This post makes me feel a bit nervous about what kind of behavior might stem from holding these mindsets around abundance and scarcity - especially if the gist of this is misguided (in practice). I'm interested to read the next post.
I think some of the conclusions around energy are missing some super important context that may lead to opposite conclusions. I think Nate Hagens is someone who describes this perspective quite well. A couple points that feel relevant: Much of the trend of energy getting cheaper is that we were historically getting better at extracting fossil fuels, especially when we use fossil fuels to get more fossil fuels. We're seeing diminishing returns, and the 'abundantly cheap' energy we see now is an anomaly as we draw down resources which took millennia of sunlight to accrue. A second point is around renewable energy - the challenge comes with storing energy efficiently. With current battery technology, it doesn't seem like there are enough rare earth metals to make this a viable solution for large scale implementation with our current energy usage habits (Peter Zaihan makes this case well).
In my part of the network, we come from an understanding that the physical world contains natural scarcity, and that the abundance comes in our subjective experience - things like love, beauty, joy, and meaning can become decoupled from material consumption (to a certain extent), and that this is a safer path for humanity to take, rather than to treat energy and materials as abundant and aligned-AGI as the cure-all.
That said, I'm looking forward to the next piece and where you take this train of thought - diversity of perspectives is the best way to understand a complex topic like this one! And I'm also happy to schedule a chat if you'd like to compare notes :)
I don’t think scarcity is the main cause of wars. There aren’t many wars that I can think of where scarcity is the main cause—although there are a lot of new arguments that various eras of climate change drove some—like for example the 17th C. But, even then, the stated causus belli was almost always ideological. Once upon a time, most wars were about what we would call glory and plunder. Then many were about religion or ideas of human liberty and dignity. Wars continue now in times of relative abundance—Ukraine is not a war about scarcity, nor is the Syrian conflict. The Libyan Civil War is not about scarcity, though competition over abundant resources are central to it, but about who will rule. AI might make ideological wars more vicious. Anyways, my small quibble—interesting article, thanks.
Amazing article as usual. Can u spend some time on the AGI alignment problem. Lex freedman had an episode with Eliezer Yudkowsky recently and it’s down to a very simple premise: creating a system that is more intelligent than humans is pretty bad idea with catastrophic outcomes: demise of our species. In the ensuing discussions people attack the person but not his logic and argument. It’s the usual sad state of Twitter discussions. But your at length expositions are able to dig deep and reveal subtle nuances and shed useful light on complex topics. In this article you are talking about the positives of super intelligence. Worth exploring the potential risks ?
I must confess that I was tempted to “cheat” and go straight onto reading the next article in the series, but I seem to have managed to resist temptation. I’m sticking with the idea that it is more useful to try to clarify my thoughts before reading yours, particularly as we are now getting to the heart of the matter.
Why does food cost money? Because it is OWNED by someone else.
Why are there people who can’t afford it? Because they don’t OWN enough wealth to buy it
Why is food scarce? Overall it isn’t these days. The distribution of the world’s wealth and power prevents it from getting to those who don’t have enough.
Land useful for humans is somewhat scarce relative to the world’s population which is why it has been such a valuable asset and such a good store of wealth if you own it.
Energy is not at all scarce, but certainly is in its more useful, concentrated forms. Owning the rights to extract oil and coal have been extremely good ways of accumulating wealth.
Yes, scarcity is mutable. So if you produce an abundance of something it becomes less financially valuable and instead of helping someone acquire wealth, it can make them lose it. Business people know this: they carefully control production to avoid excessive supply and consequent price reduction. But of course you have to also reduce competition or someone else will undercut you. So the barriers to reducing scarcity often come from those who are going to lose out.
Knowledge used to be a precious commodity. But with the advent of the internet, people often now give it away free of charge!! It still has immense value, but financially it has been devalued. The supply of computational power has likewise increased dramatically and its cost plummeted. Intelligence has also increased. Why? More people with more access to information and to each other, plus a healthy dose of competition.
Has wisdom increased? I would vote no, in fact I think overall it has decreased. This means that the intelligence to wisdom ratio has become very unbalanced, a potentially dangerous state of affairs when powerful destructive weapons are available. Why do we even need wisdom? Because people all have different needs and wants which sometimes come into conflict. They are programmed for conflict and competition to varying degrees, so ideally we have to work out safe ways of resolving these conflicts. I agree that reducing material scarcity will help greatly, but there are human concepts which cannot be created because their very nature is relative (e.g. wealth, power, social status, mojo*). If they were not scarce, they would lose their meaning. Competition for these limited resources can lead to conflict. Is it possible to create Artificial Wisdom? Maybe. It might be more acceptable to some people coming from a computer than from humans who have distilled it from thousands of years of human experience.
*I still haven’t come up with a clear definition of what I mean by mojo but will keep trying
This was great as always. Could you do a post about your writing, research, and reading process? Some of this is obviously due to great skill in storytelling but I think there’s still a lot that others could learn from how you do things. Or in Tyler Cowen’s words: What is the Tomas Pueyo production function?
Thank you for helping expand my understanding of the economy and envission future possibilities. At the same time I find it hard to share your optmism, since I see that each decade more wealth is concentrating in fewer hands. The rich are getting richer, the poor are getting poorer and the environment is deteriorating really fast. I don't see that, under capitalism, technological developments really brings solutions to the main problems of society
Very interesting essay. But one quibble which is actually pretty major for undermining (pun!) your thesis: raw materials are (and will be) still scarce, even with the input of all the intelligence imaginable.
You said, "This is why peak oil has been declared for decades, but in fact we might well find peak oil not because we can’t find it anymore, but because we don’t need it anymore." Firstly, we have arguably already hit Peak Oil, in terms of peaking oil production. The IEA called for this year already. And, yes, that prognosis has been a slippery one, but we have some accumulating facts that point in the same direction: Conventional oil *discoveries* peaked in the 1960s. Conventional oil *production* peaked more recently, in the 2010s. Per capita, production's been going down since 1979, as population growth outstripped production increases. As for "proven" oil reserves... well, that's a very contested matter involving a lot of corporate and national secrecy and perverse incentives to overstate things. But, in any case, we're not actually pulling more oil out of those proven reserves, however large or small they may be.
Does that mean the oil ran out? No. There's still oil being produced, obviously. And there will be oil produced for some decades more, presumably. But the limiting factor has always been: Can a marginal unit of oil be can be extracted *economically* at a given price? If oil's $60/barrel, that reduces significantly the amount of proven reserves that would actually be worth tapping. And, at a certain point, unconventional sources are so energy-intensive, complex, and expensive to tap, they aren't reserves at all, anymore. Even at $120 or $200/barrel. Long after we stop producing oil, there will still be oil under the deepest parts of the ocean floor or aggregated with a much of non-useful gunk under the ground somewhere in Canada. But there it will remain, forever be too much trouble to extract, just like mining on an asteroid is likely to be.
And even if you take finances out of it, an even more limiting factor on whether an oil barrel goes from notional to actual is the Energy Return on Investment (EROI), or the energy input required to extract a marginal unit of energy output. And that's where innovation hasn't fixed our issue. Shale oil production, a significant innovation drawing from impressive amounts of human intelligence and skill, resulted in more oil production (especially in the United States), but the EROI decreased near to the point where it is costing nearly as much energy to get the stuff as it produces. After the initial rush of optimism and triumphalism, many of those unconventional producers quickly found that shale oil was never actually profitable, and was only feasible with a lot of easy financing. But it's not just shale oil running into this limit. Fracking shook loose a lot more methane, but at a cost. Getting the natural gas out of the ground and transporting it across oceans as LNG the way we're doing much more now since Russia invaded Ukraine makes that methane far more expensive. And, by extension, it makes energy too expensive to use, beyond a certain point. You see this with much of the German industrial base just closing up shop temporarily or permanently, given the expense of industrial heat from burning methane that now must be sourced as LNG, instead of piped from Russia. And, with oil, as we've already tapped 2/3 of discovered fields, see productivity of our most prolific fields trending in the wrong direction, and scrounge about for ever more marginal and harder-to-access discoveries, we'll be reaching the point where the EROI of fossil fuel energy production, overall, approaches 1. And that's very bad. One unit of energy to get one unit of energy is very different from the exponential effect that fossil fuels had for human civilization in the 19th and 20th Centuries, back when the ratio was closer to 100:1. A hundred years ago, you could be as inefficient with the stuff as you like because it was so cheap! Today, even with very mature fossil fuel technologies that approach the limits of efficiency, we can't get much more useful energy out of a barrel of oil that keeps getting scarcer.
But is this just because we're past the age of oil, and we "don't need it" anymore? Hardly! Oil demand fluctuates and there have been impressive gains made in replacing oil as an input for electricity production or passenger transport, but we're still very much in the oil age. Oil is still the only primary energy medium which is so energy-dense, stable, transportable, and versatile. We use fossil fuels for EVERYTHING. Including the manufacturing of the solar panels on my roof and the lithium-ion battery that helps my hybrid vehicle to go. We even basically eat the stuff, as you alluded to in your aside about fertilizers.
Oh, but we'll have a solution for that, too, you say. Though you didn't mention it under the Raw Materials section, perhaps nuclear fusion's limitless energy could allow for the transmutation of other feedstock into oil or other synthetic fuels? Perhaps we could create endless hydrogen? Perhaps, but this is relying on a kind of deus ex machina, isn't it? Viable fission doesn't even exist in prototype form yet, much less scaled out commercially over the whole face of the earth. And not for a lack of a half-century of trying. That transition, if it happens, won't be something for the first half of this century, if we see it this century at all. And aren't even the unimaginably complex machines that we hope will create fission manufactured with those same scarce inputs? You don't get a spherical tokamak fushion reactor without a hell of a lot of high-spec metals, specialized magnets, and high-voltage electricity. And you don't get those without the fossil fuel-driven processes that allow us to mine things, apply industrial heat to them, and manufacture and assemble complex machines to unbelievable exactitude.
So, I don't know quite techno-optimists think that nuclear fusion will be so easy and cost-free in the way that no other technology before it has been (remember that nuclear fission was also expected to be "too cheap to meter"). The costs in the inputs of financing and scarce resources will be largely front-ended, just like with nuclear fission, but they will be significant. And given the progress against this technology so far, we will be trying to build hundreds or thousands of fusion plants after 2050 just to keep up with our conventional energy needs, the time by which we're likely in the thick of a "polycrisis" of dwindling fossil fuels , essential resources (like phosphorus) that are also exhausted, energy that is expensive and unreliable, food production that is insufficient, all the various other knock-on effects of Climate Change, and all the political and geopolitical effects thereof.
I started a company last year that uses data analytics (our AI still being built) to make land use and human work more efficient for the deployment of renewables (won’t name it as I am anon here). Your outline is a more all encompassing description of what we talk about in some of our longer product meetings, cool article!
Re : scarcity of ressources. Don’t forget asteroid mining. With fusion propulsion it shouldn’t be a problem. Will bring a *massive* amount of raw material
This post makes me feel a bit nervous about what kind of behavior might stem from holding these mindsets around abundance and scarcity - especially if the gist of this is misguided (in practice). I'm interested to read the next post.
I think some of the conclusions around energy are missing some super important context that may lead to opposite conclusions. I think Nate Hagens is someone who describes this perspective quite well. A couple points that feel relevant: Much of the trend of energy getting cheaper is that we were historically getting better at extracting fossil fuels, especially when we use fossil fuels to get more fossil fuels. We're seeing diminishing returns, and the 'abundantly cheap' energy we see now is an anomaly as we draw down resources which took millennia of sunlight to accrue. A second point is around renewable energy - the challenge comes with storing energy efficiently. With current battery technology, it doesn't seem like there are enough rare earth metals to make this a viable solution for large scale implementation with our current energy usage habits (Peter Zaihan makes this case well).
In my part of the network, we come from an understanding that the physical world contains natural scarcity, and that the abundance comes in our subjective experience - things like love, beauty, joy, and meaning can become decoupled from material consumption (to a certain extent), and that this is a safer path for humanity to take, rather than to treat energy and materials as abundant and aligned-AGI as the cure-all.
That said, I'm looking forward to the next piece and where you take this train of thought - diversity of perspectives is the best way to understand a complex topic like this one! And I'm also happy to schedule a chat if you'd like to compare notes :)
I don’t think scarcity is the main cause of wars. There aren’t many wars that I can think of where scarcity is the main cause—although there are a lot of new arguments that various eras of climate change drove some—like for example the 17th C. But, even then, the stated causus belli was almost always ideological. Once upon a time, most wars were about what we would call glory and plunder. Then many were about religion or ideas of human liberty and dignity. Wars continue now in times of relative abundance—Ukraine is not a war about scarcity, nor is the Syrian conflict. The Libyan Civil War is not about scarcity, though competition over abundant resources are central to it, but about who will rule. AI might make ideological wars more vicious. Anyways, my small quibble—interesting article, thanks.
It could be argued that the population of the planet today is largely the result of oil. That is to say; we convert oil into people.
Amazing article as usual. Can u spend some time on the AGI alignment problem. Lex freedman had an episode with Eliezer Yudkowsky recently and it’s down to a very simple premise: creating a system that is more intelligent than humans is pretty bad idea with catastrophic outcomes: demise of our species. In the ensuing discussions people attack the person but not his logic and argument. It’s the usual sad state of Twitter discussions. But your at length expositions are able to dig deep and reveal subtle nuances and shed useful light on complex topics. In this article you are talking about the positives of super intelligence. Worth exploring the potential risks ?
I must confess that I was tempted to “cheat” and go straight onto reading the next article in the series, but I seem to have managed to resist temptation. I’m sticking with the idea that it is more useful to try to clarify my thoughts before reading yours, particularly as we are now getting to the heart of the matter.
Why does food cost money? Because it is OWNED by someone else.
Why are there people who can’t afford it? Because they don’t OWN enough wealth to buy it
Why is food scarce? Overall it isn’t these days. The distribution of the world’s wealth and power prevents it from getting to those who don’t have enough.
Land useful for humans is somewhat scarce relative to the world’s population which is why it has been such a valuable asset and such a good store of wealth if you own it.
Energy is not at all scarce, but certainly is in its more useful, concentrated forms. Owning the rights to extract oil and coal have been extremely good ways of accumulating wealth.
Yes, scarcity is mutable. So if you produce an abundance of something it becomes less financially valuable and instead of helping someone acquire wealth, it can make them lose it. Business people know this: they carefully control production to avoid excessive supply and consequent price reduction. But of course you have to also reduce competition or someone else will undercut you. So the barriers to reducing scarcity often come from those who are going to lose out.
Knowledge used to be a precious commodity. But with the advent of the internet, people often now give it away free of charge!! It still has immense value, but financially it has been devalued. The supply of computational power has likewise increased dramatically and its cost plummeted. Intelligence has also increased. Why? More people with more access to information and to each other, plus a healthy dose of competition.
Has wisdom increased? I would vote no, in fact I think overall it has decreased. This means that the intelligence to wisdom ratio has become very unbalanced, a potentially dangerous state of affairs when powerful destructive weapons are available. Why do we even need wisdom? Because people all have different needs and wants which sometimes come into conflict. They are programmed for conflict and competition to varying degrees, so ideally we have to work out safe ways of resolving these conflicts. I agree that reducing material scarcity will help greatly, but there are human concepts which cannot be created because their very nature is relative (e.g. wealth, power, social status, mojo*). If they were not scarce, they would lose their meaning. Competition for these limited resources can lead to conflict. Is it possible to create Artificial Wisdom? Maybe. It might be more acceptable to some people coming from a computer than from humans who have distilled it from thousands of years of human experience.
*I still haven’t come up with a clear definition of what I mean by mojo but will keep trying
This was great as always. Could you do a post about your writing, research, and reading process? Some of this is obviously due to great skill in storytelling but I think there’s still a lot that others could learn from how you do things. Or in Tyler Cowen’s words: What is the Tomas Pueyo production function?
Thank you for helping expand my understanding of the economy and envission future possibilities. At the same time I find it hard to share your optmism, since I see that each decade more wealth is concentrating in fewer hands. The rich are getting richer, the poor are getting poorer and the environment is deteriorating really fast. I don't see that, under capitalism, technological developments really brings solutions to the main problems of society
Very interesting essay. But one quibble which is actually pretty major for undermining (pun!) your thesis: raw materials are (and will be) still scarce, even with the input of all the intelligence imaginable.
You said, "This is why peak oil has been declared for decades, but in fact we might well find peak oil not because we can’t find it anymore, but because we don’t need it anymore." Firstly, we have arguably already hit Peak Oil, in terms of peaking oil production. The IEA called for this year already. And, yes, that prognosis has been a slippery one, but we have some accumulating facts that point in the same direction: Conventional oil *discoveries* peaked in the 1960s. Conventional oil *production* peaked more recently, in the 2010s. Per capita, production's been going down since 1979, as population growth outstripped production increases. As for "proven" oil reserves... well, that's a very contested matter involving a lot of corporate and national secrecy and perverse incentives to overstate things. But, in any case, we're not actually pulling more oil out of those proven reserves, however large or small they may be.
Does that mean the oil ran out? No. There's still oil being produced, obviously. And there will be oil produced for some decades more, presumably. But the limiting factor has always been: Can a marginal unit of oil be can be extracted *economically* at a given price? If oil's $60/barrel, that reduces significantly the amount of proven reserves that would actually be worth tapping. And, at a certain point, unconventional sources are so energy-intensive, complex, and expensive to tap, they aren't reserves at all, anymore. Even at $120 or $200/barrel. Long after we stop producing oil, there will still be oil under the deepest parts of the ocean floor or aggregated with a much of non-useful gunk under the ground somewhere in Canada. But there it will remain, forever be too much trouble to extract, just like mining on an asteroid is likely to be.
And even if you take finances out of it, an even more limiting factor on whether an oil barrel goes from notional to actual is the Energy Return on Investment (EROI), or the energy input required to extract a marginal unit of energy output. And that's where innovation hasn't fixed our issue. Shale oil production, a significant innovation drawing from impressive amounts of human intelligence and skill, resulted in more oil production (especially in the United States), but the EROI decreased near to the point where it is costing nearly as much energy to get the stuff as it produces. After the initial rush of optimism and triumphalism, many of those unconventional producers quickly found that shale oil was never actually profitable, and was only feasible with a lot of easy financing. But it's not just shale oil running into this limit. Fracking shook loose a lot more methane, but at a cost. Getting the natural gas out of the ground and transporting it across oceans as LNG the way we're doing much more now since Russia invaded Ukraine makes that methane far more expensive. And, by extension, it makes energy too expensive to use, beyond a certain point. You see this with much of the German industrial base just closing up shop temporarily or permanently, given the expense of industrial heat from burning methane that now must be sourced as LNG, instead of piped from Russia. And, with oil, as we've already tapped 2/3 of discovered fields, see productivity of our most prolific fields trending in the wrong direction, and scrounge about for ever more marginal and harder-to-access discoveries, we'll be reaching the point where the EROI of fossil fuel energy production, overall, approaches 1. And that's very bad. One unit of energy to get one unit of energy is very different from the exponential effect that fossil fuels had for human civilization in the 19th and 20th Centuries, back when the ratio was closer to 100:1. A hundred years ago, you could be as inefficient with the stuff as you like because it was so cheap! Today, even with very mature fossil fuel technologies that approach the limits of efficiency, we can't get much more useful energy out of a barrel of oil that keeps getting scarcer.
But is this just because we're past the age of oil, and we "don't need it" anymore? Hardly! Oil demand fluctuates and there have been impressive gains made in replacing oil as an input for electricity production or passenger transport, but we're still very much in the oil age. Oil is still the only primary energy medium which is so energy-dense, stable, transportable, and versatile. We use fossil fuels for EVERYTHING. Including the manufacturing of the solar panels on my roof and the lithium-ion battery that helps my hybrid vehicle to go. We even basically eat the stuff, as you alluded to in your aside about fertilizers.
Oh, but we'll have a solution for that, too, you say. Though you didn't mention it under the Raw Materials section, perhaps nuclear fusion's limitless energy could allow for the transmutation of other feedstock into oil or other synthetic fuels? Perhaps we could create endless hydrogen? Perhaps, but this is relying on a kind of deus ex machina, isn't it? Viable fission doesn't even exist in prototype form yet, much less scaled out commercially over the whole face of the earth. And not for a lack of a half-century of trying. That transition, if it happens, won't be something for the first half of this century, if we see it this century at all. And aren't even the unimaginably complex machines that we hope will create fission manufactured with those same scarce inputs? You don't get a spherical tokamak fushion reactor without a hell of a lot of high-spec metals, specialized magnets, and high-voltage electricity. And you don't get those without the fossil fuel-driven processes that allow us to mine things, apply industrial heat to them, and manufacture and assemble complex machines to unbelievable exactitude.
So, I don't know quite techno-optimists think that nuclear fusion will be so easy and cost-free in the way that no other technology before it has been (remember that nuclear fission was also expected to be "too cheap to meter"). The costs in the inputs of financing and scarce resources will be largely front-ended, just like with nuclear fission, but they will be significant. And given the progress against this technology so far, we will be trying to build hundreds or thousands of fusion plants after 2050 just to keep up with our conventional energy needs, the time by which we're likely in the thick of a "polycrisis" of dwindling fossil fuels , essential resources (like phosphorus) that are also exhausted, energy that is expensive and unreliable, food production that is insufficient, all the various other knock-on effects of Climate Change, and all the political and geopolitical effects thereof.
Great piece. Really laid it out clearly
I started a company last year that uses data analytics (our AI still being built) to make land use and human work more efficient for the deployment of renewables (won’t name it as I am anon here). Your outline is a more all encompassing description of what we talk about in some of our longer product meetings, cool article!
and creates 1 big one: Skynet!
This is absolutely brilliant. Such a great post.😀
Re : scarcity of ressources. Don’t forget asteroid mining. With fusion propulsion it shouldn’t be a problem. Will bring a *massive* amount of raw material