Tag Archives: technology

How to invent ideas

Posted on by

I found Zorina Khan’s Inventing Ideas: Patents, Prizes and the Knowledge Economy very interesting. It uses an impressive assembly of empirical evidence about inventors, patents, the administrators and recipients of innovation prizes and awards, and industrial exhibitions – largely in the US, UK and France – to support a specific analysis of what enabled the US to become the most innovative and richest industrial nation from the late 19th century on. As she points out, much of the literature asks why Britain was the first country to experience an industrial revolution, so the question itself is distinctive.

Her argument is that compared with Europe, there were “dramatic differences in the new approach to growth that were manifested in early US policies.” The key difference – supported by the mass of evidence – is a far greater emphasis in the US on patents (as a market-oriented innovation system) rather than prizes and awards (an administered system). A second and consequential difference is the preponderance of incremental and commercially successful innovations in the US. “Elites have always mistrusted markets: wealth and influence often lead to the convistion that the insights of the favored fiew can outperform spontaneous co-ordination,” Khan observes. The US was strongly anti-elitist (at least in that era), whereas “the most significant variable affecting whether or not a British inventor received a prize was elite education at Oxford or Cambridge,” neither university at the time focused on technical or scientific excellence.

Along the way to supporting its argument that the marketplace of ideas beats elite technocracy, the book demolishes quite persuasively the recent trend toward innovation prizes as an effective incentive mechanism. Less persuasive is the argument that patent trolling is no greater a problem than it ever was (although there clearly was a lot of litigation over patents in the 19th century).

It also makes the point that European and American patent systems operated differently. The specific institutional details mattered. So the conclusion one could draw is that the underlying elitism of European societies and egalitarianism of the US does more to account for latter’s emergence as technological leader. In which case, the longer term outlook for the US staying at the frontier may be less rosy. In any case, much food for thought in the book, and fascinating empirical and historical detail.

41oRCed1IrL._SX329_BO1,204,203,200_

 

Taking ideas seriously

Posted on by

In preparation for delivering the 2021 John Urry lecture at Lancaster University on Thursday, I’ve been re-reading the book that introduced me to his work, Economies of Signs and Space, co-authored with Scott Lash. It was published in 1994, but being an economist, and therefore more ignorant of the other social sciences than I ought to be, I had only just found it when I wrote my 1997 The Weightless World. The commonalities in our ideas were striking – more so to me now than I recall them being 25 years ago, although I cite the book.

These included the intuition about the increasing salience of time and space – both books have a ‘cities’ chapter – fragmenting production systems, the importance of the cultural industries, the deficit of institutions lagging behind economic and cultural change. But above all the increasing share of value assigned to the intangible or weightless. They write: “What is increasingly produced are not material objects but signs,” and note the “increasing component of sign-value or image embedded in material objects.”

The lecture this week will pick up on these insights – I think I and they were pretty prescient – to talk about what it means to have an economy of ideas, but will also talk about the need to re-focus on the material foundation of this economy: giant warehouses and energy-guzzling AIs. Oh, and human brains.

512lA1P034L._SX331_BO1,204,203,200_

Our robot overlords?

Posted on by

I’ve chatted to Martin Ford about his new book Rule of the Robots for a Bristol Festival of Ideas event – the recording will be out on 6 October.

It’s a good read and quite a balanced perspective on both the benefits and costs of increasingly widespread use of AI, so a useful intro to the debates for anyone who wants an entry into the subject. There are lots of examples of applications with huge promise such as drug discovery. The book also looks at potential job losses from automation and issues such as data bias.

It doesn’t much address policy questions with the exception of arguing in favour of UBI. Regular readers of this blog will know I’m not a fan, as UBI seems like the ultimate Silicon Valley, individualist, solution to a Silicon Valley problem. I’d advocate policies to tilt the direction of automation, as there’s a pecuniary externality: individual firms don’t factor in the aggregate demand effects of their own cost-reduction investments. And also policies that address collective needs – public services, public transport, as well as a fair and sufficiently generous benefits system. No UBI in practice would ever be set high enough to address poverty and the lack of good jobs: if you want to pay everyone anything like average income, you’d have to collect taxes at a level more than average income.

But that debate is what the Bristol event is all about!

51V4pDtvYDL._SY291_BO1,204,203,200_QL40_ML2_

Actually existing AI

Posted on by

For the first time in a year I managed to get abroad for a few days – the Ambrosetti Forum at the Villa D’Este on Lake Como – and apart from the inherent joy of being somewhere beautiful and sunny and foreign, it gave me plenty of reading time. One of the books I polished off is Kate Crawford’s excellent Atlas of AI. It’s a forensic exploration of the unseen structures shaping the way AI is being developed and deployed in the world, and it is fair to say she is prfoundly sceptical about whether ‘actually existing AI’ is serving society broadly as opposed to making a small minority of (mainly) men rich and powerful. “To understand how AI is fundamentally political,” she writes in the introduction, we need to go beyond neural nets and statistical pattern recognition to instead ask what is being optimized, and for whom, and who gets to decide.”

The book starts with the material basis of the industry, in particular the extraction of rare earths and its voracious and growing consumption of energy. We all surely know about the energy appetite of crypto but one point I hadn’t really appreciated is this: “The amount of compute used to train a single AI model has increased by a factor of ten every year.” The next chapter goes on to discuss the extent to which AI depends on low-cost human labour. I think the way Amazon’s Mechanical Turk works is quite well known – a nice book about this was Ghost Work – but this chapter focuses on Amazon warehouses, image-labelling work (“the technical AI research community relies on cheap crowd-sourced labour for many tasks that can’t be done by machine”), and also – nice neologism – ‘fauxtomation’ when tasks are transferred from human workers to human customers: think ‘automated’ checkouts in shops. The chapter has a nice section discussing the role of time in business models: in an evolution of the industrial organisation of time, the continuing automation of economic activity is requiring humans to work ever-faster. The battle is for ‘time sovereignity’.

There is not surprisingly a chapter on data, underlining the point that it is profoundly relational, but also making the point that the reliance on ‘data’ downgrades other forms of knowledge, such as linguistic principles, and how little questioning there is of where it comes from and what it actually measures. I hadn’t realised that many computer science departments have not had ethical review processes on the basis that they do not have human subjects for their research. It’s also a bit of a shocker to realise that some widely used AI databases are palimpsests of older collections of data embedding unpalatable classifications and assumptions.

There’s a similarly shocking chapter on facial recognition – bad enough in the ungoverned way it’s being used but I hadn’t clocked the latest trend of using it to “identify” people’s moods. And the book winds up back at power. As Crawford writes, “We must focus less on ethics and more on power.” I couldn’t agree more. There are a gazillion ethics statements and loads of ethics research but it won’t change anything. I’d add incentives too, but given the concentration of all that compute, understanding the way AI and power structures interact will shape the kind of world we are in 10 years from now. Excellent book.

41UYHH+mC8L._SX336_BO1,204,203,200_

The business of digital disruption

Posted on by

It has taken me a shamefully long time to read Will Page’s excellent book Tarzan Economics. Will was Spotify’s economist and before his move into the music business had worked for the Scottish Government. So he has the distinct advantage of being able to wear two pairs of spectacles to look at digital disruption, the policy lens and the lens of the disruptor. The term ‘Tarzan Economics’ refers to the leap businesses need to make from one vine in the business jungle as it descends, to another vine, in order not to crash to the ground. The book combines economic analysis of digitalisation with business advice, and carries off the combination. It isn’t in quite the same league as Shapiro and Varian’s now old classic (1998) Information Rules, but on the other hand is far more up to date and gives us a front row seat for what has happened in the music business.

It was always astonishing to me (see Sex, Drugs and Economics) that the music business reacted to the Napster et al threat by deciding it would be a good idea to prosecute their biggest fans (rather than responding to the demand for unbundling). As Will writes, “If piracy of a particular artist was increasing, the lawyers would be getting worried about intellectual property being stolen, whereas the promotion departments would recognise they had a hit on their hands.” The book identifies the real threat to any content business being the limited amount of time and attention we all have. There are nice examples of more sensible ways of responding (other thany trying to put your customers in prison). One is the Atlanta Falcons having made their stadium a pleasant environment with good, reasonably priced food and no rip-offs. Elasticity of demand is such that revenues per attendee have risen substantially, attending the game winning out for enough people over watching on TV from the La-Z-Boy recliner at home.

The book is structured around (as the subtitle has it) ‘eight principles for pivoting through disruption’. These include for instance tactics for working the dynamics of the long tail and how to price discriminate: voluntary donations can raise more than conventional pricing, for instance, the famous Radiohead experiment in voluntary payment for their album (followed later by release of a special boxed set) being one of the examples here. I found the chapter on the use of data, including Spotify examples, fascinating. There’s a lovely anecdote about Will visiting Richard Thaler, who came up with the answer after the company’s data scientists had failed to discover – despite intense data mining – exactly why Discover Weekly was such a success; I won’t spoil the story.

Will is one of the band of enlightened economists who can think more broadly than many. He gives the specific example here of the limitations of the cost-benefit analysis – for example in deciding whether to invest in a museum; the inspiration and education it provides need to be in the mix along with the visitor numbers and entry fees. Not surprisingly given his Spotify role, he argues that the music industry held on to its damaging old vine for a decade too long but things are looking rosy now – I’m not sure all of the music industry buys into this cheerful, new vine outlook. Nevertheless, it was one of the earliest industries to face profound digital disruption and the lessons are well worth pondering. As Will says, the aim of the eight principles and the examples in the book is not to proclaim answers but to help readers ask the right questions about their situation and pick the most appropriate strategies and tactics.

Whether you are involved in a disrupted business or just interested in digital economics, Tarzan Economics is a terrific read, very nicely written, and with the economic analysis sweetened with plenty of examples. Will will be appearing at the Bristol Festival of Economics talking about it in November.

41cVKl1KQCL._SX323_BO1,204,203,200_