The Machine Economy: An Essay on the Communication of Value in an Automated Economy
By Projectvxn/BryanG
Introduction
In an increasingly automated economy, the future of human commerce will come to a fork in the road. On one hand, we have proposals for Universal Basic Income (UBI) schemes to be paid to all individuals, mandated by law from the proceeds of private enterprise, on a global scale. On the other hand, new technologies such as blockchains and decentralized distributed networks may offer a solution for an automated future.
As human beings, our labor is what creates a baseline value system. We work to provide for ourselves. In an automated economy, the human being is removed from the equation. Schemes like the UBI are intended to balance the equation by using the force of law to ensure the basis of industry continues to function. All funded, of course, through taxation schemes that require a non-automated industry to continue to exist long after obsolescence. This essay contends that to maintain a global exchange economy, we must automate the exchange of value as well as production; in tandem we would convert humans from a labor force to account holders for all the machines under their individual ownership, ensuring a stake in the economy as automation erases the current basis of valuation, human labor.
The Machine Economy: An Essay on The Communication of Value in an Automated Economy
To understand the future automated economy as viewed in this essay, we must briefly explore the history of money as a technology and how it has guided us from Ancient Mesopotamian barter systems to modern Globalism.
The History of Money: Communicating Value
Money, at its core, is simply a method of communication. Prior to the invention of money as a means of exchange, value was transmitted by bartering. This was based on the assessment of needs versus immediate risks regarding trading off valued goods. The exchange of value as a concept seems to be inherent to humans. Throughout history we’ve placed value in many things, some tangible, others not. Perceived risks often drove our transactions, and for many generations, prior to the written word, the exchange of value was essentially the oral contract. However, for our purposes, we will focus on the history of the barter system in civilization. The barter system is an exchange system by which goods and services are traded for other goods and services. This system, while ancient, survives to this day even among advanced economies, though to a lesser degree. Early civilizations, such as the (Mesopotamian) Akkadian Empire used barter systems throughout their lands and with other empires (Arensberg, C. M., Pearson, H. W., Polanyi, K. 1957). Gold currency was typically reserved for those of higher status, whereas the overall trade economy was a complex barter system. The barter system of this Ancient World was sufficiently sophisticated to keep accurate ledgers, however, the accurate exchange of value as an abstraction was still a very new idea. At this stage in the history of money, value was an arbitrary idea based on the labors of humans and animals-divided by their time. It took a certain amount of labor to create a particular item or service, that labor is divided into time. That time is, in turn, calculated against potential risks far more real and dangerous in this era than the economic dangers we perceive today. This laid the foundations for what would be centralized accounting ledgers and denominated currency in much later civilizations.
Fiat Currency and Labor Economy
Money is an abstraction of value. Humans went from the barter system to using items of perceived worth as a conveyance of value. At this point, gold and silver are the predominant forms of currency. But the supply of these metals is finite, and with an increasing population, metals become harder to divide and carry. This led to the Promissory Note. This concept migrated from China where it was first used (Szczepanski, K. 2017-03-08), to Europe where the Knights Templar began to spread the promissory note concept. This normalized the previously controversial idea of paper currency along their establishments across pilgrimage routes from England to Judea (Ralls, K. 2007-04-15).
The promissory note was the first paper currency. Despite its gold backing, the promissory note did not derive its value from the gold, but from the value depicted on the note itself. The Gold Standard is based essentially on the promissory note model. It can be argued that even the gold standard was a form of fiat, as there was never any real way to determine the validity of a government's gold and silver holdings. It was the promissory note that denoted the worth of the gold and not the other way around, even if the true value of gold and silver never changed, the speculative value has limits because the supply is finite. This was one of many reasons the United States and most of the world moved away from the Gold Standard, and then widely adopted the Fractional Reserve System in the late 19th and early 20th centuries. Fractional Reserve fiat currency is based on mathematics. The aggregate of our production, which is equal to our credit and the faith our creditors place in our ability to pay them back. In this process, the creation of debt and cash go hand in hand. When we add leverage requirements, we get exponential growth, this is an inflationary process, so interest rates are what is used to control excess inflation in the money supply (Quickonomics.com, 2017). The fractional reserve system, and all systems before it, however, still use the labor of humans-- divided by time --as a metric of value (Smith, A. 1776). For this reason, I argue that the exponential growth of fractional reserve banking has a serious problem shared by its predecessors, scaling.
The Blockchain
It is impossible for me to discuss blockchain technology without talking about Bitcoin. Bitcoin is a digital cryptographically secured and defined digital asset based on an immutable ledger system. What Bitcoin achieved, was to turn digital information into an unassailable digital property, and make it tradable on the open internet (Nakamoto, S. 2008).
Its creator, Satoshi Nakamoto, is an enigmatic figure who has yet to be identified. This, however, did not stop him from collaborating with other developers. The original whitepaper for Bitcoin was first submitted to Source Forge, and later moved to GitHub where its source code can be viewed, and submissions made for code adoptions. The first Bitcoin was mined in 2009. Since then, Bitcoin has outperformed gold, silver, palladium, platinum, and every known national currency in value appreciation. It has also given birth, by further development of the underlying technology, to an entire class of currency and economic networking known as the alt-coin market.
In this market, Initial Coin Offerings (ICOs) work as a means for start-up technology companies and organizations to seek the funding necessary to build blockchain research and ventures without having to rely on research grants, loans, or crowdfunding (Sherry, B. 2018-01-29). In this way, they can generate capital for the project and return on investment for buyers of their currency, without the need for brokerages or other intermediaries. It is a very risky and unregulated market where money is made but often lost to scams, hacks, and government interventions. Despite this, the growth of the alt-coin market has shown no signs of slowing down, nor has investment in Bitcoin. With exchanges like Binance.com boasting 100,000 to 200,000 new registered users per day (Lam E., Kang S., White, T. 2018- 01-10), cryptocurrency has thus managed to lay the foundation for the 5th and most dramatic change in monetary history, automated communication of value.
The Automated Economy and the Universal Basic Income
The concept of technological unemployment was laughable only a decade ago, but today with machine learning, automation, artificial intelligence, and quantum computing making regular headlines, people are finally asking the question, “What will happen to my job?” Automation will affect much more than blue-collar workers. White-collar jobs are on the line as well. Most jobs that require record keeping and analysis, accounting, logistics, materials handling, packaging, transportation, sanitation, and even most police investigation will be automated. In response, some scientific and political organizations have partnered with governments to form a consensus for a universal basic income system.
The Universal Basic Income (UBI) is a collection of taxes based on profits made by corporations who use AI systems to replace their human workforce, carbon taxes, corporate and capital gains taxes, as well as civil asset forfeitures. Disbursements are then sent from a centralized authority where the money is distributed to national governments (Futurism.com 2017). The UBI would be funded by a pool of money collected by global and national institutions who would then disburse funds to various nations or localities, convert it into a local currency where appropriate, and pay the affected former workers. This would turn all affected human beings into legal employees of their respective governments. If the proceeds of production are to go to a workforce that doesn't exist, then it is only a government that can mandate this. They would have to convert everyone in the country to government employees and pay accordingly, but what does that do to the relationship between our now constitutional government that protects our rights, and a government-as-a-national-employer that reserves the power to restrict the rights of its employees? For the UBI to work, all industry would have to be nationalized, all humans would necessarily become wards of the state, and all private property would then have to be dissolved and appropriated by the state for later distribution.
It is my view that such a scheme, one that benefits from the taxation of industries and revenue sources that will no longer exist, will be forever in deficits; further, that the UBI as it is known today would be devastatingly inflationary and without a system of valuation by which to maintain stability (Freedman, D. H. 2016-06-13). It violates the rights of individuals to their own inherent and real property. It removes the individual entirely from the economic process when accounting for how long the UBI operates. It appears that the UBI may be a way to pay off those left behind by technological unemployment rather than offer a solution for the inclusion of as many as we can into a new kind of economy. One that allows for the creation of virtual real estate, transferable digital property, and electronic services.
The Machine Economy
Decentralizing and automating digital processing, fabrication, assembly, and service transactions linked to a single ownership account on a blockchain (or blockchain-like technology), would ensure that the owner gets paid and continues to participate in the economy. Decentralized networks and automation in a machine economy would make a cellphone, an electric car, or an idle computer a contributor to the economy, while the person reaps the benefits. With blockchain technology turning digital information into digital property, virtual environment simulations would be able to sell virtual property, create and sell virtual consumer goods and services, and even help create virtual societies in which people may live and work (Ordano, E., Meilich, A. Jardi, Y. et. al, 2013). Concepts like distributed networking and decentralized processing are already in use. For instance, the BOINC system relies on distributed computing for the storage and processing of signals data for SETI and other scientific programs’ observations. If the value of labor is work divided by time, then this can be transferred on to an idle CPU to render a service that benefits the owner (Anderson, D.P. 2002).
Distributed networking and processing, machine learning (and other artificial intelligence research), cryptocurrencies, and blockchain in general, are nascent technologies whose potential to fundamentally alter our understanding of economics has not been fully realized. With distributed network systems and new, novel methods of computation, the expansion of human economics into the territory of the virtual is inevitable. We have not yet reached the limit of technological progress, and it may be that no such limit exists (Gelley, B., Vidal, C., Gendler, A. 2016-12-19) Our technological horizon seems to be as elusive as the edge of the observable universe is to the astronomer. For this reason, the question of scaling digital assets and decentralization of production will eventually need to become essential processes in the creation of any machines for public or private use. These machines will have to have these concepts as built-in functions because we will need to create new economies far from the influence of Earth and her laws. I speak, of course, of the colonization of space. Without the scaling ability of automated, decentralized economic models, and the digitized exchange of value concept, human civilization may not survive the vacuum of space.
The economics of a space-faring human civilization has yet to be truly conceptualized. The colonization of space would, in my view, cause the maturity of the concept of economic decentralization, as any long- term expedition into the Final Frontier would require the extraction and refinement of raw materials, the production goods, application of resources, and all decision-making powers to be independent of the decision-making authorities of Earth. (Smith, C. M, Davies, E. T. 2012).
Conclusion
I believe we will not have the luxury of a choice between one system or another. Our technological progress, as demonstrated by this essay, will drag us into compliance. It is impossible to say for certain where this untraveled road will lead, what this future will look like, or identify all the challenges a concept of this scale could face on the road to maturity. But, as we spread into our own cosmic backyard, we will need to address these issues economically, technologically, politically, and even spiritually. There may still be a Great Filter ahead of us (Urban, T. 2014-05-21), a challenge from nature or of our own making. Tackling automated economics today, and how humanity can benefit or potentially suffer from it, will increase our chances of surviving into the next chapter of our existence.
The question now becomes: If you automate industry and the exchange of value between machines for services rendered, and converted the human labor force to individual account holders for the properties they own that will render these services, then what is the daily relevance of the act of commerce for human beings? The impact of daily commerce for individuals would be minimal. At this level of technological maturity, money as it is understood today becomes not much more than a constantly updated ledger that tracks the exchange of goods and services for the purposes of managing resources in real-time. Our daily lives would be consumed with exploration, education, and innovation without having to concern ourselves with menial tasks or the real threat of poverty. With technology, our labor no longer must be the base valuation of economic activity. Machine labor can now fill this role in both tangible and intangible goods and services. The goal of money, in my view, should be its own obsolescence as we understand it today, changed once again to a simple accounting tool, operating much faster and underlying our lives rather than consuming it.
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