Boundless Frontiers of Untold Wealth
ARTICLE | November 4, 2011
Society constitutes an invisible web of relationships between its members. It has a defined structure of authority, status, rights, knowledge, beliefs, values, laws, specialized institutions, functional systems and formal activities radiating down and out from centers of power to the periphery. Beyond the perceptible limits lies an amorphous unknown territory akin to the undiscovered New World which Columbus encountered on his first voyage in search of untold wealth through an unchartered passage to India. The organized part of society is always complemented by an unorganized vastness which is largely unperceived but seething with potential. The organized portion is creative of structured social forces, wealth, power and knowledge, symbols and symbolic power. Beyond that lies an unorganized expanse from which unrealized potential continuously emerges. The perception of limits is always confined to the organized society, a boundless finite encompassed and embraced by a boundless infinity of unimagined opportunity.
Before the advent of agriculture, food gathering was thought to be entirely dependent on the natural productivity of nature, and wandering tribes had to migrate periodically to wherever food was most abundant. Society was organized for food gathering and hunting to draw upon Nature’s limited reserves. The life of hunter-gatherer communities possessed an organized structure, hierarchy, division of labor, distribution of authority, knowledge - symbols of status and wealth. These structures enabled them to survive under the stressful and unpredictable conditions of physical nature. Little did they imagine the untapped potential which their descendants would unearth by systematically imitating nature’s method. The organization of agriculture gave humanity the power to produce food in excess and the attendant leisure for thought and recreation. Constant migration was replaced by settled communities of cultivators. Surplus production gave rise to market towns and eventually to cities where education, entertainment, arts and culture flourished.
The untapped potential of unorganized social forces is always vastly greater than the present organized social reality, for it grows unperceived with each advance in the organized portion. The invention of barter trade provided an incentive for every producer to maximize production, but the subsequent invention of markets, money, credit, banking, Hindu numerals, double-entry bookkeeping, bills of exchange, stock and commodity exchanges multiplied the potential for trade exponentially by a function resembling Moore’s Law. Society’s view of possibilities is always confined to the existing structure. The rest is left to the imagination of the visionary.
In Adam Smith’s day the prosperity of nations depended on the number and skill of their productive manual workers. James Watt’s much improved steam engine, patented in the same year Smith published Wealth of Nations, had not yet announced the onset of the Industrial Revolution. A century later Edison and Tesla inaugurated the Age of Electricity. The discovery of the integrated circuit in 1959 ushered in the Electronic Age we live in today. In recent years Moore’s Law of doubling has doubled. Beyond still lies the unlimited potential for harnessing this ever expanding computational capacity by more subtle and powerful software. Each stage in this progression represents a radical transformation of our conception of realizable potential and our capacity for practical accomplishment.
The visionary is almost always a rebel, an outcast, a member of the unorganized fringe, rejected or ignored by mainstream society. At a time when America was regarded as an uncivilized refuge for the unwanted and unfit, Smith predicted that within a century these impoverished immigrants operating in an atmosphere of unmitigated freedom would create the most prosperous nation in the world. It was not the behemoths of corporate America that discovered and tapped the potential of the personal computer, but college drop-outs like Steve Jobs and Bill Gates tinkering with electronics in the garage.
About thirty years ago a profound original thinker in economics recognized this truth about society. He perceived the potential of the unchartered territory beyond the monetarized economy and the continuous interchange it conducted with the unmonetarized aspects of our lives. Long before its commercial potential was evident, his thought revealed how a free natural resource like drinking water could grow into a global market valued in excess of $60 billion and the global market for education could exceed $2 trillion.[*],1,2
With even greater insight, he perceived the incalculable latent potential of uncertainty. Inspired by the discoveries of quantum theory and long experience in the insurance industry, he realized that uncertainty was the fundamental principle of the modern service economy. Discarding the premise of fixed laws and equilibrium equations which economics had borrowed from Newtonian physics and clung to long after physicists had moved on to a relativistic, quantum view of reality, he saw that uncertainty is the basic condition in which economic value is created. Rather than regarding it as a measure of temporary ignorance which could be overcome by greater knowledge, he perceived that uncertainty is an inherent property of life and the potential source of unlimited wealth. His vision compelled him to challenge the very conception of limits, for he saw that the structures on which our modern economy is based – education, technology, organization, ideas, values – admit of infinite extension in realms that lie beyond our perception in the unchartered waters of the future. Uncertainty has no limits. The more we learn, the more there is to learn. The more we organize, the more there is to organize. The more we realize, the more there is to realize. The only limit is the belief in limits.
The force of his argument, as well as the power of this phenomenon, has become far more evident and perceptible since the advent of computers and the Internet, but the principle has always been true. The development of education is illustrative. Education evolved as a system of personal instruction in ancient India and Greece, which was constrained by limits to the knowledge that society could pass down orally or in handwritten manuscripts from one generation to the next. The advent of the printing press, scientific societies and government-sponsored public education in recent centuries extended the scope for education from the privileged few to the entire society. The USA, which awarded just one PhD in 1870, now confers about 50,000 annually. Since then the scarcest and costliest of all commodities – knowledge – became the most abundant, and even free. The spread of education in turn has created the foundation for unimagined developments in science, law, administration, invention, business, banking, transport, communication, energy, sports, entertainment, community, family, collective welfare and individual well-being. All these potentials for civilized living have emerged from an unperceived creative caldron of human social potential that lies beyond the structured bounds of society.
The frontiers of global education are rolling back rapidly to reveal vast opportunities that have yet to be organized. In five short years a single individual, Salman Khan, has demonstrated how much further the limits may be extended in future by creating 2400 educational videos and delivering 75 million free lessons over the internet. According to UNESCO estimates, global enrollment in universities rose from 500,000 in 1900 to around 100 million in 2000. Raising global participation rates in higher education to the level prevalent in the U.S. would require the establishment of hundreds of thousands of new colleges and universities and the training of millions of qualified instructors. For India to raise participation rates to the current U.S. level through traditional means, the number of college students would have to rise from 14 million to 81 million, which would require creation of a few thousand new universities and about 100,000 new colleges. Obviously the solution does not lie in the traditional structure of brick and mortar universities, but in the unexplored hinterland of the global virtual classroom. 3
The visible limits are giving way in many other fields as well. An upstart start-up appropriately named Amazon is transforming the book business from a local into a global virtual marketplace, converting the book itself from a physical object produced by costly labor and precious raw materials into a virtual object that can be reproduced and distributed infinitely at no marginal cost, and breaking the cartel on book publishing to enable individual authors anywhere to publish and distribute their own works everywhere at negligible cost. Similarly, e-Bay has transformed the marketplace, creating a new market structure which enables any individual to become a global retailer, and Wikipedia has devised a means to gather, organize and distribute the collective knowledge of all humanity. These along with Google, Apple and many others are only the most recent and dramatic instances of an age-old process of materializing opportunity out of unstructured uncertainty. Technology may provide the foundation, but it is innovations in social organization that are creating new structures to reach out into previously unchartered territories of creative potential.
What is now happening in education occurred with regard to money long ago and the process is still unfolding. Early forms of money were rare or valuable objects, including a variety of commodities and precious metals. About a thousand years ago money evolved from an object to a form of credit based on trust, a promise to pay later for a present exchange based on trust. Centuries later banks began to issue their own deposit receipts which became a convenient form of money based on confidence in the financial soundness of the institution. Governments also learned that they could create different forms of money based on trust in their ability to generate revenues and repay obligations at a future date. Eventually confidence in government-backed financial instruments became so strong that government issued currency and bonds backed by faith in the government and the nation it represented became the principal form of money. The spread of unsecured credit card loans is a form of money backed by confidence in the individual card holder’s ability and willingness to repay sometime in future. And the process goes on as new forms of money are created, thereby giving present monetary value to intangible assets and future capabilities.
While the emerging nations are teething with energy and boundless opportunities in their quest to emulate more economically advanced countries, the most prosperous nations look into a future that appears bound by severe constraints – demographic, economic, ecological, financial, and political. In truth, the only constraints are perceptual. The only limits are limits to our vision and values. The future of humanity lies beyond those limits.
The creative potential of uncertainty and the unmonetarized economy are most dramatically illustrated by the emergence of the modern service sector, which now accounts for 64% of global output and 70% of employment in OECD countries. At the time Adam Smith wrote his treatise on wealth, most service activities were so economically insignificant that he did not even consider them as part of economics. In the USA, education and healthcare now account for 13% of GDP, business services 14%, financial services 9%, information, arts & entertainment 8%.4 Nobel laureate Sir Arthur Lewis viewed industrialization as an emergent property of agricultural surpluses in 19th century England. Similarly, the modern service economy is an emergent property of manufacturing. Industrialization and rising levels of income inevitably give rise to new needs and new opportunities. What next? Physical needs and resources may be limited, but the potential for services is not. The field of services is not land or factory. It is human relationships. Human needs and resources are social and psychological and not subject to any inherent limits.
Once again we approach the boundaries of the finite and struggle to see or imagine what lies over the edge. As European sailors seeking a route to India once feared to venture beyond Cape Bojador midway down the Western coast of Africa for fear of falling off the end of the earth, now too our incapacity to see beyond the present lends the impression that we are at the edge of the earth with no further room to advance. This territory beyond the veil is explored from an original perspective in Orio Giarini’s article “ Evolution of Wealth and Human Security”.
- Peter Gleick, Bottled and Sold: The Story Behind Our Obsession with Bottled Water (Island Press, DC: Shearwater, 2011).
- “The Global Education Marketplace,” Career College Association http://www.erzwiss.uni-hamburg.de/Personal/Lohmann/Lehre/som3/eduGlobalM...
- Ivo Šlaus and Garry Jacobs, “Human Capital and Sustainability,” Sustainability 3, no. 1(2011), 97-154 http://www.mdpi.com/2071-1050/3/1/97/pdf
- “Gross Domestic Product by industry data,” Bureau of Economic Analysis http://www.bea.gov/industry/gdpbyind_data.htm