Keynes, the Economy and the Technological Singularity

by Larry Smith

"We are suffering just now from a bad attack of economic pessimism, wrote the famous British economist John Maynard Keynes in a 1930 essay. "It is common to hear people say that....a decline in prosperity is more likely than an improvement in the decade which lies ahead of us."

Keynes was one of the most renowned economist of his day, and his theories of deficit spending to stimulate demand were the global economic orthodoxy from the time of the Great Depression until the 1970s. They are now coming back into fashion as the world economy collapses around us.

But in this instance Keynes was no doomsayer. At the beginning of the Depression - which was to last 15 years until the outbreak of the second world war in 1945 - he wrote a 4,000-word essay entitled Economic Possibilities for our Grandchildren, in which he called the understandable pessimism of his day mistaken.

"The prevailing world depression...blind(s) us to what is going on under the surface, to the true interpretation of the trend of things," he wrote. "We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another."

The purpose of his essay was to consider the long-term future: "What can we reasonably expect the level of our economic life to be a hundred years hence? What are the economic possibilities for our grandchildren?" Keynes believed that the slow rate of human progress over the past 3,000 years had been brought to an end by a combination of capitalism and science.

"If capital increases, say, 2 per cent per annum, the capital equipment of the world will have increased by a half in 20 years, and seven and a half times in a hundred years...At the same time technical improvements in manufacture and transport have been proceeding at a greater rate in the last 10 years than ever before in history."

He predicted that we would be, on average, eight times better off by 2030, and our economic problems would be solved. It would be the end of economic history. But he worried that this outcome might produce other difficulties.

"For the first time since his creation man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure time which science and compound interest will have won for him, to live wisely and agreeably and well."

The future, he believed, would free us from the need to work, with the love of money finally recognised as "a somewhat disgusting morbidity". Instead, we will come to value those who can teach us how to "pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin."

It will be the greatest change that has ever occurred in human history, and Keynes was convinced - while facing a bleak prospect in 1930 - that the transformation had already begun. The speed of the transition would be governed by our ability to avoid war and overpopulation, by the rate of capital accumulation, and by the pace of scientific achievement.

References to this Depression-era prognostication have been cropping up in newspaper commentaries everywhere as the recession that the world currently finds itself in bites ever deeper into our collective pockets and pysches. But the event that prompted this article was the recent opening of something called the Singularity University in California's Silicon Valley.

This is an institution sponsored by both Google and NASA whose mission is “to assemble, educate and inspire a cadre of leaders who strive to understand and facilitate the development of exponentially advancing technologies; and to apply, focus and guide these to the best benefit of humanity and its environment.”

The idea of accelerating social and technological change was explored by futurist Alvin Toffler in his revolutionary book, Future Shock, published in 1970. But the originator of the singularity concept was an American mathematics professor and science fiction writer named Vernor Vinge.

In looking at the potential of computer science he came to the conclusion that the world must eventually run into a technological singularity - an event similar to its astrophysical namesake, which lies at the centre of a black hole. This is defined as a point in space or time at which existing models of reality are no longer valid.

Vinge presented his idea at a NASA symposium in 1993. He predicted that within 30 years we will have the technological means to create superhuman intelligence, and argued that "we are on the edge of change comparable to the rise of human life on Earth." And it occurred to me that this incredible forecast is amazingly close to the time period envisioned by the late John Maynard Keynes 78 years ago.

The singularity concept was popularised by another computer scientist and futurist named Ray Kurzweil (who developed the Xerox OCR software known as Textbridge) in a 2005 book called "The Singularity is Near". Kurzweil developed the “Law of Accelerating Returns” to describe technological changes over the coming decades — from faster, more powerful computers to radical breakthroughs in artificial intelligence, biotechnology, neuroscience, and nanotechnology.

In fact, Kurzweil's best-selling book has now been made into a movie slated for release early this year. Subtitled "A True Story About the Future", the film presents a view of the remarkable transformations of the coming age "as our species breaks the shackles of its genetic legacy and achieves inconceivable heights of intelligence, material progress, and longevity."

The movie intertwines a documentary featuring Kurzweil and other thinkers with a narrative story about a virtual alter ego, which becomes increasingly life-like as the film progresses. The theory is that nonbiological intelligence will have access to its own design and will therefore be able to improve itself to the point where human intelligence is unable to follow - and that will mark the singularity.

Projections are that within 20 years, artificial intelligence will match the range and subtlety of human intelligence. By 2030, a thousand dollars of computation will be about a thousand times more powerful than a human brain. And the nonbiological intelligence created in 2045 will be a billion times more powerful than all human intelligence today. That will represent a profound change.

Science fiction, you say? Then how do you explain Singularity U? Based at NASA's Ames Research Facility in Silicon Valley, the university's trustees include Kurzweil and Peter Diamandis, founder of the XPrize Foundation for private space flight. And Google, the Internet information provider, is the chief corporate sponsor. The university offers postgraduate courses in biotechnology, nanotechnology and artificial intelligence.

"Singularity University makes no predictions about the exact effects of these technologies on humanity; rather, our mission is to facilitate the understanding, prediction and development of these technologies and how they can best be harnessed to address humanity’s grand challenges," the university's website says.

As Kurzweil says, “we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate)...technological change so rapid and profound it represents a rupture in the fabric of human history.”

Keynes was certainly right that we (by the millions) are no longer working, as our 21st century economy collapses around us. But he forgot to tell us how to pay the bills in the meantime. Perhaps we will all have to indenture ourselves to some monstrously brainy robot.

 The singularity theory gives us hope that the intractable issues we face today, like poverty, energy and climate change, will all be solved within a few short years.

As one pundit put it, "We are on a wild ride to an interesting destination." It is a ride that would no doubt be of great interest to John Maynard Keynes. Perhaps he is rolling over in his grave.

Comments

[rick]

The several trillion dollar question you pointed out is, how will we pay for it.

You said...But he forgot to tell us how to pay the bills in the meantime.

If only governments had listened to Mises, Hayek and Rothbard. But I guess it's easier to dismiss them as ideologues.

But alas, politics usually trumps everything.

[C.Lowe]

At the end of the day, humans have to eat, have to sustain their earthly reqirements for life.
Machines will have no use for history, and maybe even humans.
But machines have no initiative, aspiration, desire, or emotion or drive to succeed.
These are human attributes.
As for Keynes, better left buried.

[Erasmus Folly]

@ C. Lowe

Really, that is your response?

With even an iota of imaginative effort, you can see beyond what you just described. It is we who will imbue these machines with purpose - our purpose. Whether we maintain control or not is another question, but it will happen. Our laziness will ensure that it does.

Keynes buried? He is the only one who will save us from this current mess. Please read 'Economic Consequences of the Peace', so that you can understand just how powerful his mind and his ability to predict events was. He understood all too well the abstract world that finance people live in and their myopic view of the world around them. His warning was dire at the Treaty of Versailles. He warned that the greed of the Wall Street and London financiers would lead to world depression and the collapse of the German economy. He warned of a totalitarian response from Germany. All his warnings were unheeded and WW2 erupted 20 years later.

You shouldn't dismiss brilliance because it disagrees with your ideology. One should always respect brilliance and try to learn from it where one can. Therein lies the key difference between ideologues and open minded people.

Keynes has much to teach still, as does Milton Friedman. You take the best from both... from all.

[larry smith]

Guys, this was not an ideological argument. It was a feature article pulling together two interesting strands of thought that focus on the same horizon...in the context of today's gloom and doom.

[Erasmus Folly]

Sorry, I had to anecdote. The comment made by C. Lowe to your article was pointless and the little extra added flippant attack on Keynes was indefensible.

[C.Lowe]

Declare your name sir, and I will address your point.
I do not box with shadows.

[Erasmus Folly]

@ C. Lowe

Due to the possibility of political victimization in the Bahamas and my desire to post contentious and strong critical points about Bahamian affairs, I decided some time ago to assume a pseudonym when posting here. Pardon my shadow pugilism, but it will remain so. Polemical posts on issues like the police force, governance, corruption, economic structure, tax reform and other such matters are not something I would like myself or people I know to have to suffer for. I believe strongly that this country needs MAJOR reform. Sadly, the culture here is not dynamic and not excited for change.

We celebrate independence every year, but we are more and more dependent on the outside world with each year. Take the matter of foreign reserves. I would venture a guess that 1 of every 2 US dollars that comes into this country leaves almost immediately to finance our car/oil/electricity trifecta clusterf%^$. If we could get serious about staving off the need for such massive imports of cars and oil for transportation and energy, we could boost our foreign reserves tremendously, thus reducing the need for top heavy taxation and increasing business opportunities. Sunshine is a resource we own.

I have no intention of brushing against powerfully entrenched interests and rocking that boat publicly, because I know how this island works, hence the pseudonym. I have every intention to continue to critically share ideas though. Awareness is the beginning of action and too many Bahamians sit and mind numbingly blissful ignorance, while their politicians laugh all the way to the bank and do nothing to change or better the country. The PLP is a useless dead horse and the FNM is only marginally better. I want to be able to say that statement without fear of reprisal.

My comments, nevertheless, are ideas that stand for themselves and I am happy to debate them as such.

Larry wrote a very clever and informative article, as he always does and your comments seemed almost a dismissal of his points without much justification being offered. I am sure, if you reread Larry's article and use a little imagination, you can see the benefit/threat that AI and the dawning of the 'singularity' represent. As with any tool, the tool itself isn't good or evil - it is the use. A hammer can crack a skull or build a house. AI will be like that. It is how we use it and what we do with it, that will determine its fate.

As to Keynes, he was a brilliant mind and I find any flippant dismissal of a brilliant mind reprehensible - especially if no justification is offered and no sense of the person's true immersion in the ideas being flippantly dismissed is forthcoming.

I mean no offense. My attack was not ad hominem, but on the ideas presented. Identity is not the issue.

Best regards to you,

Erasmus Folly

[Youri_Kemp]

Hi all,

Keynes was as much of a fortune teller as he was a historian.

Fact of the matter is, civilization, has been doing just that--advancing.

You don't need Keynes, as much as I respect his body of work, to tell you that it will come a day.

But, in any event, on a separate but equal and far more important topic, we need Keynesianism today like we needed it before.

Best,

Youri
http://globalviewtoday.blogspot.com/