The Post-Scarcity Information Economy

There’s nothing particularly insightful from Nadella’s latest post on the “Reverse Information Paradox” (except that the Microsoft CEO taking a firm stance against Anthropicisms), but I think there is a broader issue here.

In consuming intelligence, you are creating intelligence. And what you create should belong to you. This is your particular intelligence, in Hayek's sense: the knowledge of time, place, and circumstance that no one else can hold. It knows what you think, what you value, and how you measure success.

While the great innovation that comes from model providers having fair use rights to train models on public data is needed, I find it ironic that the status quo is to then turn around and impose restrictive terms on distillation, and to reserve the right to learn from customer usage and interaction data. If learning flows in only one direction, economic value converges toward the owners of the learning infrastructure rather than the creators of the knowledge itself. Therefore, it's imperative that we distribute the learning infrastructure to every firm so that they can control their own learning loop.

For a long time, I thought society trying to make data a kind of property (i.e. “intellectual property”) was a very weird thing. I still do now, but now that it’s widely accepted as de-facto status quo that AI companies are pirating data to train their models and there is basically no way around it, I think society will inevitably rethink the idea of using the model of property on information and data.

Traditional property was exclusive, because physical possession is exclusive. Two people cannot eat the same piece of cake. The concept of property was created to determine who gets to eat that cake, by ensuring nobody else can eat it without consent of the “owner”.

Information does not have the exclusive property, so it was weird to map the idea of physical property to information. The issue is that in our economies property<->value<->money are intertwined, so if information has value it is forced to interact with traditional property concepts, and this frankenstein “intellectual property” thingy was invented.

IP in particular copyrights as applied to digital information was not inevitable. As late as 1976 Bill Gates (interestingly another Microsoft CEO) wrote an open letter making a moral appeal against “stealing” software… if it was explicitly illegal he would have sued).

In a surprising turn of events (to me at least), in response to copyright software and harsh crackdowns on copying data (esp. music), the community invented software and information communism (well, I guess credits to RMS and FSF for that). Well, the polite terminology is Open Source software and Creative Commons… but in this context it is important to note that it is basically communism as applied to “intellectual property”. As naturally abundant things, the limitations of communism in the physical world do not apply in the world of information. I wouldn’t say OSS and CC had no issues, but by and large it was successful even in the highly capitalist early 21st century.

Speaking of that, now that in the 21st century some societies are not doing much physical production at all. It is one thing for a society where the predominant economic activity is production of physical goods to apply the laws of physical exclusion to non-physical information, but in advanced economies today, does it really make sense to keep using the old laws and paradigms when so much economic activity is simply exchange of information?

It’s not that physical goods don’t matter. They still do, but to a much lesser degree. Turning to international news (warning: long digression below), war is escalating in the Persian gulf and apparently oil supply is constrained – for reasons that baffle professional traders (some ibank trader told me this 😃) , the price of oil has been successfully suppressed for months, still around the levels before the war broke out. People call crude oil “black gold”, but at US$80 per barrel , it comes out about $0.5/L – this crap is cheaper than retail price of Coca Cola. Even if we consider retail prices of gas, gasoline at a gas station can still potentially be cheaper than your fancy brand bottled water on a per volume basis.

Physical things are cheap these days. If you look at the price increase of commodities, AFAICT they are generally below CPI inflation. Which means things are getting cheaper. Bullish commodities traders and speculators decry “financial manipulation” of markets, and there is a little bit of truth there, but if you can actually “artificially” provide enough physical supply (eg. from strategic oil reserves) to cover your financial shenanegans, that means there is enough stuff… for now. I think most people under-estimate the abundance of stuff compared to bygone eras.

Stuff is cheap. Physical abundance is basically the norm in some societies. The abundance is not felt across all strata of society because society still runs on rules that assumes physical scarcity. It’s quite obvious that these days money in the system is not used to buy “stuff”, but rather used to make speculative bets in semi-virtual stuff called financial assets. Financial assets are make-believe things that have some strenuous and sometimes indirect legal connection to physical stuff, but then these days financial assets are increasingly purely virtual (eg. Bitcoins). The game of trading financial assets takes up the bulk of “money” in advanced economies, which results in people without financial assets feeling poor despite “stuff” being so cheap. The issue is that poor (i.e. little financial assets) people have no way to make money – machines make stuff these days, so physical labor is decreasing in value faster than stuff is getting cheaper. But humans are not machines, right? We have thoughts, ideas, imaginations! Our values, hopes and dreams matter, right? Right?

Now we’re getting back on topic 🙂

It should now be clear that humanity collectively has a clear path to beat the game of physical survival, and has entered a new phase of information creation (aka “information age” proper). It may not feel like that now due to temporary logistical problems, which is the only reason CEOs of the most financially rich companies are complaining they don’t have enough electricity to run the data centers. But if you actually look at energy production, renewables like solar are already there as long as you get the logistics right (eg. building a data center in a desert and only turn it on during the day?) Supply of computing hardware is also not a big issue in the medium/long term, because once production capacity is provisioned, the marginal costs of producing more hardware is relatively low, and silicon is just refined sand. As we painstakingly(it wasn’t painful to write, maybe it’s painful to read?) explained above, stuff is cheap.

As we’ve proposed previously, eventually the actual scarcity would be human creativity and expression. There are only a couple billion of us here, and if birth rates in developed countries are a general trend, it looks like we might not scale up that well after all. Besides, who cares about the stinky people who are not at all like us? The only ideas that matter are MINE…… and I only have at most 24 hours per day to create ideas. Ideas relevant to ME are even more scarce. Eventually economic value would be predominantly expressed as interactions between human tokens and AI tokens.

Ah, this finally relates to what Nadella is talking about.

Nobody knows what the future is like (because we have yet to decide what it is by tautological definition), but I think the model with which we structure such human/AI interactions would be crucial to the future of humanity as a concept. Will we continue clinging on to old ideas of scarcity and attempt to apply them in a world of practical physical abundance, and place artificial restrictions on the availability of “tokens” (as an economic valuable goods)? Or will we take a leap of faith and realize most of us are no longer in a bitter struggle for survival, and we have so much to share?

I can totally imagine two polar opposite scenarios: (1) every rich person buys a private “AI fortress”, shuts off communication to outside and just fiddles with the AI with their own private data. Maybe they will sell a couple tokens of insight to poor people who can’t afford computing hardware; and (2) communities pool together data and information to contribute to a “local” (not necessarily geographically local) community AI, and everyone gets more out of what they put into the pool.

Right now due to capitalist legal immunity (i.e. too big to jail) most AI companies are simply doing a variant of (2) by “stealing” (defined by a (1) perspective) data. I kind of doubt we will ever actually get back to a true (1) world because it’s obvious it would lead to stagnation. The difference is so big that pragmatism won the day and we haven’t put CEOs of AI companies in jail for copyright infringement. (Yes, recall you can jail company CEOs for copyright infringement. By the way, Kim Dotcom’s extradition proceedings are still ongoing.)

But to have truly stable token exchange economics that mutually benefits the users and the AI, the capitalist model of centralized control of the AI cannot be sustained. If we recognize that token economics will dominate economic activity, then money-representing-physical-goods will not matter much, i.e. it doesn’t matter whether users pay the AI or the AI pays the user (in today’s kind of money) for the tokens – the token is the new money, and if the exchange is not mutually beneficial the system will not be stable.

Given that physical stuff will be abundant, it is hard to imagine how in the medium/long term AI developers will be able to restrict access (without WW3/4). Hardware prices will drop eventually (medium term is like ~5 years?), and there are no real secrets on how the AI stuff is developed. Eventually information, hardware and energy will be so abundant that any community will be able to reproduce a competent AI. Maybe less developed communities will be less efficient in doing so, but I suspect it would still be within an order of magnitude. Also, communities help each other, right? There is no more scarcity of stuff.

This is, I guess, one kind of probable future. But honestly, after having written this, I cannot see things happening any other way. I could have foreseen the fall (note: think fading into irrelevance, not huge financial crisis) of the old capitalist system a decade ago, but never in my wildest dreams would I realize it would be replaced with some kind of “token economy” (well, it wouldn’t actually be tokens like how tokens are charged in LLM APIs, but more like some kind of information/creativity measure of value expressed in things like tokens and other data/bit measures). The more I think of it the more it seems likely to happen.

Right, I only thought about it for like 2 hours, the time it took me to dump this from my brain. The whole thing flowed out effortlessly, so this stuff is new to me too. Heh.

By the way, such “tokens” will not necessarily have an measurable objective value. It’s more like exchanging poem you wrote for a sexxxy naked pic than trading commodity futures. It may sound weird, but a lot of the habits are already in place. People are already doom scrolling for “interesting” information. The only structural change that must be made is to cut out the middleman (centralized platforms) or at least not have it be the sole arbiter of “token” value. We already have some kind of “attention economy” where if a million people like your jokes you could probably use it to buy an expensive thingy for yourself. It takes a paradigm shift to imagine the new world, but the infrastructure is surprisingly ready.

In retrospect, it’s almost obviously clear that we were “supposed” to head towards this future. It may or may not come, but the momentum is clearly pointing in that direction. It’s going to be an exciting ride.

(Man, haven’t done actual prophesying in ages!)