Marc Andreessen, the renowned VC, begins this long article by claiming that we are being lied to about the pernicious effects of technology on our lives. He exhorts us to take a different point of view: “We believe growth is progress – leading to vitality, expansion of life, increasing knowledge, higher well being…There are only three sources of growth: population growth, natural resource utilization, and technology.
Developed societies are depopulating all over the world, across cultures – the total human population may already be shrinking. Natural resource utilization has sharp limits, both real and political. And so the only perpetual source of growth is technology.
In fact, technology – new knowledge, new tools, what the Greeks called techne – has always been the main source of growth, and perhaps the only cause of growth, as technology made both population growth and natural resource utilization possible.
We believe technology is a lever on the world – the way to make more with less…We believe this is why our descendents will live in the stars. We believe that there is no material problem – whether created by nature or by technology – that cannot be solved with more technology….”
Now, the sceptic might ask during the darker days of the VC funding winter as to why Mr Andreessen is optimistic about technology’s power to solve most of our problems. The legendary VC gives you three reasons to justify his point of view.
Firstly, he believes in the power of free markets to deliver good outcomes: “We believe free markets are the most effective way to organize a technological economy. Willing buyer meets willing seller, a price is struck, both sides benefit from the exchange or it doesn’t happen. Profits are the incentive for producing supply that fulfills demand. Prices encode information about supply and demand. Markets cause entrepreneurs to seek out high prices as a signal of opportunity to create new wealth by driving those prices down.
We believe the market economy is a discovery machine, a form of intelligence – an exploratory, evolutionary, adaptive system.
We believe Hayek’s Knowledge Problem overwhelms any centralized economic system. All actual information is on the edges, in the hands of the people closest to the buyer. The center, abstracted away from both the buyer and the seller, knows nothing. Centralized planning is doomed to fail, the system of production and consumption is too complex. Decentralization harnesses complexity for the benefit of everyone; centralization will starve you to death.
We believe in market discipline. The market naturally disciplines – the seller either learns and changes when the buyer fails to show, or exits the market….We believe markets are an inherently individualistic way to achieve superior collective outcomes.
We believe markets do not require people to be perfect, or even well intentioned – which is good… Adam Smith said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.”…We believe central planning is a doom loop; markets are an upward spiral.
The economist William Nordhaus has shown that creators of technology are only able to capture about 2% of the economic value created by that technology. The other 98% flows through to society in the form of what economists call social surplus.
We believe in David Ricardo’s concept of comparative advantage…”
Secondly, the Silicon Valley luminary believes in something he calls the ‘techno-capital machine’: “Combine technology and markets and you get what Nick Land has termed the techno-capital machine, the engine of perpetual material creation, growth, and abundance.
We believe the techno-capital machine of markets and innovation never ends, but instead spirals continuously upward. Comparative advantage increases specialization and trade. Prices fall, freeing up purchasing power, creating demand. Falling prices benefit everyone who buys goods and services, which is to say everyone. Human wants and needs are endless, and entrepreneurs continuously create new goods and services to satisfy those wants and needs, deploying unlimited numbers of people and machines in the process. This upward spiral has been running for hundreds of years, despite continuous howling from Communists and Luddites. Indeed, as of 2019, before the temporary COVID disruption, the result was the largest number of jobs at the highest wages and the highest levels of material living standards in the history of the planet.
The techno-capital machine makes natural selection work for us in the realm of ideas. The best and most productive ideas win, and are combined and generate even better ideas. Those ideas materialize in the real world as technologically enabled goods and services that never would have emerged de novo.
Ray Kurzweil defines his Law of Accelerating Returns: Technological advances tend to feed on themselves, increasing the rate of further advance.
We believe in accelerationism…”
And thirdly, Mr Andreessen, says that be believes in intelligence – both natural and artificial: “Intelligence makes everything better. Smart people and smart societies outperform less smart ones on virtually every metric we can measure. Intelligence is the birthright of humanity; we should expand it as fully and broadly as we possibly can.
We believe intelligence is in an upward spiral – first, as more smart people around the world are recruited into the techno-capital machine; second, as people form symbiotic relationships with machines into new cybernetic systems such as companies and networks; third, as Artificial Intelligence ramps up the capabilities of our machines and ourselves.
We believe we are poised for an intelligence takeoff that will expand our capabilities to unimagined heights.
We believe Artificial Intelligence is our alchemy, our Philosopher’s Stone – we are literally making sand think.
We believe Artificial Intelligence is best thought of as a universal problem solver. And we have a lot of problems to solve….”
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