Book Club: The Industrial Revolution and its Discontents, Code Economy, ch. 5

1. The Industrial Revolution and its consequences have been a disaster for the human race. They have greatly increased the life-expectancy of those of us who live in “advanced” countries, but they have destabilized society, have made life unfulfilling, have subjected human beings to indignities, have led to widespread psychological suffering (in the Third World to physical suffering as well) and have inflicted severe damage on the natural world. The continued development of technology will worsen the situation. It will certainly subject human beings to greater indignities and inflict greater damage on the natural world, it will probably lead to greater social disruption and psychological suffering, and it may lead to increased physical suffering even in “advanced” countries. –Kaczynski, Industrial Society and Its Future

The quest to find and keep a “job for life”–stable, predictable work that pays enough to live on, is reachable by available transportation, and lends a sense of meaning to their daily lives–runs though every interview transcript, from those who are unemployed to those who have “made it” to steady jobs like firefighting or nursing. Traditional blue-collar work–whether as a factory worker or a police officer–has become increasingly scarce and competitive, destroyed by a technologically advanced and global capitalism that prioritizes labor market “flexibility”… Consequently, the post-industrial generation is forced to continuously grapple with flux and contingency, bending and adapting to the demands of they labor market until they feel that they are about to break. –Silva, Coming up Short: Working-Class Adulthood in an Age of Uncertainty

The historical record confirms that the realities of the ongoing processes of mechanization and industrialization, as noted early on by Lord Byron, were very different from the picture adherents to the wage fund theory held in their heads. While the long-term impact of the Industrial revolution had on the health and well-being of the English population was strongly positive, the first half of the nineteenth century was indeed a time of exceptional hardship for English workers. In a study covering the years 1770-1815, Stephen Nicholas and Richard Steckel report “falling heights of urban-and rural-born males after 1780 and a delayed growth spurt for 13- to 23-year old boys,” as well as a fall in the English workers’ height relative to that of Irish convicts. By the 1830s, the life expectancy of anyone born in Liverpool and Manchester was less than 30 years–as low as had been experienced in England since the Black Death of 1348. –Auerswald, The Code Economy

On the other hand:

Chapter 5 of The Code Economy, Substitution, explores the development of economic theories about the effects of industrialization and general attempts at improving the lives of the working poor.

… John Barton, a Quaker, published a pamphlet in 1817 titled, Observations on the Circumstances Which Influence the Condition of the Laboring Classes of Society. … Barton began by targeting the Malthusian assumption that population grows in response to increasing wages. … He began by noting that there was no a priori reason to believe that labor and capital were perfect complements, as classical economists implicitly assumed. The more sensible assumption was that, as wages increased, manufacturers and farmers alike would tend to substitute animals or machines for human labor. Rather than increasing the birth rate, the higher wages brought on by the introduction of new machinery would increase intergenerational differences in income and thus delay child-bearing. Contrary to the Malthusian line of argument, this is exactly what happened.

There’s an end note that expands on this (you do read the end notes, right?) Quoting Barton, 1817:

A rise of wages then does not always increase population… For every rise of wages tends to decrease the effectual demand for labor… Suppose that by a general agreement among farmers the rate of agricultural wage were raised from 12 shillings to 24 shillings per week–I cannot imagine any circumstance calculated more effectually to discourage marriage. For it would immediately become a a most important object to cultivate with as few hands as possible; wherever the use of machinery, or employment of horses could be substituted for manual labor, it would be done; and a considerable portion of existing laborers would be out of work.

This is the “raising the minimum wage will put people out of work” theory. Barton also points out that when people do manage to get these higher-paid jobs, they will tend to be older, more experienced laborers rather than young folks looking to marry and start a family.

A quick perusal of minimum wage vs. unemployment rate graphs reveals some that are good evidence against minimum wages, and some that are good evidence in favor of them. Here’s a link to a study that found no effects of minimum wage differences on employment. The American minimum wage data is confounded by things like “DC is a shithole.” DC has the highest minimum wage in the country and the highest unemployment rate, but Hawaii also has a very high minimum wage and the lowest unemployment rate. In general, local minimum wages probably reflect local cost of living/cost of living reflects wages. If we adjust for inflation, minimum wage in the US peaked around 1968 and was generally high throughout the 60s and 70s, but has fallen since then. Based on conversations with my parents, I gather the 60s and 70s were a good time to be a worker, when unskilled labor could pretty easily get a job and support a family; unemployment rates do not seem to have fallen markedly since then, despite lower real wages. A quick glance at a map of minimum wages by country reveals that countries with higher minimum wage tend to be nicer countries that people actually want to live in, but the relationship is not absolute.

We might say that this contradicts Barton, but why have American wages stagnated or gone down since the 60s?

1. Automation

2. Emergence of other economic competitors as Europe and Japan recovered from WWII

3. Related: Outsourcing to cheaper workers in China

4. Labor market growth due to entry of women, immigrants, and Boomers generally

Except for 2, that sounds a lot like what Barton said would happen. Wages go up => people move where the good jobs are => labor market expands => wages go down. If labor cannot move, then capitalists can either move the businesses to the labor or invest in machines to replace the labor.

On the other hand, the standard of living is clearly higher today than it was in 1900, even if wages, like molecules diffusing through the air, tend to even out over time. Why?

First, obviously, we learned to extract more energy from sources like oil, coal, and nuclei. A loom hooked up (via the electrical grid) to an electric turbine can make a lot more cloth per hour than a mere human working with shuttles and thread.

Second, we have gotten better at using the energy we extract–Auerswald would call this “code.”

Standards of living may thus have more to do with available resources (including energy) and our ability to use those resources (both the ‘code” we have developed and our own inherent ability to interact with and use that code,) than with the head-scratching entropy of minimum wages.

Auerswald discusses the evolution of David Ricardo’s economic ideas:

By incorporating the potential for substitution between capital and labor, Ricardo led the field of economics in rejecting the wage fund theory, along with its Dickensian implications for policy. He accepted the notion the introduction of new machinery would result in the displacement of workers. The upshot was that the workers were still assumed to be doomed, but the reason was now substitution of machines for labor, not scarcity of a Malthusian variety.

Enter Henry George, with a radically different perspective:

“Like a flash it came over me that there was the reason of advancing poverty with advancing wealth. With the growth of population, land grows in value, and the men who work it must pay more for the privilege.” …

George asserted that increasing population density, (not, as Malthus claimed, population decline) was the source of increased prosperity in human societies: “Wealth is greatest where population is densest… the production of wealth to a given amount of labor increases as population increases.”  The frequent interactions among people in densely populated cities accelerates the emergence and evolution of code. However, while population growth and increased density naturally bring increased prosperity, they also, just as naturally, bring increasing inequality and poverty. Why? Because the fruits of labor are inevitably gathered by the owners of land.

In other words, increasing wages => increasing rents and the workers are right back where they started while the landlords are sitting pretty.

In sharp contrast with Karl Marx, … George stated that “the antagonism of interest is not between labor and capital… but is in reality between labor and capital on the one side and the land ownership on the other.” The implication of his analysis was as simple as it was powerful: to avoid concentrating wealth in the hands of the few, it was the government’s responsibility to eliminate all taxes on capital and laborers, the productive elements of the economy, and to replace those taxes with a single tax on land.

Note: not a flat tax on land, but a tax relative to the land’s sale value.

I was glad to see Henry George in the book because I enjoy George’s theories and they are under-discussed, especially relative to Marxism. You will find massive online communities of Marxists despite the absolute evidence that Marxism is a death machine, but relatively few enthusiastic Georgists. One of the things I rather appreciate about Georgism is its simplicity; the complication of the tax code is its own, additional burden on capitalists and workers alike. Almost any simplified tax code, no matter how “unfair,” would probably improve maters a great deal.

But there’s more, because this is a dense chapter. Auerswald notes that the increasing complexity of code (ie, productivity) has lead to steadily increasing standards of living over the past two centuries, at least after the Industrial Revolution’s initial cataclysm.

Quoting economist Paul Douglas, some years later:

“The increased use of mechanical appliances in offices has tended to lower the skill required. An old-fashioned bookkeeper, for instance, had to write a good hand, he had to be able to multiply and divide with absolute accuracy. Today his place is taken by a girl who  operates a book-keeping machine, and it has taken her a few weeks at mot to become a skilled bookkeeper.” In other words, the introduction of machinery displaced skilled workers for the very same reason it enhanced human capabilities: it allowed a worker with relatively rudimentary training to perform tasks that previously required a skilled worker.

…”Another way of looking at it, is this: Where formerly the skill used in bookkeeping was exercised by the bookkeeper, today that skill is exercised by the factory employees who utilize it to manufacture a machine which can do the job of keeping books, when operated by someone of skill far below that of the former bookkeeper. And because of this transfer of skill form the office to the factory, the rewards of skill are likewise transferred to the wage-earner at the plant.”

This is a vitally important pint… The essence of this insight is that introducing more powerful machines into the workplace does more than simply encode  into the machine the skills or capabilities that previously resided only in humans; it also shifts the burden of skill from one domain of work to another. … A comparable shift in recent decades has been from the skill of manufacturing computing machines (think IBM or Dell in their heydays) to that of creating improved instructions for computing machines’ the result has been a relative growth in programmers’ wages. The underlying process is the same. Improvements in technology will predictably reduce demand for the skills held by some workers, but they also will enhance the capabilities of other workers and shift the requirements of skill from one domain of work to the other.”

The problem with this is that the average person puts in 15-20 years of schooling (plus $$$) in order to become skilled at a job, only to suddenly have that job disappear due to accelerating technological change/improvement, and then some asshole one comes and tells them they should just “learn to code” spend another two to four years unemployed and paying for the privilege of learning another job and don’t see how fucking dispiriting this is to the already struggling.

The struggle for society is recognizing that even as standards of living may be generally rising, some people may absolutely be struggling with an economic system that offers much less certainty and stability than our ancestors enjoyed.

A final word from Auerswald:

… work divides or “bifurcates” as code advances in a predictable and repeatable way. The bifurcation of work in a critical mechanism by which the advance of code yields improvements in human well-being at the same time as it increases human reliance on code.

Which came first, the City or the Code? (book club Code Economy Ch 2)

The Code of Hammurabi

Writing, which is itself a form of code, enable humans to communicate code. Cities grow as code evolves. –Auerswald

Welcome to The Code Economy: A Forty-Thousand Year History, by Philip E. Auerswald. Chapter Two: Code looks at two epochal developments in human history: writing and cities.

One of the earliest pieces of writing we have uncovered is the Sumerian Hymn to Ninkasi, Goddess of Beer, which contains, yes, a recipe for making beer (translation by Miguel Civil):

Your father is Enki, Lord Nidimmud,
Your mother is Ninti, the queen of the sacred lake.
Ninkasi, your father is Enki, Lord Nidimmud,
Your mother is Ninti, the queen of the sacred lake.

You are the one who handles the dough [and] with a big shovel,
Mixing in a pit, the bappir with sweet aromatics,
Ninkasi, you are the one who handles the dough [and] with a big shovel,
Mixing in a pit, the bappir with [date] – honey,

You are the one who bakes the bappir in the big oven,
Puts in order the piles of hulled grains,
Ninkasi, you are the one who bakes the bappir in the big oven,
Puts in order the piles of hulled grains,

You are the one who waters the malt set on the ground,
The noble dogs keep away even the potentates,
Ninkasi, you are the one who waters the malt set on the ground,
The noble dogs keep away even the potentates,

You are the one who soaks the malt in a jar,
The waves rise, the waves fall.
Ninkasi, you are the one who soaks the malt in a jar,
The waves rise, the waves fall.

You are the one who spreads the cooked mash on large reed mats,
Coolness overcomes,
Ninkasi, you are the one who spreads the cooked mash on large reed mats,
Coolness overcomes,

You are the one who holds with both hands the great sweet wort,
Brewing [it] with honey [and] wine
(You the sweet wort to the vessel)
Ninkasi, (…)(You the sweet wort to the vessel)

The filtering vat, which makes a pleasant sound,
You place appropriately on a large collector vat.
Ninkasi, the filtering vat, which makes a pleasant sound,
You place appropriately on a large collector vat.

When you pour out the filtered beer of the collector vat,
It is [like] the onrush of Tigris and Euphrates.
Ninkasi, you are the one who pours out the filtered beer of the collector vat,
It is [like] the onrush of Tigris and Euphrates.

Sumerian tablet recording the allocation of beer

You guys requested beer or wine with your books, so here you go.

The hymn contains two layers of code–first, there is the code which allows each symbol or character to stand for a particular sound, which let the author write down the recipe and you, thousands of years later, decode and read the recipe; and second, there is the recipe itself, a code for producing beer.

The recipe’s code likely far predates the hymn itself, as humans had begun brewing beer at least a couple thousand years earlier.

Writing and cities go hand in hand; it is difficult to imagine managing the day-to-day need to import food (and water) for thousands of people without some ability to encode information. As cities grow larger, complexity grows: one man in the woods may relieve himself behind a tree; thousands of people packed into a square mile cannot.

Each solved problem, once routinized, becomes its own layer of code, building up as the city itself expands; a city of thousands or millions of people cannot solve each person’s problems anew each day.

Gobekli Tepe, Turkey

But which came first, the city or the alphabet? Did the growth of cities spur innovations that improved agricultural output, or did agricultural innovations spur the growth of cities?

For example, settlement and construction appear to have gotten underway at Jericho (one of the world’s oldest inhabited cities) around 9 or 10,000 BC and at the mysterious Gobekli Tepe site began around 7-9,000 BC, before agriculture emerged in the region.

Writing developed a fair bit later, developing from clay shapes to shapes impressed in clay between 8,000 and 4,000 BC.

Amphitheater, Norte Chico, Peru

Others of the world’s earliest civilizations had either no or very little writing. The Norte Chico civilization of Peru, for example; by the time the Spaniards arrived, the Inca had an accounting system based on the quipu, a kind of string abacus, but appear to have not yet developed a true writing system, despite their palaces, cities, roads, emperor, and tax collectors. (Here is my previous post on Norte Chico.)

The Great Bath of Mohenjo-daro

The extensive Indus Valley civilization had some form of symbolic encoding, but few of their inscriptions are longer than 4 or 5 characters–the longest inscription found so far is 26 symbols, spread over three different sides of an object. Not exactly an epic–but the Indus Valley Civilization was nevertheless quite large and impressive, supporting perhaps 5 million people. (Previous post on the Indus Valley.)

Auerswald documents some of the ways cities appear to drive innovation–and to “live”:

The Santa Fe team found that cities are like biological organisms when it comes to “metabolic” urban processes that are analogous to nutrient supply and waste removal–transportation, for example, ha a branching structure much like veins or bronchi–but that cities differ fundamentally from biological organisms when it comes to indicators reflecting the creation and transmission of code. measuring the size of cities based on population and on the urban “metabolism” using metrics such as wages, GDP, electric power and gasoline consumption, and total  road surface, the team found a systematic relationship between city size and indicators of the supply of “nutrients” and waste removal… However, while metabolic indicators do not keep pace with the size of cities as they grow, indicators relating to the creation and transmission of code increase at a greater rate than city size. … In short, the creation of ideas accelerates with city growth, whereas the cost of new infrastructure is minimized.

This intriguing macro-level departure from the inverse relationships that hold for organisms ends up risking more questions about the evolution of cities than it answers: What mechanism enables larger cities to produce disproportionately more innovation and wealth than smaller cities?

Data Economy has a fascinating article in a similar vein: Street Smarts: The Rise of the Learning City:

The city as a brain

An amalgam of terms that have been used for parallel conceptions of the Smart City among them cyberville, digital city, electronic communities, flexicity, information city, intelligent city, knowledge-based city, MESH city, telecity, teletopia, ubiquitous city, wired city.

However the one I would like to propose, with population movement in mind, is The Learning City.

The term is based on a combination of two theories The Ego City and The Flynn Effect.

In 2009 Neurobiologist Mark Changizi from the Rensselaer Polytechnic Institute released a paper entitled Ego City: Cities Are Organized Like Human Brain.

Changizi sees strikingly real similarities between the brain and a city.

The central idea being that they organise and evolve similarly due to the need for efficiency.

As brains grow more complex from one species to the next, they change in structure and organisation in order to achieve the right level of reciprocity.

This is analogous to the widening of streets in cities.

The research team found mutual “scaling laws” for brains and cities.

For example, as the surface area of a brain or city grows, the number of connectors (neurons or highways) increased at a similar rate for each.

Likewise, a bigger city needs more highway exits in the same proportion as a bigger brain needs more synapses connecting neurons.

“The brain is like a city.

Cities develop and grow bigger and may get problems with roads and infrastructure, which is similar to what happens to our brains when we get older”, notes Håkan Fischer, Professor of Biological Psychology at the Department of Psychology at Stockholm University.

 The learning city

This is curious when taken in the context of The Flynn Effect.

Intelligence Researcher James Flynn found that every decade without fail the human population scored higher on IQ tests.

An average increase of 3 points per decade.

His thesis suggests that the more information we as humans have to absorb and compute leads to an increase in IQ.

In this instance the increased information is data collected within the city.

As cities gain more data they adapt and in turn get smarter.

Human brains faced with a busier world filled with more information brings about an increase in IQ from generation to generation.

As people migrant to cities creating a more complex environment for the city it to must gather this data, learn and raise its Smart City IQ.

This is The Learning City.

On the other hand, the data Auerswald cites–from the “Santa Fe Team”–only looks at cities from the US, China, the EU, and Germany. How would this data look if it incorporated other megacities, like Manila, Philippines (the world’s densest city); Sao Paolo, Brazil; Bombay, India; Caracas, Venezuela; Karachi, Pakistan; or Jakarta, Indonesia? Of the world’s ten biggest cities, only two–Seoul, #1, and Tokyo, #10–are in the first world. (#9 Shanghai, is well on its way.)

#2 Sao Paolo might be more energy efficient than villages in the Brazilian hinterland (or it may not, as such towns may not even have electricity,) but does it produce more innovation than #11 New York City? (No American city made the top 10 by population.)

If cities are drivers of innovation, why are so many of the biggest in the third world? Perhaps third world countries offer their citizens so little that they experience a form of extreme brain drain, with everyone who can fleeing to the most productive regions. Or perhaps these cities are simply on their way–in a century, maybe Sao Paolo will be the world’s next Shanghai.

The city, by definition, is civilization–but does the city itself spur innovation? And are cities, themselves, living things?

Geoffrey West has some interesting things to say on this theme:

“How come it is very hard to kill a city? You can drop an atom bomb on a city, and 30 years later, it’s surviving.”

Here’s a transcript of the talk.

Hiroshima in 1945:

Hiroshima today:

Hiroshima montage

Detroit, 1905:

Belle Isle Park, Detroit, 1905–h/t Photos of Detroit’s Golden Age

Detroit today:

Detroit Book Depository

“Bombs don’t destroy cities; people destroy cities.”

I Dream of 3D: Makerbot, IP, and the advance of Technology

There is an oddly fascinating documentary on Netflix about 3D Printers, Print the Legend. The story follows two startups–MakerBot and Formlabs–and three established companies–Stratasys, PrintForm and 3D Systems.

I don’t think we’re heading toward a micro-industrial revolution, a 3D printer in every backyard, but they have many interesting possibilities:

3D printing seems perfect for reasonably small, individually customized items like prosthetics, dentures, hearing aids, and shoe inserts. I can easily imagine a vending machine at the shoe store that takes an impression of your feet and then prints custom inserts while you wait–like the photo booth that prints silly pictures of you and your friends.

But let’s discuss possibilities later–today we’re discussing MakerBot, IP, and learning curve. MakerBot was founded in 2009 by Adam Mayer, Zach Smith, and Bre Pettis. The original MakerBot Printers were quite cute, with a DIY, home-hobbiest feel. (They were, in fact, DIY-kits you assembled yourself.) Later MakerBots, by contrast, look like digital ovens and come pre-assembled–aimed at the “professional consumer” market.

In its early days, MakerBot was a creativity-driven startup cobbling everything together in a warehouse where, as they put it, new employees even had to build their own chair when they arrived.

In those days, MakerBot attracted the sorts of hacker nerds who wanted to work in a startup warehouse, and adhered to hacker ethics: the hardware was open-source.

Open-Source hardware meant you could copy their design and build your own, or you could modify your MakerBot and share your innovations with the broader MakerBot community. With an enthusiastic community working together, it wasn’t long before user-created innovations were incorporated back into the MakerBot’s products.

MakerBot also launched Thingiverse, essentially the MakerBot Open-Source community’s home and database on the web.

As MakerBot moved from startup dream to reality, the culture changed. By mid-2011, they had sold about 3,500 bots. In late 2011, The Foundry Group (venture capitalists) invested $10 million and joined the company’s board. In 2012, Bre Pettis pushed out co-founder Zach Smith, (who wanted to remain true to their founding principles.) A month later, the company moved from its startup garage to a New York apartment office headquarters in the sky.

Bre Pettis fired about 100 people (they only had 125 employees when they moved) and hired far more. These new employees weren’t hacker nerds; they were the kinds of people who wanted to wear suits and work in an office.

A few months later, in a massively controversial move, MakerBot went closed-source.

By June of 2013, they had sold 22,000 printers, and competitor Stratasys Incorporated decided to eliminate them by buying them for $604 million. Good deal for Bre Pettis; shitty for Zach Smith and all of the folks in the MakerBot community whose Open Source hardware ideas eventually made Pettis rich.

In 2016, MakerBot/Stratasys moved their manufacturing plant from New York to China.

Did MakerBot do wrong by transitioning from Open to Closed source? Did they cheat the people who helped them grow, or did they make a wise economic decision?

The growth curve for new startups is initially quite flat:

This is actually the growth curve for yeast, but it’s the same for companies. In their first few years, companies experience little–even negative–growth. Only once they reach a particular size and level of competence do corporations enter a period of rapid growth (until, at maturity, they have captured as much of the market as they reasonably can.)

Much of the difficulty for a new company–especially a company that is building a new product–is informational. Where do I buy parts? Where do I buy 10,000 parts? Where can I hire workers? How do I withhold income taxes from paycheques? Where did I put the receipts for those 10,000 widgets I ordered? What do you mean you threw out all of the steel because it wasn’t good enough?

Solving problems and then routinizing those solutions–as Auerswald would put it, developing code–is critical to early growth. More employees means more knowledge and ideas, but employees cost money, and new companies don’t have a lot of money.

Here’s where Open-Source comes in: by expanding the number of people effectively working on the problem (at least on the hardware end), the open-source community greatly increased MakerBot’s effective company size without increasing costs. Free expertise=faster growth. The community also fostered growth by increasing demand for the bots themselves, as each person who contributed quality printing ideas to the Thingiverse databases increased the realm of ideas other makers and potential makers had to be inspired by.

Once the hardware designs were basically perfected, Open-Source could no longer contribute to hardware innovation, and became a liability, as people could simply download blueprints and make their own bots without paying any money to MakerBot. At this point, as MakerBot entered its rapid growth phase, moved to bigger offices and hired a ton of new employees, it abandoned open-source.

There is a very similar phenomenon in the world of writing, but the ethics are regarded very differently. Many aspiring novelists are members of writer’s clubs, critique groups, or fandoms where they post, share, read, and give feedback on each other’s work. This creative foment and mixing of ideas spurs innovation–as when fan works take on a life of their own nearly independent of the original–and refinement, as when a novel is finally polished and sent out to publishers.

In some cases, very popular writers initially built up followings by publishing in fandoms based around established books or movies before transferring that audience to their own, original works. 50 Shades of Gray, for example, started as Twilight fan-fiction before morphing into its own book.

In other words, in their initial, creative phases, many novels are essentially “open;” this allows the writer to draw on the knowledge and expertise of dozens of other writers. When the novel is good enough to consider publication, it becomes “closed;” a published novel costs money. (It is considered good manners, though, to offer a free copy of the novel a a thank-you gift to anyone who gave significant help along the way.)

This is the same open and closed process as MakerBot pursued, but since it is considered normal and completely expected in writing communities for people to take suggestions, incorporate them into their stories, and then try to pitch the stories to agents, no one looks askance at it. I myself have edited many novels, one of which is now an Actually Published Book by a Real Author. I don’t resent that the book I once read for free and offered feedback for now costs money; I’m just happy on behalf of the author and glad I could help.

By contrast, people were surprised by MakerBot’s pivot, even though it made sound business sense. Surprising people tends to piss them off.

Traditional IP is structured so that copyright/patent protection starts at the time of innovation and eventually runs out; it doesn’t really include an open or semi-open period after which the work becomes closed. In writing this is handled by a convention that so long as the entire novel is not openly posted on the internet or elsewhere, the author can still sell the rights to it. I don’t know how things work over in patents, but given the number of patent infringement lawsuits filed every year, attempting to share designs that you would later like to make closed sounds like a potential nightmare.

Nevertheless, I think something like this Open-Closed process would be beneficial for many new companies, especially as they struggle to grow, learn, and optimize. If it were expected, as in writers’ communities, then the pivot to closed-source wouldn’t be seen as a betrayal, but as a sign of success–a company that had made it big.

Spurring innovation doesn’t just help companies and their owners. We all benefit from better products. Amputees benefit from better, cheaper prosthesis. Sick people benefit from better, cheaper medicines. Poor people benefit from better, cheaper houses.

Just imagine three of these, joined together, located anywhere you want to live…

 

Book Club: The Code Economy ch. 1

Greetings! Grab a cup of coffee and pull up a chair. Tea is also good. Today we’re diving into chapter one of Philip Auerswald’s The Code Economy, “Jobs: Divide and Coordinate.”

I wish this chapter had been much longer; we speed through almost 2.5 million years of cognitive evolution in a couple of pages.

The earliest hominins had about the same short-term memory as a modern-day chimpanzee, which is to say they could keep track of only two operations at a time. … Our methods for creating tools gradually became more sophisticated, until we were using the tools we created to produce other tools in a repetitive and predictable manner. These processes for creating stone tools were among humanity’s first production algorithms-that is, the earliest code. They appeared almost simultaneously in human communities in most part of the world around 40,000 BC.

Footnote:

…[E.O.] Wilson refers to this phenomenon more broadly as the discovery of eusocial behavior… Wilson situates the date far earlier in human history than I do here. I chose 50,000 years [ago] because my focus is on the economy. it is clear that an epochal change in society occurred roughly 10,000 years BCE, when humans invented agriculture in six parts of the world simultaneously. The fact of this simultaneity directly suggests the advance of code represented by the invention of agriculture was part of a forward movement of code that started much earlier.

What do you think? Does the simultaneous advent of behavioral modernity–or eusociality–in far-flung human groups roughly 50,000 years ago, followed by the simultaneous advent of agriculture in several far-flung groups about 10,000 years ago speak to the existence of some universal, underlying process? Why did so many different groups of people develop similar patterns of life and technology around the same time, despite some of them being highly isolated? Was society simply inevitable?

The caption on the photo is similarly interesting:

Demand on Short-Term Working Memory in the Production of an Obsidian Axe [from Read and van der Leeuw, 2015] … We can relate the concepts invoked in the prodcution of stone tools to the number of dimensions involved and thereby to the size of short-term workign memory (STWM) required for the prodction of the kind of stone tools that exemplify each stage in hominin evolution. …

Just hitting the end of a pebble once to create one edge, as in the simplest tools, they calculate requires holding three items in the working memory. Removing several flakes to create a longer edge (a line), takes STWM 4; working an entire side takes STWM 5; and working both sides of the stone in preparation for knapping flakes from the third requires both an ability to think about the pebble’s shape in three dimensions and STWM 7.

(The Wikipedia article on Lithic Reduction has a lovely animation of the technique.)

It took about 2 million years to proceed from the simplest tools (working memory: 3) to the most complex (working memory: 7.) Since the Neolithic, our working memory hasn’t improved–most of us are still limited to a mere 7 items in our working memory, just enough to remember a phone number if you already know the area code.

All of our advances since the Neolithic, Auerswald argues, haven’t been due to an increase in STWM, but our ability to build complexity externally: through code. And it was this invention of code that really made society take off.

By about 10,000 BCE, humans had formed the first villages… Villages were the precursors of modern-day business firms in that they were durable association built around routines. … the advance of code at the village level through the creation of new technological combinations set into motion the evolution from simplicity to complexity that has resulted in the modern economy.

It was in the village, then, that code began to evolve.

What do you think? Are Read and van der Leeuw just retroactively fitting numbers 3-7 to the tools, or do they really show an advance in working memory? Is the village really the source of most code evolution? And who do you think is more correct, Herbert Spencer or Thomas Malthus?

Auerswald then forward to 1557, with the first use of the word “job” (spelled “jobbe,” most likely from “gobbe,” or lump.)

The advent of the “jobbe” a a lump of work was to the evolution of modern society something like what the first single-celled organism was to the evolution of life.

!

The “jobbe” contrasted with the obligation to perform labor continuously and without clearly defined roles–slavery, serfdom, indentured servitude, or even apprenticeship–as had been the norm throughout human history.

Did the Black Death help create the modern “job market” by inspiring Parliament to pass the Statute of Laborers?

I am reminded here of a passage from Gulick’s Evolution of the Japanese, Social and Psychic, (published in 1903):

The idea of making a bargain when two persons entered upon some particular piece of work, the one as employer, the other as employed, was entirely repugnant to the older generation, since it was assumed that their relations as inferior and superior should determine their financial relations; the superior would do what was right, and the inferior should accept what the superior might give without a question or a murmur. Among the samurai, where the arrangement is between equals, bargaining or making fixed and fast terms which will hold to the end, and which may be carried to the courts in case of differences, was a thing practically unknown in the older civilization. Everything of a business nature was left to honor, and was carried on in mutual confidence.

“A few illustrations of this spirit of confidence from my own experience may not be without interest. On first coming to Japan, I found it usual for a Japanese who wished to take a jinrikisha to call the runner and take the ride without making any bargain, giving him at the end what seemed right. And the men generally accepted the payment without question. I have found that recently, unless there is some definite understanding arrived at before the ride, there is apt to be some disagreement, the runner presuming on the hold he has, by virtue of work done, to get more than is customary. This is especially true in case the rider is a foreigner. Another set of examples in which astonishing simplicity and confidence were manifested was in the employment of evangelists. I have known several instances in which a full correspondence with an evangelist with regard to his employment was carried on, and the settlement finally concluded, and the man set to work without a word said about money matters. It need hardly be said that no foreigner took part in that correspondence. …

“This confidence and trustfulness were the product of a civilization resting on communalistic feudalism; the people were kept as children in dependence on their feudal lord; they had to accept what he said and did; they were accustomed to that order of things from the beginning and had no other thought; on the whole too, without doubt, they received regular and kindly treatment. Furthermore, there was no redress for the peasant in case of harshness; it was always the wise policy, therefore, for him to accept whatever was given without even the appearance of dissatisfaction. This spirit was connected with the dominance of the military class. Simple trustfulness was, therefore, chiefly that of the non-military classes.

“Since the overthrow of communal feudalism and the establishment of an individualistic social order, necessitating personal ownership of property, and the universal use of money, trustful confidence is rapidly passing away.

We still identify ourselves with our profession–“I am a doctor” or “I am a paleontologist”–but much less so than in the days when “Smith” wasn’t a name.

Auerswald progresses to the modern day:

In the past two hundred years, the complexity of human economic organization has  increased by orders of magnitude. Death rates began to fall rapidly in the middle of the nineteenth century, due to a combination of increased agricultural output, improved hygiene, and the beginning of better medical practices–all different dimensions of the advance of code…. Greater numbers of people living in greater density than ever before accelerated the advance of code.

Sounds great, but:

By the twentieth century, the continued advance of code necessitated the creation of government bureaucracies and large corporations that employed vast numbers of people. These organizations executed code of sufficient complexity that it was beyond the capacity of any single individual to master.

I’ve often wondered if the explosion of communist disasters at the beginning of the 20th century occurred because we could imagine a kind of nation-wide code for production and consumption and we had the power to implement it, but we didn’t actually have the capabilities and tools necessary to make it work.

We can imagine Utopia, but we cannot reach it.

Auerswald delineates two broad categories of “epochal change” as a result of the code-explosion of the past two centuries: First, our capabilities grew. Second:

“we have, to an increasing degree, ceded to other people–and to code itself–authority and autonomy, which for millennia we had kept unto ourselves and our immediate tribal groups as uncodified cultural norms.”

Before the “job”, before even the “trade,” people lived and worked far more at their own discretion. Hoeing fields or gathering yams might be long and tedious work, but at least you didn’t have to pee in a bottle because Amazon didn’t give you time for bathroom breaks.

Every time voters demand that politicians “bring back the jobs” or politicians promise to create them, we are implicitly stating that the vast majority of people are no longer capable of making their own jobs. (At least, not jobs that afford a modern lifestyle.) The Appalachians lived in utter poverty (the vast majority of people before 1900 lived in what we would now call utter poverty), but they did not depend on anyone else to create “jobs” for them; they cleared their own land, planted their own corn, hunted their own hogs, and provided for their own needs.

Today’s humans are (probably not less intelligent nor innately capable than the average Appalachian of 1900, but the economy (and our standards of living) are much more complex. The average person no longer has the capacity to drive job growth in such a complicated system, but the solution isn’t necessarily for everyone to become smarter. After all, large, complicated organizations need hundreds of employees who are not out founding their own companies.

But this, in turn, means all of those employees–and even the companies themselves–are dependent on forces far outside their control, like Chinese monetary policy or the American electoral cycle. And this, in turn, raises demand for some kind of centralized, planned system to protect the workers from economic hardship and ensure that everyone enjoys a minimum standard of living.

Microstates suggest themselves as a way to speed the evolution of economic code by increasing the total number of organisms in the ecosystem.

With eusociality, man already became a political (that is, polis) animal around 10,000 or 40,000 or perhaps 100,000 years ago, largely unable to subsist on his own, absent the tribe. We do not seem to regret this ill-remembered transition very much, but what about the current one? Is the job-man somehow less human, less complete than the tradesman? Do we feel that something essential to the human spirit has been lost in defining and routinizing our daily tasks down to the minute, forcing men to bend to the timetables of factories and international corporations? Or have we, through the benefits of civilization (mostly health improvements) gained something far richer?

Book Club: The Code [Robot] Economy (pt. 2)

Welcome to EvX’s book club. Today we’re discussing Philip Auerswald’s The Code Economy, Introduction.

I’ve been discussing the robot economy for years (though not necessarily via the blog.) What happens when robots take over most of the productive jobs? Most humans were once involved in directly producing the necessities of human life–food, clothing, and shelter, but mostly food. Today, machines have eliminated most food and garment production jobs. One tractor easily plows many more acres in a day than a horse or mule team did in the 1800s, allowing one man to produce as much food as dozens (or hundreds) once did.

What happened to those ex-farmers? Most of us are employed in new professions that didn’t exist (eg, computer specialist) or barely existed (health care), but there are always those who can’t find employment–and unemployment isn’t evenly distributed.

Black unemployment rate

Since 1948, the overall employment rate has rarely exceeded 7.5%; the rate for whites has been slightly lower. By contrast, the black unemployment rate has rarely dipped below 10% (since 1972, the best data I have.) The black unemployment rate has only gone below 7.5 three times–for one month in 1999, one month in 2000, and since mid-2017. 6.6% in April, 2018 is the all-time low for black unemployment. (The white record, 3.0%, was set in the ’60s.)

(As Auerswald points out, “unemployment” was a virtually unknown concept in the Medieval economy, where social station automatically dictated most people’s jobs for life.)

Now I know the books are cooked and “unemployment” figures are kept artificially low by shunting many of the unemployed into the ranks of the officially “disabled,” who aren’t counted in the statistics, but no matter how you count the numbers, blacks struggle to find jobs at the same rates as whites–a problem they didn’t face in the pre-industrial, agricultural economy (though that economy caused suffering in its own way.)

A quick glance at measures of black and white educational attainment explains most of the employment gap–blacks graduate from school at lower rates, are less likely to earn a college degree, and overall have worse SAT/ACT scores. In an increasingly “post-industrial,” knowledge-based economy where most unskilled labor can be performed by robots, what happens to unskilled humans?

What happens when all of the McDonald’s employees have been replaced by robots and computers? When even the advice given by lawyers and accountants can be more cheaply delivered by an app on your smartphone? What if society, eventually, doesn’t need humans to perform most jobs?

Will most people simply be unemployed, ruled over by the robot-owning elite and the lucky few who program the robots? Will new forms of work we haven’t even begun to dream of emerge? Will we adopt some form of universal basic income, or descend into neo-feudalism? Will we have a permanent underclass of people with no hope of success in the current economy, either despairing at their inability to live successful lives or living slothfully off the efforts of others?

Here lies the crux of Auerswald’s thesis. He provides four possible arguments for how the “advance of code” (ie, the accumulation of technological knowledge and innovation,) could turn out for humans.

The Rifkin View:

  1. The power of code is growing at an exponential rate.
  2. Code nearly perfectly substitutes for human capabilities.
  3. Therefore the (relative) power of human capabilities is shrinking at an exponential rate.

If so, we should be deeply worried.

The Kurzweil View:

  1. The power of code is growing at an exponential rate.
  2. Code nearly perfectly complements human capabilities.
  3. Therefore the (absolute) power of human capabilities is growing at an exponential rate.

If so, we may look forward to the cyborg singularity

The Auerswald View:

  1. The power of code is growing at an exponential rate [at least we all agree on something.]
  2. Code only partially substitutes for human capabilities.
  3. Therefore the (relative) power of human capabilities is shrinking at an exponential rate in those categories of work that can be performed by computers, but not in others.

Auerswald notes:

In other words, where Kurzweil talks about an impeding code-induced Singularity, the reality looks much more like one code-induced bifurcation–the division of labor between humans and machines–after another.

The answer to the question, “Is there anything that humans can do better than digital computers?” turns out to be fairly simple: humans are better at being human.

Further:

1. Creating and improving code is a key part of what we human beings do. It’s how we invent the future by building on the past.

2. The evolution of the economy is driven by the advance of code. Understanding this advance is therefore fundamental to economics, and to much of human history.

3. When we create and advance code we don’t just invent new toys, we produce new forms of meaning, new experiences, and new ways of making our way in the world.

What do you think?

Book Club: The Code Economy pt 1

I don’t think the publishers got their money’s worth on cover design

Welcome to EvX’s Book Club. Today we begin our exciting tour of Philip E. Auerswald’s The Code Eoconomy: A Forty-Thousand-Year History. with the introduction, Technology = Recipes, and Chapter one, Jobs: Divide and Coordinate if we get that far.

I’m not sure exactly how to run a book club, so just grab some coffee and let’s dive right in.

First, let’s note that Auerswald doesn’t mean code in the narrow sense of “commands fed into a computer” but in a much broader sense of all encoded processes humans have come up with. His go-to example is the cooking recipe.

The Code Economy describes the evolution of human productive activity from simplicity to complexity over the span of more than 40,000 years. I call this evolutionary process the advance of code.

I find the cooking example a bit cutesy, but otherwise it gets the job done.

How… have we humans managed to get where we are today despite our abundant failings, including wars, famine, and a demonstrably meager capacity for society-wide planning and coordination? … by developing productive activities that evolve into regular routines and standardized platforms–which is to say that we have survived, and thrived, by creating and advancing code.

There’s so much in this book that almost every sentence bears discussion. First, as I’ve noted before, social organization appears to be a spontaneous emergent feature of every human group. Without even really meaning to, humans just naturally seem compelled organize themselves. One day you’re hanging out with your friends, riding motorcycles, living like an outlaw, and the next thing you know you’re using the formal legal system to sue a toy store for infringement of your intellectual property.

Alexander Wienberger, Holodomor

At the same time, our ability to organize society at the national level is completely lacking. As one of my professors once put it, “God must hate communists, because every time a country goes communist, an “act of god” occurs and everyone dies.”

It’s a mystery why God hates communists so much, but hate ’em He does. Massive-scale social engineering is a total fail and we’ll still be suffering the results for a long time.

This creates a kind of conflict, because people can look at the small-scale organizing they do, and they look at large-scale disorganization, and struggle to understand why the small stuff can’t simply be scaled up.

And yet… society still kind of works. I can go to the grocery store and be reasonably certain that by some magical process, fresh produce has made its way from fields in California to the shelf in front of me. By some magical process, I can wave a piece of plastic around and use it to exchange enough other, unseen goods to pay for my groceries. I can climb into a car I didn’t build and cruise down a network of streets and intersections, reasonably confident that everyone else driving their own two-ton behemoth at 60 miles an hour a few feet away from me has internalized the same rules necessary for not crashing into me. Most of the time. And I can go to the gas station and pour a miracle liquid into my car and the whole system works, whether or not I have any clue how all of the parts manage to come together and do so.

The result is a miracle. Modern society is a miracle. If you don’t believe me, try using an outhouse for a few months. Try carrying all of your drinking water by hand from the local stream and chopping down all of the wood you need to boil it to make it potable. Try fighting off parasites, smallpox, or malaria without medicine or vaccinations. For all my complaints (and I know I complain a lot,) I love civilization. I love not worrying about cholera, crop failure, or dying from cavities. I love air conditioning, refrigerators, and flush toilets. I love books and the internet and domesticated strawberries. All of these are things I didn’t create and can’t take credit for, but get to enjoy nonetheless. I have been blessed.

But at the same time, “civilization” isn’t equally distributed. Millions (billions?) of the world’s peoples don’t have toilets, electricity, refrigerators, or even a decent road from their village to the next.

GDP per capita by country

Auerswald is a passionate champion of code. His answer to unemployment problems is probably “learn to code,” but in such a broad, metaphorical way that encompasses so many human activities that we can probably forgive him for it. One thing he doesn’t examine is why code takes off in some places but not others. Why is civilization more complex in Hong Kong than in Somalia? Why does France boast more Fields Medalists than the DRC?

In our next book (Niall Ferguson’s The Great Degeneration,) we’ll discuss whether specific structures like legal and tax codes can affect how well societies grow and thrive (spoiler alert: they do, just see communism,) and of course you are already familiar with the Jared Diamond environmentalist theory that folks in some parts of the world just had better natural resources to work than in other parts (also true, at least in some cases. I’m not expecting some great industry to get up and running on its own in the arctic.)

IQ by country

But laying these concerns aside, there are obviously other broad factors at work. A map of GDP per capita looks an awful lot like a map of average IQs, with obvious caveats about the accidentally oil-rich Saudis and economically depressed ex-communists.

Auerswald believes that the past 40,000 years of code have not been disasters for the human race, but rather a cascade of successes, as each new invention and expansion to our repertoir of “recipes” or “codes” has enabled a whole host of new developments. For example, the development of copper tools didn’t just put flint knappers out of business, it also opened up whole new industries because you can make more varieties of tools out of copper than flint. Now we had copper miners, copper smelters (a  new profession), copper workers. Copper tools could be sharpened and, unlike stone, resharpened, making copper tools more durable. Artists made jewelry; spools of copper wires became trade goods, traveling long distances and stimulating the prehistoric “economy.” New code bequeaths complexity and even more code, not mass flint-knapper unemployment.

Likewise, the increase in reliable food supply created by farming didn’t create mass hunter-gatherer unemployment, but stimulated the growth of cities and differentiation of humans into even more professions, like weavers, cobblers, haberdashers, writers, wheelwrights, and mathematicians.

It’s a hopeful view, and I appreciate it in these anxious times.

But it’s very easy to say that the advent of copper or bronze or agriculture was a success because we are descended from the people who succeeded. We’re not descended from the hunter-gatherers who got displaced or wiped out by agriculturalists. In recent cases where hunter-gatherer or herding societies were brought into the agriculturalist fold, the process has been rather painful.

Elizabeth Marshall Thomas’s The Harmless People, about the Bushmen of the Kalahari, might overplay the romance and downplay the violence, but the epilogue’s description of how the arrival of “civilization” resulted in the deaths and degradation of the Bushmen brought tears to my eyes. First they died of dehydration because new fences erected to protect “private property” cut them off from the only water. No longer free to pursue the lives they had lived for centuries, they were moved onto what are essentially reservations and taught to farm and herd. Alcoholism and violence became rampant.

Among the book’s many characters was a man who had lost most of his leg to snakebite. He suffered terribly as his leg rotted away, cared for by his wife and family who brought him food. Eventually, with help, he healed and obtained a pair of crutches, learned to walk again, and resumed hunting: providing for his family.

And then in “civilization” he was murdered by one of his fellow Bushmen.

It’s a sad story and there are no easy answers. Bushman life is hard. Most people, when given the choice, seem to pick civilization. But usually we aren’t given a choice. The Bushmen weren’t. Neither were factory workers who saw their jobs automated and outsourced. Some Bushmen will adapt and thrive. Nelson Mandela was part Bushman, and he did quite well for himself. But many will suffer.

What to do about the suffering of those left behind–those who cannot cope with change, who do not have the mental or physical capacity to “learn to code” or otherwise adapt remains an unanswered question. Humanity might move on without them, ignoring their suffering because we find them undeserving of compassion–or we might get bogged down trying to save them all. Perhaps we can find a third route: sympathy for the unfortunate without encouraging obsolete behavior?

In The Great Degeneration, Ferguson wonders why the systems (“code”) that supports our society appears to be degenerating. I have a crude but answer: people are getting stupider. It takes a certain amount of intelligence to run a piece of code. Even a simple task like transcribing numbers is better performed by a smarter person than a dumber person, who is more likely to accidentally write down the wrong number. Human systems are built and executed by humans, and if the humans in them are less intelligent than the ones who made them, then they will do a bad job of running the systems.

Unfortunately for those of us over in civilization, dysgenics is a real thing:

Source: Audacious Epigone

Whether you blame IQ itself or the number of years smart people spend in school, dumb people have more kids (especially the parents of the Baby Boomers.) Epigone here only looks at white data (I believe Jayman has the black data and it’s just as bad, if not worse.)

Of course we can debate about the Flynn effect and all that, but I suspect there two competing things going on: First, a rising 50’s economic tide lifted all boats, making everyone healthier and thus smarter and better at taking IQ tests and making babies, and second, declining infant mortality since the late 1800s and possibly the Welfare state made it easier for the children of the poorest and least capable parents to survive.

The effects of these two trends probably cancel out at first, but after a while you run out of Flynn effect (maybe) and then the other starts to show up. Eventually you get Greece: once the shining light of Civilization, now defaulting on its loans.

Well, we have made it a page in!

Termite City

What do you think of the book? Have you finished it yet? What do you think of the way Auersbach conceptualizes of “code” and its basis as the building block of pretty much all human activity? Do you think Auersbach is essentially correct to be hopeful about our increasingly code-driven future, or should we beware of the tradeoffs to individual autonomy and freedom inherent in becoming a glorified colony of ants?

Come read “The Code Economy: A 40,00 Year History” with us

I don’t think the publishers got their money’s worth on cover design

EvX’s Book Club is reading Philip Auerswald’s The Code Economy: A 40,000 Year History looks at how everything humans produce, from stone tools to cities to cryptocurrencies like bitcoin, requires the creation, transmission, and performance of “code,”  and explores the notion that human societies–and thus civilization–is built on a mountain of of encoded processes.

I loved this book and am re-reading it, so I would like to invite you to come read it, too.

Discussion of Chapter 1 Jobs: Divide and Coordinate, will begin on May 23 and last as long as we want it to.

Here’s Amazon’s blurb about the book:

What do Stone Age axes, Toll House cookies, and Burning Man have in common? They are all examples of code in action.

What is “code”? Code is the DNA of human civilization as it has evolved from Neolithic simplicity to modern complexity. It is the “how” of progress. It is how ideas become things, how ingredients become cookies. It is how cities are created and how industries develop.

In a sweeping narrative that takes readers from the invention of the alphabet to the advent of the Blockchain, Philip Auerswald argues that the advance of code is the key driver of human history. Over the span of centuries, each major stage in the advance of code has brought a shift in the structure of society that has challenged human beings to reinvent not only how we work but who we are.

We are in another of those stages now. The Code Economy explains how the advance of code is once again fundamentally altering the nature of work and the human experience. Auerswald provides a timely investigation of value creation in the contemporary economy-and an indispensable guide to our economic future.