The World After Capital

how can we sort of shrink the economic sphere much like we shrunk the agricultural sphere it's not like when we went from the agrarian age to the industrial age it's not like agriculture disappeared it's just that it went from consuming 80 plus percent of human attention to like sub five percent in a developed country today um and i think we need to do the same with the economic sector we need to go from the sector where everything is based on prices where everything is explicitly incentivized that now occupies the vast block of people's lives we need to shrink that down to make room for all these non-economic things because a lot of stuff that we need to work on can't have prices i'm here today with albert wenger he's a partner at union square ventures here in new york city i'm excited to talk about his new book the world after capital we come to this meeting at a time when the world is both excited by the possibility of technology and terrified of the disruptiveness of technology and i think he can help us sort ourselves out albert thanks for joining me here today pleasure to be here what inspired you to write this book you've been a practitioner and a visionary have followed your blog but all of a sudden you went to the book yeah what's going on well um as a vc i sort of feel like i have this front row seat to innovation to kind of what's coming down the pike and um even before becoming a vc i as a both undergraduate and graduate student had studied computer science and economics and eventually came to realize wow computers are going to have a much much bigger impact on the world than most people tend to believe like way bigger and i was seeing it in the kind of things we were investing in i was seeing it and what was happening in the world and i was starting to give these talks and i was sort of trying to get at this idea that somehow this is a big shift it's a big transition and i remember i was walking down i think market street in san francisco and it kind of snapped for me because i had this insight that this is as profound a transition as when we went from the agrarian from the forage age to the agrarian age and then from the agrarian age to the industrial age and that really is what the book is about the book is about why is digital technology so disruptive why is it causing such another transition and then how should we be thinking about this transition into a new age which in the book i call the knowledge age understanding not only the technology as the possibility for efficiency or whatever but understanding it in its context with a sustainable society is a very important dimension i think that's absolutely crucial right because if we think about what happened in the transition from the agreement the industrial age it took us quite a while to find something that works right i mean the early industrial age people lived in squalor in the cities working conditions were terrible there was child labor and so forth it took quite a while and really we had sort of a golden age of at least in the us and several other developed countries post world war ii we're seeing a massive rise again in kind of sort of people being depressed people taking drugs even suicide is climbing significantly and a lot of this is related to this transition and this shift that we're in and i think one of the key points is that politicians have been treating this shift as if it were some increment on the industrial age and people are like yeah you keep saying that you keep saying that retraining which you mentioned or something else is going to work but all i see from where i sit is the elites and the cities are getting wealthier and um where i am it's with devastation and opioids and you know and so i think because we've been unwilling to acknowledge that we need to invent a new age we've been caught up in incrementalism and that incrementalism has opened the door for people like trump because trump sort of says well look what they're telling you is not working i'm going to take you into the future the future in this case being actually an imagined past it's a return to the patents so he doesn't actually have a forward-facing agenda but this rise of populism that we're seeing in many parts of the world is again the same transition that's happening and so in the book i make this point that why are these transitions happening it's because some fundamental shift in technology so the furture to a grand transition was the invention of agriculture and from hunter gatherer to exactly those things agriculture and that was roughly 10 000 years ago and as a result we changed everything right we went from being migratory to being sedentary we went from very flat tribal societies to extremely hierarchical agrarian societies we went from basically being promiscuous to be monogamous-ish and we went from having these animistic religions where every animal every tree had a spirit in it to the theistic religions and then only a couple hundred years ago we had the enlightenment and with the enlightenment we had all sorts of scientific breakthroughs chemistry and electricity and mining and so forth um and that again brought us this huge change it shifted us from um living in the countryside to living in the city from living in large extended family to living nuclear family or no family from having lots of comments to basically private property being everywhere um from um kind of a great chain of being theology where religious services look you're a farmer and i'm going to tell you how to be the best possible farmer but you'll never be a noble person because you weren't born as one we went from that to the protestant work ethic like you work harder you make more money and wealth is good and maybe even greater is good um and so we had these two huge transitions and the sort of insight that i had when i was walking down the street in san francisco was the reason what happens is when you make a big technological leap is you shift the binding constraint so when you are a hunter-gatherer society your binding constraint is food how much food can you find once you invent agriculture your binding constraint is land arable land how much arable land do you have and once you have industry it shifts to capital who can build machines and railroads and infrastructure and the reason the book is called the world after capital is because i basically say look we have sufficient capital and i have a definition of sufficient that we can talk about in a second but what we're what the scarcity now is is attention what is it that we are as humans are paying attention to this huge crisis of attention effectively and that's sort of the central idea of the book interesting now i've seen some which might call smoke signals of concern like the movie uh the social dilemma and various about what how this is affecting the human brain somebody gave me a book this weekend it was about um what was it called something about personal mythology they said you used to have the church the gods the parables and everybody thought of those as the myths kind of the joseph campbell catalog but now there's so much hitting you all the time that in your own psychology what becomes your myth is almost a personal thing rather than a collective thing that we all adhere to like easter sunday over you know moses or something like that and i think that breakdown is related to this technological shift also not just in the fact that we have social media and so forth which we can come back to in a second but also because when we went into the industrial age we made the narrative of purpose one about your purpose is to find a job do well in the job and then also you know consume and maybe donate a little to the community right um and that was sort of held out as purpose for people but as it's getting harder and harder for many people to find meaningful jobs jobs that are interesting jobs that um pay a living wage uh that narrative has broken down and we have not substituted any kind of new narrative of purpose and so yes when you have this breakdown of an existing purpose like the automotive workers when their plants were shut down or coal miners when the mine is shut down when you have that breakdown when you don't have an alternative narrative and then you have this infinity of opinions online where you can read anything and everything that's a perfect storm for a huge crisis of mental health for a huge crisis of purpose for a huge crisis of democracy yes experts are now on the out and out there it used to be you know your professor at nyu or oxford or university of south carolina or something and there was an aura about that and now people say experts oh they're just bag men for power people like richard edelman who does a lot of work for the world economic forum has shown that confidence in expertise confidence in academic leaders or nobel laureates are all plummeting yeah the edelman trust survey shows the lowest levels of trust that we've had in a long time um martin guri has a good book about this called the revolt of the masses yes and um i in my book what i attempt to do is to say there is a narrative that we can provide people with and there is a new source of purposes a way of thinking about purpose in an age that's post the industrial age and i call it the knowledge age because i think basically we need to substitute we have this what i call the job loop in the job loop is you know you have a job you make some money you spend the money on goods and services that other people produce who also have a job and that loop was very successful for us but the loop that we need to really be spending time on is this sort of knowledge loop and the knowledge loop is where you create a piece of knowledge knowledge by the way i use very broadly in the book including art music et cetera and then you know somebody else can you you share that somebody else can basically consume that piece of knowledge and they can then create a new piece of knowledge on the basis of that and that knowledge loop of course has been at work for a long time but we really need to accelerate it now because we have these big unsolved problems like the climate crisis infectious disease and so one place to find purpose is in the knowledge loop or in basically supporting things that are non-economic so a lot of the things that i think we've lost sight of are non-economic things you know taking care of your friends taking care of your family taking care of animals the environment things that are not economically incentivized and a big goal of what i write about in the book is how can we sort of shrink the economic sphere much like we shrunk the agricultural sphere it's not like when we went from the agrarian age the industrial age it's not like agriculture disappeared it's just that it went from consuming 80 plus percent of human attention to like sub five percent in a developed country today and i think we need to do the same with the economic sector we need to go from the sector where everything is based on prices where everything is explicitly incentivized that now occupies the vast block of people's lives and we need to shrink that down to make room for all these non-economic things because a lot of stuff that we need to work on can't have prices right so um i don't know whether you saw don't look up oh sure right soroda the co-writer with adam mckay is one of my best friends oh fantastic we don't have enough people today looking out for big objects from space why because there's no price mechanism to incentivize that society as a whole has to decide this is an important thing and there can't be a price for it because these events happen every few million years there's no market for it and so in the book i write that there's lots and lots of things that don't have prices and can't have prices and so the goal of this transition in my mind the goal of the power of digital technology and the way we should be using digital technology is to shrink the economic sector and let the non-economic sector grow and how do you see how do you see the arts in that realm is that part of the non-economic section oh absolutely absolutely and i think you know um with the internet we have seen a flourishing of the arts in a really marvelous way right because let's say you write a song in the pre-internet world you kind of had to find a label to put out your song and get it on the radio and so forth um today you just put it on your soundcloud or your website or wherever uh youtube and millions of people can hear it yep and so i think we have in fact blown the door wide open on arts um i think we have a huge explosion of beautiful new graphical art being generated and i i do think that's something we're already seeing we just need to create a society where more people find that's how all i need to do and i can live we're still attached to the idea no no no if you want to live you have to have a job it's the only way you get to live you have to have a job you have to pay for yourself otherwise you don't get to live but we have all this automation and we can make more automation so why should we be attached to this idea that everyone needs to have a job and you can connect to large scales of people what i might call audience because of this technology yes so instead of playing in a bar for 12 people sitting at the counter maybe 2 000 or more can be watching and it doesn't preclude you from playing in the bar that's right i mean these are these are materials yes exactly exactly there's a danger here which is in the middle of a transition in the disruption when the fear is rampant a counter reaction could which michael stop stomp out the potential and turn us away from something that could ultimately be a much better life oh absolutely but i think the step one is politicians leaders of all parts of society need to first accept that we are in the middle of a transition that is as profound as these prior transitions and so it means we have to change everything that means we have to change how we think about the education system how the healthcare system works we in in the book i talk about what i call three freedoms i call about talk about economic freedom informational freedom and psychological freedom so economic freedom is some form of universal basic income just give people enough money so if you don't want to work you don't have to work if you want to just do art all day play the guitar fine totally fine informational freedom is about who controls computation is it controlled by a few large corporations in the government or is computation accessible to anybody and everybody and psychological freedom is about how do we let go of all these things that culture has now told us for several hundreds of years of like where your worth comes from where your value comes from and how do we live in a world where i can access anybody else's information all the time like how do i create the psychological freedom that i don't constantly react by saying oh this person is awful and this is terrible and i'm in this constant state of agitation so those are the three freedoms i talk about in the book and to me they complement each other and they are necessary to handle this transition well i mean if you look at the prior transitions the prime transitions were absolutely awful when we went from the hunter-gatherer age to the agrarian age the hunter-gatherer societies basically wiped out up the agrarian societies basically wiped out and then how did we get from the agrarian age to the industrial age well we got there basically through a series of bloody revolutions and then two world wars i mean we talked previously about thomas piketty earlier and capital in the 21st century where he documents how the old power wasn't which was land-based capital wasn't really removed until the end of world war ii when industrial capital became the new power a lot of people um believed that the sort of hunt together age was sort of this incredibly violent age that people didn't live very well but actually um what we know is that hunter-gatherers worked only a few hours a day and lived pretty happy lives and things really went sideways on us when we went to agrarian societies because we were bad at agriculture at first so we didn't produce enough output so people starve we live close to animals so we introduced all these diseases from the animals and so actually that transition was a very bad transition not just for the hunter-gatherers whom we wiped out for the most part it was also a bad transition for the agrarians and some people interpret the story of the fall from eden as going from the sort of hunter-gatherer life to now having to you know till the soil and live by the sweat of your work that's one possible interpretation my personal preferred interpretation is that once we started creating knowledge knowledge started creating new problems for us so we created the knowledge of agriculture and that created problems like infectious diseases for us and starvation and so we needed to figure out how to store things we need to figure out how to refrigerate things and then more recently you know we invented fossil fuels and how to burn them to make power and electricity and transportation and that's great at the climate crisis so i tend to think of the of the fruit of knowledge and eating from the forbidden tree of the fruit of knowledge as getting on this treadmill of we invent something and the thing that we've invented has these consequences that we now need to live with and deal with so a big part of the thinking in the book is how do we free up more human attention get it out of that job loop and get it into the knowledge loop so we can work on these big problems and also big opportunities frankly um it's not just about problems it's also opportunities we've made huge breakthroughs in decoding the genome and understanding how cells work we're making huge material science breakthroughs we're making breakthroughs and building rockets so there's also all this upside i agree with you though that you know if there isn't a narrative that describes a future that makes sense not just technological sense but also societal sense if we leave this vacuum then people like trump will come in with a very crude narrative and it will resonate with people because we haven't given them an alternative and that really you asked me at the beginning why i wrote the book that's really the thrust of the book is to start to create a narrative that people can be excited about there's another dimension of this that economists often worry about they had this old what i'll call metaphor called the treaty of westphalia the nation state and they were installing a government that governed those things in the world of globalism with the technology nanosecond transfer of money or other things many people are scared that with those efficiencies powerful can escape governance and i would i say people are very much more vulnerable and at risk and i i it felt to me like in the beginning of globalization say when i was in college and people like dick caves or people i can remember the book global reach and various people at harvard mit were talking about there was so much enthusiasm for globalization and now it almost feels like as you say the trumpians have picked up and it's a haunted house you know this there's definitely a backlash against it and i think one can easily understand why right i mean we've taken a lot of manufacturing and shifted it from the us to other places and people have lost jobs we've talked about this earlier and we had told people your job that's kind of your purpose and so um absolutely it's it's really easy to understand why people are discontent with globalization however i would say with the technological progress we're making that's no longer the sort of question right because nike today can make a shoe without a human touching it from beginning to end so it doesn't matter what the price of labor is it's just a bunch of machines churning out shoes and so while i think there are good arguments to be made why globalization was maybe not handled always in the smartest of ways i think that's you know sort of undoing that and thinking that when you reassure manufacturing you're going to create a lot of manufacturing jobs i think is equally wrong so if we reassure manufacturing it's going to get reshort in a very very very low labor um i was going to say you just put the robots on a different continent and yeah and assembled that way we've gone through a pandemic a tremendous distress in crisis i saw some interesting upsides i have two little daughters and so my daughters at the start of the pandemic we're in second and fifth grade my second grader became what you might call virtuous a virtuoso in the realm of using a laptop computer and transferring things stuff i didn't learn how to do until i went to college so i think at some level the what you might call the silver lining of the stress of home schooling and so forth allowed some of these children to get on the pathway to that world that you're envisioning so we homeschooled our children i'm all the way through high school we now have two graduating college seniors one at wesleyan and one at upenn wow and we have a sophomore cornell so we embraced homeschooling long before it became popular and in part because the education system we have today is strictly an industrial system we created and scaled it we treat children by manufacturing date um ken robertson talks about this in great detail and and so because i believe we're past industrial age that's the whole point of the book i wasn't going to suggest that our kids go through an industrial age system and so you know we had this beautiful setup um they you know spend a couple hours a day with tutors and the rest of the day they could kind of do whatever they felt like and sometimes that was making a movie sometimes that was cooking sometimes that was learning how to make fashion there's a very sort of wide variety of interests but the interests are what propelled the curiosity so much of the school system is about stamping out curiosity and to the extent that we want this knowledge loop to work we want more rather than less curiosity well my older of those two young daughters who's now almost 13 in seventh grade said you know dad being in remote school for a year i'm not sure how much i think going to school is a good thing anymore and she started looking online and found a stanford online high school and said i may want to apply to that i said well what are you going to do with your time she said paint draw and play the piano and maybe you'll let me borrow your guitar and so she was right in that spot so i do think the pandemic accelerated certain things that were already happening so there was homeschooling was growing and it's grown much more as a result also micro schools just alternatives to the existing school system um remote work was already a trend has grown tremendously in our portfolio we have 125 active portfolio companies a third or roughly are entirely remote now they don't have an office anymore um so that's a trend that got accelerated but i also think coming back to something you said earlier um the crisis also showed how fragmented society is today i mean at every step along the way is there a virus is there not a virus did it come from china from a lab does it matter you know should we mask should we not mask i mean every single thing became super polarized um everything became a reason for people to yell at each other as opposed to try and work with each other and that is the result of this sort of social media landscape that we find ourselves in um which we basically haven't you know we we haven't learned how to be good citizens and nobody's taught us how to be good citizens in that world um off this sort of multi just anybody gets to say whatever they want at any time now i think that's a good world ultimately i just think we need to figure out how to live in it and that's going to take us some time and again that requires some level of creation you said it earlier you need to have some level of creation some level of values that you all subscribe to something that you sort of say that all makes us you know want to sort of be together first and then we can disagree about certain things that's fine but we have we need this base layer where we sort of say here's some level of solidarity i mean i love the quote that you have coming in right which talks about that it's not just for ourselves not just for our family but for all of us yes uh and so that's really a big part of the sort of book is to sort of say how can we create this narrative how can we in a way bring back some form of humanism some form of sort of talking about you know human solidarity amongst ourselves as the first and foremost thing before we get into whatever our differences on any policy on any particular issue might be but right now we don't have that because it used to be provided by religion not being provided by religion anymore purpose used to be provided by work for many people not being provided by work anymore so we have these things that have broken down the edelman survey shows trust has broken down massively so we we badly badly need to reinvest in this base layer of what is it that when we get together makes us see each other as humans as wanting to work with each other not against each other healthcare with the pandemic and all the technology are you seeing an evolution of health care and health care systems in a way that's hopeful yeah i mean we've made a number of investments in digital health and i think as a first step just giving people more and better access to information is really really important so for instance we're investors in a company called clue that makes an app for women where women can track the cycle and can really sort of empower women to understand their reproductive situation uh that's easily accessible anybody with a smartphone can just download that app right you don't need to go to a doctor you don't need a prescription you just go get the app um we've made an investment in a company called nurex that if you want birth control for example you used to have to go to a doctor and get a prescription in many states with norix you just do it over text it takes back and forth with the doctor get a birth control prescription so i do think broadening access is something that's happening through digital technology but we still are very much in this problem where we have created a setup in healthcare where so much is about you know making profits of drugs making profits for health care systems uh and i think when you're trying to provide this kind of service you need structures that allow not just profit optimization but also saying we need to serve the community whether that's by mandate or because we simply embrace that as who we are doesn't matter how it comes about but it needs to be there and i think we've lost sight of that i mean i think a lot of that descent into sort of the maniacal focus on profit starts around the milton friedman you know a company sold responsibilities as we used to earn the profit yeah op-ed in the near times and so we need to come back from that and again the basic idea here is if we create more room for non-economic activity so non-economic activity includes a lot of basic research right and a lot of health is actually still very poorly understood like try to read up on nutrition and see how incredibly poorly nutrition is understood by the way you earlier said we have this lack of trust into academics well one reason we have this lack of trust in academics is because for example if you look at nutrition the whole thing about um you know carbohydrates versus fats that came out of a harvard study that was paid for by the carbohydrate industry and so it's no wonder why people don't trust things because when you sort of peel back the cover all of a sudden like wait we've been told this thing is bad when in fact this other thing is bad largely because of a study done by some prestigious academics who were paid off by the sugar industry yeah there's a book a man colin campbell i believe have been at cleveland clinic and cornell called the china study and it was about the transformation of people from agriculture to the coastline industries and how their diet changed in the onset of things like alzheimer's disease and heart disease and so forth and when campbell created that book he came back and he was invited to be on boards of many health charities he took so much heat from industry people who he then i think a second or third edition of the book wrote a final chapter about the the political economy of inhabiting foundations to stop them from recommending healthy things to preserve the profits and it was really really hard reading i mean my father was a physician and i was you know like wow i can't believe how tense this has become and then i look at my friends democratic party friends republican party friends concerned about fiscal discipline and i showed them world health organization united states ranking 38th oecd numbers on the cost of health care per capita we are double the oecd average and i believe all but one oecd country ranks above us in performance so i said if you guys are budget hawks why don't you go after that whether it's pharmaceutical insurance or whatever there are many dimensions to the cost but why aren't we creating with all of our technological wizardry and so forth and innovativeness and the way we talk about our society's vitality why aren't we producing twice as good for half the price instead of 38th best for twice the price and one of the arguments i make is because we're caught up in this job loop thinking and because we're caught up in this thinking of the way to do things is through market prices and i i'm a vc i love markets i love well they're they're a valuable tool yeah but there are lots of things that they can't solve and we have gotten to this point of sort of market maximalism where we're like oh well the way to solve this is by privatizing it and the way to solve this is and in fact at the same time we've allowed many markets to become highly concentrated i have a chapter on why concentration is being driven further by digital technology digital technology drives concentration massively because of basically what happens when you have data and then you have a little more data and you have a little more data and you see this in google and facebook but you will also see the manufacturing you will also see in cpg and you've seen it you've seen in financial services so we're sort of this strange combination where we have this market maximum lesson where we believe we can solve everything from markets at the same time we're very poorly functioning markets because they highly concentrate with lots of market power and then we wonder why we have bad outcomes so in my mind we just need to really kind of hit the reset button in a big way and make this big transition where we let more and more people opt out of that system once we let people out of that system interesting things will happen like it's as long as we keep people trapped in this job loop if you're working for a pharmaceutical company if that's how you make your living and that's how you pay for your house for your children's education and so forth of course you're going to push this drug even if you know that it's the wrong thing even if you know that it makes people addicted because like it's hard to get off that thing once you're inside of it i once attended a lecture at the union theological seminary and the individual the speaker that night gave a talk about why we have deified markets he said because looking at it he's a theologian at face value it's a tool it's an instrument as a means to our end but he talked about how at the end of the feudal period he was talking about scotland and adam smith going from the theory of moral sentiments to wealth of nations he said they realized that using moral and ethical discourse as a civil servant made you look like you were affiliated with the corrupt feudal lords because the church had co-opted so you went to this antiseptic scientific value-free discourse which carried on and then when the communist nations russia and china adopted this central planning on scientific basis a lot of people didn't want to use that antiseptic language anymore and so they deified the market and the market became the thing that solved all our problems and i think it's fair to say and i say it in the book i think it's fair to say that markets actually worked incredibly well for the creation of capital so the capital and the title of the book is not financial capitalist physical capital it's the thing you know we don't drive around any gold bars you need cars you don't clothe yourself in dollar bills you need clothing so markets actually were incredibly good at giving us a lot of capital it's the question now what do we point all those resources at and this is the moment where we need to recognize that there are these vast swaths of problems and opportunities that cannot be addressed by the market system in in effect one way of saying i said in the book is that it's because markets have been so successful that the problems that are kind of left over are the problems that markets and especially markets of the variety that we have today cannot and will not solve and so this goes back to the same idea that when we went from the agrarian age to the industrial age we shrunk the agricultural sector relative to human activity and now we need to do the same with the economic sector with the one where everything is explicitly incentivized through an income through profit through stock options we need to shrink that relative to human activity and really let the human activity that's based solely on i'm doing this because i want to do it because i want to help my friend because i want to spend time with my daughter my parents um because i want to you know take care of um animals whatever the case may be to really create room for that and we have the technology because of digital technology because of automation we have the ability to do this but we have to create a society where this becomes possible and desirable for people where you don't look at somebody and say well that person's a bum they just play the guitar all day they don't have a drop where you go oh well it's beautiful that they can play the guitar and now i kind of like that song you know that that mindset shift is dramatic and it requires us to change everything exactly the same way we changed everything in those two big priorities and we just don't seem to have the the will or the desire to embrace this instead we're just clawing on as hard as we can to the industrial age which is no longer working

2022-07-07 15:15

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