.SingularityWatch.com
      Understanding Accelerating Change
    • wayne radinsky
      ... Thanks, John :) Actually, what you say doesn t surprise me. I bet you could extend it back billions of years, back to the orgin of life itself, if you
      Message 2 of 5 , Jun 3, 2002
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        --- John Smart <john.smart@...> wrote:
        >
        >> In fact, if you look at the graph in Kurzweil's book, where
        >> he plots technological growth on 5 different substrates,
        >> you can see that it did not change EVEN during World War
        >> II. Even something as catastrophic as World War II has NO
        >> IMPACT on the rate of technological change!
        >
        > Bravo Wayne! Thanks for that insightful analysis. These
        > observations can be extended even further, as I present in
        > my book. Any good history of technology text, in the West
        > or East, shows that technological advances have stayed on a
        > very smooth exponential acceleration over all recorded
        > history.

        Thanks, John :)

        Actually, what you say doesn't surprise me. I bet you could
        extend it back billions of years, back to the "orgin of
        life" itself, if you had enough data. Remember Carl Sagan's
        calendar? He certanly makes it look like an exponential
        trend is at work in biological evolution as well. I don't
        have the data, but with all the stuff you read, you might
        see it.

        > We've seen countless collapses of *civilizations*
        > (Egyptian, Roman, Minoan, Greek) but looking closely at any
        > of them, you discover that the technologies rapidly
        > filtered out into surrounding environments, were parallel
        > invented, rediscovered, were usefully mutated, etc. Same is
        > true with written literature. The burning of the Library of
        > Alexandria, if you look into it, was a myth. There were a
        > number of ransacks of that place, over many years, and
        > several scholars have proposed that a lot of the books made
        > it out. If we charted the number of written characters
        > since the start of writing I'd also expect to see a smooth
        > exponential acceleration.

        One of the things I've heard about the Library at
        Alexandria, is that fewer than 10% of the books that were
        once there survived.

        The actualy loss of *knowledge* is probably not that great,
        because there's redundancy in the books. Still, I think the
        book burning was tragic. We would know a lot more about
        ancient civilizations if the people didn't go around
        burning books.

        > I think we see this because, while human social systems may
        > be desirable or undesirable, technological advances have
        > broad positive feedback loops within any society.
        > Technology apparently solves deep human problems, in an
        > incremental manner. We stay on that acceleration because
        > human creativity doesn't flag. And catastrophes, whether
        > war or depression, will accelerate certain types of
        > innovation, even as they dampen others. ("Necessity and
        > invention").

        Oh, I totally agree with you here. Where I disagree is the
        claim made by you, Kurzweil, and others, that this
        arrangement will continue forever.

        > In ancient times, you can look at the number of humans on
        > the planet, take an average creativity function independent
        > of social factors, and get your exponential, when tracking
        > technology. But it gets even better than that once you've
        > moved to written records of technology development, because
        > then you can rediscover with a fraction of previous effort,
        > and you can start moving into numeric human independence in
        > tech development (growth in technological autonomy, a
        > process which will be completed within this century).
        > Algorithms become the new keys to the kingdom.
        >
        > Of course it's difficult to get clean definitions for all
        > this, but you can take multiple metrics and follow them
        > over thousands of years with current records and see what
        > falls out. Computation per dollar is one. Number of printed
        > words is another. Average communication (verbal and
        > technological) is another. Energy density of your machinery
        > is yet another, and my current favorite (read Chaisson,
        > Cosmic Evolution).

        I also think the energy density metric is the most
        interesting. You know, John, it really amazes me how much
        stuff you read and how you manage to find all this stuff. I
        definitely want to follow up on the energy-density stuff. I
        think it is really key because energy is such a fundamental
        concept in physics. In biology energy is also key to the
        process of evolution -- different species competing for
        matter and energy resources. In physics matter is even
        represented as a form of energy, remember E=mc^2.

        Recently I've been trying to understand the connection
        between energy and economics. If you think of the world
        economy as an energy circuit, where different financial
        transfers represent energy flows with different energies,
        then you can think of money in the bank as a store of
        potential energy. Since 5% of the population controls 50%
        of the wealth in the world, you can see that there is
        extreme concentration of energy -- that is, high energy
        density -- at particular points in the economic system.
        (Unfortunately for me I am not one of those points :). This
        energy density may correlate, in some manner that I haven't
        figured out, with the energy density for machinery metrics
        that you have found. That would tie "economic evolution"
        in with the concepts we're developing for biological
        and machine evolution.

        > Unfortunately, though, I don't think this necessarily
        > translates into market capitalization. Because we've moved
        > to an intangibles economy, what I call an Algorithmic
        > Economy, we are mostly ascribing relative psychological
        > value to algorithmic intangibles. Book value has been
        > steadily losing its meaning over the last century, so now
        > market cap represents primarily a social variable that
        > tracks the mass manic-depressiveness of the population's
        > psychological impressions of the system, to use your Warren
        > Buffet quote. I could easily see a ten year average
        > recession, for example, if we felt we deserved
        > self-imposition of that kind of correction (guilt for the
        > excesses of Kosmo and Sock Puppets? :), though I'm sure
        > there would also be some exponential winners over that time.

        Why do you think so?

        I disagree because, they way I see it, the value of
        *everything* is psychological. A house, for example, is a
        big, physical object, but what is its value? You can get
        educated guesses by looking at recent sales of similar
        property, or hire an appraiser, but the fact is you don't
        really know what it's worth until somebody buys it. The
        same is true of, say, a share of stock in Microsoft
        Corporation. I think Microsoft is a good example because
        their business is primarily bits and not atoms (though I
        acknowledge that they do make some hardware like mice and
        X-boxes). Their business is primarily Windows in all its
        flavors, Office, etc, which is bits, not atoms. The price
        of the CD's the software comes on is probably around $1,
        and it wouldn't surprise me if the printed books and
        cardboard box cost more. Microsoft last traded for $49.42
        per share, which gives it a market cap of $276.2 billion.
        So I don't see how you can argue that
        psychologically-valued "intangibles" and "algorithms" can't
        translate into market cap? Microsoft has $276.2 billion in
        purely psychological value, but that's real money.

        Actually, you want to take it one further, money *itself*
        is just a psychological construct. What is my bank account
        balance, besides a number stored on a hard disk at my bank?
        That's all it is, a number on a hard disk somewhere. Its
        "value" is entirely psychological.

        > To look at some of the possible winners, I'd read all the
        > articles on the "Exponential Economy" concept at Nathan
        > Mhyrvold's site below:
        >
        > http://www.intellectualventures.com/RecentNews/
        >
        > Mhyrvold really gets it, and is doing some good singularity
        > metrics. He sees that biotech is poised for a
        > computationally-driven phase of exponential growth, and
        > this will create amazing value for human society.

        Oh, Mhyrvold has "gotten it" for a long time. I went to
        some speeches he gave when I was at Microsoft. He is quite
        a character. All the news articles about him always mention
        he's a "gourmet chef" and that totally fits him -- he's a
        very jolly, chubby, bearded, fellow. I'd been wondering
        what he was up to since he left Microsoft a couple of years
        ago. I was kinda worried he was just spending all his time
        cooking and eating. I'm glad to see he's doing some more
        interesting stuff :)

        Anyway, around 1992 he gave a speech about Moore's Law, and
        was talking about how we'd see a factor of a million
        increase in the upcoming decades, and how this had
        surprising consequences, such as long distance phone
        service becoming free. He said that voice traffic uses so
        little bandwidth, that, with the exponential growth in
        bandwidth, it would become a tiny trickle and thus had to
        become free. And the mind of everybody in the room was
        boggled by that one! But look at where we are today (only
        10 years later). There's "dark fiber" everywhere. And the
        only reason I can tell why long distance phone service
        isn't free is because there are government regulations
        propping up the price. That is, if you want to set yourself
        up as a cheap long-distance company, you still have to pay
        a per-minute local access fee of about 2 cents on each end
        of the long distance call, which puts a minimum at the cost
        of a long distance call. If you look at the prices people
        are charging for long distance, the lowest prices on the
        market are only fractions of a penny above the regulatory
        limit. With all the development in voice-over-IP (VOIP)
        technology, it's clear that if the government doesn't
        change the regulations, people will figure a way to route
        right around them through their internet connections. But
        anyway, my point is that Myhrvold's 1992 prediction was
        absolutely right. It's easy to forget that in 1992, the
        concept of free long distance seemed unthinkable. He really
        nailed that one.

        I would advise everyone to go check out the Myhrvold link
        John gave. Myhrvold really knows what he's doing.

        > Best,
        >
        > JS
        >
        > http://www.SingularityWatch.com
        > Understanding Accelerating Change

        Wayne

        --- John Smart <john.smart@...> wrote:
        >
        > > In fact, if you look at the graph in Kurzweil's book, where
        > > he plots technological growth on 5 different substrates,
        > > you can see that it did not change EVEN during World War
        > > II. Even something as catastrophic as World War II has NO
        > > IMPACT on the rate of technological change!
        >
        > Bravo Wayne! Thanks for that insightful analysis. These
        > observations can be
        > extended even further, as I present in my book. Any good
        > history of
        > technology text, in the West or East, shows that technological
        > advances have
        > stayed on a very smooth exponential acceleration over all
        > recorded history.
        > We've seen countless collapses of *civilizations* (Egyptian,
        > Roman, Minoan,
        > Greek) but looking closely at any of them, you discover that
        > the
        > technologies rapidly filtered out into surrounding
        > environments, were
        > parallel invented, rediscovered, were usefully mutated, etc.
        > Same is true
        > with written literature. The burning of the Library of
        > Alexandria, if you
        > look into it, was a myth. There were a number of ransacks of
        > that place,
        > over many years, and several scholars have proposed that a lot
        > of the books
        > made it out. If we charted the number of written characters
        > since the start
        > of writing I'd also expect to see a smooth exponential
        > acceleration.
        >
        > I think we see this because, while human social systems may be
        > desirable or
        > undesirable, technological advances have broad positive
        > feedback loops
        > within any society. Technology apparently solves deep human
        > problems, in an
        > incremental manner. We stay on that acceleration because human
        > creativity
        > doesn't flag. And catastrophes, whether war or depression,
        > will accelerate
        > certain types of innovation, even as they dampen others.
        > ("Necessity and
        > invention").
        >
        > In ancient times, you can look at the number of humans on the
        > planet, take
        > an average creativity function independent of social factors,
        > and get your
        > exponential, when tracking technology. But it gets even better
        > than that
        > once you've moved to written records of technology
        > development, because then
        > you can rediscover with a fraction of previous effort, and you
        > can start
        > moving into numeric human independence in tech development
        > (growth in
        > technological autonomy, a process which will be completed
        > within this
        > century). Algorithms become the new keys to the kingdom.
        >
        > Of course it's difficult to get clean definitions for all
        > this, but you can
        > take multiple metrics and follow them over thousands of years
        > with current
        > records and see what falls out. Computation per dollar is one.
        > Number of
        > printed words is another. Average communication (verbal and
        > technological)
        > is another. Energy density of your machinery is yet another,
        > and my current
        > favorite (read Chaisson, Cosmic Evolution).
        >
        > Unfortunately, though, I don't think this necessarily
        > translates into market
        > capitalization. Because we've moved to an intangibles economy,
        > what I call
        > an Algorithmic Economy, we are mostly ascribing relative
        > psychological value
        > to algorithmic intangibles. Book value has been steadily
        > losing its meaning
        > over the last century, so now market cap represents primarily
        > a social
        > variable that tracks the mass manic-depressiveness of the
        > population's
        > psychological impressions of the system, to use your Warren
        > Buffet quote. I
        > could easily see a ten year average recession, for example, if
        > we felt we
        > deserved self-imposition of that kind of correction (guilt for
        > the excesses
        > of Kosmo and Sock Puppets? :), though I'm sure there would
        > also be some
        > exponential winners over that time. To look at some of the
        > possible winners,
        > I'd read all the articles on the "Exponential Economy" concept
        > at Nathan
        > Mhyrvold's site below:
        >
        > http://www.intellectualventures.com/RecentNews/
        >
        > Mhyrvold really gets it, and is doing some good singularity
        > metrics. He sees
        > that biotech is poised for a computationally-driven phase of
        > exponential
        > growth, and this will create amazing value for human society.
        > As Murphy and
        > Topel have estimated in their book, Exceptional Returns,
        > eliminating all
        > deaths from heart disease would increase national wealth by
        > $48 trillion.
        > Eliminating cancer would generate another $47 trillion. A
        > hundred trillion
        > infusion into the economy just two domains, is the order of
        > effect of
        > technological acceleration we can expect over the next 30-50
        > years as we
        > slide into the high end of the exponential economy, just prior
        > to
        > singularity.
        >
        > Best,
        >
        > JS
        >
        > http://www.SingularityWatch.com
        > Understanding Accelerating Change
        >
        >
        >
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      • John Smart
        Thanks for the nice response, Wayne. ... I d respectfully disagree. Human psychology isn t driving the Moore s acceleration. The value of that double
        Message 3 of 5 , Jun 3, 2002
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          Thanks for the nice response, Wayne.

          Wayne writes:
          > the way I see it, the value of
          > *everything* is psychological.

          I'd respectfully disagree. Human psychology isn't driving the Moore's
          acceleration. The value of that double exponential computational growth that
          the physics of the universe are *allowing* to be easily discovered by modern
          civilization will be settled in terms of universal adaptation, not the court
          of human psychology. Market valuations will move from primarily what humans
          value to primarily what machines value as we enter the Symbiotic Age.

          Your idea of an energy density metric for economics is fascinating. Yet to
          fully develop it I think it would have to include a significant nonhuman
          computational component. Humans are on their own S curve, and that includes
          human consumption of all goods, including energy. If you look at the DOE's
          projections, you'll see the data shows we are leveling off in the global use
          of energy, strongly correlated with the fact that our population won't be
          going above 10 billion, and will be lower in 2100 than in 2060. (see
          http://www.nature.com/nature/fow/010802.html). The reduction of world energy
          consumption velocity that has *already* occurred, however, is even less
          widely known today than the reduction in population velocity. I think it is
          driven by a combination of:
          1. saturation in the S curve of the soon-to-be-surpassed substrate of
          biological humanity
          2. the fact that systems in the tech substrate become far more energy
          efficient with each new generational form (what I call MEST efficiency).
          3. Machines will be "doing" a lot less and "simulating" a lot more, the
          smarter they get. This latter point may be the least defensible at present,
          as it requires accepting a very controversial hypothesis, computational
          closure, explained in my book summary, Exploring the Technological
          Singularity. I can send that to any of you BA Futurists on request, if you'd
          like to be added to the reviewer group.

          Wayne writes:
          > He (Mhyrvold) said that voice traffic uses so
          > little bandwidth, that, with the exponential growth in
          > bandwidth, it would become a tiny trickle and thus had to
          > become free. And the mind of everybody in the room was
          > boggled by that one!

          Yeah, so cool to see that kind of foresight out there in our futurist
          community.

          Take care,

          JS
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