This is a topic that was theorized many years ago. However, as technology progresses, an obscure economic theory is looking more realistic. At a minimum, we can now see a path to that potentiality.
The economic singularity follows up on the one applied to technology. This was actually hijacked from physics. Nevertheless, the theory is a point where technology (of economic activity) starts accelerating at a rate faster than we can control. Ultimately, it heads towards the infinite although never truly reaching that point.
Futurists are split on when this will take place. There are some who believe it is nonsense. As stated, it is a theory so nobody is actually right (or wrong).
Placed on top of this is the economic singularity. They do not necessarily have to be tied together. In other words, we can have the economic without the technological. However, they will parallel each other to some degree.
In this article we will give into this to see what it discussion is about and what we possibly can expect.
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The Economic Singularity: Accelerating Growth Rates
Since the start of the Industrial Revolution, we saw growth rates of roughly 3% globally. This held true for more than 100 years. The last couple decades resulted in a shift lower, coming in at around 2.2%.
This leads many to believe that we are destined for a future where lower is expected. However, this might not be the case.
What happens if we move towards a 30% annual growth rate?
On the surface this seems absurd. It is estimated that humans have increased their wealth 100x throughout the entire history. A 30% annual growth rate would mean a 1,000x increase in wealthy in 25 years. That ought to put things in perspective.
To dive into this, we have to focus upon the engines of growth. These boil down to:
- population
- capital (not only money but machinery and other things that produce economic output)
- technology
The first category is where we are suffering. Over the last 80 years, we saw massive decline here.
This is more than just population decline. That actually has not happened yet. Instead, we see a productivity decline. While technology has increased this, it causes an overall reduction. How does this work?
Let us look at agriculture and manufacturing. These are two industries where productivity skyrocketed. We produce more food and goods with less people. Each saw a massive drop in the number of people in those fields. Yet, the output is much higher.
These also make up a smaller part of the global economy. Prices fell causing other sectors to gobble up more.
To contrast, we can focus upon education and healthcare. These are two areas where both prices and personnel increased. Over time, they became a larger percentage of GDP. This means overall productivity gains per individual is waning. These industries have not experienced that.
Here is where forecasting or predictions enter.
Those think massive economic gains are nonsense point to this fact. Whatever is achieved by AI, will only create another bottleneck. There will be other areas where humans congregate, slowing down the gains.
The flipside argues that AI, along with robots, will usurp this. No longer are we going to be constrained like we were in the past.
Capital Productivity
When looking into the economic singularity, we come across the feedback look. This is based around capital.
Robotics offers some insight into the population situation. Here we see capital being deployed in a manner which instantly enhances the population. If we are implementing an artificial workforce, one that can be trained simply via a software update, we are potentially faced accelerated growth rates.
Essentially we are witnessing a scenario where robots are created, using capital invested, which enter the workforce, generating economic output. The proceeds from that activity is further deployed in a manner creating more robots, multiplying the impact.
If we keep cycling this through, we can see how capital starts overwhelm the impact that comes from population. Accelerated growth rates will occur if this process starts to disrupt the bottlenecks in the economy.
Whether this happens or not comes down to the ability to substitute. Can machines (or software) replace what is being done? Opponents of this theory believe that we will always have imperfect substitutions.
Being able to forecast the likelihood of this, in my view, comes down to robotics. To me, there is little doubt that software will substitute humans for knowledge work. This is a contested view but one I think will be clear in a year or two.
The challenge comes in the real world. Will robots be able to do most tasks as well has humans? At the moment, we are dealing with an industry that is, proportionately speaking, in its early stages. It might be 5 years before we can even venture a reasonable guess at this.
However, what it is possible? If that is the case, then we are likely seeing the potential for the economic singularity.
Even if that isn't achieved, what is a constant 30% annual growth rate is attainable? How will this make things look?
The Need For Web3
For those who feel a 10x is absurd, we have to look back at history.
Economists estimate the annual growth rate, pre-Industrial Revolution, was .3%. That means that the century long rate of 3% was a 10x from what went prior. Thus, we are not without precedent in this matter.
Can robotics and AI produce an outcome, with regards to the growth rate, similar to the Industrial Revolution? That is the key question.
However, if it does happen, what does this mean for people? Most jobs will melt away, likely within a decade. So what are people going to do?
Here is where the discussions about UBI or UBA (universal basic assets) enter. There is, however, something that is a more viable solution.
What is going to be important in a society where abundance is the norm? In my view, social interaction will be valued.
Circling back, this means that we have a new form of income. As discussed in the past, this can be phrased as digital real estate or owning the social layer. There will still be an enormous economy built around social activities.
Based upon this, it is important to concentrate the things AI will not replace. Live events are an example. Sports, stand up comics, or music concerts are examples. The last one already went through this. Record music profits plummeted 2 decades ago yet in person concerts were still major money makers.
Let us use sports as the example.
Think of Manchester United. This is a popular football team with a large following. Consider the economy around this single club.
Imagine being an influencer in this realm. Consider the MANU token for a moment. This would be applied to the social layer of the team. It would have nothing to do, directly, with the business itself. Instead, it is housed in the digital world, branching out into other fan related activities.
It is at this point where an entire economy can form. Network effects are massive value generators. Consider the potential that millions of dedicated fans can generate. We could be looking at economic activity worth billions of dollars over time.
In other words, community is going to be key. Whatever people decide to assemble around, that is going to be where value will reside. It is something that cannot be replicated by AI, although that will likely be interwoven. The connections humans make within those communities will transcend even the digital realm.
Is This Possible
Is what is discussed here possible? Of course.
The question is one of probability. Is this all likely to unfold?
That is a case of major speculation at this point. We can see some of the foundation going into place. Compute is regularly increasing, providing more people to the digital realm. If we see humanoid robots starting to emerge in the tens of millions, then we could be at the point where this moves from theory to likely to happen.
My guess is we will have a clear idea by 2030 of how this is progressing.