Will Nanotech Kill Markets?

Above: Nanotech is coming to get you

One of the first definitions of Economics I came across in my life was “the study of scarce resources and unlimited wants.” That is, how choices are made with regards to which of the unlimited wants are to be met and not, or in other words, how resources are allocated. Here, markets come in as one of many possible mechanisms for making such choices socially.

In the context of Technology Governance, another way of understanding economics appears. That is, in recognizing that in the presence of innovation and changing technology, economic systems are not static, the extent to which resources are scarce depends on our ability to produce. As such, economics in this context can be better described as the study of how humans mitigate scarcity of resources by means of technology. Here, the core questions do not so much relate to allocation of scarce resources but to our changing capacity to make available those resources.

However, technology does not only change which resources or goods are available in which quantities, they also strongly influence the market (or other) mechanisms by which they get distributed. The unfolding of the current ICT paradigm has provided us with ample examples of this. For one thing, it has become increasingly difficult to monetize web-based content, such as online news, etc. And – to the great dismay of many former entertainment industry giants, more and more previously offline content is moving online. Here, music was an early mover as the MP3 music format emerged. Moving on, as bandwidths have increased dramatically, movies and TV series have proliferated dramatically on online file-sharing networks and live-streaming websites. Additionally, the book printing industry is also being hit as .pdf versions of printed works become available freely online. In spite of iTunes, Kindle, and other valiant attempts at keeping market power in the same hands as in the last paradigm, the free online sharing of content appears unstoppable. In particular, this is the case because consumers appear less and less willing to pay for online content at all. Demographics tend towards making this feature of development even more important, as young people are the least willing of all to pay for content. The important point here is that we are seeing a total change in the workings of some large markets, not because the modes and means of production have changed (even though they have), but because the means of distribution have changed.

In parallel to the de-monetizing of some industries, the unfolding of the ICT paradigm has also brought with it a plethora of non-market production of intellectual content. This includes the vast open-source encyclopedia project Wikipedia (along with a host of other wiki’s), the renowned (and supposedly super-stable) open-source operating system Linux, a vast “blogosphere” of (amateur or professional) journalists and analysts publishing for free, open-source resources for warfare primarily produced and made use of by loose networks of guerillas and/or terrorists, as well as a huge number of other open-source software for basically any use in direct competition with a range of monetized products (Mozilla Firefox and Open Office are examples of this).

In explaining both of these developments, the central feature of ICT as enabling copying and movement of information at incredibly low cost is critical. Instead of distributing music on CD’s, which are very cheap but require physical transportation and handling – making it conducive to being distributed through monetized transactions (in for example shops) – online file sharing is as if it were invisible, and can move through space across rivers, forest, mountains, and oceans without ever changing hands. As such, the nebulousness of its physicality makes its distribution almost impossible to monetize.

The open-source movement shares ease of copying and dissemination as the basis for its existence. People have been writing letters to the editor or participating in town-hall meetings for a long time without expecting any payment. People have also shared their knowledge on motorcycle repair or botany with their friends and neighbors long before the internet came around. Offline “open-source” design and development on a small scale has also taken place on a day-to-day basis, in local communities and to some extent within organizations. The vast proliferation of online versions of these same activities makes a lot of sense, precisely because the process of sharing is so cheap and easy. Again, the production itself is arguably not the primary driver of the development, but rather the changing mechanisms of distribution.

With this in mind, the emergence of nanotechnology begs the question of whether a very similar market breakdown may occur on a much more vast scale, as one of the core features of the technology in question is that “copying” of physical things; machines, buildings, clothes – even food – is one of the core features offered by the new field. In a primitive, Solowian sense, this will show up as tremendously increased productivity. And of course, an important feature of nanotechnology will be just that – tremendously increased productivity. However, to the extent that nanotechnology makes possible extremely small machines with the ability to self-replicate and manipulate matter down to a sub-atomic level, we may expect – if not in the first generation – that infinite-purpose nano-robots may easily become available to consumers at large. At this point, the market-devastating possibility of nonphysical distribution of every kind of physical good becomes possible. What if one can download an open-source car design and have nano-robots build such a car in your garage overnight? Would there be a market for cars left? Would there be markets for anything left?

Not only markets for replicable physical goods could possibly be obliterated by advanced nanotech. Service industries too, would be profoundly affected. It would be no matter serving you automatically in a restaurant with (literally) flying saucers. Not to mention fixing your car. But even in highly advanced services such as medicine could humans be largely replaced by advanced nanotech. Who needs a doctor when one is being kept in tip-top shape by an army of tiny nano-robots?

An unlikely model for a post-nano economy can perhaps be found in the work of William Morris, the British anti-technological socialist. In his main literary work, News from Nowhere, he describes a socialist economy based on arts, crafts, and voluntarism. Notably, there is no money, and not even barter in a strict sense. Rather, everyone works for the sake of working – working with something worth working on, that is – not mind-numbing and exploitative industrial work which produces garbage-like goods totally removed from any sense of eigentlichkeit. In the Morris economy, the carpenter builds houses – beautiful houses – because he takes pride in his work and derives pleasure from seeing the results of it, the farmer grows high quality vegetables for the same reason, and the baker bakes wonderful artisan bread because he wants to.

William Morris, anti-tech socialist prophet of the open-source nano-economy

Now, one might ask why not then, if it is free, the first few people to arrive at the bakery in the morning would not take with them 20 loaves of bread each, such that the last ones would be left wanting. Morris’ striking answer is “why would they?”; after all nobody would be hungry enough for it to make any sense. Such notions, Morris argues, are but a result of the absurd ideas propagated by a sick industrial society, where one produces nothing but garbage and everyone is poor because of it. In the Morris-economy, competition would not be about who can make things “a little worse and sell a little cheaper”, as in an industrial setting, but rather centered on artisanal pride and good workmanship.

There are some striking problems with the Morris model. A modern economist would immediately point out that with no prices affecting production choices, the Morris economy would be frightfully inefficient. That is, one would tend to see (potentially huge) overproduction of things that a lot of people like to make but not so many want much of (beautifully carved tobacco pipes?), and underproduction of things that a lot of people want a lot of but not so many people like to produce.

Moreover, with no real mechanism for trade, one would hardly be able to enjoy any goods from foreign countries. For example, the happy and harmonious people populating William Morris’ utopia – which presumably is set in Britain – are enjoying wine, although they do not appear to have means of obtaining such or any other goods from abroad (and if the wine they were drinking was made from British grapes they would be neither happy nor harmonious). Of course, one could perhaps argue that one could more than contently enjoy pale ale and porter in Morris’ utopia.

The most important problem with Morris’ anti-technological utopia, however, appears to be that it is only possible for it to support a very small population – which begs the question of what happened to all the Brits who were around before the revolution. Arguably the only adequate (and morbid) answer is that they died in it – a holocaust-like solution Morris himself hopefully would not be very satisfied with.

Now, while not enabling an economy built around arts and crafts, nanotechnology in its fullest sense could perhaps both enable and necessitate an economic structure very similar to that envisioned by Morris. Firstly, by potentially breaking down the ability of firms to monetize transactions of hardly any goods, and by replacing humans in many or even most service industries, the stage is set for a spreading of the ICT “open-source” system throughout the economy. Already, “open-source” as it exists today is astonishingly similar to that of the voluntarist William Morris-economy. Participants contribute their time and knowledge toward common goals apparently because they enjoy doing so. Again, as in Morris’ utopia competition is not based around who can do things “a little worse and a little cheaper”, but around who can do things better. In a very real way, a high-tech artisanal pride is a driving force.

With nano-robot as a pervasive tool throughout the economy, and raw materials not being a problem as such robots in their most advanced form potentially would be able to rearrange not only atoms but electrons (so that any material could be created from anything else, like air or sand), one could easily imagine global, online, open source communities producing and disseminating downloadable designs for almost any product; food, cars, even spaceships; with little grounds left for markets as we know them today to stay alive. Even the market for land would not necessarily stick around when it becomes more than possible to build one’s own continents, either on this planet or new ones, and at the same time travel and communicate so quickly and efficiently that being based in the same place no longer is very valuable. While there may of course remain numerous tasks left that have to be done by humans on a professional basis – public administration and education comes to mind – the lack of markets and monetization in most of the economy would still leave one with the problem of how to pay those who already have everything. As such, it is not inconceivable that those jobs that would still have to be filled by people would be done so either on a voluntary basis, or on a rotating compulsory “community service” basis.

Above: Various kinds of arts and crafts, William Morris wallpaper on the left and bundles of carbon nanotubes to the right

Nanotech would also in large part solve the main problems of Morris’ original utopia. That is, the efficiency problem would no longer be relevant in a scenario with near infinite abundance of resources. Furthermore, one major difference between the open-source nanotech-utopia and the William Morris utopia is that while in the latter production of goods happens on a voluntary basis, in the former production of design happens on a voluntary basis; while production of actual goods happens on everyone’s private initiative, using freely available designs and self-reproducing infinite-purpose nano-robots. That is, in the nanotech-utopia, consumers produce their own end-user goods, effectively eliminating the need for prices to steer production and allocation of goods. For the same reason, the population problem of Morris’ utopia is not an issue in the nanotech-utopia. Nor is international trade – British villagers can easily download great Italian wine instantly. And if you are worried about the wine’s eigentlichkeit, imagine the countless hours spent perfecting it by the thousands of wine-loving Italian nano-engineers.

Of course, the nanotech-utopia is hardly what Morris envisaged. Its economic structure however, may fit better to that of Morris’ utopia than any anti-tech utopia could ever have done.