Rethinking capitalism — a response to Paul Tudor Jones II
A good friend shared the TED talk by famous trader legend and hedge fund manager Paul Tudor Jones on the need to rethink capitalism and asked me if I had any further thoughts on the topic. As it turns out, the topic offers a lot of food for thought as we’re likely to see hundreds of millions of people get out of traditional jobs as our world becomes even more technological and automated over the next 20 years.
I don’t know how you feel about the talk. I sensed that while the title of the talk sounded great, the content fell short of the expectations the title raised within me. It’s probably a step in the right direction and the positive feedback to the talk gives evidence of this, but I strongly feel a lot more can be done and Paul Tudor Jones might want to rethink some of the aspects he mentioned.
Before we dive into it: Why all of this matters? I believe this might be the biggest question of the next 30 years.
Quick summary: the second machine age
Innovation first replaced manual routine work (replaced tailors with unskilled production workers empowered by the steam engine), then cognitive routine work (I'm thinking of calculators for example), but now it might replace non-routine mental work:
Here are some concrete probabilities according to Erik Brynjolfsson and Andrew McAfee:
So to cut things short, for the following discussion, let’s just assume that all jobs that don’t require a large amount of emotional intelligence, creativity and perception are going to be automated. Let’s imagine the world like this: Your average taxi driver will be replaced by a driverless car or a car with a great comedian or model as your more expensive premium driver.
Here’s a powerful video if you would like to feel the emotion better:
In such a world, some people will not be able to work at all. Does capitalism still work then?
Why Paul Tudor Jones II thinks capitalism needs to be rethought
In his Ted talk, he mainly mentions income disparity as the root need for a new kind of capitalism (the definition of capitalism being that of a system in which a country is organised by private people for their own profit rather than by the state). The rich get richer, the poor get poorer and whenever this exceeds a certain level, society responds with higher taxes, war or revolution which are all undesirable, so a new solution needs to be found.
It’s worth amending his thoughts by the implications of the second machine age
The second machine age is likely to lift the income disparity to a new level. Anyone reading this most likely has a high education and no existential worries. Now whether you deem it possible or not, imagine income disparity and computerisation reached such a level that you could not start a new company any more without giving up all equity in return to access to capital and not live in the city centre without becoming someone’s sex slave. That’s most likely going to be the equivalent feeling for a taxi driver in 2030.
Why none of this matters
No one wants a revolution, so a sceptical mind might argue that we’ll simply keep prices for everything people like cheap enough to live good lives and everyone will be happy.
What can a billionaire or in the future, trillionaire, even do to harm other people? When does it become too much for the world? Probably never. We can always print money and as long as people are happy with their place in the world, they’ll be fine. There will be a natural balance between what the rich will push for and what the less endowed are willing to accept.
The problem with that perspective is that indeed everything might be fine when there are few people who are just that much richer than the general population. But what when there are just two camps, the unemployed and the employed, or the poor and the super-rich, will we be fine? When there’s not a pyramid, but two triangles, with no middle class, will they just lose all empathy for the other side? Most likely yes. We already can’t put ourselves into the shoes of other social classes, because there’s a natural gentrification in all cities and we quickly compare ourselves only with our very similar neighbours.
A solution attempt: new, social currencies, education and “communism powered by technology = real-time capitalism”
Paul Tudor Jones II is creating an index that highlights companies that contribute to society in ways that society considers desirable, determining those factors by public surveys.
Inequality is human. Equality is machine-like.
I think the money can be used better. Reduction of income inequality is not the solution. There will always be inequality, because people are different and contribute to society to different degrees. There are already many studies about happiness and happiness indeces out there. But even if we moved from a GDP determined in monetary terms towards a “happiness currency” , some people would be “happiness creation billionaires” and others be poor. Inequality is human. Equality is machine-like.
All life has an inherent value
Life is unique and valuable, so today we would probably all agree that we have a purpose beyond contributing to others, be it to their monetary or happiness wealth — an inherent, independent and universal value — and that we should therefore all still be allowed to live even in a fully-computerised, automated, optimised world.
One thing is important for the following thoughts: I believe that we will live in a future of abundance, not one of scarcity. A future with low energy costs and fully automated production of all existentially relevant goods. At least, these basic things will be cheap enough for everyone.
Appreciation as the driving currency of the society of the future or a dollar for a smile
So how can that society look like? I feel that it’s already quite visible that people prefer to be appreciated than to be rich. Social recognition seems the ultimate social currency. The jobs that will still be needed in the future are jobs that people will want to do even if they did not get paid to do them. They are inherently human. Everything else can sooner or later be computerised. So is there still a need for ownership? The desire to own things and having your own space seem to be deeply human too. Just like the joy of sharing. What if communism was far ahead of its time, because it was lacking the right technology?
If we look at the list again, you’ll see that accounting will most likely be automated:
If it’s automated, it’s most likely also real-time. In a real-time economy, there should be a convergence of monetary and social currencies. Anything you do that creates value for another human being will be appreciated real-time. A dollar for a smile.
In that world, a billionaire will be as happy as the people he is creating value for. There is no enrichment for him without enrichment for others. Maybe that’s even the case today and income inequality is not a real issue. It’s something that sounds like it’s a problem, but really people who create value help other people. And that’s great. What they do with that money is the real question. In a real-time happiness accounting economy, will a billionaire still buy a skyscraper loft in central London and leave it empty most of the time while driving out other people from the city? Is tax saving still going to be a thing? I don’t think so. As soon as there is abundance, saving doesn’t make sense.
I guess basically I'm saying, we’ll be fine. Go create that real-time accounting. It’ll drive good behaviour. Of course, I could be massively wrong about the abundance assumption. Famous last words?
Closing words
I feel kind of exposed to criticism by what I've written as it’s so unfinished and sounds ridiculously naive. At the same time, if looking into the future was easy, there’d be more billionaires already. I do acknowledge that these thoughts are not all-encompassing, I may be jumping way too far between different arguments for a lot of readers and I am very likely to be wrong all together. Finally, from a scientific and stylistic level, this is still at the level of a stimulating small talk conversation in a bar. Don’t let that hold you back from sharing your thoughts, feelings and opinions on what I've written. Feel free to help me expand on it and if it inspires anyone to do something cool or expand on this, it’s already been worth it.
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