Paradoxes of the second machine age
Among the many interesting concepts in The Second Machine Age: Work, progress, and prosperity in a time of brilliant technologies, three stand out for me: intangible assets, productivity and employment, bounty and spread. A big driver in all of them is digital technology.
The rise of intangible assets
Production in the second machine age depends less on physical equipment and structures and more on the four categories of intangible assets: intellectual property, organisational capital, user-generated content, and human capital.
The decoupling of productivity and employment
Productivity continued its upward path as employment sagged. Today the employment-to-population ratio is lower than any time in the last 20 years, and the real income of the median worker is lower today than in the 1990s. Meanwhile, like productivity, GDP, corporate investment, and after-tax profits are also at record highs.
The bounty and the spread
Thanks to technology, we are creating a more abundant world – one where we get more and more output from fewer inputs like raw materials, capital, and labor.
But not everyone is a winner, it seems that ultimately there may be more losers in the future if disruptions continue along current trajectories:
It is also an engine driving spread, creating larger and larger differences over time in areas that we care about – wealth, income, standards of living, and opportunities for advancement.
What does it mean?
Should we be concerned that increased productivity does not lead to more jobs, and that higher profits are shared by fewer people? Or are these first-machine-age concerns? I suspect that we need new ways of thinking about second machine age challenges. On the flip side, an abundance of good things mean that we have more opportunities to improve ourselves than ever before.
But ultimately, are we ready for what’s to come? We are on the verge of even greater disruptions because eventually Moore’s Law will outrun many of our notions of what’s possible, and what is not. Maybe we should resist the temptation to predict the future and focus instead on using the new abundance to tackle wicked problems.