We have had all these innovations and have always found new things for people to work on.

This is the Lump of Labor fallacy all over again.

You are a Luddite!

What makes you think this time is different?

This is the rhetoric aimed at people like myself who argue that we need to fundamentally rethink how the economy and society work because digital technologies changing the world. I have taken to replying “you are correct, but you are looking at the wrong time frame.” What all of the above objections share is that they look at a relatively short part of human history. If you look at a larger arc then a different picture emerges.

There have been two fundamental scarcities in human history and we are now moving on to the third. Each time the scarcity shifted, due to a new technology, we had a massive dislocation. So yes, this time is the same, scarcity is shifting again and with it we are experiencing another such massive dislocation.

The first scarcity to emerge was land. We started out as hunter gatherers and eventually developed planting and harvesting and domesticated animals. Agriculture is the first massive technological change. We were horrendously bad at agriculture at first — no surprise it was a brand new technology. If you haven’t done so already, I highly recommend reading Sapiens by Yuval Harari. He has a terrific set of chapters on the agricultural revolution that makes clear just how bad we were and how much worse people in early agrarian societies were off compared to their hunter gatherer ancestors.

Because we were so bad at agriculture, land was scarce. It could barely support the people living on it. But it generated just enough local surplus to support the emergence of rulers and armies. And that of course meant one thing for several thousand years: fights over who owns what land. More land meant somewhat less scarcity and a bigger army. Land ownership and control became highly concentrated.

The ruling elites everywhere came from and represented the owners of land. This setup persisted even as the next big technology arrived in the form of machines and industrial production. The transition to industrial society was a horrific dislocation exactly because the political elites were still representing land interests. This is how we wound up with numerous revolutions and ultimately two world wars. Even Hitler’s mad ambitions were still about land — the Nazis pursued “Lebensraum” (room to live), when the real scarcity had already shifted to capital.

We had already become relatively good at agriculture which resulted in a lot of people being “freed” up to move to cities. But industrial production was only getting started and once again, like early agriculture, we were horrendously bad at it. Early factories had harrowing working conditions and were massively polluting the environment. A lot of capital investment was required and capital was scarce because there wasn’t much of it yet and capital markets were underdeveloped. So we had lots of unemployment and boom bust cycles (similar to famines in early agricultural mono societies that depended on a single crop).

As it turned out markets were good at producing and allocating capital. That’s why capitalism eventually beat other systems such as communism and socialism during the industrial age. And it also turned out that capital and labor were long-term complements. The owners of capital needed labor to make that capital productive. And workers required a job in order to earn a living. Entrepreneurship and further technical innovation resulted in massive gains in the standard of living. This process is still playing itself out in less developed parts of the world which are being lifted out of poverty.

We now live in a world that has moved almost entirely to capitalism even in China. And much like land before it, the ownership of capital has been concentrating along the way. Only 1% of the global population now controls about 50% of all capital. And in another critical historical parallel, the ruling elites everywhere directly or indirectly represent the interests of capital. Capital has replaced land as the factor against which policies are measured. Take quantitative easing for example, which is aimed at reducing the cost of capital on the belief that this will continue to create jobs.

But the new technological disruption has already arrived and it is digital technology. This is a new set of machines and networks. Unlike their earlier predecessors they are universal machines which as they get better can eventually do anything. And the results are that capital and labor are no longer long-term complements which has been driving down labor’s share of the economy and depressing wages. Digital technology even means that less and less capital is required for most endeavors (see for instance how much cheaper it is to start a new company today than it was even a decade ago). Capital is no longer scarce and labor even less so.

Where is the new scarcity? It is human attention. With birth rates thankfully decelerating almost everywhere, peak population is finally a possibility. We all have only 24 hours in the day and we need to work, eat and sleep. That puts a hard limit on how much human attention exists. At the same time digital technologies are producing unprecedented amounts of information that we could pay attention to. On Youtube alone 100 hours of video is uploaded every minute. Increasingly you can measure how valuable something is by how much attention it controls (e.g., Google, Facebook, etc).

And just like previous scarcities one of the reasons that attention is scarce is that we are bad at this new technology. As society we have lots of information locked up through copyright and patents instead of making it available to everyone. As individuals we too often lack a purpose other than making money and we will happily watch another cat video in our limited free time than read a challenging book. Over time we will get better at all of this and it will let us achieve amazing things as humanity, including free education and healthcare for everyone and cleaning up the mess we have made of the planet. But none of that will happen as long as we keep ourselves trapped in a belief that capital is scarce and that everyone needs a job.

So yes, this time is the same. Once again technology is fundamentally shifting scarcity and the ruling elites are controlled by the prior scarcity, this time capital, which is trying hard to maintain its power. The sooner we all begin to understand this, the better our chances of a peaceful transition. The longer we wait, the more we will be like the land owners who didn’t get industrialization and led us down a path of violent change.

