We are the Code's Lunch

September 15, 2011 4:32 AM

Marc Andreessen thinks Software is Eating the World
posted by vanar sena (86 comments total)

I miss the old Marc Andreessen, from the Book of Mozilla days. He's an old fat bald fuck now.
posted by twoleftfeet at 4:50 AM on September 15, 2011 [2 favorites]

Sadly my first reaction wasn't all that far off from twoleftfeet's. All I could think was "holy crap he's old now." But then I realized he's 2 years YOUNGER than me. Ugh. Anywhoo....

"I am co-founder and general partner of venture capital firm Andreessen-Horowitz, which has invested in Facebook, Groupon, Skype, Twitter, Zynga, and Foursquare, among others. I am also personally an investor in LinkedIn."

Wow. Ol' Boy has quiet an eye for investing.
posted by Blake at 4:54 AM on September 15, 2011

Groupon generated over $700 million in revenue in 2010, after being in business for only two years.

Granted, Andreessen doesn't mention Groupon too much, but one has to admire the circular logic of an tech-focused investor in a company that is up for a tech IPO, who argues that tech IPOs and other tech companies are good investments.
posted by Blazecock Pileon at 4:56 AM on September 15, 2011 [3 favorites]

I, along with others, have been arguing the other side of the case. (I am co-founder and general partner of venture capital firm Andreessen-Horowitz, which has invested in Facebook, Groupon, Skype, Twitter, Zynga, and Foursquare, among others. I am also personally an investor in LinkedIn.) We believe that many of the prominent new Internet companies are building real, high-growth, high-margin, highly defensible businesses.

Investor tries to get others on board, film at 11.
posted by DU at 4:57 AM on September 15, 2011 [9 favorites]

Ol' Boy has quiet an eye for investing.

That's why I'm doubling down on ReplayTV.
posted by twoleftfeet at 5:00 AM on September 15, 2011 [1 favorite]

Is 'software' his wife's pet name for him? Because then I can see his point. Otherwise, not so much.
posted by sutt at 5:00 AM on September 15, 2011

Pump pump pump it up
posted by Blazecock Pileon at 5:06 AM on September 15, 2011

greedy fucks are eating the world.
posted by ennui.bz at 5:14 AM on September 15, 2011 [11 favorites]

Meh, I was expecting a something a little more interesting. This was just re-heated internet hype from 1990s wired magazines and then a list of examples of 'software' companies making a lot of money. The whole thing was getting redundant and I started skimming and then gave up like halfway through.

I guess there may be people out there who don't realize his basic point, which is that internet companies have replaced a lot of older companies because they were online/wrote better software/whatever, but the article seemed more about self promotion then anything else (I started the first cloud computing company! Talk to me if you want to make money on this 'internet' thing!)

Sadly my first reaction wasn't all that far off from twoleftfeet's. All I could think was "holy crap he's old now." But then I realized he's 2 years YOUNGER than me. Ugh. Anywhoo....

He's looked like that for the past decade. Although he was skinny for a while.
posted by delmoi at 5:16 AM on September 15, 2011

Pump it up
posted by ennui.bz at 5:22 AM on September 15, 2011

The real money in software is invisible. It's not flashy, it doesn't have television ads, and the company's web page is just as likely to be laid out in tables and imagemaps as in HTML5. It's called "the software that actually does things." Banks, utility companies, doctor's offices, factories, power plants, and so on.

Contracts are signed for years at a time, the platform is stable as a rock, and most the guys who work on developing and supporting it will never write a piece for a newspaper or magazine about how their technology is taking over the world. Unlike toy apps, though, it actually is.
posted by sonic meat machine at 5:23 AM on September 15, 2011 [5 favorites]

> Andreessen-Horowitz, which has invested in Facebook, Groupon, Skype, Twitter, Zynga, and Foursquare, among others. I am also personally an investor in LinkedIn.

That's nice. What percentage of the total number of company investments in the portfolio is a loss?
posted by ardgedee at 5:23 AM on September 15, 2011

It's an interesting perspective, and buried under all of the positivity is a really scary message about the future of the average worker in the US:

"[...] many people in the U.S. and around the world lack the education and skills required to participate in the great new companies coming out of the software revolution. This is a tragedy since every company I work with is absolutely starved for talent. Qualified software engineers, managers, marketers and salespeople in Silicon Valley can rack up dozens of high-paying, high-upside job offers any time they want, while national unemployment and underemployment is sky high. This problem is even worse than it looks because many workers in existing industries will be stranded on the wrong side of software-based disruption and may never be able to work in their fields again. There's no way through this problem other than education, and we have a long way to go."

Considering the state of US education in comparison to many of our competitor countries, what he seems to be saying is that the future looks very bright for those who have or can pursue technology skills while they are still under 30, but that most others will be increasingly unemployable. Most of the jobs, once software eats the economy, will go to the top tier of US candidates (those with the best and most expensive educations) and the corresponding top tiers in China, India, Russia, Northern Europe, etc... but for the rest of the populations here, in those countries, and elsewhere, this is not good news.

(I give the article a bit of a pass on the name-dropping of Mr. Andreessen's investments - I suspect that this is just his way of trying to work the WSJ's required full disclosure into the article text.)
posted by Wylla at 5:23 AM on September 15, 2011 [4 favorites]

HP should prevented by law from making software.
posted by the noob at 5:31 AM on September 15, 2011 [5 favorites]

Marc Andressen is the perfect example of a "job creator" in the technology sector who is out to disrupt and destroy whole swaths of the economy, wipe out millions of jobs, all for the glorious beauty of software that will yield stratospheric wealth to investors only.

He and his ilk are the reason why we have 15% poverty in this country and almost 20% unemployment*.




-------------------
* yes. i know the official number is around 9.4% but we know that's only people who haven't given up on looking for jobs and aren't in college/back-to-school.
posted by liza at 5:32 AM on September 15, 2011 [5 favorites]

..."job creator" in the technology sector who is out to disrupt and destroy whole swaths of the economy, wipe out millions of jobs, all for the glorious beauty of software that will yield stratospheric wealth to investors only.

Yeah, I notice the costs they focus on cutting are always labor, never environmental. "We can turn natural resources into private resources even more efficiently with less leakage to other humans!"
posted by DU at 5:35 AM on September 15, 2011 [2 favorites]

Smash the Looms!
posted by seanyboy at 5:52 AM on September 15, 2011 [13 favorites]

This is a tragedy since every company I work with is absolutely starved for talent. Qualified software engineers, managers, marketers and salespeople in Silicon Valley can rack up dozens of high-paying, high-upside job offers any time they want.


I'm constantly amazed at young people in my workplace that don't have basic idea of how a computer works - simple stuff like saving a file.

We had a client visit us, and they were tossing around an idea for a web application they wanted, and she asked me - "do you think there is anyone already doing this?" I opened google and entered their business function and she said -

"wow, I didn't realise you could use google for that!"

She's the sort that types URLs into google and double clicks on hyperlinks.
posted by the noob at 5:52 AM on September 15, 2011 [6 favorites]

"wow, I didn't realise you could use google for that!"

She's the sort that types URLs into google and double clicks on hyperlinks.
posted by the noob

steps back out of the room
posted by infini at 5:54 AM on September 15, 2011 [1 favorite]

twoleftfeet: "I miss the old Marc Andreessen, from the Book of Mozilla days. He's an old fat bald fuck now"

You mean the Book of Mozilla days, methinks.
posted by barnacles at 5:59 AM on September 15, 2011 [1 favorite]

I think it's too easy to blame the entire global economy on Andreessen and his ilk - the US citizenry, as a whole, has never been inclined to pay for and run the types of education systems that we need.

This is not to say that Andreessen's idealism isn't based on self-interest, or that better education would help all sectors of the economy...but without it, there's no way that US-educated people can compete, outside of a narrow swath of private and home educated people and those from the very best public schools. The US could do it if there was political will and sustained energy, but (in my experience) Americans in general don't place a very high value on education, especially when they suspect that better education would benefit people from backgrounds different than their own, and there really isn't the political will. I am much less optimistic on this point that Mark "We have a long way to go" Andreessen seems to be. He seems to be assuming that once the software takes over, the US will start training software engineers in droves. I think the proverbial entrepeneurs in the proverbial garage will just move their company to Bucharest (or Pskov, or Bangalore, or wherever), and most of the workers other than the top guys will not be American.

(We aknowledge this all the time in MeFi - in just about every education thread, someone pops up to say that the US can't be expected to run education systems comperable to those in "smaller, more homogeneous countries"...We conveniently ignore the fact that countries like Sweden are actually quite diverse, and that, for example, Finland - perpetual example of good education - is almost exactly the size and rural/suburban/urban distribution of Washington State.)
posted by Wylla at 6:01 AM on September 15, 2011 [1 favorite]

The real money in software is invisible. It's not flashy, it doesn't have television ads, and the company's web page is just as likely to be laid out in tables and imagemaps as in HTML5. It's called "the software that actually does things."

QFT. I can heave a rock from here and hit several companies I've done work for whose operations are centered around CICS (1960s mainframe technology). Not surprising, since:

While CICS has its highest profile among financial institutions such as banks and insurance companies, over 90 percent of Fortune 500 companies are reported to rely on CICS (running on z/OS) for their core business functions, along with many government entities. CICS is used in bank-teller applications, ATM systems, industrial production control systems, insurance applications, and many other types of interactive applications.

The first release of the CICS Program Product developed by IBM became available on July 8, 1969, not long after IMS database management system. CICS was originally developed in the United States at an IBM Development Center in Des Plaines, Illinois, beginning in 1966. The first CICS product was released in 1968, named Public Utility Customer Information Control System, or PU-CICS. CICS was originally developed to address requirements from the public utility industry, but it became clear immediately that it had applicability to many other industries, so the Public Utility prefix was dropped with the introduction of the first release of the CICS Program Product.

Moore's law effects aside, the history of software is one of providing an ever-richer user experience to the ever-diminishing segment of the market that actually requires that experience. But this is all sitting on a substrate of hundreds of billions of dollars of transaction management software sold during the preceeding decades.

This boring old software contributes to keeping tens of millions of people employed in offices, retail, factories, warehouses, and distributions centers, here and around the world.

The software that makes the world go around is not sexy.
 
posted by Herodios at 6:05 AM on September 15, 2011 [7 favorites]

Yeah, that bothered me about this too. Andreesen speaks of the productivity improvements this switch will bring, but it's unclear to me what those people will be freed up for, exactly. When your job as a hay mower got taken over by a combine, there was a shoe factory for you to go work in... When Craigslist can effectively replace >50% of the newspaper classified section in the country while employing fewer than 100 people, where are the replacement jobs suppossed to cone from? Netflix, Amazon --- there's similar orders-of-magnitude differences in the amount of people the new businesses they're creating need to run verses the ones they replace.
posted by Diablevert at 6:10 AM on September 15, 2011 [4 favorites]

When Craigslist can effectively replace >50% of the newspaper classified section in the country while employing fewer than 100 people, where are the replacement jobs suppossed to cone from?

This is the morality of the Slave State, applied in circumstances totally unlike those in which it arose. No wonder the result has been disastrous. Let us take an illustration. Suppose that, at a given moment, a certain number of people are engaged in the manufacture of pins. They make as many pins as the world needs, working (say) eight hours a day. Someone makes an invention by which the same number of men can make twice as many pins: pins are already so cheap that hardly any more will be bought at a lower price. In a sensible world, everybody concerned in the manufacturing of pins would take to working four hours instead of eight, and everything else would go on as before. But in the actual world this would be thought demoralizing. The men still work eight hours, there are too many pins, some employers go bankrupt, and half the men previously concerned in making pins are thrown out of work. There is, in the end, just as much leisure as on the other plan, but half the men are totally idle while half are still overworked. In this way, it is insured that the unavoidable leisure shall cause misery all round instead of being a universal source of happiness. Can anything more insane be imagined?

— In Praise of Idleness, Bertrand Russell
posted by enn at 6:22 AM on September 15, 2011 [34 favorites]

It's interesting that the world is making more and better stuff, cheaper and cheaper, that fewer and fewer people can afford, isn't it?
posted by empath at 6:23 AM on September 15, 2011 [1 favorite]

We believe that many of the prominent new Internet companies are building real, high-growth, high-margin, highly defensible businesses.

That doesn't actually mean there isn't a bubble.
posted by LogicalDash at 6:23 AM on September 15, 2011 [3 favorites]

Diablevert, that's my concern as well. The US used to have a "next thing" that could take in workers displaced by changes in technology. But now there is no next thing. You lose your job and there's nothing comparable for you to go to. Instead, you move down market (and down in salary) where you end up competing with folks willing to work for much less than you.

It's a race to the bottom and we all lose.
posted by tommasz at 6:24 AM on September 15, 2011 [3 favorites]

In a sensible world, everybody concerned in the manufacturing of pins would take to working four hours instead of eight, and everything else would go on as before. But in the actual world this would be thought demoralizing.

I think 'destabilizing' is a better word. People with an excess of free time have time to cause trouble for the powerful.
posted by empath at 6:25 AM on September 15, 2011 [2 favorites]

(an excess of free time and money to go along with it, that is).
posted by empath at 6:25 AM on September 15, 2011

LMTYA my anarcho-primitivism, etc.
posted by This, of course, alludes to you at 6:57 AM on September 15, 2011

His point about the mismatch between job availability and job seekers is right on point. I can't figure out why we have 140 law schools and numerous business schools and institutions offering managerial undergraduate degrees who shield young people from the realities of the business world and thrust them onto it with only academic exposure and theoretical experiences.

Worse yet, the number of very talented smart people who rather be another lawyer versus a software programmer is past me...software can be a lot more fun, engaging and productive than defending some corporation who might be doing something bad....but then, again, Kate Hudson or Sarah Jessica Parker never star in movies where they're software programmers who must somehow find love.....
posted by skepticallypleased at 7:03 AM on September 15, 2011 [1 favorite]

I'm sympathetic about the lack of alternative career options available to people laid off in this economy, but I can't get behind the idea that, given a choice between an inefficient and error-prone process and one that is efficient and reliable, we should choose the former just to give people something to do for eight hours a day.

Maybe the next big thing isn't obvious right now, but I don't think we're any more likely to come up with it by keeping people in cubicles and factories just for the sake of it.

People are good at research, at engineering, and at art, and the day software "eats" those pursuits will be time for a much bigger conversation than this one. There's no good reason to put paper-pushing, manufacturing, or warmaking on that list.
posted by Riki tiki at 7:07 AM on September 15, 2011 [1 favorite]

I stopped reading when he called Fed Ex a software company, which, sitting here in Memphis and listening to the planes flying overhead 24/7, is demonstrably untrue. It's a cargo airline.
posted by vibrotronica at 7:30 AM on September 15, 2011 [5 favorites]

Yeah I was thinking about the Bertrand Russel thing as well. What we need, really is to get passed the idea that people need to spend all their time working.

Think about it this way: A long time ago people spent most of their time working to produce the things we all needed to survive. But with technological advances meant that fewer and fewer people needed to work on things they needed just to survive. So they started working on things that we wanted, refrigerators, TVs, cars, etc. But what happened when we only need a small proportion of human labor to produce all the things we want? What are people going to do?

It's a cargo airline.

FedEx does a lot of ground shipping too.
posted by delmoi at 7:38 AM on September 15, 2011

He's calling FedEx a software company because that is what it is using to be competitive, not because it doesn't do other things. Obviously there is huge value in its distribution network of trucks and planes and drivers and pilots, but it's the organization of that network that gives it its value. And it's organized by software.
posted by ropeladder at 7:46 AM on September 15, 2011 [3 favorites]

I stopped reading when he called Fed Ex a software company, which, sitting here in Memphis and listening to the planes flying overhead 24/7, is demonstrably untrue. It's a cargo airline.

The value of Fed Ex is far and away more than the value of their actual physical plant, though. Their logistics systems are what makes Fed Ex worth what it is. Calling Fed Ex a shipping company is like calling a human being a bag of protein that turns food into shit.
posted by empath at 7:46 AM on September 15, 2011 [2 favorites]

(a cargo airline, rather)
posted by empath at 7:47 AM on September 15, 2011

It's compatible with Kondratiev wave theory. Which is useless (like all historical waveform analysis) because it suggests a pattern without any way of applying it to future events. Oooh, we're in a trough now. That must mean there is going to be a peak later. Phhfffft.
posted by warbaby at 7:53 AM on September 15, 2011

...every company I work with is absolutely starved for talent. Qualified software engineers, managers, marketers and salespeople in Silicon Valley can rack up dozens of high-paying, high-upside job offers any time they want, while national unemployment and underemployment is sky high.

Mozilla employs 400 people worldwide. According to their site, they have 85 positions open, mostly near San Francisco. Some of those are for multiple positions, of course, so let's say they're looking to double the size of their company. That's 400 jobs.

Twitter has, apparently, about 650 employees. Facebook has about 2000. Their revenue is estimated at two billion.

It would take 500 companies the size of Facebook to employ a million people. Over fifteen hundred new Twitters would have to spring up in order to employ a million people.

There are, optimistically, 14 million unemployed people in the United States at the moment.

Mozilla could double its size overnight, and take care of one thirty-five-thousandth of the unemployment problem in the US.

The idea that we need to somehow revamp our educational system to feed the software industry is ludicrous. If they were that worried about it, they could set up a scholarship program that would solve their industry's personnel problems in four years.

In the meantime, McDonalds, with ten times Facebook's revenue, employs over two hundred times more workers. Target, with revenue twenty-five times Facebook's, employs over a hundred and fifty times as many people.

It would take 1,690 Mozillas to employ as many people as Target.

Software is great, software runs the world, I love me some software. There are some jobs in the software industry. But, as the man himself says, On the back end, software programming tools and Internet-based services make it easy to launch new global software-powered start-ups in many industries—without the need to invest in new infrastructure and train new employees.

Software is in the business of making business more efficient, which often translates to being less dependent on human beings to do work. There certainly aren't enough jobs in the software industry to replace the jobs that software has eliminated the need for.
posted by MrVisible at 8:00 AM on September 15, 2011 [15 favorites]

OK then, FedEx is a shipping company. Like all shipping companies, they use software to do their job better. That doesn't make them a software company. I know several people who write software for FedEx and they would find the notion that they work for a software company just plain wrong.
posted by vibrotronica at 8:08 AM on September 15, 2011

Ahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh.

This is horseshit. Go look at the data. The problem isn't the mismatch between where the jobs are and what people skills are. The problem is jobs - and it isn't really even jobs for people with college degrees (really what this argument pertains to - too many basketweavers not enough coders). The unemployment rate for that cohort is <5>The data is here

People - assume anything in the WSJ is either statistical manipulation or just a lie.
posted by JPD at 8:16 AM on September 15, 2011 [2 favorites]

Oh that link did work. Try this
posted by JPD at 8:17 AM on September 15, 2011

The unemployment rate for that cohort is <5>

clearly I'm not a skilled HTML coder. that shoud say "The unemployment rate for that cohort is less than 5%"
posted by JPD at 8:18 AM on September 15, 2011

I think Andreesen's column has some window dressing about the current downturn, but the core of his argument is about long term structural changes to the economy, which what people have responded to.
posted by Diablevert at 8:30 AM on September 15, 2011

Software is in the business of making business more efficient, which often translates to being less dependent on human beings to do work. There certainly aren't enough jobs in the software industry to replace the jobs that software has eliminated the need for.

Alternatively, one could pay programmers a lot of money, and then tax them enough to support all the people they're putting out of work.
posted by empath at 8:50 AM on September 15, 2011 [2 favorites]

It's not fair to blame Andreesen and his "ilk" (says the computer programmer.) Increasing productivity increases the total amount of wealth in the system. The problem is that the rich and powerful get too much of the wealth. The answer is not to trade total wealth for greater equality but to better distribute the total wealth. This can be done with progressive taxation combined with social spending and labor laws.

Globalism is a much harder problem if you're a poor American, since there is a natural tradeoff between protecting/improving poor Americans' wages on one side and global total wealth and equality on the other. The best solution is to use the government to create or "stimulate" jobs that can only be done in America (i.e. don't have to compete with other labor markets) as a form of redistribution.

None of this works politically right now, unfortunately. America desperately needs better education or at least better propaganda.
posted by callmejay at 8:56 AM on September 15, 2011 [3 favorites]

Money is not the same thing as wealth.

Software isn't wealth. It's a valuable tool we can use to make wealth, but in itself it's nothing.

Quesnay had a decent insight in that economic growth only comes from certain activities. He limited that to agriculture,* but later observers like Hamilton expanded that to include mining/manufacturing as well.

Everything else? It's either ultimately dependent upon or acts in the service of agriculture and mining/manufacturing. For example, I'm a lawyer. Nothing I do creates wealth, because nothing I do involves mixes land, i.e. natural resources, and labor.** What I do is important for the economy, because businesses that do engage in agriculture and manufacturing depend on my services to do what they do. But I can and should never forget that what I do is ultimately in the service of another project and that I cannot charge more for my services than their value in the process of getting other stuff done.

Andressen, like most modern finance observers, has forgotten this. He thinks that the fact that Apple has a large market capitalization means that it's the "largest company" in America. All it really means is that it has a large market capitalization, though Apple is a bit different because it does make most of its money selling stuff, unlike, say, Facebook, LinkedIn, or any of his other major investments.

Until we stop believing that we can make up arbitrary values for stuff forever, until we remember that the world really is out there and doesn't give two shits what we think a lot of the time, we'll continue to see malinvestments and bubbles.

*Which, intuitively, does make a certain amount of sense. Start with one ton of seed, wait a few months, presto!, surplus. It's harder than that, and we now know that this is just rearranging stuff rather than creating new stuff, but there isn't any other thing we can do that looks like that.

**Not that Locke is right here, but this isn't a bad insight either.
posted by valkyryn at 9:03 AM on September 15, 2011 [7 favorites]

Andressen, like most modern finance observers, has forgotten this. He thinks that the fact that Apple has a large market capitalization means that it's the "largest company" in America. All it really means is that it has a large market capitalization, though Apple is a bit different because it does make most of its money selling stuff, unlike, say, Facebook, LinkedIn, or any of his other major investments.

And what about microsoft?
posted by empath at 9:10 AM on September 15, 2011

what about microsoft?

I almost used that as an example, but I decided to stick with the list of companies in the article. But Microsoft does fit, because it makes the vast majority of its money selling software and actually hasn't yet broken even on its XBox division.
posted by valkyryn at 9:15 AM on September 15, 2011

Quesnay had a decent insight in that economic growth only comes from certain activities. He limited that to agriculture,* but later observers like Hamilton expanded that to include mining/manufacturing as well.



heh. you do sort of see why this is amusing yes?
posted by JPD at 9:51 AM on September 15, 2011

valkyryn: Software isn't wealth. It's a valuable tool we can use to make wealth, but in itself it's nothing.

If you believe a manufacturer of mechanical calculators is creating wealth (by shaping natural resources into a useful machine) then I don't see how you can conclude that author of a spreadsheet program isn't also creating wealth, about a million times more efficiently and effectively to boot.
posted by Western Infidels at 10:08 AM on September 15, 2011 [2 favorites]

If they were that worried about it, they could set up a scholarship program that would solve their industry's personnel problems in four years.

Or affect immigration policy. Fellow Americans, our lunches are going to be eaten for a while.
posted by mrgrimm at 10:16 AM on September 15, 2011 [1 favorite]

heh. you do sort of see why this is amusing yes?

No. Instead, I see why thinking that expanding to software and other intangibles is an easy mistake to make.
posted by valkyryn at 10:16 AM on September 15, 2011

the logic is inherently flawed. There is nothing special about land or mining or manufacturing in the model. The model already had to be adjusted once when the nature of an economy changed to permit mining and manufacturing, it will have to be changed again.

People said exactly what you are saying when the American economy was transitioning from an agrarian to a manufacturing society. There are some amazing quotes from Teddy Roosevelt as part of his attacks on Ford back at the beginning of the 20th century.

Its just wrong.
posted by JPD at 10:22 AM on September 15, 2011

Part of the problem is employees are now seen as a loss center as opposed to resources. I used to work with a CEO that joked that one day he would fire all the employees and he would run the company and I would write software to do everyone's jobs. We look for ways to cut employees at every turn, we should think now that we have freed up these employees from shuffling paper, lets find something for them to do to make even more money. But instead, we fire them to reduce costs so everyone can hit their numbers and get bonuses.
posted by Ad hominem at 10:24 AM on September 15, 2011 [3 favorites]

He limited that to agriculture,*

So that includes farmville right?
posted by seanyboy at 10:30 AM on September 15, 2011 [1 favorite]

Software is in the business of making business more efficient

It's also in the business of making people less efficient. Games being the most obvious example of this.
posted by seanyboy at 10:34 AM on September 15, 2011

The model already had to be adjusted once when the nature of an economy changed to permit mining and manufacturing, it will have to be changed again.

You're making a category mistake. The model focused on physical production, and it was actually suggested at the time that manufacturing constituted physical production too. It wasn't that the model was expanded as the economy developed, because the economy of mid-eighteenth-century colonial America was actually more agrarian than seventeenth-century France. It was that Hamilton and others realized that Quesnay's insight was less about agriculture per se and more about the combination of land and labor.

Software and other IP-related goods do not involve natural resources. Never have, never will. What I'm suggesting is that there is something inherent about agriculture and manufacturing, i.e. both involve turning natural resources into usable products, that software, IP, and even things like finance, simply lacks.
posted by valkyryn at 10:42 AM on September 15, 2011

When Craigslist can effectively replace >50% of the newspaper classified section in the country while employing fewer than 100 people, where are the replacement jobs suppossed to cone from?

I can't favorite this hard enough.

There is, in the end, just as much leisure as on the other plan, but half the men are totally idle while half are still overworked. In this way, it is insured that the unavoidable leisure shall cause misery all round instead of being a universal source of happiness. Can anything more insane be imagined?
— In Praise of Idleness, Bertrand Russell

Russell's point is probably needed in the U.S., but if it's ever going to be taken seriously, it's going to be a long slog. We have decades -- no, probably centuries -- of inertia in the idea that personal status/value is deeply tied up with employment and work ethic (substitutable, of course, with net worth). That's a good set of values to have when the problems that both individuals and society face involve the need for willing hands, so I don't think it's really served us altogether poorly. But automation is changing this deeply.

I consider myself lucky as someone who got into software, which is (Andreesen is right about this) a key force in making new companies more competitive. And at the moment, there seems to be no particular limit to our appetite for new and better software. I am likely to be employable for the foreseeable future. But what about everybody else? Do we retrain the workforce for this like we did for manufacturing?

But if you want the really scary stuff...what if we do create an AI? Heck, what if we don't ever manage anything as fantastic as that, but manage to improve or automate the creation of software itself to the point where what we do now takes 1/10th or even 1/100th of the workers it takes now?

Now throw in with near-ubiquitous robots. Who needs employees?

* Why the Future Doesn't Need Us.
* Robots don’t want to kill all humans…they just want to take all their jobs.
* The robotic takeover did not start at MIT, NASA, Microsoft or Ford. It started at a Burger-G restaurant in Cary, NC on May 17, 2010.

Andreesen is right that this moment is an opportunity for a lot of people. But his optimism should be tempered by some sober thought about those who might not be included.
posted by weston at 10:46 AM on September 15, 2011 [3 favorites]

I keep hearing that we've done this transition before; from agriculture to manufacturing. Which is fine, but manufacturing was already obviously in need of people when agriculture was winding down. It was the expansion of manufacturing that made agriculture redundant, as machines were manufactured that did the work instead of people.

Of course, now that manufacturing was available, new markets were created, new products could be made that people wanted, and eventually there were as many people employed in manufacturing as there used to be in agriculture. Especially when the World Wars came around and created all sorts of new demands.

Now, software is being written that does work instead of people. And there are new products out there that simply weren't imaginable just a few years ago. However, software development takes very, very few people compared to manufacturing; the new markets that are opening up take few people to get started, and a few more to keep running.

Meanwhile, manufacturing hasn't been standing still; instead, production of goods is becoming similarly more streamlined, and the efficiency improvements (made possible in part by software) translate into a need for fewer people.

So, to those who point to the transition from agriculture to manufacturing as a model for navigating our current transition from manufacturing to... something else... please elaborate on where the new demand for workers will come from? As we get more efficient, and need fewer people, in every step of almost every industry, where are the people who are being made redundant going to be required? Where are the new products that require large quantities of workers to produce or service?
posted by MrVisible at 10:53 AM on September 15, 2011

I'm not sure I get where all this talk of the 'end of jobs' and leisure is coming from. When the giant whose shoulders we stand on grows taller, we don't hunch down to stay at the same level - we go on to new heights, right?

And it's not like there aren't jobs that need to be done - infrastructure in the US is falling apart and kids aren't being taught art or music. Some of these giants seem to be shrinking.

I'm not saying that workers shouldn't benefit from new efficiencies equal with management. Partially, I am wondering if it is in the interest of capital for the 'end of jobs' narrative to be floating around. Does it make 10% (or 20%) unemployment seem less of a problem?

My job might be obsolete now, but when my bosses absorb my income, that's a pretty big problem for me. Until that dynamic is resolved, we are nowhere near the end of jobs.

( On a side note, how do worker-owned businesses handle game-changing gains in efficiency? )
posted by thetruthisjustalie at 10:54 AM on September 15, 2011 [1 favorite]

What I'm suggesting is that there is something inherent about agriculture and manufacturing, i.e. both involve turning natural resources into usable products, that software, IP, and even things like finance, simply lacks.


yes I'm telling you that your argument makes no sense. And it never made sense, hence the need to adjust it to encompass other forms of assets. Its not a category error at all. Just quoting things said by people working before the idea of an intangibles based economy was even a possible thought in someones mind is not a well reasoned argument. Again there is nothing special about tangible assets as an input into an economy. Intellectual property creates wealth. Of course it does. Software is just another flavor of IP.

There is an argument that finance creates value by facilitiating transactions, but it does seem as though that industry extracts all of that value in a way the prohibits it from actually creating wealth.
posted by JPD at 10:56 AM on September 15, 2011 [2 favorites]

dammit, you faster posters made some of my post obsolete
posted by thetruthisjustalie at 10:57 AM on September 15, 2011

MrVisible - please go read what was being said at the time of the industrial revolution. You can almost copy:paste into your comments.


Transition periods are always hard. Go look at what average wages looked like for the very first people employed in manufacturing jobs were compared to what their other options would have been a few years earlier. Its ugly. It takes time to figure itself out. You need government intervention to help as well. In the beginning it represents a sea change in the power of labor as well. That's what we're dealing with today. The powerlessness of labor is a huge problem.

What you can't do is pretend like its an absolute evil and try to hold off the inevitble.
posted by JPD at 11:01 AM on September 15, 2011 [1 favorite]

Just quoting things said by people working before the idea of an intangibles based economy was even a possible thought in someones mind is not a well reasoned argument.

Shift towards a post industrial platform was an era analysis study conducted about 7 or 8 years ago by The Doblin Group (part of Monitor) that points to exactly this evolution over the past 100 years.

The eleven platforms they were pointing to for the near future (in 2003) were business models built around concepts such as personal expression, political freedom, simplicity, enlightenment, relationships and some more familiar such as travel, well being, financial services.

I see these now - whether its a twitter/facebook/tumblr style personal expression platform or one based on simplicity (first glance at an iPod, iPhone or Google's home page?) or even enlightenment (the example then given was Tadao Ando's architecture).

There's also some good stuff here on imagining the internet from folks like Douglas Engelbart, Vernor Vinge, George Gilder etc - I like going back to see what was said back then in order to see where we're at now thus able to take another look toward where we're going forward.
posted by infini at 11:10 AM on September 15, 2011 [3 favorites]

From the linked article: And, perhaps most telling, you can't have a bubble when people are constantly screaming "Bubble!"

In come the waves: "The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops." The Economist, Jun 16th, 2005
posted by benzenedream at 11:17 AM on September 15, 2011 [2 favorites]

What you can't do is pretend like its an absolute evil and try to hold off the inevitble.
posted by infini at 11:19 AM on September 15, 2011

MrVisible - please go read what was being said at the time of the industrial revolution. You can almost copy:paste into your comments.

That may well be so. No, really, I do get that ---- it's entirely possible that we are as simply unable to imagine what the new jobs will be like as a 18th sheepherd would have been unable to conceive of a telephone operator.

But there is one thing that niggles at me. One might say that the industrial revolution was about replacing brawn ---- human and animal muscle power replaced by machines. But this information revolution --- it's about replacing brain. A computer calculates, and from the very beginning, what it has been meant to replace is brain power ---- instead of a roomful of guys with protectors, you get one big box that pumps out trajectories.

The thing is, what's the step up from brain? Is there one, really? If the Internet makes infinite information instantly and universally accessible.....does that not tend to devalue expertise? It seems to me that any business which is about information transmission is vulnerable to this devaluation...first they came for the record labels, etc., etc. ... But also academia, real estate, the law. The industries which seem least vulnerable to such disruptions are not high status high pay, brain-needing industries but low status, low pay body-satisfying industries: cooking, medicine, cleaning. There's fuzz and overlap. Certain body tasks may be automated, certain brain tasks may still require human presence. Nothing will disappear entirely; you can still buy buggy whips and vinyl records. But so much seems vulnerable. It worries me.
posted by Diablevert at 11:27 AM on September 15, 2011 [1 favorite]

It worries me.


Of course it should. Capitalism and creative destruction are awful terrible things. That's why the state has to be there to help.

I strenuously object to the characterization of the "information revolution" replacing brain. It hopefully frees up "brain" to do new and even more exciting things. But its ugly on the way there.

I mean it all sounds fatalistic, and it is.
posted by JPD at 11:55 AM on September 15, 2011

This week, Hewlett-Packard (where I am on the board) announced...

Aaaand, I'm out.
posted by belarius at 12:03 PM on September 15, 2011

If the Internet makes infinite information instantly and universally accessible.....does that not tend to devalue expertise?

I disagree (not with that's what's happening perceptually online but with this concept)

Curation is still required in order to inform you that such and such is not spammy scraped blog.
posted by infini at 12:14 PM on September 15, 2011

Just quoting things said by people working before the idea of an intangibles based economy was even a possible thought in someones mind is not a well reasoned argument.

You aren't paying attention. The idea of an "intangibles based economy" was already a pretty well-established idea in the eighteenth century. Smith, responding to Quesnay, entirely understood the concept. And he argued that trying to base an economy on intangibles was foolishness.

Given the past few years in economic history... you really want to tell me he was wrong?

Intellectual property creates wealth. Of course it does.

This is not an argument at all. This is an assumption which perpetuates the definition of "wealth" I've been arguing against all thread, and which classical economists thought was not only wrong, but actually immoral.
posted by valkyryn at 12:30 PM on September 15, 2011

I understand; we're in the throes of the transition to the next big thing.

My point is, we've been in those throes for a long time now. We've been talking about the Information Revolution since at least 1969.

Forty years into the conversion to factories, we were pretty sure where the jobs were going to be in the future, even if they weren't there yet.

Since before I began my working life, I've been promised that some wellspring of jobs was going to arise from all of this, despite the fact that every industry I've ever heard of or been in contact with was using industrial and informational technology to pare down its work force to an absolute minimum. The new technology was going to create new opportunities, and with them new jobs, just you wait and see, yessirree bob...

The new industries that have sprung up have been created with very few people, and have been built on as few employees as possible. They don't come close to employing as many people as the industries which are now obsolete, plus the employees who aren't needed now due to efficiency improvements.

We have record-setting global unemployment, with 205 million people out of work.

When do we get to quit waiting for this new and completely unforeseeable source of jobs to materialize, and get to work figuring out what to do when we don't need a significant portion of the workforce anymore?
posted by MrVisible at 12:39 PM on September 15, 2011 [2 favorites]

I'm paying attention. You believe there is some magical difference between the tangible and intangible. That real wealth only comes from labor + a depletable natural resourse. And I'm telling you that this isn't true. Empirically this isn't true. Classical economists were working during a different time, they had ideas that had value, but like anything else over time some of them have been superceded. I mean the view you espouse is just so conservative (in the reasonable Burke sense of the word) it just ignores the fact that the world has changed in the last 200 years.

Forty years into the conversion to factories, we were pretty sure where the jobs were going to be in the future, even if they weren't there yet.


Actually we weren't. It was in the Teens when Roosevelt ran on a populist anti-industrialization platform. At the latest you would argue the Industrial Revolution began in what? the 1850's?
posted by JPD at 12:55 PM on September 15, 2011

Oh also I think you mischaractierize Smith's views on the labor theory of value. Its about the labor much more than its about what that labor is applied to.
posted by JPD at 1:00 PM on September 15, 2011

I mean the view you espouse is just so conservative (in the reasonable Burke sense of the word) it just ignores the fact that the world has changed in the last 200 years.

Or, in fact, asserts that it hasn't changed at all, and that a lot of the so-called "wealth" that's been "created" by IP and exotic financial products is just an illusion. Which, I suggest, is a theory admirably supported by the last ten-odd years of economic history. I'm saying that we've made ideological moves that we shouldn't have made and that 2008 was the price for that.
posted by valkyryn at 1:11 PM on September 15, 2011

Software and other IP-related goods do not involve natural resources. Never have, never will. What I'm suggesting is that there is something inherent about agriculture and manufacturing, i.e. both involve turning natural resources into usable products, that software, IP, and even things like finance, simply lacks.

They're tangible, but that doesn't necessarily mean superior. It's true that those tangible goods meet tangible needs: we grow food because we have to eat, we build houses because we need shelter, we burn fuel to heat and light the houses, and so on. Without those things we either die or remain barely alive. And those primitives can be extrapolated up to oil rigs and supercargo ships and so forth.

But what about books? Recorded history, by definition, began with the invention of writing and its documentary function. The recording and (later) the distribution of information involves both labor and natural resources for the creation of the medium. Humanity has expended vast effort on the creation and distribution of all these media, from vellum scrolls through paper through electromagnetic storage. I'm not talking about the content here, just the physical mass of all this information-recording stuff. I have a hunch that the weight of all the books Mrs. Browl and I own probably exceeds that of our furniture or any other class of possessions. If/when we move farther than the other side of town this is going to translate to an appreciable cost just in fuel costs for the truck that carts them about. Our telecommunications infrastructure consists of electrons pulsing through wires, and we build satellites to both speed up these communications and to gather and send back more information on things like the weather (as well as what the rest of the universe looks like).

Now, why do we do this? You can't eat a book, and they're not much good as building materials or even fuel. Clearly the value of a book is in the information printed on the pages, just as the primary value of a hard drive lies in its use as an information store. The information is not necessarily for life at the individual level, but it is absolutely necessary for life at the cultural level. By 'culture' I do not mean literature, but the signalling process between an agglomeration of social units that share some common language. Our informational infrastructure is just as important as the nerves or chemical signaling structures that exist within organisms. It's lack of tangibility is not in any way less valuable; arguably, it is more important than most tangible resources.

Consider; plants are alive, but they don't move around and don't have any nervous system. Instead they do all their information transmission with chemicals, which they leech out of the ground and transform with the help of sunlight. Animals are unable to use minerals or sunlight for growth directly, but the upside is that they can go where the food is. This requires nerves, for transmitting information between sensors and muscles. Chemicals propagate whereas nerves conduct, and the latter tends to be a lot faster. There are still chemical processes going on within cells and higher-order structures like sensory organs and muscles, as with plants, but the nerves are just acting as conduits for electrons. Transmitting that information around has an energy cost, but it clearly creates value. Likewise, recorded information has value, as evidenced by most animals having brains; and storing information has value, as evidenced by learning even in primitive animals. The exchange of learned information allows social structures to emerge. The big difference between humanity and the lower animals is that we're so good at abstracting things. Some other animals use or even make tools, and a few have a rudimentary concept of property that leads them to carry and keep things that seem useful or interesting. but our capability for abstraction allows us to expand in time as well as space, by leveraging concepts of the past and future.

Now, you mentioned earlier that you're not creating value as a lawyer, although your work has an important economic function. But my view is that you are creating value, as surely as if you were building bridges or laying pipes. Roads are essential for the efficient transportation of resources, but the fundamental characteristics of a road are visibility (so you can see where to go next) and exclusivity (a lack of obstacles to movement). The tarmac or rails or concrete are just additional conveniences; trails are creating by the wearing away or dismantlement of barriers to movement. Likewise, pipes are used to carry resources to where they are needed and carry waste away. If a pipe is blocked it can't fulfill this function and so we need plumbers. Now a plumber's work is the diagnosis and clearing of blockages as much as the placement and connection of piping; the labor that goes into the removal of such blockages creates value in just the same way that a tunnel through a mountain does, even though the act of tunneling is one of removal.

Lawyering allows the creation of social infrastructure. Without it, we wouldn't be able to grow anything bigger than a village. Look at primitive tribes in history or places like the Amazon basin; they got stuck at the level of periodically raiding each other because they are lacking a key piece of social technology. Sure, the product of your labor is intangible, but so are maps and weather data and I think most people would agree that they have value despite their inherent intangibility.
posted by anigbrowl at 1:18 PM on September 15, 2011 [7 favorites]

Lawyering allows the creation of social infrastructure. Without it, we wouldn't be able to grow anything bigger than a village.

See also the work of Hernando de Soto Polar.
posted by weston at 2:08 PM on September 15, 2011

Thank you, anigbrowl, for typing out what I was thinking first.
posted by MikeKD at 2:34 PM on September 15, 2011

Or, in fact, asserts that it hasn't changed at all, and that a lot of the so-called "wealth" that's been "created" by IP and exotic financial products is just an illusion. Which, I suggest, is a theory admirably supported by the last ten-odd years of economic history. I'm saying that we've made ideological moves that we shouldn't have made and that 2008 was the price for that.

Well, that too. Maybe we should be scoring financial or legal instruments in terms of risk/reward ratios as a factor of GDP, or some as-yet-to-be-defined Net Global Product. The value of IP might be a function of Metcalf's law, for example. Or maybe bilateral transactions should be measured in terms of deviation from a harmonic mean, as discussed in Nichomachean Ethics. But I'm way out of my economic depth at this point.
posted by anigbrowl at 3:34 PM on September 15, 2011

MrVisible: "In the meantime, McDonalds, with ten times Facebook's revenue, employs over two hundred times more workers. Target, with revenue twenty-five times Facebook's, employs over a hundred and fifty times as many people."

It's hardly surprising that more people are creating software-based businesses than new McDonald's-style chains, though. A single person with a good idea and a few hundred dollars can set up a website and start getting ad revenue (for example) in weeks or months. Starting a McDonald's franchise is going to cost you a million dollars up front before you've assembled a single burger.
posted by vanar sena at 6:08 AM on September 16, 2011

Conflicts of interest aside, he's right. We're in the middle of a paradigm shift. A shift as big as electricity was (maybe bigger?). You almost can't imagine what will come next. And I find it both exhilarating and terrifying to watch the changes flash before my eyes, knowing that I'm missing countless opportunities.
posted by readyfreddy at 7:13 AM on September 16, 2011

MrVisible: When do we get to quit waiting for this new and completely unforeseeable source of jobs to materialize, and get to work figuring out what to do when we don't need a significant portion of the workforce anymore?

An economist would argue that there's two different problems here:

1. The US is at the bottom of a particularly bad business cycle. It's a demand problem: because people are constrained by debt (like the millions of people underwater on their mortgages), they're spending less money, which means there's less work. It's an urgent problem, but a short-term one.

2. Technology (and trade) will reduce the number of jobs in one sector, as it becomes more efficient; but as long as there's enough demand, employment will increase in other, less efficient areas, so that shouldn't be a long-term problem. Paul Krugman:

Start with a first, seemingly paradoxical principle: The kinds of jobs that grow over time are not the things we do well but the things we do badly. The American economy has become supremely efficient at growing food; as a result, we are able to feed ourselves and a good part of the rest of the world while employing only 2 percent of the work force on the farm. On the other hand, it takes as many people to serve a meal or man a cash register as it always did; that’s why so many of the jobs our economy creates are in food service and retail trade. Industries that achieve rapid productivity growth tend to lose jobs, not gain them.

In the industrialized countries, there's an ongoing shift from manufacturing to services (Target and McDonald's, just like you said; but also education and health care).

That does lead to a third problem, namely inequality. In the US context, I think this is actually the hardest of the three problems.
posted by russilwvong at 7:53 AM on September 16, 2011 [2 favorites]

For an entirely different perspective on the role of computers, manufacturing, software and what it might mean for an economy:

After varsity Chinery-Hesse moved to the UK where he buried himself in manufacturing technology before working as a manufacturing engineer. "I had the idea of being in manufacturing when I returned to Ghana, but I didn't have money to set up a factory and couldn't get a loan so I had to think about what it was I was going to do. The minute I saw my PC I realised my computer was a factory that required no capital, only brainpower, and that I could use it to accumulate capital."

He laughs and says if his parents had been millionaires perhaps he would have ended up owning a car factory rather than a software empire.

SOFTtribe was started close on 20 years ago in Chinery-Hesse's bedroom, which was sparsely furnished, but did have a chair, a bed and an Amstrad XT with a 20MB hard drive. Chinery-Hesse didn't get to use the chair because he took in a former classmate as a partner and who was so large he needed the chair. So the SOFTtribe founder sat and coded on his bed.
[...]
Today SOFTtribe's clients include Unilever, Guinness Breweries Ghana Limited, Pricewaterhouse-Ghana, the British High Commission, Ghana's Millennium Development Authority, Ghana National Petroleum Company, Zenith Bank, Cargill and a host of other government, multinational and private sector blue-chip clients. SOFTtribe's reach includes Kenya, Nigeria, Senegal, Togo, Burkina Faso, Gambia, Guinea, Liberia and Côte d'Ivoire
posted by infini at 10:33 AM on September 16, 2011

Some points.

The US seems to be genuinely going through the same thing that the UK went through in the 70's and 80's - that of a collapse in the stable blue-collar environment you've relied on for years to provide incomes for the majority of blue-collar workers. Combine that with the beginnings of the same for "knowledge workers" (what used to be called clerical work) as well as the collapse in the largest bubble *ever* and i can see why the commenters on this thread all smell of the same odour of desperation.

The US' protectionism over the last few decades has meant that you've kept the pain away for a long time, but it also means that when the change comes it pours in like a tidal wave, all at once and irresistible. You now have to deal with sevveral waves of change, all at once. Ouch.

So, lessons to remember:

There are plenty of blue collar jobs out there for the future, but the transition is brutal. Ask a Nissan plant worker in Sunderland, and ask a redundant car worker from the old industrial heartland. There's a reason why the left hates Thatcher with a bitterness bordering on the pathological. She allowed the old UK manufacturing industries to compete in an open market for the first time, and of course, without their old statist protectionism, they collapsed like the coddled incompetent jokes they were... See British Leyland for a painful example. Nowadays we are world leaders in a few manufacturing sectors, but there aren't many steel mills making basic sheets of bent metal. Rolls Royce Aero Engines is world class, but doesn't employ a city full of workers like the steel industry did in Sheffield in the '70s. Tata makes the steel for those engines, in India.

The prime and single reason I'm not a programmer is the advice I was given fifteen years ago when we first started to send insurance claim forms to Bangalore (in a suitcase because comms were so unreliable): "If your job can be done by phone and email, then your job *will* be done by phone and email - from the cheapest place in the world.". That simply means that clerical jobs are going to be done by people on the other side of a screen, not here in this office.

How can you stay employed? Think about the parts of your job that involve relationships. We *still* have programmers in the UK office (in the IT company I currently work for). They help the guys in Romania understand what the customer wants. They do the social part of the work that outsourced jobs can never ever do - and we've tried (with video, IM, you name it).

No matter what, personal relationships will always matter - and those are the jobs you'll find are stable over the next few decades. Of course, there are losers from every change. The introverted anti-social programmers who've clung on for grim death and are now forced to spend their days doing inter-cultural translation and explanation between UK non-technical customers and eastern-european programmers with english as their second language really really really struggle. I have no idea what jobs they could do... Perhaps start their own software firm?
posted by Hugh Routley at 1:47 PM on September 16, 2011

The times they are a'changin'. Being able to generate more value with less than 1% of the workforce needed by old technologies is great news for investors, but it certainly presents challenges. I've always loved new technology and always will, but many people will be hurt by their inability to understand and adapt to those new directions, and to embrace how technology can be a great equalizer. Survival of the fittest and the laws of natural selection and it's been happening since the dawn of time, I know, but it can still be a cruel world to live in for those whose breadwinners are not the fittest. For many people and even whole countries, those technologies that respond to social as well as corporate needs may prove to be the real game changers in the long run.
posted by kipley at 11:58 AM on September 18, 2011