hrystia Freeland

The shrinking human factor in a machine-to-machine economy

CHRYSTIA FREELAND | Columnist profile
From Friday's Globe and Mail

 

 

If you want to get a feel for one of the most important transformations in our world today, read The Fear Index, Robert Harris’s new thriller.

Mr. Harris has been widely praised for his adept portrayal of the hedge fund universe in which his novel is set. His hedgies are a welcome and realistic departure from the “masters of universe” of most popular fiction.

And he knows his super-rich. As they are being wooed to make a billion-dollar investment, an international group of investors discusses the ways that their national governments oppress them. Alex Hoffmann, the billionaire hedge fund manager protagonist who is making the pitch for their cash, reflects: “He was remembering now why he didn’t like the rich: their self-pity. Persecution was the common ground of their conversation, like sport or the weather was for everyone else.”

But the most valuable takeaway from this riveting novel is the element that has been widely dismissed by reviewers as familiar and unpersuasive: VIXAL, the intelligent machine at the heart of the story that torments its human creator and may be trying to rule the world.

VIXAL is worth getting to know because so much of what it does is already happening in real life. Futurists and fantasists have been dreaming about the rise of intelligent machines for centuries. Now it is actually starting to happen.

For a drier, but in many ways even more astonishing, account of what is going on, read “The Second Economy,” an essay in McKinsey Quarterly by W. Brian Arthur, a visiting researcher at the Intelligent Systems Lab at the Palo Alto Research Center in California.

His contention is that a second, machine-to-machine economy is emerging and that it will bring deep economic, social and political change comparable to the transformation wrought by the Industrial Revolution.

“Business processes that once took place among human beings are now being executed electronically,” Mr. Arthur writes. “They are taking place in an unseen domain that is strictly digital. On the surface, this shift doesn’t seem particularly consequential – it’s almost something we take for granted. But I believe it is causing a revolution no less important and dramatic than that of the railroads. It is quietly creating a second economy, a digital one.”

Economists and novelists aren’t the only people musing about the rise of the machine-to-machine economy and its transformative potential.

Yuri Milner is one of the savviest technology thinkers in the world; he was a pioneering investor in Facebook, a bet that was wildly vindicated last week.

Mr. Milner has a presentation in which he describes the nine most important changes in the world today. Three are about what Mr. Arthur has dubbed the second economy: the rise of what Mr. Milner calls “the Internet of things,” or the machine-to-machine economy; the growing power of artificial intelligence; and the emergence of a “global brain,” which is the network of all of the people and the machines in the world and their connections to one another.

The Fear Index depicts the rise of the machine-to-machine economy as murderous and menacing. That time-worn worry that smart machines will turn on their creators isn’t one I share. I am a fan of the machine-to-machine economy and of all the ways it makes my human life cheaper and easier.

But I am concerned about something Mr. Harris only hints at. At the end of the book, VIXAL changes its hedge fund’s mission statement. The first lines of the new, machine-written version read: “The company of the future will have no workers.”

I’m not afraid our smart machines will try to exterminate us, but I do worry that the second economy may be a jobless one.

Mr. Arthur doesn’t offer much comfort on that score. In an exchange with a reader after his essay was published, the economist wrote: “Since the second economy began, in the early and mid-1990s, we’ve had wave after wave of downsizing and layoffs, and now we have ongoing structural joblessness. I hope jobs will be created, and maybe they will. More likely, the system, as so many times before in history, will have to readjust radically. It needs to find new ways to distribute the wealth.”