Automation, Space Colonization & The Post-Transactional Economy

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Image: NASA

“How is this even a business?” my late father asked when I described a notional model for human space colonization. “How are you going to make money? What product are you going to sell?”

Admittedly the model — developing a swarm of self-replicating , self-repairing decentralized, solar-powered construction automata and using them to mine asteroids and produce more such automata as well as habitable colonies— is not monetizable in the same fashion that building a picture-sharing smartphone app, or social network, or web search engine is.

And although there are ways to monetize space colonization — it is, essentially, a very extreme kind of full-stack real estate development — I think my father hit upon the fact that this kind of venture is of a fundamentally different nature to the modern economy as it exists on Earth today.

And the more I think about this kind of economic development, the more fascinating I find it.

I would never have started thinking about this process if it wasn’t for the Moore’s Law-style cheapening of solar energy and the accelerating development of robotics and AI. We are heading toward a world where plentiful solar energy is very cheap to capture, cheap to store thanks to breakthrough in batteries, and where advanced computing and robotics technologies give us very many options in terms of what to do with that energy.

I believe that aside from ending global poverty and hunger (which are already falling at very rapid rates) and powering complex virtual reality simulations, space exploration and colonization will form a very major aspect of what we do with our newfound energy inheritance.

Why? Well, consider that enough energy from the Sun hits the Earth in an hour than we use in a year. Then consider that only 0.000000045292 percent of the Sun’s energy hits the Earth. There’s a whole lot of energy up there, radiating out into space. Energy we could do useful things with. And that’s just one star.

Then consider the fact that natural resources on Earth such as water, hydrocarbons and metals exist in very finite quantities. There are vastly more of all of these things up in space.

Finally, consider the dangers of not colonizing space. A one-planet species is a very endangered species. One global cataclysm — like a nuclear war, or asteroid strike, or pandemic bug — could wipe us out. Colonizing space would remediate this problem.

So, what is going to change?

At the most basic level, economics all boils down to physics. As humans our behaviour is circumscribed by physical limitations, and physical needs and wants.

We use markets and monetary systems as means to efficiently satisfy needs and wants given the finite resources that are currently accessible. Markets work by matching willing buyers and willing sellers, simultaneously allowing the buyers to get the most they can given the sellers’ needs, and allowing the sellers to get the most they can given the buyer’s needs.

We bring new resources into the orbit of the economy via human labour, which is a finite resource subject to feeding, clothing, housing, transporting, educating. Human labour is subject to tiredness, and emotions, and competing desires, and quitting the job and finding another better paying or less tiring one, and all kinds of things. Satisfying these needs requires the development of a highly fungible medium of exchange, such as money to coordinate all of these complexities.

Replacing human labour with automated labour removes many of these complexities and replaces them with a simpler framework altogether: the cost of energy. The more automated a system becomes, the less important the flow of a fungible medium of exchange becomes. Access to sustainable and replenishable sources of energy — to run the robots, drones, AI and other such automata — becomes the key determinant factor. This is a whole new post-transactional economy.

Obviously money will remain an essential factor for coordination in inter-human economic relations. But for highly-automated ventures — particularly those operating in space, where there is currently no such thing as the rule of law, no easy access to subcontractors, and plentiful natural resources in asteroids, moons, planets, and solar energy, and so forth — it is more of a case of capturing resources and deploying them as needed, at least at the frontier where there is no clear system of property ownership beyond the law of the jungle. And space — unlike Earth — is a huge and endless frontier.

This kind of development, of course, is only really possible given very high levels of technology and massive economies of scale and given massive pre-existing resources. You need to have control of a swarm of highly-developed robots in the first place to be able to get to the stage where they can become self-replenishing and self-perpetuating (so long as they can gain access to energy). And you need highly efficient energy capturing technologies (like nuclear fusion or high-efficiency photovoltaic cells) to keep your EROEI ratio positive.

But once you have these things (all of which are gradually coming to fruition) it becomes plausible to ride the swarm all the way up until you have constructed a Dyson sphere around the Sun. And once you have a single Dyson sphere capturing the entirety of the Sun’s energy output, sending new swarms out to other stars to repeat the process seems just a matter of hitting the repeat button.

Of course, I expect arms races will reduce the efficiency of any such process. The potential gains from expansion into space in terms of power and reach and resources are so massive that many different actors will want to get a piece of the action, and grab what they can get. I would be surprised if many of the huge gains in resources we get from colonizing space aren’t wasted on endless warfare between different groups and ideologies.

But that has been a major pattern throughout human history. And we have made it a long way already.

 

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Tesla & The New Economics Of The Coming Renewable Energy Boom

I don’t need to tell anyone of the importance of Tesla’s expansion into home battery technology. A home battery lets you store solar energy to use when the sun isn’t shining, which is a really, really major thing in terms of power distribution. As I’ve been pointing out for years, this is the crucial missing link between photovoltaic cells being a rapidly, rapidly cheapening technology with a lot of rollout potential, and photovoltaic cells being the major source for the world’s power. As I predicted in The Week in 2013:

The promising trends in technology and cost suggest much more than renewable energy becoming the fastest growing energy source in the next 30 years. They suggest that renewables will grow to be the number one energy source in the United States and the world in the next 30 or 40 years.

I’d say that that was actually an overly conservative projection. I now foresee solar to be number one in the next twenty, if not the next ten years.

It’s nice to live in the knowledge that renewable energy will overcome problems posed by diminishing oil reserves and (at least) mitigate anthropogenic climate change. It’s nice to know that as solar efficiencies continue to increase and solar manufacturing costs continue to fall that the long term trend for energy costs is down.

And you can do a heck of a lot of cool things with cheap, decentralized energy, like heating and lighting your home, manufacturing goods and technology and food and tools, and powering computers and artificial intelligence.

This, in my view, is the furnace to power the next fifty or a hundred years of soaring mid-20th century style economic growth. This is the beginning of an energy-driven economic supercycle — which takes us from the era of handheld computing to the era of building asteroid mining space stations and extraterrestrial colonies and maybe even interstellar spacecraft. It’s the main reason why I switched from bearish to bullish in 2013.

But what I really want to know is how to make money out of this trend. If photovoltaic cells and batteries are the new crude oil, coal, gasoline and natural gas (etc), does that mean Musk’s firms (Tesla, SolarCity, SpaceX, etc) are going to be the next Exxon-Mobil or Shell or Gazprom?

Maybe. But I’d tend to see renewable energy and emerging tech index funds as a slightly smarter bet. The trouble is that we’re at a very early stage in the supercycle.

An imperfect analogy: Xerox made an operating system akin to Windows years before Microsoft and Apple did, but Microsoft and Apple were the ones who reaped the bigger rewards. There are a whole load of factors that could dramatically affect which renewable energy systems are the ones that dominate the market: interface, battery-photovoltaic cell integration, price per unit of energy, price per unit of storage, durability and probably some others. And also a slew of more superficial factors such as marketing. If this is going to be as big as I think it is there will be a lot of competition from outside the renewables sector not least from firms like Google, and Apple and Facebook and Samsung as well as from older energy giants like BP, Shell and Exxon-Mobil.

For now, of course, Musk does seem to be establishing himself as the market leader and trendsetter in much the way Steve Jobs once did. But that could all change. It’s even not just a matter of competing firms. Just as the internet decentralized information distribution, and solar is on the cusp of decentralizing energy production, the whole manufacturing and (I’d argue) product design paradigm is edging closer to being transformed by another set of emergent technologies: 3-D printers and home manufacturing. Maybe as home manufacturing begins to become more prominent, open-source collaborative product and component design will beat out the current proprietary model.

The main takeaway here seems to be that this is an incredibly exciting time to be alive. We’re all set to get a lot richer from this, whether or not we bought Tesla at an early stage, just as people in the early 20th century didn’t have to buy Standard Oil shares to do well from that other energy revolution.