Economics and Technology — Heavenly Match or Dangerous Duo?

Who Owns the FutureIn our post Great Recession world, it is difficult to think deeply about the future of culture without considering economics realities. While there are many ways to look at the economic disruptions of the last years, when it comes to understanding the deeper historical forces driving economic events, virtual reality pioneer Jaron Lanier’s quirky and brilliant book, Who Owns the Future, is a revelation. He has thought deeply about the cultural impact of the information economy and the rise of powerful companies like Google, Facebook and Amazon. His economic insights are original, his social analysis intriguing and even his more existential considerations are provocative (though that is mostly the subject of his previous book, You are Not a Gadget).

Lanier asks a question that also lurks behind today’s headlines and has never been far from the lips of thoughtful economists. Are middle classes natural? They are part of the lifeblood of capitalism, but are they an inevitable result of the rise of wealth that has accompanied modernism and the industrial revolution? Or are they more tenuous creations, dependent on fortuitous policies and politics, made possible by the wealth that capitalism’s creates, but still dependent on the moderating, shaping influence of human institutions? Lanier writes:

Marx argued that finance was inherently hopeless technology and that market systems will always degrade into the rut of plutocracy. A Keynesian economist would accept that ruts exist but would also add that falling into ruts can be staved off indefinitely with interventions in order to survive…Great wealth is a naturally persistent, generation to generation, as is deep poverty, but a middle-class status has not proven to be stable without a little help. All the examples of long-term stable middle classes we know of relied on Keynesian interventions as well as persistent mechanism like social safety nets to moderate market outcomes.

Lanier worries that the increasing speed of technological change could be tipping that tenuous balance, changing the fundamental equation, destroying middle class jobs in sector after sector of our economy at a rate that far exceeds new job creation.  The argument usually employed is that as certain sectors lose jobs as a result of technological change, new industries are simultaneously created. Buggy whips producers are long gone. Electric car battery factories are on the rise. The once mighty GM went bankrupt a few years ago, but Apple and Google are thriving. Creative destruction is all part of a healthy economy. To impede that process is to restrict the wealth creating mechanism that built modernity. That is all certainly true, but as Lanier points out the social consequences of “creative destruction” may be changing as technology moves forward. Google and Apple employ a small percentage of the people that GM did at its height. And there is concern that an information economy, despite its many significant positives, might not be able to easily sustain the job creation capacity that our industrial economy once did.

Who Owns the Future introduces us to new terms like the idea of a “siren server”. Lanier defines them as “elite computers…on a network…characterized by narcissism, hyperamplified risk aversion and extreme information asymmetry.” Think Amazon, Google, Facebook, Orbitz. The powerful influence of a siren server can create whole industries all built to work around the preferences of that information node. Entire companies are structured around Google’s search algorithms. Millions moderate their behavior to fit the parameters of Amazon’s preferences. Wal-Mart, he suggests, was siren server from a slightly earlier era.  Their success was driven, not just by the China price, or by small town economics, but by achieving unmatched market efficiencies driven by information asymmetry. Now Amazon is playing that exact game in a new decade, and improving it. Lanier points out that those who own or are very close to siren servers are making most of the great fortunes of our age. We can debate the pros and cons of these informational economic engines, but even the distinction, which he draws out over the course of the book, makes you think about the forces shaping our lives in new ways.


Lanier is also suspicious of “free” economy, pointing out that as more and more services become free, we all benefit, but we also pay a hidden cost. Music is becoming free but musicians, with the exception of celebrities and stars, struggle to make a living. News is free but journalism has suffered greatly. Education looks to be headed the same way. More and more technology companies provide free services and use advertising as their primary business model. Is that sustainable over the long run? Can an information economy built on “free” provide the islands of middle class wealth that have been so essential to the stability of the developed world? Or will the fast-rising waters of massive technological disruption swamp them?

While Lanier’s concerns are many, he is far from a Luddite. The issue for him is not whether we go forward, but how we go forward. Are there ways to best shape outcomes in the information economy in ways that produce not a race to the bottom or a winner take all economy, but the bell curve—some rich, some poor, most in the middle—that is the sign of societal health.

In the developed world, it’s easy to forget that the great advances of our century—social, political and economic—have been dependent upon the health of our unprecedented middle classes. If they begin to falter, the political implications could be far-reaching. The wrath of America’s so-called “Tea Party” and Occupy Wall Street’s activism point to kind of anger that will proliferate if a winner take all system become the norm of our economy. Lanier points out that when it last looked like capitalism might destroy the middle class and create a plutocracy, we developed policies that curtailed the disparities, bolstered the labor movement and also staved off the over-reaction of a socialist revolution—all while encouraging the forward-looking growth of our economy. The information revolution for all its many wonders and opportunities presents new but related challenges to our global policymakers. How do we embrace the future being created in technological hubs around the world while actively promoting the best possible outcomes of those changes? Lanier ‘s work is indispensable in that critical conversation.

Progress or Pessimism: How Should We Think about the Future?

optimistic_pessimisticOver the last eight months, I’ve been traveling a great deal. In the context of a recent book tour, I’ve had the chance to speak to many different groups of people in cities around the United States about the future of consciousness and culture. In those talks, dinner conversations, salon discussions, bookstores Q&As and media interviews, I’ve had a unique opportunity to engage with people from all ages and many walks of life. We’ve pursued questions that get at the heart of the human endeavor, and I’ve appreciated hearing how they think about the big questions—where we’ve come from, where we are going, and what it all means. And among all the different attitudes and ideas about the future I encountered, one thing stood out. I was surprised to find out how many people are quite pessimistic. They express a quiet but real despair about humanity’s potential.

Between the challenges posed by climate change, the economic difficulties of developed and developing nations, the dangerous mix of technology and terrorism, the ongoing poverty and suffering of billions of our fellow humans, and the seeming inability of governments to respond to these significant issues and others, people find themselves losing faith in our collective future. They are pessimistic, not that we could respond to the issues that beset us, but that we will. We may have the ability, but they observe that we lack the political or social will and global solidarity to make the choices necessary to put us on a positive track forward.

If once is an example, twice is a coincidence, and three times or more is a trend, then pessimism is a serious trend out there among many progressives. But what makes this anecdotal observation particularly interesting is that there is another active trend establishing itself on the front pages of our media these days and influencing the edges of our culture as well. Optimism. I see it every day, in books and articles by some of the smartest, best informed, most forward-thinking of our culture’s intelligentsia. There is a resurgence of a kind of unbridled optimism about the possibilities of the future—from “rational optimist” Matt Ridley’s debunking of apocalyptic thinking to Steven Pinker’s assertions that violence has been decreasing throughout history in his bestseller The Better Angels of Our Nature, to Steven Johnson’s trumpeting of technology and peer networks in Future Perfect, to Peter Diamandis’ techno-inspired optimism expressed in his book Abundance. These thinkers argue that we simply don’t appreciate how good things are in comparison to how they have been historically, and how much better they are likely to become in the near and far future. They point out how far the modern world has come, how much technology and industry have already transformed human culture for the better, and they allude to new economic, social, and technological revolutions on the horizon. While they vary in tone and content, the overall message stands in stark contrast to the perspectives of so many whom I met on the road this last year. Pessimism is misguided, they tell us. Optimism is the only rational conclusion to be drawn from the trajectory of history.

So how do we negotiate the conundrum of these contradictory conclusions? Should we feel exuberant or terrified about the future? Should we feel encouraged or alarmed by the trends of history? Is optimism or pessimism the rational conclusion of our moment? My own problem is that I identify to some degree with both positions. I find myself embracing the optimist’s convictions while simultaneously being moved by the pessimist’s concerns. Is that a tenable place to stand? Am I being sensible or schizophrenic? Am I trying to have it both ways, or is there a way to integrate these two opposing values?

The Power of Innovation

“Ever since Thomas Robert Malthus,” Matt Ridley writes in his recent Wired article, “doomsayers have tended to underestimate the power of innovation.” He is optimismright. There is a longstanding tendency in human behavior to see the world around us as being in decline, no matter when we are living. In so doing, we often fail to see the actual movement of progress, technological and otherwise. We imagine Golden Ages past, when life was simpler, easier, and more peaceful, despite the fact that there is little evidence that such a time ever existed. We forget how much technology and innovation have changed our world and we look to the past through rose-colored glasses. And we also inappropriately project the problems of the present onto the future, forgetting that life is never static and the world is ever in motion, missing the small but significant changes that are improving our world every day. In Future Perfect, Johnson notes that the media tends to focus on the dramatic, bad or good, missing deeper, but less sexy historical narratives of incremental change. “You can always get bandwidth by declaring yourself a utopian. You can always get bandwidth by mourning the downward trend lines for some pressing social issue,” writes Johnson, “But declaring that things are slightly better than they were a year ago…never makes the front page.”

The most famous contemporary example of failing to take into account technological innovation is Paul Erlich and his concerns about the “Population Bomb” in the 1970s. His alarmist writings about human population failed to take into account the kind of technological breakthroughs that have steered us away from the mass calamity and famines he predicted decades ago. In his Wired article, Ridley points to Erlich’s failure again and again, trumpeting the power of innovation over the all-too-human tendency toward apocalypticism. He makes a convincing case that such an approach to the future is rife with irrational conclusions, and out of touch with modernity’s ability to innovate its way out of danger. And he concludes by mentioning climate change in the current list of over-the-top prognostications of future apocalypses.

Defending Modernism

My concern with Ridley’s thinking, and many of the authors I have mentioned here, is not their scholarship or careful research, or even their general conclusions. It is that there is a subtle but powerful agenda behind their work, one that we should surface in order to better understand the context of their thinking. They are defenders of a modernist worldview’s promise of scientific and technological innovation providing material abundance and leading us forward in history. They are attempting to rescue modernity and the values of the Western Enlightenment from the assaults of those who don’t appreciate just how far and how fast human culture has come in the last couple hundred years. These optimists are reminding us that the modernist values of democracy, industrialization, economic prosperity, and techno-futurism have created conditions for human culture that are so positive relative to the past that we actually begin to forget just how messed up the world was before the eighteenth and nineteenth centuries. And I applaud their efforts, albeit with caution.

There is not the time here to fully explain the history of these motives, but suffice to say that much of European and American intellectual scholarship over the last several decades has not been kind to the previous several centuries of human civilization. It has placed many of humanity’s ills at the doorstep of industrialization and held modernity responsible for much of what is wrong with the contemporary human condition. And the idea of progress, so central to the modernist worldview, was all but left for dead after the two World Wars.

Pinker, Ridley, Johnson and others are bucking this trend with a vengeance. They are attempting to provide a rational basis for a sense of progress in history and laying the foundation for a positive futurism. They have debunked significant errors in contemporary thinking about both the past and the future. But it’s this more defensive part of their work that concerns me. Modernity is not without significant problems, and we need to confront them. Pessimistic and apocalyptic thinking may indeed run counter to reality, but that doesn’t mean reality is inherently sunny. Progress, technological or otherwise, can be brutally disruptive if unmanaged by capable hands. We are entering a period in which the global scale of human impact needs a global scale of intelligent response. Optimism can carry with it a concurrent blindness, especially when it’s driven by the need to prove wrong all of those countercultural thinkers who are telling us that capitalism has failed and modernity’s promise is a mirage.

The Middle Way

Today, we face challenges unlike any that humanity has ever dealt with, problems caused by our own incapacity to appreciate the far-reaching consequences, both good and bad, of our technological revolutions. Climate change is just one such problem, and Ridley can’t help but play it down in his article, given how environmentalists have trafficked in exactly the kind of sky-is-falling thinking he is decrying. But we can’t let ideology trump sober science or cause us to turn away from the potential magnitude of the issue. We may not have cause for panic, but that doesn’t mean there is not reason for real concern, not just on climate change but on a whole host of issues. Just because a case can often be overstated doesn’t mean it’s invalid. Just because the environmental movement has tended toward a kind of eco-apocalypticism doesn’t mean that climate change is a paper tiger. Yes, pessimists can often look at history ass-backwards and draw negative conclusions about modernity that are unwarranted, but that doesn’t mean that everything else they say is wrong and can be dismissed as false prophecy. And here is the delicate part: If we’re more concerned about defending modernity than actually embracing the world as it is and the evidence as we find it, we may downplay and dismiss critical issues that need our attention.

I love the energy and data-driven enthusiasm of the optimists and I recommend their work (especially to the pessimists). The message of progress in history is encouraging and so often under-appreciated in today’s cultural climate. But the pessimists should not be summarily dismissed. The specific content of many of their concerns can be embraced, even if we decide not to embrace the context of their fears. I want my optimism to be infused with realism, to be able to stand unflinching in the face of the pessimists concerns, to embrace their legitimate issues even while rejecting all the sky-is-falling rhetoric that has often been the currency of those who are drawing our attention to the problems that confront our society. Ultimately, we can’t be pessimists and optimists at the same time, and given the choice, I far prefer the latter. But there are real dangers to optimism, no less so in the form it travels in today. By recognizing them, we can give others and ourselves justifiable faith in the future while fully confronting the dangers ahead.