Home » Economics » charles hugh smith-Our New Robot Overlords & The Third Type of Capital

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

charles hugh smith-Our New Robot Overlords & The Third Type of Capital

charles hugh smith-Our New Robot Overlords & The Third Type of Capital.

Our New Robot Overlords & The Third Type of Capital   (October 18, 2014)

Fortune will instead favor a third group: those who can innovate and create new products, services, and business models.A recent issue of Foreign Affairs sported a catchy cover teaser: Our New Robot Overlords. This brings to mind various sci-fi scenarios, but the actual article title is academic to the point of obscurity: Labor, Capital and Ideas in the Power Law Economy.

Rather than rehash the usual failed Keynesian Cargo Cult economics, the authors describe three powerful ideas that resonate very strongly with my own work:

1. Digital technologies (networked software, automation and robotics) are radically reducing the need for human labor and the leverage of traditional capital (land, fixed assets and cash) globally.

2. Premiums flow to whatever inputs are scarce. Labor and traditional capital are no longer scarce; what’s scarce is innovative, practical ideas. Ideas (for new models, products, services, processes, etc.) are a third form of capital that will accrue most of the rewards.

3. This distribution of premiums/rewards follows a power law, i.e. the Pareto Distribution where the “vital few” with the 3rd type of capital (good ideas) reap most of the rewards.

…click on the link above for the rest of the article…

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress