Unskilled and Poorly skilled workers are finding it difficult to sustain their livelihoods. Tech aficionados and Entrepreneurs are building “new economies” on Web3 using NFTs & DAOs. The nation-states are grappling with new waves to covid variants. Overworked and exhausted remote and hybrid employees are resigning in heaps to explore their passions. Rest are passively seeing the world pass by riding the pay hikes. If you take a snapshot of the world that’s what we find.
Pandemics and downturns usually give rise to new economic models and this time is no different. The best we can do is learn from the past and build a better system and this series of thoughts is a way to explore such a system.
The Goal / Destination
“We are suffering just now from a bad attack of economic pessimism. It is common to hear people say that the epoch of enormous economic progress which characterized the nineteenth century is over; that the rapid improvement in the standard of life is now going to slow down — at any rate in developed countries; that a decline in prosperity is more likely than an improvement in the decade which lies ahead of us.
This is a wildly mistaken interpretation of what is happening to us. We are suffering, not from the rheumatics of old age, but from the growing pains of over-rapid changes, from the pains of adjustment between one economic period and another. The increase of technical efficiency has been taking place faster than we can deal with the problem of labor absorption; the improvement in the standard of life has been a little too quick; the banking and monetary system of the world has been preventing the rate of interest from falling as fast as equilibrium requires.”
When do you think the above words were written? If you guessed 100 years, you’re right! In 1930, John Maynard Keynes, the father of macroeconomics, imagined the world 100 years in the future in his paper “Economic Possibilities for Our Grandchildren.”
He spotted phenomena like job automation (which he called “technological unemployment”) coming, but those changes, he believed, will help us grow a better society, eventually leading to collective liberation from work.
The pace at which we can reach our destination of economic bliss will be governed by four things-
Our power to control population
Our determination to avoid wars and civil dissensions
Our willingness to entrust to science the direction of those matters which are properly the concern of science,
The rate of accumulation as fixed by the margin between our production and our consumption;of which the last will easily look after itself, given the first three. — Keynes
So, getting rid of work was always the goal. He also warned that this sudden change in our evolutionary habit of toiling and laboring will be hard on our psychology so we will go into this phase of the “transition phase” where we will have 3-hour workdays. So we don’t have to worry about “boredom”. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam (The old Adam will be so strong in us that everybody will need to do some work if he is to be contented) in most of us! — Keynes
Where are we now?
We are just 8 years away from that promised land of an economic utopia where people worked only 3 hours a day that too just to kill the boredom so where are we now? This #covidpandemic has made evident that there are gaps in our current system — inequality, data and power accumulation.
However, though the #pandemic eroded economic activity for the last 18–24 months (and probably more) and it could be a saving grace for the macro indicators as pandemics are usually followed by post-pandemic booms - Economist
But there’s also something peculiar happening this time. There’s great attrition in the developed economies.
Who do we turn to?
These will be the biggest challenges that will be facing once the pandemic subsides. We are looking down a barrel of unemployment crisis and global recession, structural changes thanks to the pandemic, a trade war between the developed and developing economies.
In his book “The Jobs Crisis in India” Raghavan Jagannathan / Jaggi states that India is on the path to periodic unrest and sometimes large-scale social unrest thanks to unemployment. India’s working population is 450–885 million with 12 million entering the labor force every year. The unemployment rate is 2% — 6% depending on which data institution you trust that’s 9–53 million people unemployed and that’s an old census (2011). Am sure it’s at least twice of that given the fact that most companies are laying off employees/employees are voluntarily quitting.
Keynes became prominent during the last great depression in the late 1920s. when unemployment in Britain and US was 18 million. So he suggested the government to stimulate demand and thus macroeconomics was born. So, the typical answer to such an unemployment / economic crisis is government stimulates demand but the typical route of infrastructure development won’t move the needle much in India however construction and low-skilled jobs are available but no takers as the wages are too low. Since the demand side efforts failed, the government started meddling with the supply side. It tasked the Ministry of Skill Development to skill 500 million Indians by 2022. The project was scrapped in 2018 citing a lack of direction of demand. Think about it, the Indian government sitting on a record level unemployment rate of 6% has no clue about the future job market.
So if the state can’t help us, usually the market steps in (Any Milton Friendman fanatics in the house? say ‘aye’). The 2008 financial crisis sparked innovations such as Bitcoin (Jan 3 2009) and hence Decentralised finance and the extreme of that is what we are seeing today which is the narrative spun around web3 and the feud between Elon musk, jack vs the ethereum & web3 team (A16z ahmmm)is fun to watch but it’s gonna lead “us” nowhere unless one knows how to leverage these for trading their tokens and coins.
So the State has no clue. The Market is dolling out its self-righteous solutions and what do we do? Who do we turn to — The answer is Ourselves.
We gotta look at alternate institutions which means understanding the system we’ve built. Look at factors affecting an output other than capital which is labor and see if we can build a system on that.
In 2010, the Nobel prize for economics went to three economists “Peter Diamond, Dale Mortensen, and Christopher Pissarides.” for their work on “MARKETS WITH SEARCH FRICTIONS”. It’s because there are too many frictions in the labor market that impedes the feedback between the demand to supply of skills in the labor market.
How do we solve these frictions? we start small, we understand at the ground level what’s the future of the job market gonna look like is it gig economy, is it community economy, etc
The solutions are always local no matter how global the problems are.
Even Gandhiji was a strong believer in that. That’s precisely why he prescribed economic self-reliance at a village level / 5 km radius level. Because at this smaller radius there are fewer frictions and supply and demand of skills can reach equilibrium soon. Now with new techs like blockchain, cryptocurrencies and web3 and DAOs, it’s imperative that the same models (self-sustaining communities built on labor) can be brought to the digital space across boundaries
+State or Market won’t make you wealthy/well
YES! SAVE YOURSELF. But is the answer that bleak? Should we add to the loneliness and depression pandemic by making people even more individualistic? Don’t we need better institutions and systems that give power to the individual whilst organized in self-sustaining communities?
The 84.5 Trillion$ Question — What sort of institutions and systems should we create to help us wade through the crisis with minimal damage and make us less vulnerable, more resilient to the next? These are the questions we will be answering the next 20 chapters and here’s a snapshot of the thought series flow.
Thought Series Flow
To arrive at a possible solution ( a better system), we look at the current state of the world objectively from a social, economic, political, and tech perspective, investigate the problem deeply to frame the problem into manageable chunks and look into the past economic solutions to learn from. Then we get into exploring the solution by rebalancing labor and building a frictionless labour movement platform.
Then we delve deeper into frictions in the labor market and their impact on a nation’s unemployment. We explore different frictions in the labor market such as verification friction, validation friction, search & match friction, and onboarding & exit frictions, and build a system dynamics model with stock and flow and feedback loops in the value chain of skills.
Then we go into solution exploration through defining the Skill Identity, how a skill moves, how can a platform be built to move such skills but with data ownership at the individual level.
Then we build on the solution that has been laid out by modeling the wellbeing of an individual and his/her wellbeing being sustained through a de-centralized self-sustaining community platform with a reputation score as a currency leveraging the crypto and the fiat world.
Then we look at the theoretical implications of such a platform. The real impact a wellbeing-based reputation can bring into the access and usage of financial services, the implications of the wellbeing score through a public impact matrix framework, and lay down certain guidelines in terms of organizational structure.
Finally, we set the tone for future research by putting the above-framed solutions to work. We look at such an economy in action with the working communities we have built around hard skills (Growth, Quantum, Tech) soft skills(StopBeingBoring), and WellBeing (StrangerSapiens).
Eventually, we end this series with a call to action for the individual, institutions (educational, corporate), and non-profit foundations to join us on this mission in their own capacity.
We understand the weight of the claim of an economic utopia and a 3-hour workday especially when it’s not projected 100 years in the future. We don’t claim to have the silver bullet (NO ONE DOES) but we have a good hypothesis.
A decentralized community economy where the data ownership lies with the individual lets her optimize for her wellbeing by being part of multiple communities.
Why should you invest your time and read our thoughts?
When there’s so much happening every minute on the internet
Primary Research — Since May 2020 we ( Joel John ) had the opportunity to work on “Data Ownership & Well being of a Gig Worker” research funded by Bharat Inclusion Initiative and in the tenure, we interviewed 4060 digital platform gig workers across 5 skill levels and from 8 cities in India. - research logs
Secondary Research — This thought catalog of 20 chapter series is curated secondary research of scraping through whitepapers (Bitcoin, Ethereum …) & books - our reading list
Execution Data — It’s relatively easy to have a hypothesis and research but it’s exponentially harder to put them to action. Since the first lockdown, we’re building a few communities to test our larger hypothesis - communities
So here’s a bunch of nobodies who believe that not only a better economy can be built but also dedicated their lives to seeing it through. Hope that gives you enough reason to read through the article series.
A few thumb rules before we start.
1. Think in Systems -
We have often made the mistake of boxed thinking. Go down this rabbit hole: https://youtube.com/watch?v=NNnIGh9g6fA…. This is contrary to how we actually live and interact with the world. Isolated decisions can have unanticipated side effects. Effective decision making and learning in a world of growing dynamic complexity requires us to become systems thinkers — to expand the boundaries of our mental models and develop tools to understand how the structure of complex systems creates their behavior. The challenge we face is moving from generalizations about accelerated learning and systems thinking to tools and processes that help us understand complexity, design better-operating policies, and guide change in systems ranging from the smallest business to humanity as a whole. However, learning about complex systems when you also live in them is difficult.
We are all passengers on an aircraft we must not only fly but redesign in flight.
System dynamics is a method to enhance learning in complex systems. Because we are concerned with the behavior of complex systems, system dynamics is grounded in the theory of nonlinear dynamics and feedback control developed in mathematics, physics, and engineering. Because we apply these tools to the behavior of human and physical and technical systems, system dynamics draws on cognitive and social psychology, economics, and other social sciences. So as you read through the next few days remind yourself to think in systems.
2. Seek the truth.
We will look at the economic and societal systems such as the global economy, the institutions that govern them, and the stories we tell. All these pieces can be tuned and adjusted and if need, rebuilt. How do you then seek the truth among the recommendations? One way to go about this is to seek an unbroken chain of logic or first principle-based reasoning and build up with systems thinking with feedback loops.
3.Tend towards the balance.
Extremes are usually bad. A woke leftist is as dangerous as a conservative rightist. From macro-level physics to micro-level neuroscience. But what does balance mean in our context? When we look at the extrremems of economic constructs such as crony capitalism (state and market colluding to make the rich even richer) or communism (shared ownership of production factors), the solution lies somewhere in the middle.
Economist Raghuram Rajan calls this “midway” the #community and the extremes being state and markets. Daron Acemoglu and James A. Robinson call it the Narrow Corridor. Political scientists call this Centrism.
So as you read through the next 20 days, keep in mind to think in systems, seek the truth, and root for balance!
In this context setting chapter, we’ve defined our goal — the economic utopia/wellbeing of an individual, the series of chapters we will be going through to think through ideal better economic system, the reasons for you to invest your time in these thought series, and a few thumbrules to keep in mind as we progress through this maze of “building a better economy” #TheInternetOfValue
In the next chapter, we shall explore the current state of the world a little deeper through social, economic, technological & political lenses.
Moses Sam Paul