💡 Dematerialisation [corrected]
[Sorry - due to a configuration problem an earlier version of this went out which was partially garbled for some recipients. Have had to resend. My apologies.]
Here is another bonus essay!
My book is out, as many of you know. It provides a framework to think through the Exponential Age. It is quite distinct from the newsletter, full of new insights embedded in a accessible framing. Readers of the wondermissive will find it comforting, yet also novel.
Rodolfo Rosini was one of the first 50 people to sign-up to the newsletter six years ago. Of my book, he writes:
In the course of writing the book, much was left on the wayside. I previously introduced you to French aristocrat, Gaspard De Prony. Today I want to share the ideas of demateriality which also ended on the cutting room floor. Some of the concepts and a more salient argument about the shape of our economy remains in the published book.
The extract begins with my drawing attention to an idea popularised in the early 1990s by Nicholas Negroponte, the founder of the MIT Media Lab. Read on.
From atoms to bits
Negroponte, ahead of his time, described the distinction between “atoms”, the physical. One the one hand, we have atoms, the stuff matter is made from, the tangible, things you can pick up and things you can stub your toe on. And then there were bits, the stuff of computation, massless, instantenous, moving at the speed of light.[1] George Gilder, another futurist, wrote that “the central event of the twentieth century is the overthrow of matter. In technology, economics, and the politics of nations, wealth in the form of physical resources is steadily declining in value and significance. The powers of mind are everywhere ascendant over the brute force of things.”
Our economies are today dematerializing. Economies that take advantage of exponential technologies are reducing their use of raw material, like metals, hydrocarbons, wood, and other types of resources. Dematerialization means a less resource intensive economy, not necessarily a poorer one. Our economies are getting richer despite using less physical material. Aluminium drinks cans, for example, declined in weight six-fold between 1996 and 2011.[2] A modern mobile phone is smaller lighter and more powerful than a vintage 1980s handset.
Take one simple fact. In 20 years since 1999, British GDP has increased 75% yet the amount of electricity the economy uses has declined 15%. We literally create twice as much wealth for every bit of electrical energy we use. But there is more, we generate our electricity using fewer raw materials. In that same period, coal has dropped from about a third of our electrical generation to less than 1%. We’re burning less of coal every year. That coal has been replaced by the exponential technologies of solar and wind-power, weightless and free of carbon dioxide pollution. Between 1985 and 2016, the British economy grew by 71% whiles its carbon dioxide emissions declined by 34%, a two-and-a-half-fold improve in the carbon intensity of the economy.[3]
Exponential technologies are a key enabler of dematerialisation. The breakthroughs in solar and wind power ridding us of the shackles of barrels of oil and tons of coal. The improvements in synthetic biology allowing us to “grow” products we need using microorganisms, rather than high-temperature industrial processes. The use of digital blueprints and computer-controlled additive manufacturing to precisely engineer components, without the waste of grinding, chisselling and planing.
One of the consequences of demateralisation is that things that “retain their economic values independent of the physical medium containing them”[4]. The value of a product is not in its tangible heft, rather it is in the intangibles, the know-how that went into it, its design, look-and-feel, engineering specification and brand. Economists call these weightless attributes intangible assets to distinguish them from the tangible physical assets. When McKinsey & Co evaluated 6,000 global companies, they found the top 10%, the superstars, were masters of the intangible, from R&D to brand stewardship; from digital adoption to skills.[5]
Winds of change
There are a number of different drivers behind this dematerialization. Natural resources cost money and they are prone to the whims dodgy polities and fickle commodity markets. As we force march into the environmental crisis, for firms to reduce their footprint makes abundant sense. If they aren’t being taxed for their environmental degradation today, they soon will be. Tesla, the electric car company managed to reduce the amount of cobalt, a particularly dirty and distressing mineral to acquire, in its batteries by about 60% between 2012 and 2018.[6]
Another is the power of simulation. The power of simulation. Rather than building a new car, we build a digitial model of a new car run computational simulations of the new car. Doing this in silico is cheaper and less energy-intensive than building prototypes.
When a leading racing yacht team was looking to defend its America’s Cup title, it turned to artificial intelligence to help simulate hydrofoils to find the design that provided the best racing characteristics. These virtual hydrofoils let the team test ten times more designs than they otherwise might have. The virtual hydrofoils existed only in the simulation environment of the servers. Only final design candidates needed to be produced.
British Scientist James Field has built a business called LabGenius. He effectively find new molecules in silico without the costly process of building every candidate in real life. In fact, scientists of all types now lean on computational methods to help guide their decisions, so less effort is spent wandering down the wrong pathway.
In the discovery domain we see an exciting range of applications. James Field runs LabGenius. EVA James’s technology helps identify novel proteins. The AI technology is capable of mapping hundreds of trillions of proteins, predicting their likely behaviors and the viability of the routes to create them. The heart of the technology is an “empirical compute engine” which can “recursively and intelligently search a solution space” It then recommends the best performing, easiest to manufacture candidates. And we need many, many candidates for real-world testing. A world-class research chemist can design a dozen proteins per year for testing. James’s AI systems can find a few trillion per day.
This means that James can bring candidate molecules to market hundreds if not thousands of times faster than traditional methods. So much faster that, in some sense, LabGenius achieves what can’t be achieved by humans, however smart.
Chris Gibson’s Recursion Pharma is also using machine learning to advance drug discovery. The traditional way of discovering drugs it slow: researchers focus on one drug, one hypothesis and one decade at a time. For many complex diseases, this approach cannot work if we’re looking to solve them within this century. What AI enables researchers to do nowadays is to expand to looking at many experiments, vast data sources, many diseases and treatments at one time in order to encompass the complexity of biology. Using it AI based systems, Recursion searches potential compounds against a genmic model to figure out if there is any useful effect. The search is complex, at more than 1.4m experiments a week, it would take Gibson’s team anout 4,000 ears. With the AI system, it takes 10 weeks. The software itself saves Recursion doing some 300 billion experiments.
And by combining robots with a close understanding of a plants genetics, the high-intensity urban farms run by 80 Acres, where I am an investor, can produce vegetables using eighty times less water than the best greenhouse farmer. Such resource maximizing techniques will have a meaningful effect on world trade and the international order as I explore in chapter six of Exponential.
IT systems, and in particular optimisation tools, have helped companies get better and using what they already have. Firms can sweat their assets better than before. One example: airlines reduced the number of empty seats they flew with by more than half between 1971 and 2018 by better managing their ticket sales.[7] (Of course, the Covid crisis turned the clock back somewhat.)
We have a modern-day Philosopher’s Stone that does better than turning lead into gold, it produces something from nothing. The magic of dematerialization occurs when computation and information overlap to produce some kind of appropriate knowhow. That knowhow more precisely tells us when to water the plants and which phytonutrients they need or when they need a shot of cold for some health stress. Or it tells us what shape of hydrofoil will best cut through the water.
The thing that we make because less valuable than the recipe, the blueprint for making it. And perhaps the most valuable becomes the method for making the recipes and the blueprints that we use to make the thing.
[extract ends]
No magic bullet
Dematerialisation is a powerful theme. It can help with our jounrey to making at least one aspect - the production side - of our economies more sustainable. But Jevon’s paradox rears its head. Our demand for cheaper products might yet grow faster than the resource efficiencies, in other words the total rate of depletion may yet increase.
The promise of dematerialisation might be seized on as some kind of ineluctable force. It might give s an excuse not to reduce resource usage exogenous to this trend. Or to pay less attention to zero-waste thinking or circularity and reuse. It might persuade us that we can behave like the hare, not the tortoise in this race.
That is something to guard against.
Ciao
I hope you enjoyed this little Saturday special. Sometimes what is left on the cutting room floor can still provide some intellectual pleasure.
Azeem
[1] Nicholas Negroponte, Being Digital, 1st ed (New York: Knopf, 1995).
[2] ‘Capitalism Will Save the World’, National Review, 2019 <https://www.nationalreview.com/2019/10/capitalism-will-save-the-world/> [accessed 19 December 2020].
[3] Amina Syed, ‘The Decoupling of Economic Growth from Carbon Emissions: UK Evidence’ <https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/compendium/economicreview/october2019/thedecouplingofeconomicgrowthfromcarbonemissionsukevidence#:~:text=Download%20this%20chart&text=Real%20GDP%20per%20head%20grew,34.2%25%20during%20the%20same%20period.&text=The%20rate%20of%20decline%20in,as%20shown%20in%20Figure%204.>.
[4] Danny Quah, ‘The Invisible Hand and the Weightless Economy’, Centre for Economic Performance Occasional Paper No. 12, 1996 <https://www.researchgate.net/publication/30522422_The_invisible_hand_and_the_weightless_economy> [accessed 25 August 2020].
[5] ‘“Superstars”: The Dynamics of Firms, Sectors, and Cities Leading the Global Economy’ <https://www.mckinsey.com/featured-insights/innovation-and-growth/superstars-the-dynamics-of-firms-sectors-and-cities-leading-the-global-economy> [accessed 19 December 2020].
[6] ‘Tesla Targets Cobalt-Free Batteries in All Models’, BloombergNEF, 2020 <https://about.bnef.com/blog/tesla-targets-cobalt-free-batteries-in-all-models/> [accessed 13 October 2020].
[7] Andrew McAfee, More from Less: How We Finally Stopped Using up the World - and What Happens Next, 2019.