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OS:Economic Transformation

Lasted edited by Andrew Munsey, updated on June 15, 2016 at 1:42 am.

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This is taken from material written by Paul Fernhout and posted under a free license in a comment to Andrea Rossi's Journal of Nuclear Physics, and is posted here by the author under the GFDL.

The key point here is that breakthrough clean energy technologies will change the very nature of our economic system. They will shift the balance between four different interwoven economies we have always had (subsistence, gift, planned, and exchange). Inventors who have struggled so hard in a system currently dominated by exchange may have to think about the socioecenomic implications of their invention in causing a permanent economic phase change. A clean energy breakthrough will probably create a different balance of those four economies like toward greater local subsistence and more gift giving (as James P. Hogan talks about in Voyage From Yesteryear). So, to focus on making money in the old socioeconomic paradigm (like by focusing on restrictive patents) may be very ironic, compared to freely sharing a great gift with the world that may change the overall dynamics of our economy to the point where money does not matter very much anymore.

There have always been four interwoven economies, and the balance of them is shaped by our society:

A subsistence economy (“There’s some lovely berries over here.”)

A gift economy (“The meat from this deer is going to spoil let’s share it with the tribe.”)

A planned economy (“Let’s put the longhouse here.”)

An exchange economy (“You scratch my back, I’ll scratch yours.”)

Paid human labor has less and less value due to several causes including due to robotics, AI, and other automation, due to better design, due to the accumulation of physical infrastructure, due to cheaper energy (which can often substitute for human labor), and/or due to the emergence of voluntary social networks.

Mainstream economists try to get around this long term trend by assuming infinite demand, but that is just not in accord with human psychology or social dynamics. See Maslow’s Hierarchy of Needs, or an emerging “Reduce, Reuse, Recycle” ethic, or see any of the world’s major religions — including humanism — about moving beyond materialistic values.

So, we can expect the balance between those four economies to change as our technology and society changes, perhaps with:

A subsistence economy through 3D printing and local PV solar panels or other clean energy technologies (like cold fusion or something else)

A gift economy through the internet, like sharing digital files to use with our 3D printers

A planned economy on a variety of scales, including through taxes, subsidies and regulation affecting market dynamics and

An exchange economy marketplace softened by a basic income.



When Martin Fleischmann and Stanley Pons made their original cold fusion announcement, I sent them a copy of the book “Midas World”. It is a collection of science-fiction short stories by Frederik Pohl on some of the socioeconomic implications of cheap fusion energy. It includes a funny satirical story called “The Midas Plague”, originally published in 1954. Wikipedia has a page on the book, which reads in part: “… in this new world of cheap energy, robots are overproducing the commodities enjoyed by mankind. So now the ‘poor’ are forced to spend their lives in frantic consumption, so that the ‘rich’ can live lives of simplicity.” In that imaginary world, only the “rich” get to have small homes, eat plain food, and work a lot both to help other people and in their small gardens the “poor” are condemned to living in mansions, eating vast amounts of fancy food, being entertained endlessly, and are not allowed to do meaningful work for others or themselves — all to make an old-fashioned scarcity-based economic model still work out in an age of cheap energy. :-)

In the last chapter of the book, there is a section quoted from the inventor’s diary on his bitter disappointment about how humankind used his invention. He had hoped cheap fusion power would liberate humanity for a life of contemplation, creativity, or even just loafing around (see also Bob Black’s essay “The Abolition of Work”). But instead that fictional world ended up with “a snowmobile in every driveway … and a dune buggy plowing up every patch of sand”.

The inventor said he was shut out by large corporations etc. from advocating positive ideas about the social issues relating to his invention of cheap fusion energy, and his aspirations for humankind’s social uplift. While he got a lot of money from the patents, the cheap energy soon made everyone rich in material terms, and so being financially obese did not mean much anymore. Fortunately, even though the inventor was pessimistic, humanity did expand into space habitats eventually in that fictional world (given room in the solar system for quadrillion of people in habitats built from asteroidal ore), and one could hope such a human proliferation (or even better robotics and AI) would bring some wider social diversity along with time for reflection by some individuals on a healthier relationship between consciousness and the universe.

I’d recommend reading that book just for some general insights into the social and economic side of cheap energy (and some laughs for stressful times). As it is a satirical novel, I’m not saying its predictions are going to be 100% true (I sure hope not), but it is a useful cautionary tale to read none-the-less. James P. Hogan’s hard sci-fi novel “Voyage From Yesteryear” is another good book on a similar topic, about the collision of a society rooted in scarcity assumptions with a society built around abundance assumptions and cheap energy.

In reality, there are many non-paying activities most people would like to do more of, things that take a lot of time. These are essentially voluntary things, like to be a good friend, to be a good neighbor, to be a good parent, to be a good caretaker for sick relatives, or to be an informed citizen. I hope material abundance through cheaper energy and other innovations could make it more possible for people to have time to do those essential humane tasks as well as they want to do them and are otherwise prevented from by the need to work just to get a basic subsistence income (even as meaningful productive work itself can be a very good thing in our lives, see E.F. Schumacher’s essay on “Buddhist Economics”). So, I can hope that we see a better future than the picture painted in Frederik Pohl’s “Midas World” (or from other directions in “The Pleasure Trap” or “Supernormal Stimuli”). James P. Hogan’s “Voyage From Yesteryear” is more optimistic.

Since the 1980s, I’ve continued to think about this issue of abundance. Albert Einstein said a long time ago: “The release of atom power has changed everything except our way of thinking…the solution to this problem lies in the heart of mankind. If only I had known, I should have become a watchmaker.”

Today, where every digital watch (or certainly at least every cellphone used to check the time) probably has vastly more computing power than was needed to develop the first atomic weapons, even being a watchmaker cannot absolve anyone of the need to think about what we invent and its relationship to the wellness of our society and the rest of the natural world.

Einstein’s comment does not apply just to nuclear energy it also applies even to solar energy, as well as nanotech, biotech, robotics, the internet, or even just bureaucracy. All technology can be an amplifier, and technologies can then interact in synergistic ways to amplify things even more than one could by itself. So, cheap energy leads to even cheaper computing which leads to cheaper robotics which leads to even cheaper energy again from cheaper raw materials, and so on and so on. What vision and social aspirations do we have that we want amplified?

I’ve generalized Einstein’s comment to: “The biggest challenge of the 21st century is the irony of technologies of abundance in the hands of those thinking in terms of scarcity.”

So, we can choose whether to build our nickel into cold fusion power plants and robotic mining tools or we can choose to build our nickel into guns and bullets to fight over the ownership of nickel mines and who should be forced to do the mining, essentially at gunpoint with the implicit threat of starvation in a society where as Daniel Quinn and Frances Moore Lappé suggest the defining aspect of our current society is that all food and productive land is under lock and key.

I’ve written further on that theme in an essay called “Recognizing irony is key to transcending militarism”.

Still, we must accept that there is nothing wrong with wanting some security (or prosperity). The issue is how we go about it in a non-ironic way that works for everyone (including other creatures in the biosphere). Key here are ideas of “mutual security” (Morton Deutsch) and “intrinsic security” (Amory Lovins in Brittle Power, and many others). I’ve also written a knol called “Beyond a Jobless Recovery: A heterodox perspective on 21st century economics” that explores these issues further.

In brief, a combination of robotics (and other automation, all made possible by cheaper computing), better design (whether from cold fusion devices or thin-film solar panels), and voluntary social networks (especially with volunteers cooperating through the internet on free and open source digital public works), are decreasing the value of most paid human labor by the law of supply and demand. Cheaper energy will only accelerate this trend, since often you can substitute energy for labor and thought.

At the same time, demand for goods and services is limited for a variety of reasons. These reasons include some classical ones, like a cyclical credit crunch or a concentration of wealth (with that concentration aided by automation, intellectual monopolies, and the rich getting richer and buying up more and more resources like land for rent seeking). The reasons also including some heterodox alternative economics ones, like people moving up Maslow’s Hierarchy of Needs as they get a lot of “stuff” and move on to other pursuits than materialism (including spiritual aspirations, self-actualization, and social connections in communities), and as people embrace a growing environmental consciousness of “Reduce, Reuse, Recycle” to protect the biosphere.

In general, mainstream economists ignore these issues or have very unexamined beliefs about them. Imaginative innovation, like economist Julian Simon talks about in “The Ultimate Resource”, makes possible many wonderful potentialities if we think them through. Please don’t let your inventiveness or cold fusion get blamed for any issues caused by unimaginative scarcity-based economic models held onto with almost a religious fervor by so many (see “The Market as God” by theologian Harvey Cox in the Atlantic). Mainstream economist have long used such scarcity-based models to apologize for an overly hierarchical social order that we probably did not even need in the past — search on “The Mythology of Wealth”. Still, some degree of centralization can be a good thing see Manuel De Landa on “meshworks and hierarchies”, and how they keep turning into each other and how all real systems are mixtures of both. So, we need to think and experiment regarding ways to allow our 21st century society to function in a healthy way given all the 21st century technology people like yourself are busy creating in all sorts of areas.

A New York Times article called: “They Did Their Homework (800 Years of It)” talks about the inbredness in the mainstream economics profession and how it is based on endless mathematical extrapolation on extrapolation, in the absence of much connection to history or broader cultural issues. Of course, looking at history may only be a start, as economists also need to look to the future and what abundance and cheap (or even free) energy means in terms of producing divide-by-zero errors in all their elegant theoretical mathematical equations that assume demand for endless junk is infinite, and human labor will always be very valuable, and energy and material will always be very scarce.

In order to move past this problem with mainstream scarcity-based socioeconomic models, something made only more urgent by cheaper energy, our society needs to continue to develop in at least four interwoven areas:

a gift economy (like Wikipedia, Debian GNU/Linux, or blogging on the internet, but also Freecycle and more volunteering of services),

a basic income (social security and health care for all regardless of age),

democratic resource-based planning (using taxes, subsidies, investments, and regulation to achieve mutually agreed-on social goals), and

stronger local subsistence-oriented communities that can produce more of their own stuff (using organic gardens, solar panels and/or cold fusion devices, 3D printers, personal robotics, and so on).

There are some bad “make-work” alternatives also that could prop up the status quo for a time and are best avoided, like endless war, endless schooling, endless bureaucracy, endless sickness, and endless prisons. All of those just keep people busy in an addictive or destructive or mindless way to little good end and to little human happiness. Unfortunately, people turn all too quickly to those bad alternatives sometimes to deal with social problems related to abundance or uneven wealth distribution. I outline that in more depth in the knol.

Especially if cheap energy leads to an vast increase in the production of consumer goods, we also need to think more about things like the USA/NIST’s “Sustainable and Lifecycle Information-based Manufacturing Program … to prepare for a future where manufacturing has a zero net impact on the environment…” We also need to rethink a compulsory schooling system designed for the needs of a heavily centralized monarchial 18th century Prussian empire (as John Taylor Gatto talks about) we need to rethink education from a 21st century global perspective involving spreading universal abundance.

Simple attempts to prop scarcity-based economics up in the presence of cheap energy or cheap computing, like requiring higher wages to respond to declining demand for human labor and more wage-lowering competition for less jobs, will only accelerate the replacement process for workers. Higher wage requirements would just be more incentive to automate, redesign, use more energy in place of human effort, and/or to push more work to volunteer social networks. Even before cheap energy, we have been already seeing the “death spiral” of current mainstream economic models that were based primarily on a link between the right to consume and the need to have a paying job. There may still remain some needed linkage between access to resources and labor for higher-than-typical consumption rates in some situations, even with a basic income, a gift economy, cheap energy, etc.., but there would no longer be such a problematical situation where some few people are financially obese and billions of others are financially starving (and often literally starving, since without money a market will not hear their needs).

But, while this issue of abundance is ignored by most mainstream economists, you can find all sorts of people writing similar things to what I have written, such as if you search on an essay “Robots, Jobs and our Assumptions” by Martin Ford, or if you search for a document from 1964 originally prepared for US President John Kennedy called “The Triple Revolution Memorandum”. Marshall Brain has also written about this in his novel “Manna” (about the consequences of cheap flexible robotics) and in his “Robotic Nation” essays. Charles Fourier wrote about these themes around 1800 (and was where Marx took his better ideas from. :-) There are many more people talking about these issues, like at the Basic Income Earth Network, the New Economics Institute, the Venus Project, economist Richard Wolff’s “Capitalism Hits the Fan” discussions, the Institute for New Economic Thinking that (the sadly late) Tommaso Padoa-Schioppa helped start, and so on.

I’m not saying they all agree, or that I agree with all they say, just that there are alternative perspectives to the mainstream economic models about the implications on technology and society.

Bucky Fuller’s writings are another source of potential understanding about building a society that works for everyone (see his book “Utopia or Oblivion”).

So, when you think about the financial aspects of your innovation, please consider that fundamental things may change with cheap energy. Please consider how the scarcity-based economic model we all grew up with still govern so much about how innovations such as cold fusion are created, discussed, and distributed. Please consider that a scarcity-based economic model, and all the thinking and fiat-dollar-based financial conflict that relates to it, may be made obsolete very quickly by the rapid spread of a cold fusion innovation.

Sure, some people may get rich in fiat dollars in the short term by speculating on nickel futures (until cheap energy and cheap robotics drives down the price of all commodities). But ultimately, the bigger issue is encouraging a broad social transformation in a healthy way that makes the world work for everyone. That is something that will ultimately be about a lot more than a few bits flipped in some computer memory representing a bank account somewhere, and which Frederick Pohl suggested in 1954 would ultimately be meaningless in an age of cheap energy and cheap robotics.

Beyond the economics side, it is the military side of all this that is really problematical and ironic. People have long been using all these advanced technologies of abundance (robotics, biotech, advanced materials, advanced energy sources) from a scarcity perspective. This had led to engineers creating weapons using advanced technologies, with these weapons intended to be used to fight over the very scarcity that, ironically, these technologies could alleviate if used differently to address the underlying material scarcity issues. So, we ironically get, say, the spread of military robots (drones) whose primary role is essentially to enforce a social order based on forcing humans to act like robots in the workplace, rather than instead supporting the same engineers so they can just build robots to do the robot-like work, so people be more like people than robots during their working hours. The USA, where I live, ironically one of the most abundant places in the world materially, seems to have the greatest fear about scarcity, in part from lack of a good social safety net perhaps, and has been driving a lot of this misuse of such technologies of abundance.

The same is true for the misuse of nuclear energy, nanotech, rockets, and biotech — which can all be used from a scarcity paradigm to make terrible weapons. But, why not instead use such technologies to produce energy, to produce stuff, to produce space habitats, and to produce health, with the resulting prosperity shared by all? Ultimately, health and joy is a social thing, as much or more than an individual thing.

For another example, collectively, we have created an abundant internet that could inform us all and help us design “Blue Zones” of health and abundance for everyone (like through informing people about the need for adequate vitamin D, eating more vegetables and fruits, getting enough iodine, having strong social networks, living in places where exercise like walking is built into daily life through better infrastructure, finding work to do which has personal meaning, and so on). But instead of emphasizing using the internet to bring about global prosperity, sadly, some people talk about using it for cyberattacks to destroy other countries’ infrastructure. And there are spammers who are working from an old economic paradigm who clog the internet up with financially-driven spam so the internet has more trouble functioning to bring abundance to all of us (even, ironically, the spammers).

So, we need a paradigm shift to account for all the technologies of abundance that inventors like yourself are giving the world. In days to come, if people ask for your opinions about what the implications are of your invention, I hope you reflect on these words.

For a local-to-you example about social paradigms and cultural effects, if you google on “RSA Animate – The Secret Powers of Time” you’ll find an animated version of Phlip Zimbardo’s “The Time Paradox” that discusses how our different cultural perspectives on time affect what we emphasize in life and how happy we are. It has an insightful discussion of that theme as it relates to life in Italy and the North/South cultural divide there. So, that is local example of how deep issues in our culture affect what we do with all the blessings in our lives, and how awareness of these alternative paradigm issues can help us get along better with each other.

Here is a quote emerging from Lila Watson’s work as part of an Australian Aboriginal Group that may help put any efforts to help the world in perspective: “If you have come to help me, you are wasting your time. But if you have come because your liberation is bound up with mine, then let us work together.”

I hope this invention proves to be all we together hope for it. All the best.

–Paul Fernhout (Adirondack Park, New York, USA)