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Recipes and Arrangements

September 9, 2011

There are two categories of things required for economic production:

1. Natural Resources
2. Human Effort

Both categories are broad and varied, but highlighting them simplifies thought on a few key issues. Capital is not a substitute for human effort, it is a type of effort. Instead of producing goods directly at high effort per good produced, people can first produce capital and then use the capital to reduce the per-unit cost of production. Thus, capital’s share of production is the amount of return necessary to compensate the factors of production used to produce it.

Malthus’s big insight was that biological growth is exponential and natural resources are fixed. Therefore, if people continue to expand at unrestricted rates, they will eventually outstrip their food supply. The basic intuition is correct, although agricultural technology has grown very quickly and people have slowed their breeding, which has eliminated the immediate danger of a Malthusian trap.

There is a factor of production that is very peculiar, which requires only human effort to create, but once created acts as a sort of capital: the recipe. Recipes are the accumulated knowledge of arrangements of scarce resources which are effective at satisfying people’s goals. Some examples could be a blueprint of a house, a design for an engine, or the script to a play. Once discovered, they can improve all further production efforts, or satisfy needs that were unachievable before. In the past, most human effort went into following recipes already known. Hunter/gatherers spent very little effort improving the methods they used to hunt and gather. Farmers farmed the way their parents had and their parents before them. At the edge of the Malthusian trap, there is little room to try risky new recipes. Throughout history, more and more effort has been spent coming up with new recipes, and less has been spent on following them.

Soon, perhaps, robots, 3D printers and universal assemblers will be able to produce any arrangement of atoms we can design, so long as they have enough raw materials to work with. We are already there in terms of digitalizable goods. I think the economy of the future will be all about coming up with new recipes, and not very much effort will go into executing them.

5 Comments leave one →
  1. September 10, 2011 7:47 pm

    What happens to people who can’t create recipes? Before they had manual labor. What if there’s no manual labor for them to do?

    What happens when we can mechanize the creation of new recipes, too?

    Have you read “Diamond Age” by Neal Stephenson?

    • September 11, 2011 2:42 pm

      I’m going to lead up to that in my next couple articles. I think you’ll see where I’m going after the next post.

      I have not read Diamond Age, but many people have recommended it to me, so I suppose I should get a copy.

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