[extropy-chat] Brad DeLong on the economics of nanotech

Hal Finney hal at finney.org
Thu Dec 4 18:04:40 UTC 2003


Slashdot points this morning to an article by Berkeley economist Brad
DeLong on the economic implications of nanotech,
http://www.j-bradford-delong.net/movable_type/2003_archives/002838.html.

DeLong is good writer and seems to be a sharp economist.  He's got
a bloggish site with frequent updates and lots of links to economic
resources.  It's not a bad place to learn some economics from.

In this case, though, I was disappointed by his article.  It starts
off promisingly enough; he identies four questions which can guide an
analysis of the economics impact of any new technology:

 - What commodities--what goods and services--become extraordinarily
   cheap as a result of the technological revolution?

 - What human activities--what jobs and skills--become key bottlenecks,
   and thus become remarkably valuable and well-paid?

 - What risks blindside the society as the technology spreads?

 - What risks do people guard against that turn out not to be risks
   at all?

He then shows an example of how these questions could work by looking at
the early industrial revolution, specifically the impact of automation on
the textile industry:  1. Clothing became amazingly cheap.  2. Engineers
and technicians became increasingly valuable.  3. Increased demand
for cotton extended the institution of slavery another 50 years.  4.
Unfounded fears of inequality prompted the creation of communism as
an ideology.

One point missed by his list is the people who lose out, at least in
the short term; in this case the textile workers.  I think his second
item should be extended to list both winners and losers.

With regard to communism, DeLong makes a point which I will reference
below: "In retrospect, however, we can see that they sought to guard
against a danger that wasn't there: the share of total production paid
to workers has been remarkably constant over the past two centuries--the
predictions of the immiserization of the working class were completely
wrong."

Now we turn to nanotech.  DeLong "speculates" about three phases
of impact: first, improved materials; second, a "biological" wave;
and third, Drexlerian nanotech.  I'm not sure what these last two are,
but it doesn't matter, because he doesn't know, either, so he doesn't
discuss them.  All he looks at is the impact of improved materials.

And even there, his comments are limited to the prediction that increased
durability and "smartness" of materials will halve the size of the
manufacturing work force, and eliminate much of the service sector
dealing with repair and maintenance.

Winners, in his view, will be the programmers and technicians who can
manipulate and "program" the smart materials.  He then goes off on a
tangent about how American society is supposedly under-investing in
education and so we won't have a smart enough labor force to deal with
these new challenges.  He also is concerned that these changes will
increase income inequality as relatively unskilled jobs are replaced by
ones requiring more education.

This is a disappointingly shallow and unsupported analysis.  Just taking
that last point first, the industrial revolution replaced dumb jobs with
smart ones, but as he emphasized, it did not have the income inequality
effects that Marx predicted.  DeLong appears to be forgetting the very
historical lesson that he presented a few paragraphs earlier.

But going to his main predictions, why would better materials inherently
halve the size of the work force?  Wouldn't demand increase for these
materials, since they will have more uses than the ones we have today?
The textile revolution was a change in *how* things are made; many
fewer people could produce the same goods.  But this early pre-nanotech
revolution is a change in *what* things are made.  We don't have self
reproducing factories or home assemblers at this stage.  You're still
going to need a manufacturing work force.

It's possible that increased durability will eventually decrease demand
for goods, because they're not wearing out as quickly.  But I think people
are going to want new goods anyway, because due to continued progress
and innovation, the new goods will be of much higher quality than the
old ones.  The result will be that used and second-hand merchandise will
be widely and cheaply available and still be of good quality.

Overall, I thought DeLong got off to a good start and that his framework
was useful.  But it will take someone with more imagination and a better
understanding of the technology to apply these ideas to the real impact
of nanotech.

Hal



More information about the extropy-chat mailing list