CHAPTER ONE

THE AUTONOMOUS REVOLUTION

A Third Social Revolution

FOR THE THIRD TIME IN HISTORY, society is undergoing a social phase change. We are well on our way to creating the Autonomous Revolution.

Its two predecessors, the Agricultural and the Industrial Revolutions, have taught us what to expect. Our institutions will assume new forms and operate using different tools and according to new rules; our sense of time, space, and self will be irrevocably altered. Our memories of what came before the new epoch will be skewed, and the few revenants from the past that do survive it will have limited applicability in the future. But at least for a time, our gut instinct will be to continue to apply the old rules, values, and beliefs, in a losing battle with the inevitable.

The societal phase changes of the past enabled us to gain control over the natural world, create civilizations, and live comfortable and meaningful lives. But those achievements came at the cost of great human suffering. Though we forged societies with common goals, beliefs, and values, the tools that we used to do it included wars, revolutions, crusades, jihads, and genocides. Empires rose and fell. New empires are emerging today—in many ways bigger and more powerful than the great empires of the past. But they are arising in a territory we never anticipated—the virtual realm—and in the forms of corporations such as Facebook, Google, and Amazon.

Society is already feeling some of the early effects of the Autonomous Revolution. The ice-hard stability of the good job is being replaced by the indeterminate “gig.” Countless other jobs have been shipped overseas or automated out of existence, devastating the middle class. Mind-altering processes are being used to reengineer our children’s brains. Our Brave New Social Networking world looks less open and connected every day—and more and more like the dystopian surveillance states of George Orwell and Aldous Huxley.

If we want to turn the forces of the Autonomous Revolution to our advantage, we need to see them as they are, and not through the lenses of our old rules, values, and beliefs. Only then can we develop the reasoned approaches that will allow us to mitigate their less desirable side effects and benefit from the great advances they make possible.

If we aggressively and intelligently manage those changes, we will live in a world of abundance. We will build stronger communities and families and have better and more efficient government. Human productivity will increase. Civilization will become more energy-efficient and our environment cleaner. Health care will be tailored to meet our individual needs and life expectancy will increase. The quality of products and services will improve, and they will be individualized to satisfy our personal tastes.

But achieving those benefits will require us to manage the challenges of the impending, massive, change in a rational fashion. At the very least, we will need great leadership to get us through.

This book is not about what will happen. Much of that is as yet unknowable. Rather, it is about how to manage the inevitable, and the place to begin is by understanding societal phase change.

We have been living with societal phase changes for ten thousand years. Despite that, it is the contention of this book that we have never really understood them. As a result, much of our historic adaptation has been characterized by violence rather than reason.

It doesn’t have to be that way.

CHANGING FORM

Let’s look at the process more closely. The term phase change, like quantum shift, paradigm, and virtual, comes from the world of science and technology, in this case, the world of physics. The phenomenon is something we experience frequently in everyday life.

Anyone who has put water in a freezer has witnessed it. Collections of water molecules that are warmer than 32 degrees F exist in liquid form. Below that critical temperature they become ice and sometimes form beautiful crystals like snowflakes. When water changes to ice, it undergoes a phase change.

When water changes phase, it changes its form. And the rules governing the behavior of ice bear no resemblance to the rules governing water. That’s why physicists and engineers use the rules of fluid dynamics when dealing with water and those of solid mechanics when dealing with ice.

The tools we use to deal with water are pumps and pipes. But pumps won’t pump ice, and ice breaks pipes. In water’s solid phase, we use snow shovels, plows, and icebreakers. What is crucial to appreciate is that our understanding of water gives us no clues about how to deal with ice.

Human social systems go through structural transformations that are similar to phase changes in physical systems. Since we are talking about social systems and not molecules, the analogy is inexact, but when enough structural transformations accumulate in a human society, its institutions change form, obey different rules, and require different tools to manage them.

In the physical world, phase changes are distinct and frequently happen in relatively short periods of time (there are also many examples of extremely long phase changes, such as in geology, when sedimentary rock changes into metamorphic rock). Phase change in human society is a relatively slow process, measured in human lifetimes, and it tends to be cumulative—a set of minor structural transformations combine to create more significant ones, which then add up in their turn. These structural transformations occur in the realms of technology, science, medicine, ideas, politics, economics, religion, and more.

Minor structural transformations are narrowly focused, affecting specific areas of human endeavor, and they happen quickly. You have probably experienced dozens of them in the course of your life. Look at the world around you—and then try to remember the world of your childhood. If you are in your fifties, the differences are remarkable. Think of the media you grew up with and the media you use today. When you were younger you watched broadcast television and listened to vinyl records; you read printed newspapers, magazines, and books, and the movies were something you went to. If you watch television today, you probably receive it over cable or through the Internet; your record collection is on your smartphone; the news is curated for you and sent to you via your social network; and when you need an encyclopedic reference, you search Wikipedia. Movies are streamed to your home by Netflix, Amazon Prime, or any of a host of competing online services.

In the past, written information and recorded music were inscribed on physical objects—printed-and-bound pages, grooved and later digitized discs. Today they reside in invisible bits and bytes. The physical infrastructures that support the media have changed as well. Screens, smartphones, and fiber optic cables have replaced newsstands, delivery trucks, and printing presses. Media business models are different. You no longer have to purchase an entire album of music; you can buy your favorite song. In the past, broadcast television was free and you paid for your local newspaper. Today, you subscribe to online video services but can read hundreds of newspapers, from every corner of the world, on your screens for free.

Major structural transformations occur when minor structural transformations accumulate and interact, impacting broad segments of the economy and society. Since they are a result of agglomeration, they happen relatively slowly.

Right now, any number of minor structural transformations are happening in the financial industry. For example, consumers can use Apple Pay and Google Pay to make payments at retail establishments, substituting their smartphones for their credit cards. Once the payments are entered, they are processed over the old credit card networks. In China, smartphones are being used as a platform for peer-to-peer payment systems. Using applications such as WeChat, smartphone customers made $5.5 trillion in payments without the need to run the transactions through a credit card network. ¹

Facebook’s recent announcement about forming a virtual currency consortium, Libra, is an example of the type of development we should anticipate in the future—a harbinger of a world where credit and debit cards may become obsolete and currencies are ruled by commercial enterprises. ²

The first experiments with online banking date all the way back to 1981. In 1996, NetBank, the first truly successful Internet bank, was founded. In the early 2000s, automated portfolio management software began to be widely used by financial advisers. Today, robo-advisers that manage investment portfolios for consumers are available from companies such as Betterment and Wealthfront for a fraction of the cost of human advisers. ³ Scores of other financial applications (Fintech) are available, and countless more are in the development pipeline.

When peer-to-peer payment systems are integrated with peer-to-peer lending systems, Internet-only banks, and robo-advisers, the future of credit cards, retail banks, and financial advisers as we know them will be challenged. When much of the financial services industry has been absorbed into virtual space and is operated by automatons, a major structural transformation will have occurred.

A similar story could be written about the media industry. Minor structural transformations affecting print, recording, broadcasting, and publishing are combining to create a major structural transformation in the media space.

Social phase changes occur when major structural transformations combine and interact over extended periods of time, changing institutions and norms so completely that an entirely new form of society emerges. The Agricultural Revolution gave birth to cities and civilization; the Industrial Revolution sealed humanity’s dominance over the natural world. The transformations they induced were complete and all-encompassing.

Each societal phase change ushered in new infrastructures, new forms of society, commerce, governance, and belief systems. What emerged as a result of each of these transformations was almost a new human species, one that depended on technology for its survival and that would be unable to survive if it traveled back in time.

The Autonomous Revolution is being driven by a fundamental change in our relationship with machines—in particular, with intelligent machines.

The truth is that the advent of our Autonomous Revolution is already affecting every aspect of our lives—even introducing new forms of space and time. The automatons that we are creating are already acting as if they are a new collection of species that, under the direction of their controller masters, have begun to challenge the primacy of homo sapiens. If we cannot yet discern the details of the individual streets and buildings of this new world, we can already see, emerging from the mists on the horizon, its spires. And that may be all the warning we get.

Look around you. Everything is transforming before our eyes. The nature of work is changing. The good job is going away. New business structures are displacing old ones. The Internet of Things promises to serve our every need, and in the process become the platform for a massive new economy—a surveillance economy where our every action is monitored. Computers are peering into our brains to learn our thoughts, understand our emotions, and influence and direct our behavior.

Lives are moving from a physical space that has no purpose and that we have shaped to meet our needs … to a virtual space that increasingly attempts to shape our actions to meet the needs of its controllers. New value systems are emerging—and in the process, new definitions of freedom, liberty, and free speech are emerging in their train.

Our perceptions of fairness are changing as well. Automatons threaten to create millions of “ZEVs”—people of Zero Economic Value—individuals you would not hire even if they worked for free. In other words, the prospect of a world with millions of purposeless people has become a real possibility. The Protestant work ethic, on which our society and economy were built, is now in danger of setting unrealistic standards for evaluating human worth.

The Autonomous Revolution has already upended much of what we once took for granted. What mattered in the past (giant command-and-control corporations employing tens of thousands of people; huge factories filled with machinery; books; automobiles; television broadcasts that routinely captured as much as half or more of the universe of possible viewers) is becoming much less important.

We are struggling to deal with the new forms, tools, rules, and norms. Memorization is a lost skill. Declining numbers of us believe in objective journalism. IQ is no longer regarded as a true measure of intelligence. We don’t think of robots as employees yet, merely as very smart machines, ancillaries to our own labors. But the wages we pay robots already determines the value of human labor.

The economy is starting to obey different rules. Rises in productivity no longer power economic expansion. The costs of necessities, like health care and housing, are rising, while the value of middle-class work is falling—trapping tens of millions of people in a downward cycle of purchasing power. Income inequality is rocketing to historic highs.

Suddenly commercial enterprises, not repressive governments, are what pose the direst threats to our individual freedoms and privacy. Their scrutiny and surveillance follow us everywhere. They search not only our files but also our minds. They restrain our choices by placing us in algorithmic prisons without the benefit of an open trial or the right to confront our accusers—or even to know who they are. The Star Chamber that was once presided over by gray-haired men in a palace has changed venues: it now resides in corporate headquarters filled with kids in black t-shirts.

As we move larger and larger portions of our lives into virtual space, commercial enterprises not only make choices for us but also increasingly program our behavior, from the number of steps we take each day to the amount of time we are allowed to play a game before we are forced to take a break.

Businesses that once had physical form are being reduced to applications that we execute on smart devices we carry in our pockets and wear on our wrists. Some rules are changing, and many others are being written from scratch. The past is no longer a reliable guide to the future; our experience and acquired wisdom are as likely to betray us as guide us. It is as though we must learn everything anew.

Perhaps most disquieting of all is that the Autonomous Revolution will be characterized most of all by the speed of its change. It is coming astonishingly fast. Whereas the Agricultural Revolution transpired over millennia and the Industrial Revolution over centuries, this current transformation will be measured in decades.

When reflecting on the litany above, it is easy to become pessimistic about the future. But answers exist for many of these problems. In what follows, we propose what we believe would be some effective solutions, and are certain that many other valid approaches exist. We must also remember that the technologies creating many of these problems can also be used to solve them.

For example, automation causes the value of work done by many to decline. As a result, it puts pressure on incomes. But that automation also currently reduces the cost of many services, has the potential to make much of education free, and has consistently reduced basic health care costs. And, even as we fear the advent of the surveillance state, aggressive actions are already being taken in Europe to better protect individual privacy. Later in the book, we propose a more radical approach that we believe would effectively solve the problem as well.

We must keep in mind that the technologies of the Autonomous Revolution are creating a world of abundance. That means that most likely we will have on hand the resources required to face our problems.

That said, we also know from past experience that the failure to address the challenges created by phase change during the Agricultural and Industrial Revolutions led to wars and vast amounts of human tragedy. We don’t believe that this is inevitable with phase change; but, that said, we must struggle with all our might to not let it happen again.

With so much at stake, one of the messages of this book is that the time to take action is now.

SUBSTITUTING ONE FOR ANOTHER

The major forces that drive phase change are what we call substitutional equivalences: when we replace one fundamental way of dealing with the world with another that is radically different, but that performs a similar (if not identical) function.

For example, during the Agricultural Revolution, a new form of food production substituted for an older one—the cultivation of grain for hunting and gathering. Indirectly, in the form of feed for the domesticated animals that became our main sources of protein, and directly, in the form of bread and beer, one source of calories replaced another.

In the Industrial Revolution, mechanical power was substituted for muscle power. Factories replaced piecework and cottage industries, and their workers were paid wages instead of sharing directly in the results of their production. A market system of suppliers, manufacturers, distributors, retailers—and ultimately cash-paying consumers—replaced tradespeople bartering their goods in marketplaces. These equivalences spawned more. For example, civilizations that developed during the Agricultural Revolution invented writing, which in many cases substituted for verbal communication—a very important equivalence that happened as a result of the fundamental equivalence created by agriculture.

Unlike the Agricultural and Industrial Revolutions, which were primarily driven by just one equivalence, the Autonomous Revolution will be driven by three: information, intelligence, and spatial equivalences.

1. Information Equivalence. Information equivalence is what allows us to substitute virtual processes for physical ones. Much of what goes on in our lives and businesses is information transfer and processing in disguise. We go to a retail store to find out what is available and at what price. We engage in business travel to exchange information with customers. Those functions can be moved to virtual space and, when they are, the existing processes change form, operate by different rules, and use computation as their basic tool. The retail store becomes an online store, the customer trip becomes a video conference, and the office building that served as a customer support operation becomes a voice recognition and speech synthesis system hooked to a database and an artificial intelligence system that generates responses.

2. Intelligence Equivalence. Just as the Industrial Revolution replaced muscle power with mechanical power, the Autonomous Revolution will use artificial intelligence and artificial senses of touch, vision, sound, smell, and taste to replace and vastly enhance human minds. The Industrial Revolution was a 250-year campaign to increase workers’ economic productivity via mass production and their intellectual abilities via public education. The Autonomous Revolution will embed functional intelligence in autonomous machines. In practice, this means that the systematic development of human knowledge through education and work experience will have less value than it did in the past. Humans may continue to expand their knowledge and skills by accessing databases on the Internet, interfacing directly with the IoT (Internet of Things), or eventually having devices implanted in their bodies that will enhance their physical and mental abilities. But the real repositories of practical knowledge will shift to autonomous devices, which will learn much more quickly than people can. In situation after situation, automatons will substitute for humans.

3. Spatial Equivalence. Activities we used to do in physical space are being transferred to virtual space. Relationships that used to be carried out over coffee are continued over social networks. When crime, terror, and war all move to virtual space, the troops become automatons that do not bleed. Private citizens and military groups alike have access to intercontinental cyber-missiles carrying nuclear cyber-bombs. Crypto-currencies like BitCoin and the Ether may displace the coins and bills that are issued by nations. Games that used to be played on boards or on ballfields get moved to virtual space with participants from all over the world. Virtual teams play MMORPGs (massively multiplayer online role-playing games), slaying monsters and dragons. Unlike activities in physical space, many cyber-actions are almost infinitely scalable and come with close to zero incremental costs. Now for the biggest challenge of all: not just games but business, currencies, crime, terror, and war are moving to a world that has virtually no governance. For many of these activities, the rules really are different, because there are no rules.

None of these equivalences existed to an important level fifty years ago. Now, it is hard to find a corner of the developed world—and of most of the developing world—that isn’t affected.

The goal of this book is to provide readers with an understanding of the processes that are creating the Autonomous Revolution, its implications, and the types of things we can do to benefit from them. One thing is certain: if we choose to treat phase change as business as usual, we will become its victims.

Each of these three phase changes has occurred with increasing speed. The Agricultural Revolution transpired over the course of twelve thousand years, as civilization emerged from its tribal roots and nation-states and empires came into being. The Industrial Revolution transpired over two centuries, changing the form of society and its economic, political, and cultural institutions. For example, the urban share of the population of the United States was just 6.1 percent in 1800; it is more than 80 percent today. ⁴ The Industrial Revolution created jobs in urban environments for those who were no longer needed to work on the farm. Economic entities—corporations such as General Motors, Standard Oil, and U.S. Steel—achieved the scale and power of nations in just a matter of decades.

There is no sure way to measure rates of societal change. Some important changes, especially in the areas of business and the media, are occurring in months in today’s virtual environments—a rate of change that is one hundred times faster than in the Industrial Revolution. But to argue whether rates of change are one hundred times faster than in the past, or just fifty or ten times faster, is to miss the point. The Autonomous Revolution has already started, and we won’t have much time to adapt to the new social, economic, and governance forms that it is unleashing, not to mention its new values.

In what follows we will delve into the history of phase change, paying especial attention to the role of substitutional equivalences as they create new norms. While these equivalences may seem minor, the changes in the rules that they precipitate can be enormously important. When political blogs and “citizen journalism” first began to proliferate on the Internet less than twenty years ago, they seemed, if anything, to be a boon for democracy. Had we understood how radically the rules were changing, we might have recognized the darker implications of “fake news” much sooner. So too, we might have foreseen the dangers of a fully uncensored Web (child pornography, terrorism, etc.) on the one hand, and the politically biased censorship of social network content by the employees of their parent corporations on the other.

In subsequent chapters, we will explore how phase change is rewriting the rules of business while driving what we call nonmonetizable productivity, the bipolar economy, and the destruction of millions of jobs. Then, we will look at how phase change is impacting our government, our notions of privacy, liberty, and freedom, and the way that society is likely to function in virtual space. In each of these sections, we will suggest how to deal with the challenges that these substitutions present.

In the process, we will suggest some new regulations and laws that are likely to be extremely controversial. Some of our prognostications may be uncomfortable or unbelievable to many. Some of them, we freely confess, trouble us. But we have followed our speculations to their logical conclusions, wherever they may lie. We also know that we do not have a monopoly on good ideas. Human ingenuity has always been our greatest survival skill. Over time, as we better understand these unfolding changes, no doubt numerous creative and effective solutions will emerge. We suspect that many modern Malthusians will be pleasantly surprised.

Historically, social phase change has provided fertile ground for utopian movements. At the birth of the Agricultural Revolution humanity began to formalize its laws and religions and to develop the incipient marketplaces that gave rise to trade, money, and banking. The Industrial Revolution gave rise to republican democracy, modern capitalism, Communism, Fascism, and Romanticism.

And what of the Autonomous Revolution?

The poet Ezra Pound wrote about humanity’s inexhaustible hope that a “palpable Elysium” is waiting just around the next corner. It is easy to imagine how technology could usher in a golden age, yet it is also easy to imagine how things could go horribly wrong. Tellingly, Pound thought he had found his Elysium in Mussolini’s Italy.

Dealing with the phase change of the Autonomous Revolution is the great challenge of our age. Human beings are infinitely resourceful, and, if we will use them in a thoughtful and responsible way, our new intelligent tools will give us the power to create a better world. It can be a world with a universally high standard of living, longer life spans, robots that will free us from drudgery, safer communities, and access to a fascinating and exciting virtual universe.

All of these things are tantalizingly within reach; some are here already. They may not be enough to create Utopia, but they can bring us a lot closer to it than we are today. Surprisingly, a primitive form of that ideal world once existed in Silicon Valley.

The Ohlone tribe lived largely unmolested for thousands of years in what is now the southern San Francisco Bay Area. Then as now, the geography was gentle and the weather kind. But unlike today, when Valleyites are famous for their long work hours, intensity, and ambition, the Ohlone lived a life of comparative leisure. Anthropologists estimate that they only worked about ten hours per week, the women gathering the acorns that lay everywhere on the ground, the men occasionally hunting the abundant animal life, or spearing fish and harvesting shellfish from the Bay. The rest of their time was spent in relaxation.

It is not impossible that the average citizen of the Autonomous Revolution will have much in common with the Ohlone. Fifteen hours a week may be all that they have to work to maintain a comfortable standard of living, with the rest of their time dedicated to the pursuit of leisure.

Of course, there were some downsides to the Ohlone lifestyle: occasional plagues and droughts, and, thanks to the bits of gravel that got into their mortars when they were crushing acorns, most of the tribespeople’s teeth were ground down to their gums by early adulthood. Still, it was a rather idyllic existence. But it ended—we even know the exact time and date that societal phase change reared its ugly head: at 7 o’clock on the morning of January 12, 1777. That’s when Father Junipero Serra’s expedition held morning prayers for the first time at the original site of what would become Mission Santa Clara de Asis.

From that moment forward, the Ohlone’s world operated on a clock. Though they had missed the Agricultural Revolution, the Industrial Revolution ran over them like an avalanche. The Ohlone adopted a new diet and were exposed to a host of new diseases. They were drawn into jobs in the new tanneries and in the white men’s cities and towns. By 1852 their population had shrunk from 300,000 to just 1,000. ⁵

But if the Ohlone were blindsided by the Industrial Revolution, we have seen the Autonomous Revolution coming for some time—it is of our own making, after all. And we can learn from history.

It is our fondest wish that, unlike the Ohlone, we can avoid much of the pain, and can have our paradise and our social phase change, too. We hope this book will help make that possible.