Tuesday, June 11, 2013

Second Half of the Board

A recent edition of Global Business featured Peter Day interviewing MIT's Erik Brynjolfsson and Andrew McAfee about their book Race Against the Machine. In the interview they refer to an old Persian story about an Emperor who wished to thank an old man for inventing the game of chess. The old man humbly asked for a grain of rice for the first square on the board, then two for the second, four for the third, doubling thereafter on each square until all 64 were filled. The Emperor gladly agreed (figuring he had the better part of the bargain), until they got to the second half of the board. Then he, his empire and the planet ran out of rice (the final square required 18,446,744,073,709,551,615 grains of rice - a pile the size of Mount Everest).

It's a story about exponential growth and unforeseen consequences. According to Brynjolfsson and McAfee we're now on the second half of the technology board (thanks to Moore's Law and the doubling of computing power every two years or so). Despite concerns on the part of Robert Gordon and others that the West is 'post growth', there are those who think we have a few more squares to fill as technology squeezes more productivity out of the system.

I think they're both right. The collaboration economy will certainly increase productivity (after all, working for free is very 'productive' from an employer and even a customer perspective); but it won't deliver growth thanks to The Great Decoupling.

Unfortunately we still have an economy, political system and labour market that's still operating like we're on the first half of the board. They say the Emperor got very angry as the rice piled up and he realised he had been outwitted. The old man and his head parted company shortly afterwards. The second half of the board has that effect, it seems.

2 comments:

  1. If we look to nature, we see that growth normally follows an 'S' shape, on its side. http://www.n8henrie.com/wp-content/uploads/2012/09/ScreenShot2012-01-10at6.42.09PM.jpg We see it too in human activities, for example, adoption of technology. Taking that particular example, we see that development consists of a series of these S-curves. The challenge is to jump off the one you're on now, in time, to take advantage of the following one. But, what is hard is to see where you are on that curve; and which of the following curves has the potential to develop a significant exponential portion before it flattens out again. No doubt, in terms of economic relations, it's probably nearing the time when we will need to jump off the S-curve we are on now. In fact, there are a bunch of them...

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  2. Sorry, not on its side...

    ReplyDelete

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