Something I’ve been musing on recently is material wealth, and why it is (or isn’t) important. Now, there are hundreds of books and millions of theories on money, what it’s for, how to get it, whether it’s important or whether material goods corrode the soul. But I’d like to talk about something a little different that may be getting lost in the noise: the real-life importance of having wealth is changing, and changing fairly rapidly. Having money means different things now than it did 20 years ago, and will mean wildly different things even just 20 years from now. With that in mind, here are some ways reasons why money is both increasing and decreasing in relevance.
Trends that are increasing the importance of money:
- More things are for sale: technology and entrepreneurship are quickly increasing the domain of things money can buy, and this is not limited to larger plasma televisions. Historically, having wealth has tended toward diminishing returns: after providing for oneself and family, enabling a pursuit of rewarding work, and allowing an urbane outlook on life, the use of money tends toward creature comforts, status symbols, and extended getaways. There will always be a point of diminishing returns on wealth, but that point of diminishing returns is growing much higher as we approach an era of human augmentation. Many people are ambivalent about money- but this might change when they see their rich neighbors have genetically-augmented kids that can run faster, learn faster, think better, stay healthier, and be happier than their classmates.
Here’s Nick Bostrom, director of the Future of Humanity Institute at Oxford, talking to Nature about human augmentation and money:
Nature: This sort of thing (human augmentation) must be fraught with ethical concerns. What sorts of issues come up?
Nick Bostrom: One issue that always comes up is: will it lead to inequality between those who have access to it and those who don’t? Price makes a huge difference to accessibility, and one presentation at the conference tried to estimate the costs of different kinds of cognitive enhancements. These depend very much on the form the enhancement takes. If it’s a pill, it can be expected to get cheaper quickly over time [as patents run out and materials get easier to produce]. If it’s a procedure, there’s a limit to how cheap that can be, at least until we get robots to do it for us.
- Closure of the commons: many things which used to be free are now being privatized and sold in the name of efficiency. The World Bank and IMF are pressuring developing countries to privatize water, telecom companies are attempting to monetize packet priority on the internet (the net neutrality issue), and the traditional right to freely record songs from the radio is under attack. There’s a powerful, global trend toward privatization and strong physical and intellectual property rights, and the institutions behind this trend are actively building restrictions on the use of once-unregulated things into our laws and devices. Regardless of whether it’s more efficient to privatize things or merely a regressive and creativity-stifling form of wealth transfer, having to spend money on commonly-used things that were once free increases the importance of money.
- Disaster preparation: today’s combination of extreme ideologies, potential for sociopolitical unrest, and advancing technology makes a world-changing disaster a real possibility- and preparing for the worst takes money.
Trends that are decreasing the importance of money:
- Commoditization: with the constant rush of technology, many things rapidly commoditize (and fall under the “better, faster, cheaper” trend) in our society. A rising tide lifts all boats, and even many people otherwise living in poverty have cell phones and can eat fresh fruits and vegetables. Arguably, there’s never been a better time to be poor. This trend of commoditization is likely to accelerate as more things migrate to a digital medium and the law of accelerating returns percolates through more and more of our production processes. Though it’s difficult to specify a metric for this, I predict more commoditization in the next 20 years than in the last 100. And it’s less important to make lots of money if an increasing number of things are quickly filtering down to the mass market.
- Empowerment of talent: the second most important asset in starting a business is no longer capital. It’s talent. A great number of factors have come together to lower the hurdles involved in starting a technology company, which is directly connected to the fact that venture capital money is getting cheaper (in terms of what concessions one must make to get funding). If you’ve got a great idea and great talent behind it, in most cases money will not be an obstacle. One can make a similar argument about money becoming less important for bringing about social change, given that much of the once-tedious legwork of organization and collaboration can be done online. There’s never been a better time to be poor and talented.
- The Free Culture movement: Between Open Source Software, the Creative Commons, and various sources of free knowledge, there’s a lot that people can take advantage of online without any need for money (and people can often even ‘remix’ it for free, as well). It’s quite true that free software and content is not a magic bullet in all contexts, since the people who make it tend to scratch only certain types of itches: there aren’t many open source accounting packages, nor are there any creative commons-licensed top-40 radio hits or open source cars, for reasons of motivation, economics, and physical possibility, respectively. But the movement toward producing free, open-source things is growing in strength and scope: in the short term, we can expect better free software and more creative-commons-licensed content, and perhaps in the longer term, free, open-source genomes for useful organisms/biomachines and free, open-source blueprints for molecular (nano) manufacturing. And the more good free stuff that’s out there, the less important money becomes.
One of the big items that I couldn’t categorize is healthcare. It’s clear that the healthcare system in the U.S. is unsustainable, but it’s unclear what form a solution might take, or whether the solution will take a form which emphasizes commoditization or choice and privatization. I could see it going either way.
I don’t have any concrete advice about money, but I’m sure this subject is worth thinking about.
. The most important asset in starting a business is having something worthwhile to sell.
. If you do have a great idea for a product and great talent behind the idea, I would suggest reading Paul Graham’s essays if you haven’t already.
p.s. Last time, when discussing the domestication of foxes, I mentioned that I felt there might be some room for so-called “domestication genes” to explain some of the diversity among humans. I’ve since heard that a certain population geneticist from the Univerity of Utah (mentioned here previously) is actually coming out with a paper supporting this idea. I’ll be sure to post when it’s published.