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How much of our stuff is Stuff?

Posted By Administration, Tuesday, April 23, 2019

Tim Morgan publishes his fourth blog post in our Emerging Fellows program. He assumes that the digital ecosystems are leading us towards a new form of autonomous capital. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Virtualizing the real world through abstractions is as old as humanity.  Stories helped humanity thrive for tens of thousands of years by virtualizing knowledge about the world in a way that could easily be shared and remembered. The Sumerians of ancient Mesopotamia created the oldest known writing, Cuneiform, over five thousand years ago. Scribes recorded everything from astronomical calculations, to sales transactions, to battles, to ownership records, and lineages. They recorded significant stories such as The Epic of Gilgamesh and the great flood story Atrahasis. Over a thousand years later King Hammurabi of Babylon wrote one of the earliest and most complete code of laws. Much later Gutenberg created the printing press, which ultimately broke the elite stranglehold on writing and literacy. This in turn lead centuries later to the Enlightenment and the modern era.

 

Humans have virtualized experience by encoding it wherever they could via every means available, from pre-history to modern day. We have now expanded that virtualization via digital information technologies. We encode and store vast quantities of information, moving it around the world at will. Users upload over 300 hours of video a minute to YouTube, and individuals watch over 5 billion videos on their website every day. That is just one example. Development of information technologies is being driven by a very old human need to record.

 

What is new with digital technologies is execution. Ancient stories recounted person to person empowered action via hard won storified knowledge. Writing allowed civilization to further develop via persistent storage of accumulated knowledge. Printing allowed us to grow more complex societies by capturing more knowledge and widely distribute it. At each step, virtualization allowed us to manipulate the world in more complex ways. Our ancestors were living information processors. They transformed virtualized knowledge in the form of stories, writing, and print into actions.

 

Use and control of property has always had a virtualized information component. What is unique about digital technologies and automation is that humans are no longer the sole processors of information for creating value. We learned a clever new trick: how to encode our decision-making capabilities into our machines. We have created a new level of abstraction, one where not only information is virtualized via encoding, but the process of use itself is virtualized in the form of applications and networks. Digital automation is a form of virtualized human judgement.

 

This is increasingly tipping the balance between the value of things and the value of the knowledge about things. Farming was the foundation stone of early capitalism and government. It relied on human judgement, and human muscle. Today it is a technologically intensive enterprise. Modern farms heavily rely on GPS-guided autonomous robots, which still happen to be called tractors. Experienced farm-hands once drove the tractors. Now the tractors are the farm-hands.

 

Even purely virtual economies have arisen with the rise of digital information technology. The online battle game Fortnite made a profit of over $2.4 billion dollars in 2018 purely off the sale of virtual goods like character “skins” and clothes. Other games like World of Warcraft have thriving black-market economies composed of gold-farmers who sell in-game currency for real currency.

 

Virtualized knowledge and judgement are increasingly becoming the key source of new value across all economic sectors. This is creating an unprecedented situation. The physical value of capital is being superseded by its informational value. We are beginning to mimic how nature creates abundance via biological ecosystems. We are creating new interactive digital ecosystems of virtualized information and decision-making entities which are connected to real things. As they become more autonomous agents, more of our digital infrastructure will shift to become a digital ecosystem.

 

Capitalism and markets are facing a new era, one they created but not one they expected. It will be dominated by the ecosystem-like complexity of increasingly autonomous information entities blurring the lines between real and virtual goods. We are instilling a technological version of our anima into what was once passive capital. Ultimately, we may be evolving a new form of autonomous capital. The question remains, will markets co-evolve with it or will they transform into something else?

 

© Tim Morgan 2019

Tags:  capital  digitization  economics 

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Is the ownership of capital changing?

Posted By Administration, Tuesday, March 26, 2019

Tim Morgan publishes his third blog post in our Emerging Fellows program by asking about the ownership of capital. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

If you can’t open it, you don’t own it. That is the unofficial motto of the world-wide Maker Movement, which emerged along with the early development of the World Wide Web. It celebrates the fusion of art, technology, and do-it-yourself inventiveness. It inherited much of its emphasis on openness from the earlier Free and Open Source software (FOSS) movements.

 

FOSS formed in response to proprietary software which could not be changed by anyone but the copyright owners. FOSS advocates professed that collaboration via sharing source code was the best way to develop software. Makers embraced FOSS sharing sensibilities in no small part because automation was key to many of their projects. It was easier to bootstrap a new creation by copying and modifying existing code or hardware.

 

This free-as-in-speech information sharing ethos shaped the way the early Internet developed. Shared code forms the foundation of many commercial operating systems. Android alone powers over 2.7 billion smartphones and devices worldwide. The Internet and Web as we know them would not have expanded as quickly without shared-source software. This desire to share information is a design consequence of digital networks. Information can be copied with perfect fidelity as many times as desired. Perfectly copying information from computer to computer is fundamental to the design of the Internet. If the medium is the message, then the message of the Internet is to Share.

 

The drive to share is fundamental to human nature. Digital technologies unexpectedly created a new type of social structure that champions sharing - an Abundant Information Commons. Value is added by modifying for your needs; be it code, a design, a formula, or a written work. Those changes are then released back into the commons for anyone to use and improve.

 

Digital technologies are not completely free from restraints though. Individual possessiveness is in human nature too. Information may want to be free, but markets do not. Algorithms and hardware can put controls on data. Laws can penalize unauthorized use. The old ownership modes still exist, but now they are in tension with a network that wants to copy information. After several decades, we have reached an uneasy balance between owned information capital and shared information commons. Wikipedia did not replace Encyclopedia Britannica, but it did force it to adapt.

 

This balance is still shifting though. The more digital technology is embedded into everything, the more networks find new connections into physical, legal, and market domains. Cracks in the foundational layers supporting ownership are being slowly forced open by the roots and tendrils of ever-expanding networks. What was once purely physical is being bonded with the virtual.

 

Nothing owned is safe from this increasing integration with the digital realm. Networks want capital to be data-like and are actively working to make that happen by embedding code and connections in every owned thing.

 

The traditional capital triad of Ownership, Control, and Use is thus giving way to the networkable capital triad of Copying, Modification, and Sharing. The dynamic of how the virtual and real will fuse together will determine how future value is created.

 

The future of ownership is that if you want to own capital, you will need to find a way to open at least part of it and share.

 

© Tim Morgan 2019

Tags:  capital  economics  ownership 

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