The right observatory
Andrew McAfee belongs to the narrow circle of those economists who look at, understand and evaluate the new economy, made up of services and immateriality, with the correct approach. His observatory could be assimilated to the point of view of someone narrating a landscape from a hot air balloon. Maybe it's because he holds such an important position as lead researcher of the Initiative on the Digital Economy at MIT's Sloan School of Management in Boston. One of the most informed and serious think-tanks on the digital laboratory and cyberspace. It is also certain that McAfee truly belongs to a new generation of economists. A generation that now takes certain developments for granted and has stopped looking in the rear-view mirror. McAfee's reasoning always makes you think, for their originality and argumentative coherence. Difficult to find a discordant note in his pentagram of thought. The digital economy is here to stay and develop and this needs to be discussed. It seems to say McAfee. And it will also be better than the industrial-tertiary economy, if we know how to face it in a certain way, with the four horsemen of optimism, in fact. This is his starting point, even if today's optimism seems like a penalty kick that hit the post.
It will certainly be better
The age of intelligent machines will be better and more full of opportunities than the age of machine tools. The latter has impacted the balance of the planet more destructively than all other eras combined. Perhaps the digital economy will be able to stop the destruction without affecting the rate of human development and well-being that the industrial era has chaotically brought to many parts of the world. McAfee develops this thesis in his latest book More From Less, not yet available in Italian. His previous works have been translated into Italian together with Erik Brynjolfsson, director of the MIT Initiative on the Digital Economy: The new revolution of machines. Work and prosperity in the age of triumphant technology (Feltrinelli, 2017), In competition with the machines. Does technology help work? (goWare, 2018) and The Machine and the Crowd. How to dominate our digital future (Feltrinelli, 2020). Below we are pleased to offer a contribution from McAfee titled Kicking the Industrial Age's Worst Habits. The contribution appeared in the New York Times column "Turning Points". Enjoy the reading!
Change for the better
A 2019 United Nations report found that there are close to one million species of animals and plants in danger of extinction. A disaster caused by man's damage to ecosystems around the world. The steam engine and subsequent inventions changed the world. Today, fortunately, computers and technology are changing that again. Why do I say "fortunately"? Because the industrial age — ushered in by steam power and sustained by internal combustion, electricity and fossil resources — has been a very tough experience for our planet. Year after year, we have taken more and more fossil fuels from the earth to fuel the growth needs of our economies. We have mined more metals and minerals, cut down more trees, cleared more land for cultivation, used more water and fertilizers than ever before. We have exploited our world in countless other ways as well.
It happened during the industrial age
During the industrial age, population and prosperity increased exponentially, but so did the consumption of natural resources. Ever since the first Earth Day in 1970, it was clear to many that the planet could not keep up with the goose-step of the industrial age. Since then it was understood that the Earth's resources would not have supported these uncontrolled appetites, which were growing dramatically. The only viable solution seemed to curb these appetites. It could have happened voluntarily, that is by adhering to a philosophy of "de-growth", which is the same thing as adhering to the idea of a continuous and ever deeper recession. Or through central planning and resource rationing.
After 1970
What happened after 1970? Apart from some temporary restrictions such as petrol rationing, most countries have not sought to slow down the consumption of natural resources or to force companies to produce fewer material goods for the good of the planet. The United States certainly did not. Similarly, most people in developed countries have not chosen voluntary degrowth. Economic and population growth has slowed since 1970, but it certainly hasn't started to decline. On the contrary, both have continued to rise at fairly constant exponential rates. For example, the US economy is three and a half times as large as it was in 1970. The population has increased by about 60%. Natural resources have continued to be consumed at a breakneck pace, right? No! Wrong. Something completely unexpected has happened. In America and other developed countries, the use of environmentally critical materials settled and then began to decline, even as the population and economy continued to grow.
The turnaround
The magnitude of this turnaround is astounding. America used 2015 percent less steel in 15 than it did in 2000, 40 percent less copper and 44 percent less gold, according to the United States Geological Survey. Total use of timber has fallen by a third, and that of paper by 20 percent from their respective peaks. If we zoom in on industries like agriculture, we see the same thing. Total US crop tonnage has increased more than 20 percent since 1992, but overall fertilizer use has declined nearly 20 percent. Water consumption for irrigation has also decreased by 13 percent. Finally, total energy use in America has stabilized, although growth continues. The US economy is about 20 percent larger than it was before the onset of the Great Recession. In 2018, however, the country used only 0,26 percent more energy than in 2007. As was accomplished all this? How was it possible to decouple economic growth from the consumption of natural resources for the first time in human history? Setting in motion the digital revolution.
The benefits of the digital revolution
Consider the example of railways. In the late 5s, the general rule of thumb for railroads in the United States was that, on any given day, only 95 percent of boxcars were allowed to move. This wasn't because the other XNUMX% needed to park, but because the companies couldn't keep track of them. At the time, accurately tracking a fleet of freight trains across thousands of miles of track and hundreds of freight yards alone was virtually impossible. The railroads relied on human observers who monitored passing trains and then telephoned or telegraphed sightings to headquarters. While this approach was manpower intensive, it had its own economic rationale. Over time, however, these sentinels have been replaced by digital tools for locating rolling stock. Today, the railways have an almost constant visibility on their entire network and the trains travel in relation to the goods to be transported and the maximum capacity of the network.
Dematerialization
Progress hasn't just happened in America. Similar large-scale “dematerialization” has also occurred in other rich countries, such as Germany and the Netherlands. Low-income nations are still building their infrastructure and therefore using more physical material, but they are expected to start dematerializing soon too. Are the Siamese forces of capitalism and technological progress all we need to know that we will take care of our planet? Absolutely not. As every first-year business student learns, pollution is the classic negative externality — a cost that arises from an economic activity but is not borne by the parties directly involved in that activity. Technologies and markets do many things spectacularly, but they can deal with pollution and other externalities.
The Four Horsemen of Optimism
We need a couple more forces to come into play. These are public opinion and governments. The first must assume full awareness of the terrible problems caused by pollution. Governments must become more responsive, i.e. capable of implementing and applying intelligent measures to reduce the impact of capitalism and technological progress on the environment. These were the forces, for example, that led the United States to pass legislation in 1973 intended to protect animals vulnerable to the development of industry and technology. The same happened at the beginning of the XNUMXth century, when the extinction of the passenger pigeon and the near disappearance of other species led public opinion to support environmental conservation policies. I call capitalism, technological progress, public awareness and responsive government the "four horsemen of optimism". When they travel in unison, they can increase people's well-being without harming the planet. Thanks to them, it will be possible to overcome the bad habit of the industrial age of plundering the Earth to grow.
More for less
We are entering a second era of cleaner, greener cars, powered by computers and artificial intelligence. The other three horsemen are necessary, but technological progress is the only one that can allow us to get "more from less". Which means moving better in a world of dwindling natural resources.
