Transcript of Episode 54 – Robert Conan Ryan on Boom & Bust Cycles

The following is a rough transcript which has not been revised by The Jim Rutt Show or by Robert Conan Ryan. Please check with us before using any quotations from this transcript. Thank you.

Jim: Today’s guest is Robert Connan Ryan, a recent PhD graduate of business administration at the University of Pittsburgh. He was out looking for jobs and things were looking good until the COVID-19 came along, when almost all tenure track academic jobs were shut down. And he’s now looking for interesting gigs in the private sector. If you think he sounds like a guy that could do you some good, get in contact with him or get in contact with me. Welcome Robert. Good to have you on the show.

Robert: Well, thanks for having me, Jim.

Jim: Yeah, this should be fun. One of the things I had fairly often do is when I look through people’s resume and do my 10 hours of research for each episode is I find something from their past that may not fit directly on their professional track, but might tell me something interesting about them as a person. One of the things I pulled out of, I think it was your LinkedIn profile was way back yonder, you were a musical talent scout and music producer. Tell us a little bit about that.

Robert: Oh certainly. Early on, I was a performer in the music industry, so I started pretty young. In high school, I had some success with a band that it was enough success that we were able to tour around and open for folks in the Mid-Atlantic region, and so I got an early exposure to that. And then after that petered off, there’s only so many people in this world who can have a permanent job in the music industry on the performance side and so you kind of get to realize what your upper limit is. And I saw how incredibly difficult it would be to make it that direction and so I got interested in being behind the scenes. So I started consulting for some of those acts that I used to open for. And so we went from there, basically into starting from those to consulting for the record studios that I knew in the area.

Robert: And then I started consulting for private individual acts, I was telling them about business management, how to properly manage themselves. I was also starting to consult them on performance, so performance coaching to improve their stage presence, things of that nature. And one thing led to another and so I ended up consulting for a pretty wide range of acts across all genres. I got into the rave scene, the hip hop scene, industrial music, pretty much anything you can think of. And this was in the North-Eastern region from about 1997 to about five years ago. And so I got to see a lot of really interesting things and I got to see the good and the bad and the ugly of the music industry, let’s just put it that way.

Jim: Yeah. I’ve got a fair number of friends who somehow managed to make it as kind of barely holding on performers for like 40 and 50 year careers. And you get them started about the music industry, not a pretty place. Let’s get rolling here into the meat of our program, which are Robert’s professional work and professional views. And then later on, we’re going to talk a little bit about how it might be applied to radical social change movements and things of that sort. First thing that comes out of looking at your work and things you’ve written and things you’ve referred to is that you are a Neo-Schumpeterian. Is that fair enough?

Robert: Absolutely. I wear that badge with pride.

Jim: Yeah. And I followed some of the links you provided me and some links I found, particularly Carlota Perez seems to be a very articulate thinker and scholar in this field. For our audience who are smart, but not necessarily economists tell them what a Neo-Schumpeterian is.

Robert: Absolutely. So there’s a mainstream canon in economics. And in that mainstream cannon, the two most discussed sides of that canon are delineated by macroeconomics. And on the one side of that canon, you have the historical classical and neoclassical economists, right? And on the other side of that canon, you have the Keynesians, and the best way to talk about it is the people who believe in interfering with economic cycles and the people who don’t. And there used to be debate about whether there were such things as business cycles or economic cycles or recurring patterns in the economy that you could interfere with to improve things or not. But after let’s say roughly the 1980s, there became a synthesis in mainstream, right? And so the idea was that you had to, in some way, include the insights of both of these camps into the mainstream.

Robert: Now there’s a third camp, interestingly enough, the Schumpeterian camp. And the Schumpeterian camp dates back to Joseph Schumpeter, who in the 1920s through the 1950s, was one of the world’s premier economist, and he was at Harvard university. Many people looked at him as the greatest rival of John Maynard Keynes. And he had a different perspective. He came from a historical perspective of economics. He was trained in Austria and so he had some kinship with some of the Austrian heterodoxy in economics, but he wanted to create a new mainstream position. And so Schumpeter took a number of the insights of historical economists throughout the 1800s, including some of the less popular comments of the big names like Adam Smith, they said stuff that was deleted.

Robert: So basically what he did is he focused on the cyclical behavior of the economy and he was putting out his big treatise right around the same time that John Maynard Keynes was and Keynes kind of stole his thunder because at that time, governments were looking for theories about how to intervene in the economy and that’s exactly what he was speaking to. Now, what Schumpeter was trying to do instead, was to present an alternative mainstream perspective where he wanted to look at the economy from the business perspective outward. So while all the other economists were looking from the perspective of the policy wonks downward, if you’re a Keynesian, you’re thinking in terms of policy professionals who work for the government and they have their hand on certain levers like inflation and unemployment and so forth, and then they’re going to pull those levers, right? Well, in the Schumpeterian perspective, Joe was looking at the business outward and thinking about what are the levers that businesses pull that affect the economy, right?

Robert: And from that perspective, he decided that it was much more intelligent to describe the economy in terms of creative destruction, waves of change. Now what happened was that, it’s not like Schumpeter’s work disappeared, but it wasn’t taken up by the mainstream macro economic community because it didn’t give them nice little levers that they could easily control. So the way it kind of works in policy worlds is that theories are written to the policy person who has the power over that issue, right? And so they looked at his theory and they’re like, “Well, I’m not sure I know what to do with that.” But the business people immediately did. And so ever since then, Schumpeterian economics has been dominant in the business schools, but nowhere else. And so it’s been worked into all the mainstream business theories in terms of strategy, in terms of business economics and business theory.

Robert: And it’s all based on seeing the world as a symphony of cycles. Basically you have business cycles, you have 10 year cycles, two year cycles, 50 year cycles, various different lengths and intervals. And each one of those cycles is determined by real productive concerns. For example, when you have to build a new plant, you have to think 10 years in advance as to what that investment is going to do for you. You have to have a very longterm horizon perspective. And those sorts of economic decisions that businesses make are always going to be made in terms of, well, what’s everybody else doing? What am I doing? What is everybody else doing? Or are we all building plants at the same time? Or are we all being conservative about our investments at the same time?

Robert: And the argument is that when the herd makes plans that move in the same direction at the same time, you have cycles, A. And B, you have a fixed cost problem, where pretty much everything in business involves that fixed cost investment, then a variable cost investment. And the fixed cost investment is going to be causing you cycles because you have to basically plan for these big sunk costs, and then you have to plan the life cycle of that project, right? So pretty much everybody in business thinks in terms of project management and project life cycles and that’s why it all goes back to that Schumpeterian perspective.

Jim: That makes a lot of sense. I noticed that Carlota Perez then takes that to be a basis for looking at large scale, operates in the same general space as longterm macro economics. And in particular, she talks a lot about five main transitions since the industrial revolution and how we are probably at the cusp of the fifth one. Could you tell us a little bit about that?

Robert: Absolutely. So let me talk about Carlota Perez a little bit, because I think she’s amazing. So basically we had this state of affairs, right? When she came onto the scene in the 1980s, we had a state of affairs where there was people working in business were thinking outwardly from what their perspective. And then people working in macro economics were still thinking downward from their perspective. And what she did is, she was working with a guy named Chris Freeman at that time, and Chris Freeman at University of Sussex was one of these. I’m pretty sure he was there, was one of these interdisciplinary guys who was trying to break down the barriers between these different camps. And Perez came along and she very clearly had a vision of how industrial revolutions were the core of the Schumpeterian economic theory. What she did is she went back and she looked at this old work on long cycles.

Robert: Back in the late 1800s, there was a Russian named Kondratieff. And Kondratieff was studying long cycles in world history. And what he found is what he thought was roughly a 50, 55 year cycle in the global GDP. And so in the global world system, he saw this GDP cycle. And so he was doing work on this and he, he, he made the argument that every time there was an industrial revolution, there was sort of a boom-bust in terms of global output. And so at first the industrial revolution is going to start at a bust point because when you’re first producing innovations, they haven’t yet caught fire, they haven’t yet reached saturation. So you’re throwing all this money at radical new technologies, but during that period, you don’t have the financial re rewards for those investments yet, right?

Robert: So you start at a bust when there’s an industrial revolution, and then it very quickly upswings. And then over the next 25 or so years, you’re going to have a sustained boom. And then eventually you’re going to hit that saturation point where all of the investment opportunities for that industrial revolution have been tapped. And so you have diminishing returns and then you go into a downswing. And so he made this argument and Schumpeter was toying with that argument as well, but Carlotta Perez basically said, we need to go back to this because we have fresh evidence from the 1970s of a new industrial revolution that followed that pattern. There was a time period where, because of the World War I and World War II, that pattern had been disrupted. And so a lot of people thought, well that was pre-World War I, there was this world system pattern where there was this swing. After World War I that ended, we’re in a new era where no longer get to have these long cycles like Kondratieff predicted.

Robert: But Perez said, “I don’t think so. I think that we had a military disruption of that pattern and now we’re back on track.” And so she made the argument that we need to go back to looking at industrial revolutions as these periodic cycles. And the evidence was astoundingly good. Her and Chris Freeman actually, I would say, as a duo, re-opens the line of inquiry into the Kondratieff cycles. And they came up with a novel explanation for it, but they did a review of all of the research that had been done recently on historical economics, and they came out with a new model. And that new model was a multi-level multi-sector model, that would then be useful in forward-looking predictions of future industrial revolutions. And the model ended up fitting so well that even though this was considered a heterodox theory, in recent years, there’s been a huge boom in interest in this industrial revolution pattern.

Robert: And so now we have right now almost an academic gold rush of people who are suddenly noticing how strong that pattern is and how useful it is for making four looking predictions for this century. And so I’m very interested in participating in putting together a interdisciplinary set of work designed to forecast, at least the next 50 years with her theory is one of the base theories for that forecasting project. Yeah. What’s her theory on where we are today? Are we absolutely. So, so let me first mention she’s at London school of economics, which is the same place that David Graeber is. And there’s a number of really high profile heterodox folks at London school of economics. So that’s a top five economics institution. She’s also visiting a lot of other places. Oh, Tom Piketty is also visiting there. So these people know each other, you know what I mean?

Robert: So it’s not like she’s in some sort of weird periphery in the economics world. And she wrote a book in 2002 about financial cycles and about an upcoming economic crisis, right? So in 2002, she gave her explanation of the industrial revolutions. And then she talked about how there is basically a crash period. Basically you have an emergence in a growth period and then you have a crash and then you restore from that crash and you go into a golden age and the maturity period of that revolution. And so what she argued is that we were upcoming to a crash around 28, 2008, 2010. And she turned out to be correct. It’s kind of funny because several different people, all claim to have predicted the financial crisis using completely different theories, right. You know, you have the gold bugs thinking that they predicted it. You have certain canyons like Paul Krugman thinking that he predicted it. But the thing is they didn’t have deep explanations.

Jim: Well, some of them did, some did, for instance, one guy, I follow it very closely John Geanakoplos from Yale. He nailed it. He published a paper in 2006 analyzing the leverage cycle and he was showing, hey, we are heading into a very unusual time when everything is getting levered up, this cannot end well.

Robert: Yes. Okay. So that’s a good point. So that’s one of those cycles, right? So glad that you brought that up because this system of, of, of worldview involves incorporating all of the best knowledge of cycles that we have. And that is one of those cycles that’s in real business cycle models is leveraged cycles because the argument there is that basically there’s, there’s a momentum pattern or basically financial cycles swing more aggressively than business cycles do. And so you always know that if you’re having a business cycle swing, you’re going to be having a more exaggerated financial cycle swing. And therefore you can predict, like you said, looking at leverage where you are in that cycle. So it’s interesting that a lot of these things stack together. So her model basically said, look, we’re going to be facing this financial crisis and hear are all of the levels of concerns that we have.

Robert: But the more important thing that she was trying to stress is why do you even have a leverage cycle? Why would you even have these sort of monetary or economic cycles unless there was something real underlying it, that’s the argument. And she was able to give a pretty good explanation and her book got a lot of attention. And then the question then becomes, how did she do in predicting everything since that point? And the argument is it’s still working very well with their theory. So there’s a certain sense that the way that we’re going to move forward in Neo-Schumpeterian economics is to try to take the best knowledge of what all of these various independent economists are working on that has a cyclical format, and then trying to unify those cycles and to understand the relationship between them that makes sense.

Jim: Yep indeed. That’s a very good description. She also makes a point that in her view, we have the opportunity though, not the guarantee, of entering a new golden age. Could you tell us a little bit about that?

Robert: Absolutely. So each one of these industrial revolutions, as I said, has a similar structure to it. And if you’ve gotten five in a row with the same structure, more or less, I mean, the only exception was there was some variation around World War I, World War II, which was basically the fourth industrial revolution was disrupted a little bit. But other than that, barring a World War type of scenario. We’re looking at a very similar structure for the next 50 years. That doesn’t mean that the qualitative aspects of each industrial revolution are different. And so you have to update each one of these industrial revolutions with a new qualitative understanding of how the industries are going to unfold and so forth. But structurally, we, we can expect pretty much the same thing. And so going into the next 50 years, she’s looking at the very first thing that we’re going to experience is the digital golden age, okay?

Robert: So the digital revolution began in the 1970s, according to her model. And because of that, that basically, well, how should I say this? Just because there’s an industrial revolutionary 50 years, it doesn’t mean that the old one dies at exactly 50 years, right? So just because the industrial revolution started in the 1970s surrounding the digital technology doesn’t mean that digital technology abruptly dies 50 years later. What happens is that there’s an overhang. And so as the digital revolution goes into a maturity phase, which is exactly what we’re expecting right now. So the digital paradigm enters a maturity phase. Then there’s going to be an overlap between the upswing of the new industrial revolution and the sustaining of the current one. And during that overlap period, you’re going to see a golden of technology, where you get the benefits of both, you get the sustained economic productivity of the prior plus the promise of the new productivity, right?

Robert: And so under this prediction, we’ve already been there, right? That’s part of the long prolonged economic boom that we’ve had under the Trump administration. He can’t claim credit for that, right? It’s essentially been caused by the ordinary progress of technology, right? So the only thing he can do is not screw it up. That’s the president’s job is to not screw up or to not get in the way of the economy. And so we can debate how well he’s doing about that, that’s a separate story, but the argument is that over the next 10, 15 years, we should expect the digital technology to continue to drive us through a golden age. Then what will happen is at the end of that golden age stretch, we’re going to find ourselves into a new major crisis period. And so if the cycles stay as they have traditionally, we’ve got a good 15 years to go before we enter the next major crisis and that’s wonderful news.

Robert: Now, keep in mind that this model is not including chaotic events or where you are basically acts of God or viruses or things like that. So when you start looking at wars, when you start looking at viruses, and other sorts of things, these can interrupt the underlying business trajectories of the industrial revolution pattern. These are the kinds of things that haven’t yet been added into the model. And that doesn’t mean that we can’t. I know it sounds kind of funny, but we can do far better in adding a lot of these other things. We can add political events into the model. We can add environmental events into the model. And that doesn’t necessarily mean that you’re trying to predict exactly when these sorts of other events occur. What you can do as I’m sure you know, you can predict your risk level and you can also predict your response and you can also prepare for a response.

Robert: And so if you understand how the ordinary economy works, in terms of sort of like the symphony of cycles, then you can be prepared to understand how good or bad the timing is for those things, how devastating they will be. Also, whether or not they’re a good opportunity to restructure. So one of my claims right now is that if you look at the Schumpeterian cycle patterns, this is a very good, good time to exploit the COVID-19 event for a creative destruction event, to basically clear the path for some of these six generation technologies. Now this model may extend further back than the first industrial revolution, let me just put that caveat there. The point is most people don’t think there’s any value in trying to do that, so we haven’t put a lot of effort into that, but usually the model starts in the 1770s and the first industrial revolution where you have not only… people usually think about the 1770s in terms of political revolutions, the United States, France and so forth.

Robert: But it was also the revolution of steam power and textile mills and all the original factories that started the coal mining and everything that started… the march towards factories began in roughly the 1770s, give or take. And so the first industrial revolution was there. And then fast forward, 50 years, you go to the 1820s, second industrial revolution you have locomotives, railroad, you have the birth of the corporation as we understand it today, the limited liability approach and so forth, all went through the railroad boom in England. That’s sort of that whole period. You also had modern media and things like that. Like academic journals, most of the-

Robert: … media and things like that, like academic journals, most of them were born in that time period, things like that. So the first one was mechanical. The second one started going into chemical innovations, is some of the dominant of that period. A lot of that railroad stuff was driven by discovery of thermodynamics and chemical concepts. Third industrial revolution was the 1870s, and that was a very famous depression period where everyone said, “You have this economic depression, but you have just hundreds of inventions coming out,” and so everything from the typewriter, to steamships, and international trade and so forth.

Jim: The big one in that era was agricultural innovation, the tractor, and the reaper, and all that.

Robert: Oh, right, right. Yeah, absolutely, like cotton gins and all that good stuff. And so you have that suite in the 1870s, then in the 1920s, roughly, although it came a little early, you had a new boom around automobiles, the formal oil industry. That was the fourth industrial revolution, was roughly around World War I. So basically, then that got us into also radio technology, signal technology. Well, I like to call it the wave-based industrial revolution, where everything was driven by analog signals, really. And so then you had basically this mini-industrial revolution, that I like to add in here, that was somewhat caused by World War I and World War II. It’s a slight variation from the model. You see a double-dip, a mini-industrial revolution around the nuclear power phase. Right?

Robert: Basically, the reason why it’s a mini-revolution is because it was a huge deal, but we did not allow those sorts of discoveries to spread as far and wide. A lot of it was kept under wraps and under tight security. When we discovered nuclear power, it didn’t end up filtering throughout the entire economy the way that automobiles did. So it became sort of a mini-industrial revolution, off to the side, this nuclear revolution. And it was in many ways, stalled. We could have done a lot more with it than we have up to today. And you know, and I know that if we wanted to, we could have gone down the route of France, and we could have thrown nuclear power up like it was candy.

Jim: And we may well yet do that. I mean, there’s a significant argument. In fact, one, I wrote a little mini-article on the fact that if we really wanted to get serious about climate change, the best place to start would be to multiply our nuclear fleet by about five X. And then augment that with about an equal amount of wind and photovoltaic.

Robert: Especially small modular reactors and the next-gen breeders. Right?

Jim: Yeah. Frankly, if you use the Chinese or the French model where you used standard plants, knocked them up in three or four years, moved the regulatory bottlenecks out of the way, they actually work now.

Robert: Yeah.

Jim: Even with the current systems.

Robert: Absolutely. Absolutely. There’s a lot of things that would work better if we reorganized society, not even in a drastic way, but just in the ordinary way that we would in an industrial revolution cycle. There’s usually an infrastructure wave where we try to diffuse that technology to its fullest extent. Right? And it just so happens that the only major industrial revolution opportunity we had, where we intentionally pulled the plug on that innovation diffusion pattern, happened to be nuclear.

Jim: Actually, I would say it’s more complicated than that.

Robert: Oh, absolutely.

Jim: It was a complex systems interaction and that what ended up happening was that popular fear… What was that movie about the meltdown or something, right about the same time as Three Mile Island? People got all freaked out and then there regulatory overreaction, which made them too expensive. Right? The real reason that the diffusion stopped in the late seventies, early eighties was that it’s sort of multi cycles of mass media and just fear-mongering led to overregulation, which then led to costs and timelines, getting to the point where it no longer economically made any sense, and so people backed away.

Robert: And that proves that the cultural side of the equation is very important. Right?

Jim: Yeah. We’ll get to that, by the way. So we’ll come back to that specific point because that seems to be a clear point of the neo-Schumpeterian economics, that we have to include all the aspects, education, media, bureaucracy, et cetera, when we look at the old unfoldings of these cycles.

Robert: Yeah, as an integrated system. I’ll finish the explanation. So then the fifth paradigm came along in roughly the 1970s, and everybody knows about Moore’s Law. And everybody knows that we sort of declared ourselves in a new world when we had microprocessors and semiconductors. And so the thing is, when you go back and you look at this pattern across these different paradigms, there’s an initial thermodynamic change, basically some really real change in the physical economy, driven by a core technology or technologies, such as steam engines, such as nuclear powers, such as information technology, where there is a dramatic difference in terms of the cost of raw materials. And so you know that there’s a new paradigm when you have that kickoff of that beginning. And then there’s a cycle of other industrial behaviors that happen after that, in a sequence, in an order.

Robert: So once you get that kickoff of this new technology, like we did in the digital age, then you have a rush to discover the complex goods that you can use to deliver it. So you discover the microprocessor, and then there’s a rush to discover the personal computer, which is the good that carries that innovation forward. Then there’s an infrastructural development, the internet and so forth, and then there’s the service side development where people start hanging various different lifestyle changes and service changes and so forth onto that internet.

Robert: If you go back, we have a similar sequence through all these paradigms. And because that sequence is so powerful and so predictable, we can look forward into the next 50 years and say, “Well, we’re due for a paradigm change. We already have a pretty good idea of what those technologies are, and we’re starting to see the sequence unfold.” And so we can say that right now, we’re in the period where we’re hunting for that thermodynamic change. And the leading candidate for driving us over that hump, it’s actually a two hump, you’ve got quantum computing, and then you’ve got clean energy that can undercut natural gas as being the most cost-effective.

Robert: And so if we can get to that point where we have the energy, as well as the information innovations that drive us into a new level of productivity, then we will be in the sixth paradigm. And then we can start talking about the products and the infrastructures, and then eventually the services that are going to all hang off of that in a sequence.

Jim: Now, why would you point at quantum computing? I mean, it’s possible that it could open up a very vast domain, but so far it looks like its applications might be relatively limited to certain classes of arcane and difficult problems. Wouldn’t the possibility and… Actually, they’re very rapid in the current advancement up the early parts of the slope of artificial intelligence, be a potentially stronger argument for the basis of the sixth paradigm, at least on the IT side?

Robert: Well, that’s a very profound question because you would say, how much of artificial intelligence is simply an extension of the digital paradigm, right? Or how much of it is going to be firmly rooted in the new paradigm? And let me just briefly interject to label the paradigm. So the new paradigm that we’re speculating, it could be labeled multiple things. And there’s a debate about this. Carlotta Perez wants to call it the green paradigm, because she wants to focus all attention on green growth, and how the new energy is going to produce that. However, there’s a counter-argument to say it should be labeled the organic paradigm. And the reason why is because we’re reaching a state where we have the level of technology necessary to get into complex systems, in a much deeper way than we ever did before, very much how Kevin Kelly of Wired Magazine always used to kind of forecast this inevitable march towards these sort of more organic-like systems in society.

Robert: We were talking about these things for decades and that’s always the case. The question is when is it the new norm? And so the argument is that over the next 50 years, we’re looking at the organic perspective and the organic sectors, the technologies that work with organic type technologies, to overtake the digital in terms of being the new norm of our mind frame, the way we approach science, the way we approach technology broadly. And a lot of people during the digital paradigm were annoyed. Let’s say, people who worked in prior industries, like say you were a chemist or something, they were like, Well, I’m a chemist. Is that not technology? How come the word tech is synonymous with digital? That’s not fair. It’s not even true.” So I know people like that who are always kind of annoyed with that.

Robert: The counterargument is, “No, no, no. We’re in the digital paradigm, which means that the high-tech industries and the economy is being led by a lot of these technologies.” The others don’t disappear. It’s not that they just… Like chemistry just vanishes. It just says that during that time period, the center of the cognitive shape of science is around digital thinking. And what we’re looking at is a sea change right now, to shape cognitive perspectives around science from the organic perspective, more than the digital.

Jim: When you say you’re organic, does that mean living or the way you were using it sounded like it could be a synonym for complex systems thinking?

Robert: Well, let’s just say that in the same sense that evolutionary theory came out of a certain set of sciences, a lot of what we’re looking at over the next 50 years is informed by the kind of thinking that came out of organic technologies and organic perspectives. And a lot of the technology will directly be in those fields. It’ll be in medicine. It’ll be in biotech and things of that nature. So the center of attention is shifting. And if you were to go to MIT right now, or to Stanford University right now, people like Noam Chomsky are making the claim that you’re going to see more organic type technology startups right now than digital in those places. I heard him describing that recently.

Jim: Probably true at MIT. MIT has a tremendous set of spinoffs, especially bioengineering. That’s one of their very hottest areas of spinoff right now, which is kind of at the intersection of the two. And so if this paradigm shift is correct, you’d expect to see hybrids like bioengineering.

Robert: That’s right. And what happens is during the paradigm shift, there’s a process that I call… Well, I stole it from Ken Wilber, basically, the integral philosopher, transcend and include. So when you enter the organic paradigm, you don’t simply kick the ladder out from underneath you. You include those things that brought you there. So the very first thing that you’re going to see is digital and organic hybridization as the center of action. And an example of that is bioinformatics. And so you’ve got this huge bioinformatics focus. And what you were talking about in terms of artificial intelligence, this is where I wanted to come full circle. If your branch of artificial intelligence is based on the classic digital design principles, then you’re still in that paradigm.

Robert: If your artificial intelligence is using new design principles that are more characteristic of organic type thinking, then your AI is now in the new paradigm. And so let me give you an example. Classic digital paradigm design principles include such logics as modularity. For a long time, good digital design was modular. You would basically make something hierarchically decomposable. You would make it so that each one of these modules could be easily broken off separately, and then rolled back together.

Robert: Now, that’s one of those design principles that’s changing. And if you look at newer artificial intelligence, it has more of an organic perspective of interdependence, where you wouldn’t be able to so easily decompose these various pieces of the software, and then roll them back up together and so forth. The argument is that by admitting an inherent complexity into your software design, you’re going to lose the ability to control it like you used to. In the digital paradigm, it was much easier for the engineer to control the AI by making it modular.

Robert: And so if you look at some of the pioneers of artificial intelligence, like Herbert Simon, and Newell, and so forth, they express this all very clearly. Herbert Simon, one of the founders of artificial intelligence, described system decomposability as an inherently important design principle. And he said, you can have fully decomposable systems, which become modular. You can have partially decomposable systems, or nearly decomposable, which have a lot of interdependence. And then you can have non-decomposable systems, which are so radically interdependent that you can’t split them apart part at all. And what Simon said was that human systems were nearly decomposable, in other words, the ordinary business or the human organization. And that means that it had some decomposability, but it also had feedback loops and systems within it, which made it difficult to fully ever control.

Robert: There are certain aspects that can be controlled and certain that cannot. The argument was that those informal aspects of the organization should be allowed to evolve on their own, without full hierarchical decomposition by the designer of the organization. And the argument is that when you go into the organic paradigm, what you’re doing is you’re saying our technology is now going to be operating in that near decomposable framework. We’re going to create artificial intelligence that we can’t fully control. We can only partially control it, and we need to give it some of the freedom to informally do what it needs to do, and then have some faith that basically the results are clear and coherent and that we can use them, if that makes any sense.

Jim: Yeah. Absolutely. If you think about the machine learning neural net revolution, it has aspects of both. The neural nets themselves, are really pretty damn opaque to human understanding, though we’re getting a little better at it. On the other hand, we are building, how many layers should this have? What kinds of layers, et cetera? So there is still some modular thinking, but the actual details of the implementation are very much as if they were evolved. They’re not clean and level-separated, et cetera, so I think there is something to that. And there’s also branches of AI that are explicitly aimed at using the human mind as a model.

Robert: That’s right. Exactly. And so what we’re talking about is in the sixth paradigm, we’re talking about a shift to using organic systems as the model for high-tech. And so that means that we’re going to be modeling things after the human mind, which I called neuromorphism. Basically, a big part of the sixth paradigm that we’re entering is new neuromorphism. It’s one of those general design principles that everything works like a brain. If you want to create a smart infrastructure, like a railroad back in the second paradigm, because those were different design principles, you’re going to do it in the sixth paradigm, all of your infrastructures that you’re going to use to roll out your technologies, will themselves, be smart. And that means you’re going to have network infrastructures that are smart, to a certain extent, and we don’t fully control them and they work more in a brain-like or neuromorphic pattern.

Jim: Yeah. Makes perfect sense. And of course, a near neighbor of that, and again, we’re talking about an organic age and this is something that seems to fit that very well, is with our growing understanding of genetics and genetic-based development, and our ability to intervene with technologies like CRISPR. We have the ability to steer biological evolution in other species and even in ourselves, if we’re so inclined. Would that be part of this organic paradigm?

Robert: Absolutely. And what you just presented was a segue into the cultural dimension of industrial revolutions. Because if I were going to describe the paradigm in terms of cultural dimensions, I would call it the transhuman paradigm. Because although humanity has been on a march towards transhuman behaviors throughout our entire history, we’re getting to the point where it’s being moved to the forefront. And COVID-19 is one of those events that helps us to understand how much transhuman thinking is being moved into the normal consciousness. Where we’re starting to ask questions, like, do we really want to live in a world where the entire human race is dependent on a vaccine? So that’s the Bill Gates kind of perspective, where we may be looking at technologies that are universal. And what that means is that you don’t have people outside of the system and so everybody has to buy into the human-made technologies. And in fact, many of the people leading this are women and LGBTQ folks. It really is phenomenal how many people in that once oppressed community, are at the forefront of this.

Robert: But basically what they’re doing is they’re looking at breaking down all of the boundaries between humanity and technology, and also between humanity and nature are all changing. And what we’re looking at is a world where we’re going to ask ourselves, how much do we want to buy into this altered reality, and our own good or not? And the thing is that women bought in earlier than men did. If you look at the birth control pill, that was one of those things where it says, this is better living through technology, and it directly interacts with your very being. But it’s also something that you can willfully choose to participate in. Do you want to take hormonal therapies? I’m not saying that we didn’t already do that. We did, but what I’m talking about is it becoming the new normal throughout society, as to how far we go.

Jim: Interesting. And now this brings me to my next point. One of the things that was really an eyeopener for me in reading the neo-Schumpeterian material was how central the concept of lifestyle is to what brings on the next epoch and essentially gives it fuel.

Robert: Absolutely. Lifestyle is very much front and center in the Perezian view of the economy, and in mine as well.

Jim: Yeah. Let me give you the little quote here, because I could give you a good thing to rip off. “Lifestyles that shaped demand for new products and services and those products and services then become the major source of new jobs and wellbeing, essentially at the entry point into the golden age.” So go run with that, would you?

Robert: Absolutely. One of the ways I like to describe this is that there’s a two-sided process going on in industrial revolutions. You have the hard tech side of things, and the hard tech side of things is, if you were a Marxist, you would call that maybe the infrastructure or the base, depending on the classic Marxist theory, the hard tech side of things. It was based on cost and thermodynamics and physicists can even get into the game of describing how economically efficient the economy is, in terms of that.

Robert: But when you get onto the soft side of society, you realize that a very large percentage of the economy is socially constructed. And I’m not talking about a radical social construction where there is no truthiness or reality to it or something. I’m talking about a modest form of social construction, where we realize that it’s contention on people’s beliefs, so we all have to buy into something for it to be true. And the idea is that a very large percentage of the economy is on that side. Currently, we’re talking about at least 40% of the economy as being, what I would call, cultural goods.

Jim: And it’s actually maybe more than that, because as you know, we talked a little bit about game B from time to time here. One of my strong views of the game, A attractor is that an awful lot of what we can think of as our material economy is also basically culturally-driven, in that one of the binding energies of the current status quo, I would describe as status through materialism, which is kind of hypertrophicly gone nuts over the last 40 or 50 years. So the culturally determined part may be even bigger than 40%.

Robert: Right. Right. Basically, when I make that number, I’m parsing partial effects out. What I’m saying is that you have complex goods that have both the material component and a cultural component. And then you would say, “Well, how much of that economy could you parse out as being socially constructed with high confidence, versus how much of it could you reduce to some sort of efficiency equation? And so you’re right, there’s a range of debate about that. But for right now I’m making the argument that you can parse out about 40%, give or take and say, “We know that this amount of it is culturally conditions, in a very strong sense. And that means that most of the demand is based around how it updates people’s beliefs.

Robert: The experience economy, the attention economy, those things are very much in the cultural goods dimension because what they have to do with is, you have a fixed budget for how much you’re willing to spend on cultural goods. And then the attention economy divides that up into basically, what you’re willing to pay attention to and how important you think those things are to your life. Anyway, the argument here is that as time moves forward, the cultural component grows. So even though we’re having a growing…

Robert: Component grows. So even though we’re having a growing economy in terms of the material side, we’re consuming more natural resources and so forth. The thing is that we may be hitting a phase where we can stop growing on the materials side. We call it dematerialization, right? And so people like Carlota Perez are making the argument that we’ve kind of hit a materialization limit per person, per human, so your individual material footprint. So it’s not even just in terms of carbon, but your overall material consumption.

Robert: And the argument is that the cultural dimension is going to continue to grow, but over the next 50 years, a lot of the technical innovations that we’re going to be doing are going to be dematerializing on the other side. And that means we’re going to have an even bigger swing towards the cultural dimension than ever before. So we had a really big swing that direction in the 1970s with the virtualization through digital means and so forth. And the argument is that we’re going to have another swing that takes us even further down that route.

Jim: Oh, no doubt about it. When I hear people say that they’re anti-growth, I basically assume that they don’t understand this. Right? In fact, I call it growth into the microcosm. Just as an example, I have my iPhone in my hand. Costs about $1000 when it was new I believe, three or four years ago when I bought it. And you compare that to what else could you get for $1000? I ran the numbers on the current price of corn. You could buy 30 bushels of corn. A bushel is 50 some pounds, so 1500 pounds of corn. Right? Imagine that out your window. How much energy, fertilizer, land, et cetera, went into producing 1500 pounds of kernels of corn versus this little thing made out of glass and a little bit of copper, a little bit of silicon, right? And yet we value the two about the same. So there’s a fine example of dematerialization.

Jim: Or imagine, I don’t think this is on the horizon soon, but if we think about this organic AI meets gene twiddling, suppose you could get an injection, which would add 40 IQ points through twiddling the chemistry in your neurons or some damn thing. What would you pay for that? The answer’s a shitload and what would it actually consist of? You know, a couple of milliliters of liquid at most probably. So there’s a huge amount of value that’s been very substantially dematerialized.

Jim: I think when people say that they’re anti-growth, they have to really reframe that the language you used, which is you have to dematerialized growth. I would point out we had Joe Brewer on recently and he made the point that not only are we at the limits of the material intensity of our existence, but truthfully we’re probably well over it. And we might be over it by a factor of two or three.

Robert: Right.

Jim: And so if we’re going to survive on this planet, particularly we think we can survive with 10 billion people, 10 or 11, which is the current United Nations forecast for the end of this century, we may have to actually not just be static in the materialization of our existence, but we have to radically reduce the material footprint of our existence, perhaps by a factor of two as a start.

Robert: Yeah. And let me close a loop with one of the things that you just said, talking about relating the material world to the cultural world. So basically there’s a relationship there. You mentioned how much would people want a therapy that made them smarter, right? That is a transhuman innovation. Okay? So in the transhuman world, we usually talk about there being … So there’s trans therapies, right? There’s like, so you’ve got some sort of deficiency or problem, and you can go right now to a hospital and have an artificial limb made for you or something of that nature.

Robert: But then once you get past that level of social acceptance of technology, you ask, well, can we enhance ourselves? And then you go through that analysis and you say, well, we’re starting to have this big social push where people are saying, please give me the technical power to enhance myself. And that’s one of the key signs that you’re entering into a transhuman era is that you have things like transhumanist Olympics. That’s a real thing, by the way. There’s a couple of different organizations that have started transhuman Olympics. And what they’re trying to do is normalize the enhancement of the human to compete in Olympic tests that wouldn’t be possible prior to enhancements.

Jim: I love that. I used to have an idea called the unlimited class Olympics, where you could imagine the sprinters being hooked up to blood oxidization machines in the blocks, right? And you spent a bunch of money to make sure that as you took off, the thing smoothly slid out and your blood oxygen levels were pumped to ridiculously high levels. Let’s see how fast we can make humans actually go, God damn it. Right?

Robert: Exactly. And guess what? That is now socially acceptable, where that wasn’t in prior eras. A large part of that, if you look at the comic book sector … Oh man, this is such … I could do a whole podcast just on this one, Jim. But basically if you look at the rise of the mutants, that after we’ve thrown off our bourgeois culture and our bourgeois and so forth, right? From the Marx’s perspective, we went through that. Well, now what, okay?

Robert: So the next logical progression from Nietzsche and so forth was the Ubermensch, right? The superhuman, the transcendent that transcends the natural species. The argument there being that the natural species was not the best that we can be. The best that we can be is our own innovation being put back into ourselves to better ourselves. And in the digital paradigm, what you saw was this … Well, the normalization of that happened back in the third industrial revolution, but basically in the digital paradigm it was extended further with this whole cultural renaissance in the 1960s and ’70s. And there was this big fragmentation.

Robert: On the left, you had a bunch of people saying, well, what’s the new religion for us, basically? Or what’s the substitute for religion, right? And a lot of people got into the occult and they got into psychedelics, got into powers of the mind, and so forth. And that helped clear the path for the discussion of, well not only are we going to enhance our body physically like Superman or something, but we’re also going to work with magic powers and psychedelic powers. We’re going to try to explore can we recreate the powers of these mutants? Can we all become X men, you know?

Robert: And we have the first generation in world history where I would argue that a majority of youth are all saying, “Sign me up. I want magic powers.” And that’s exactly reflected in our mass media. Because if you look at the Hollywood films, seven out of 10 blockbusters in a given year now are superheroes. Seven out of 10. That means that we have a mass consensus that we all want our new gods to be us, and that we want god’s to be made in our own image. These are very ordinary type of people in their origins in many cases, except for they just happen to have super powers. And then they have to discover whether or not they’re a hero or a villain.

Robert: And oh, you have Harry Potter, right?, and that the magic hat. You place the magic hat on each person’s head, and then you decide are they Gryffindor, Hufflepuff or so forth. People want magic and they want to know which type of character they are. And then they’re going to pursue technologies which would enhance themselves towards that direction.

Robert: So the argument is in the enhancement world, you can’t be all different kinds of things at the same time. It’s sort of like taking all the different colors of the rainbow and then finger painting on a piece of paper. It comes out great. So what happens is that people have to shape their identities in the form of the archetypes that they most value, and they’re going to be pursuing those kinds of mutant powers.

Jim: Cool. Very cool. That’s a great transition point to my next topic, which is you wrote a paper where you briefly laid out a framework of meaning evangelizing, meaning applying, and then you spent most of the effort on meaning making. If we’re going to go into a world where we are headed towards transhumanism or make the principle decision not to, right?, presumably some of that is going to be based on what meanings we have adhered to us, right? What means, space, entities, you might call it equivalent of religion, or culture, or social norms. And a lot of that comes from meaning. So could you take us a little bit through your theories of meaning and particularly with your focus on meaning making, and maybe see if you can tie that back to this possible organic transhumanist epoch that we could be entering.

Robert: Absolutely. That was a great question. I love the way that flowed. So talking about meaning making. Just so that the general public knows this, there are a couple of major academic camps out there that are fighting for a social science of this that isn’t radically subjective. So most people think you only have two options, that basically either you’re an objectivist and everything is real and everything follows a strict ontology, a strict system of categories and taxonomies. Or you’re out here in la-la land where nobody understands each other and we’re all radically subjective. But what happens is that there’s this what we call weak social construction. And weak social construction is a system where you have to work within the rules of reality, but group consensus has a really big impact on culture and society, and there’s many stable equilibria that are possible.

Robert: So multiple stable realities. Not infinite stable realities. This is the important point. There are some. Right? So what people who work with in this weak social construction camp, is they look at theories of what is this small set of probable and possible social realities out of the infinite muck. And one of those theories is institutional theory. Institutional theory came out of Thorsten Veblen’s work and some of the other early sociologists over a hundred years ago. What they were talking about is that people basically form groups, and then when they’re in those groups, there’s a certain level of group reality. That it’s true in that place, in that set of relationships. But if you are external to those sets of relationships, that aspect of reality is irrelevant. So it’s a localized reality. And anyone who’s ever been in a company or an organization knows that there’s a local culture, right?

Jim: Of course.

Robert: It’s not that nutty. It’s not that hard to wrap your head around. But it’s also profound because very interesting things can happen in those spaces. And so the argument is this. The institutional theory says that there’s certain dominant institutional logics. That’s what they call it, institutional logics. And what happens is that when you’re in a certain period of human history, or if you’re in a certain social organization, these institutional logics will dominate. They are going to be the ways that people make sense of the world there. And that when the institutional logics change that the social order changes, and then people use that new logic as the new normal. Okay?

Robert: And one of those examples often given, is like during modernity, people believed basically that capitalism was a force for good predominantly. And so any logic related to capitalist thinking would be normalized. That’s just a vague example, but that’s one of the examples they like to focus on, is whether or not you have a sense of normal about those things. And those logics are going to change when you go into the sixth paradigm. Okay?

Robert: Now meaning-making concerns how those new meanings are made on the high level, so on the paradigmatic level. When you’re talking about people who are going to have a big impact on everybody else, those are meaning makers. They’re super actors. They are people who have more power than everybody else does in terms of shaping the beliefs of the social system. And the idea is that meaning-making is the study of the literal process by which the new meanings are made, which then become the new normal, and then those meanings structure sense-making for everybody else.

Robert: And so there’s a bit of an imprinting process. And that imprinting means that the individuals have some effect on history. The personality of Steve Jobs, for example, had some effect on the company, Apple. So there is an imprinting process when super actors in society advance new meanings.

Robert: What my work does is it talks about meanings as existing in a belief network. So the idea is, think about society as a cloud of beliefs, just like how people like to draw the internet as a cloud. Just say it’s a massive cloud of beliefs, and that the meaning makers are people who have social position in the network that they can then restructure not only the generally accepted logics, but also the network itself, and the structure of that network and how beliefs flow through it and so forth.

Robert: And in my paper, what I identified was six super actors that had the most important role in shaping culture during a paradigm. You have basically creators who create a lot of those ideas, but they’re usually not the same people who share them and normalize them. So you have creators.

Robert: Then you have curators. Curators are those people who curate and manage meanings. And that means that they manage audiences. So just like you have a podcast audience, you are a curator and you are managing the meaning-making process, and you are in some ways a super actor. So you’re bringing together various different creators, and they’re allowed to participate in meaning-making by working with you and with other curators, right? Now you’re also a creator to some extent as well. So it’s not that each individual is constrained to only one of these roles. There are some people who play multiple roles.

Robert: So anyway, you have the creator-curator relationship. So they need each other. Basically the curator has to attach those beliefs to specific audiences and make sense of them. Whereas the creators have to discover the new meanings, and then help to evangelize those things a little bit. So anyway, there’s a sequence, creators and curators are the meaning makers.

Robert: And then there’s a meaning evangelizing process. And during the meaning evangelizing process, these beliefs have to be scoped out wide to other groups, to other audiences and organizations. And then there’s also this scaling up of priorities. So you’ll have certain individuals who are evangelists, who will take a particular idea and prioritize it for their group or their affiliations and drive that up. So that’s the evangelizing process. I call them networkers and evangelists.

Robert: And then in the third part, I talk about signifiers and critics. And what a signifier is, is somebody who’s a doer. They put the beliefs into practice rather than debate them, drive them, share them. They’re the ones who are epitomizing that belief. And so what happens is that once that person does it, everybody else can model their behaviors directly and imitate them and say, okay, so that’s how we do it. An example of the signifier for the beatnik community was Neal Cassady, where basically you had beatniks who are writing about being beat, but then they needed main characters who exemplified it and put those beliefs in the practice. And so Neal Cassady was the guy who was their epitome of beat, you know? And so he was a signifier.

Robert: And then you have critics. And critics are those people who butter their bread on rejecting or critiquing attempts to put those beliefs into practice. They’re either going to criticize people on failing to live up to the theory, or doing it wrong. Or they’re going to criticize the theory itself as failing and saying, well, we had this theory of how the world works, but I’m rejecting it because it didn’t seem to work.

Robert: And so the argument is that this is the life cycle of meaning-making and that until you have all of these actor types fulfilled, you don’t have enough of a social movement to exemplify a change of meaning in society. So it’s a life cycle that needs to successfully run in, say a prototype phase. And once you have prototypes a set of beliefs, and you’ve got a complete cycle of social actors who are representing that, then you can start cloning those social movements, and repeating them again and again, and having other creators, other curators and so forth, start spinning off into second and third level activities along that same trajectory. And now you have a social movement.

Jim: That makes a lot of sense. And of course, I’m assuming that you are assuming that all this happens in a essentially Darwinian context, right?, mimetic propagation. That some meanings don’t take, right? Somebody wakes up one morning with a grand theory of everything and they tell it to their wife and she laughs at them. Oh, well, that was the end of that meaning-making. That’s happened to me. I can tell you. While other meanings go, oh, that didn’t sound as crazy as I thought it might be. And then it gradually finds two people that find it interesting, et cetera. And then you have 10, et cetera. And that there’s essentially a mimetic competition that goes on until you recruit the various functional actors that you described, and that they can then rebroadcast and can upregulate the signal. In our Game B world right now I’m pushing really hard for people to go from theory to practice because until we have those prototype exemplars, it’s real easy to say, it’s a goddamn talkfest and nothing more. Right?

Robert: Exactly. And you and I probably both have this bias towards prototypes. I don’t know, but I know I do. The idea is that if I can’t see a prototype of an idea, I don’t think it’s fully formed yet. So there’s a lot of people who run around with idea fragments, and a large part of the meaning economy is to try to take these various fragments and compile them. And this is the reason why you can’t simply develop a new society through analysis. You need synthesis.

Jim: And you also need experimentation, right? Complex systems, you cannot see very far into the unfolding of a totally new complex system. And so I’ve strongly focused in all my own writings about the need to do probes at reasonable costs, to learn from those probes, and to adapt. And in fact, in our Game B world, the first actual transition from individual actions and theory, we actually call a Proto B, right? The first form of Game B that will actually exist in the world with at least dozens of people operating together in a Game B fashion we literally call Proto B, because I wanted to signal that, Hey, this is an experiment. It might go wrong. Also strongly suggest that we do multiple Proto Bs because some of them will fail for all kinds of reasons, either systemic or idiosyncratic.

Robert: Absolutely. And so there’s this lovely phenomenon. This is a beautiful segue, by the way. There’s a lovely phenomenon in the industrial revolution cycle, that there is a utopianist movement that happens at the beginning of each of these cycles. And the utopianist movement is only somewhat motivated by technology, but it’s more motivated by the lifestyle promise, the promise that there’s going to be new, sustainable ways of living. And what happens is that there’s always people who are looking well into the future and hoping. They’re looking for that next big thing that’s going to turn the corner so that we can have the great society. And so there’s utopianist movements and communalist living movements that explode at the beginning of each industrial revolution.

Robert: Nicholas Christakis recently wrote a book about this called Blueprint. He’s a sociologist at Yale University. One of the observations that he made was that roughly every 50 years, there’s this utopian experiment period. Now he didn’t make the connection that that also happened to be the same time period of the industrial revolution, but it is the case. And so what happens is that like in the 1960s, for example, there was this utopianist uptick of new communalism, and you had everybody from one side of the spectrum to the other. On one side you had like the Church of Satan, which was an emergence of the 1960s. And then on the other side, you have these sort of like love cults, you know? You can just have everything from biker gangs to … and that’s exactly what happened.

Robert: There was an explosion of utopian experiments and everybody was doing their part to participate in the grand social scheme, even though not all those people who did that were thinking about it as we’re running an experiment so that you guys can benefit from my failures. They weren’t necessarily walking around there thinking that way. But as it just so happens from a bird’s eye view, that’s exactly what they were doing. They were trying thousands of different variations of the new world culturally, and then figuring out what stuck and those things that stuck the most became normalized and were taken up into the mainstream.

Robert: Some of those things had temporary importance. They were really important for the emergence phase. So for example, there was a lot of postmodern talk that was important. We had to go through that conversation. We had to talk about postmodern, relativistic thinking, and radical individual perspective and so forth. We had to go through that because that helped loosen the gears and helped create the social movements.

Robert: But a lot of those things didn’t have any longevity. They got stuck or died in the emerging space because they weren’t designed for the growth phase. Those ideas which were well-designed to scale where those ideas which became the new normal and were taken up during that growth phase. Very much how like there’s new corporations that are born during these time periods, like Apple. Apple was fit to scale. A lot of people will tell you that Apple was an unfortunate compromise because we didn’t get to have all the lovely, radical things that Steve Wozniak and most of the first generation computer geeks wanted. But the difference was that his trajectory was scalable.

Jim: He understood culture, right? I knew Wozniak a bit. Never met Jobs, but a very good friend of mine worked cheek by jowl with Jobs for 10 years. So I got a fair amount of Jobs second hand. And yeah, Wozniak had the spirit of the hacker, right?, but Jobs understood what it took to actually create a cultural revolution.

Robert: Right. And the idea has to do with people who live in the emergence phase. It’s like the Indian, blind man, and the elephant parable where you’re standing on different sides of the elephant and whatever side of the elephant-

Robert: … elephant parable, where you’re standing on different sides of the elephant, and whatever sides of the elephant you’re touching, you think that’s what the whole object looks like. Well, what happens is that if you’re a part of a cultural revolution, you don’t know what you don’t know. You don’t know what part of the overall social movement you really are, and so wherever you’re standing, you think this is the thing. I mean, it makes sense to me, right? It’s what I like. It’s what motivates me, and I know it’s good.

Robert: So Wozniak was one of those people who he knew the inherent value of open systems. He knew the inherent value of hackable systems. All of that was very clear. The Apple I and Apple II were technically convincing, right? There was nothing about it where you would say, “Well, that was a technical failure.” It was a technical success.

Robert: One of my favorite parts of that success was his invention of color using radio frequencies. Basically, there was no other technology available at the time that could do color graphics for under $1000, and he did it for a buck, because he figured out how to hack a computer chip to make it give you the color, right?

Robert: So we know he had the technical knowhow and that he could convince other engineers, “This is the direction that engineers want to go.” But what he didn’t understand was the rest of society and their needs. So he was making a computer for the 2% of people who understood the value of having that deep control over the system and the ability to build your own peripherals and the ability to expand and all that.

Robert: But what Jobs understood was that that was a phase. That was a period, and it was a feeding frenzy of getting into what I call the paradigmatic level of design. So what happened was that people who got into the paradigmatic level of design in technology in the 1970s had wonderful careers. They had the ability to write their own futures. They could go around, and the first gen adopters of the Wozniak technology would go around and be root designers and developers for the whole paradigm, because they knew how it worked on the root level. They understood the principles so fundamentally that they didn’t need to guess as they were innovating forward. It all made sense to them, intuitively.

Robert: But what Steve Jobs basically said is, “Well, okay, that’s good if you’re a creator, but what about if we go curator forward and we start thinking about all the audiences out there and what their needs are and what they’re looking for and so forth?” So what you end up finding out is that, to cross the chasm … Everybody in the Valley knows about crossing the chasm.

Jim: Yeah. Jeffrey Moore. Yep.

Robert: Right. To cross the chasm, you have to be able to move away from just that lead user set of needs, the lead user component, and say, “Well, what’s the other side of reality need?” Jobs was one of those people who basically had that vision.

Robert: By the way, one historical clarification: Jobs also had more help than probably anybody else in history ever in developing such a company. When he was developing Apple, he spent a lot of time in conversations with the who’s who in the Valley. He was very good at doing his research, and a lot of his ideas actually came from Intel. A lot of people don’t know that, but, basically, he did these deep workout sessions with what’s his name, the mayor of Silicon Valley?

Jim: Robert Noyce.

Robert: Noyce. That’s who I was thinking of. So, basically, he spent five weeks in Robert Noyce’s basement, discussing the future of Apple and the direction of the technology and the strategy that he would have to employ over the next 10, 15 years. So it’s not like he just dreamt this all up himself. What he did is he went and talked to all of the creators and the sense makers of the digital paradigm, and he did his homework. He said, “Well, I need to learn that logic so I can be consistent and true to it.”

Jim: Of course, he also famously went everywhere. He went to Xerox Parc, where they made the mistake of showing him the Alto, right?

Robert: Oh, yes.

Jim: Which is a graphic user interface with a mouse, right? He goes, “Ah-ha.” So yeah, he was a great synthesizer, no doubt about it.

Robert: Oh, the Dynabook. So the Dynabook, that’s one of my favorite side stories here about paradigms. The Dynabook project, Alan Kay, he was the first person to do a PhD in computer science from Utah, and he got to do a radical dissertation, because it was a new field. He did a dissertation about a theoretical Dynabook that would be this new computing platform and design for the future, and he knew it didn’t exist yet, but his argument was, “This is the future that we’re innovating toward. It’s the roadmap.” So he claimed that all personal computing technologies would eventually align on the roadmap to the Dynabook.

Robert: Well, it just so happens that the Dynabook is the iPad. Okay? It’s the iPad. So Steve Jobs, one of his relationships to Xerox Parc was Alan Kay, who was there at that time, and it was one of the ideas that he was exposed to. He became aware of the Dynabook, and so he wanted to see what the hell Alan Kay was working on, because he said, “This is the guy who knows what he’s talking about.”

Robert: Alan Kay was one of the people who was developing the graphic user interface for the Alto, and that was a side project. It wasn’t the major project of that facility. There was only a few people who are working on that particular project. Jobs requested to see him for a reason: because he believed in the Dynabook as the future of Apple.

Jim: I love it.

Robert: Over the history of Apple, he had a roadmap of where he was going. From day one, they were setting out to build the Dynabook, And that was their idea of the digital paradigm. Once they achieved that, they essentially reached a mature phase for the company, where they had to come up with a new myth, a new perspective or direction. Tim Cook has floundered in that role, right? He doesn’t have the vision.

Jim: He’s an optimizer. In fact, to use a language that we both use, we talk about exploration and exploitation.

Robert: Yeah.

Jim: He’s a pretty damn good exploiter, right? He could increase those margins. He can lower the quality of customer service just enough that people don’t really rebel, but profit margins go up. I remember Jobs had built a Macintosh plant in the United States, and he was quite committed to US manufacturing. Cook, not interested in the slightest, because you can save 12 cents by having it made in China.

Robert: Right, right, and if you believe that you’re in the mature phase of an industry and a mature phase in a paradigm, that’s exactly the right way to run a company. During the exploitation phase of the paradigmatic cycle, you’re going to see CEOs all over the place looking like Tim Cook, because that’s the received wisdom about how to manage companies that are in a mature phase.

Jim: Yeah. But I’ve done both.

Robert: Yeah, yeah.

Jim: But it’s absolutely true. You have to figure out … In fact, I actually wrote a paper, cowrote a paper with some folks at Santa Fe Institute on this, that you have to be realistic. Where are you? Not only where are you in your industry, but what part of the company are you in? Some parts of the company need to be hyper-optimizers, right?

Robert: Yes, absolutely.

Jim: To take some of this rhetoric, “Well, we all have to be continuously disrupting.” Wrong. You have to have disruption at the right place at the right time in the right amount.

Robert: Let’s really drill that point home, because that’s the whole theme here of this conversation that you and I are having, is it’s all about timing. This is a timing-dominant perspective of the history of strategy, of organizing of markets, the argument being is that if you have a life cycle pattern, then you need to align the capabilities with the environment at the right place at the right time.

Jim: Absolutely. In fact, for instance, I am gearing up, as I always do, to actually make some venture investments during the recession. The best time to make venture investments is about 12 months after the start of a recession, for a whole bunch of reasons, right? So these cycles operated every scale. They have different signals that are there.

Jim: Let’s do one last thing here. We’re getting near the end of our time here. I think maybe we’ll tie together a lot of the points and also give you a chance to freelance a little bit. We have your five previous transitions, the concept that we’re in the process of entering the sixth, into the organic paradigm. Also, Carlota Perez’s idea, which I think you share, that lifestyle is one of the key aspects that draws the product services and technologies forward into an actual new paradigm. I’d like to hear you speculate a little bit about what is the lifestyle of the organic epoch going to look like?

Robert: Absolutely. So, on the cultural side, it’s always much more difficult to make firm predictions, because, as you and I discussed, there’s a rabid competition among cultural elements and concepts, and there’s a bit of an execution issue. It’s not just whether or not the idea was a good idea, but who actually executed well socially and was able to win the battle for prominence, right? So there’s definitely a lot of that.

Robert: But I will argue that if we’re talking about the emergence phase of the sixth paradigm, we have some strong contenders of who may be some of the strong cultural concepts. One of those is solar punk. Okay? Because look. Before you talk about the new normal for 30, 40 years down the road, the important question is who are the people who are transitioning us? So solar punk is a perspective that says, “We’re going to be makers. We’re going to be doers. We’re going to be hackers. But we’re going to be operating in the new paradigm technologies predominantly, and those are going to be solar. Those are going to be biohacking. Those that are going to be trying to find ways to use complexity thinking and artificial intelligence and service-type robotics,” which I want to point out, service-type robotics are a sixth paradigm technology, whereas the industrial-type robotics were more fifth paradigm.

Robert: That largely has to do with that decomposability perspective, that the industrial robots have to be controlled very precisely, and they tend to not go off message, as much as service robots, which need to continually evolve, and we’re looking at creating learning robots that are going to go well beyond what their creators intend. So a solar punk is somebody who understands that all of these technologies have relationships to each other and that they’re looking to create a combination of off-grid, sustainable, decentralized, and hackable things that are going to bridge us into the next paradigm.

Robert: I’m also going to add into that that GameB does seem to have enough influence in the United States that I would put it in the list of contenders of conversations that have been ongoing. You and I may have a different perspective about the prehistory of GameB. I don’t know. We may. But it seems as if a lot of it was through a very steady thread through cybernetic theory, through Stewart Brand and the Whole Earth Catalog.

Robert: Basically, there’s been a long precedent of cultural movements that have a techno-futurist perspective, but are on the cultural side of those, right? So they know that there’s an interrelationship between technological revolution and cultural revolution, intuitively, and they’re the people trying to anticipate where those things go. GameB is one of those, and I see the GameB group as being those people who are trying to prepare for the sixth paradigm in many ways. That’s my way of taking it.

Robert: Another one of those groups is Peer to Peer. In Europe and other parts of the world, there’s been a highly decentralized movement of highly decentralized thinkers, and these are people who were part of the crypto currency world and people who are a part of … and, actually, some of them rejected cryptocurrency at the beginning. Maybe they were like, “It’s too capitalist.” But Michel Bauwens is one of my friends that’s at the helm of a lot of projects in the PTP world, and these are people who are looking at a commons-based society.

Robert: Their idea of what a commons-based society is is not strictly Marxist. It’s sort of post-Marxist. It’s also post-capitalist. They like to use that word as well, and they’re not really saying that they’re truly anti either. What they’re saying is that there’s going to be a new synthesis of ideas that make both of those perspectives obsolete and that we are going to organize herself from the bottom up, from the local level up, from neighborhoods, cities on up, rather than from the top down. There’s going to be a mass desire to exit the older systems and to underthrow those systems, rather than overthrow them. I’ve got to give credit to Max Borders, because he’s the one who introduced me to the underthrow term. I love it.

Robert: But, basically, so people who are looking for ways to create local new economies and societies that want to build those concepts around cooperative individualism. Big emphasis on individuality and a deepening of the sense of individual differences, while, at the same time, finding clever ways to make the most of those human differences in collective organization and to use markets without a profit focus.

Robert: Interestingly enough, I want to make the argument that every single industrial revolution, we’ve started off with an anarchic socialist movement. It just so seems that the cultural entrepreneurs tend to think in those terms, and the argument there is that even if they didn’t, it would make sense in their self-interest that they would want to start with small experiments. So they would think about it in those terms, and you would create these local experiments. Then you would think about how to scale them.

Robert: So, anyway, the argument is we’ve got several different anarcho-socialist-biased groups, but these groups want to move away from the prior institutional logics of how and why, and they want to do it with a way that fully embraces the new paradigm as something that’s a little bit qualitatively discontinuous in thought from the past.

Jim: Yeah, absolutely.

Robert: So they not just trying to recreate Kropotkin’s anarchist theory of the 1840s or something.

Jim: Yeah. That’s what I like about these new things. You mentioned Michel Bauwens. He’s going to be on the show next month, actually, and certainly we believe that the P2P movement, which he runs a foundation which is probably the center of, is very closely related to our GameB movement and some of these other things.

Robert: Big overlap.

Jim: Yep. In fact, I’ve got a new term, actually, which I stole from Bruce Kunkel, one of our GameB guys.

Robert: Yeah, I know him.

Jim: Yeah, great fellow. He says alignment beyond agreement, that there’s a bunch of us out there moving towards something. I label it what comes next. We don’t know the real details. Each group has its own viewpoint about what this might be, but we all need to have an epistemological modesty about predicting the unfolding of complex systems. But we’re all generally pointed in the same direction, which I find to be very interesting.

Robert: That’s right, and it’s mostly … These are just different flavors of the same general theme. So my argument is when you have a convergence of agreement on what you think the dominant themes of the future are, you should take note, because, historically, we’ve had a very good track record of being correct about that. People say, “Well, you can’t predict the future and these radical innovations,” and I say, “The hell you can’t.” If you go back and you look in history, there always were people who had it pretty well nailed. The question is whether or not they won the argument during their own time.

Robert: So it’s hard to necessarily know 50 years in advance which flavor is correct, but the futurists generally agree on the direction of these things. Look at Wired Magazine in the 1990s, and look at now. A lot of the savants of Wired Magazine were describing the kinds of movements that we are seeing now.

Jim: Very good. Why don’t you have a final statement? Let’s wrap it up.

Robert: Well, well, I have a couple different things I’d like to say. So the first one is that the project that I’m working on, I want to plug that, again, I’m working on something that I call integral cycle theory, and I believe that this is something that’s going to be sixth paradigm-oriented, basically. So it’s time for us to do this thing. We need to do it.

Robert: So we had complexity science that emerged as an interdisciplinary field around a certain set of ideas that were core to complexity study, right? Well, we’ve also had cognitive sciences, a revolution where people did interdisciplinary work around a certain set of ideas that were important to beliefs and that ended up affecting a wide range of industries and disciplines.

Robert: What I’m arguing is we’re in a period we need to do that again. We need to create another interdisciplinary push, and that push is to examine the cycles that we see in social reality and technical progress so that we can look very long-term into the future, first of all. But, second of all, because these things are driven by networks as well and what we didn’t understand in the earlier phases of history, when we’re doing Hegelian analysis of history and dialectic and so forth, so we didn’t actually understand how these things worked. Now we very well do, that social reality is organized in networks and those cycles are waves of innovation and diffusion as things filter through a network structure. So you have S curves and various other different curves and so forth.

Robert: Well, the argument is a lot of these things look a lot like music. If you’re a music producer and you’re going to lay out your tracks on a digital audio workstation, you’re going to see dozens of loops and certain waveforms and so forth. As a musician, that’s how you would think. What I’m arguing is we can do pretty much the same type of analysis using wave systems. The reason why is that you can sum waves. Mathematically speaking, you don’t need to think about endogeneity. You don’t need to basically have the waves be produced by the other waves produced by the other waves produced by the other waves. Because of a mathematical convenience of how waves work, you can just separate them and sum them.

Robert: So, basically, if you work with wave systems and you work with network systems, you can start creating massive simulations of futures. You can start saying, “Well, here’s what my integral wave theory predicts that we’re going to have. Now I’m going to go draw a picture, and I’m going to create a massive software simulation of a city or of a country or of a world system. I’m going to visualize that, and then I’m going to show you what would happen if these waves behave differently.” So we can start doing massive simulations of the future using wave perspective.

Robert: So my argument is we have people in various different disciplines who are working on little corners of this, but they need to get together and work with each other. Some of the names you mentioned are people that I’m wanting to work with. So, for example, Michel Bauwens is an old friend of mine, and he’s looking at Peter Turchin’s Secular Cycles right now. He’s looking at how commons-based movements reappear in cycles, based on where you are in the Peter Turchin Secular Cycle, and he’s arguing that he sees a commons-based movement emerging now. What I’m arguing is that we also see anarcho-socialist movements emerge at the beginning of the techno-economic paradigm. So we’ve got a double confluence of events. The Turchin cycle predicts it, as well as Carlota Perez predicts it. Okay?

Robert: So when you have a whole series of waveforms that are all basically telling you the same thing at the same time, that’s good news. It means we know where we are in history. So what I’m trying to do is get these people to work with each other a little more than they have been to put down this whole promoting their side of the elephant in isolation and to create an interdisciplinary project, where we try to understand the whole elephant using these theories.

Robert: That’s my plug there, and then my other point I wanted to make was that we’ve got a media crisis going on, and we didn’t address that. We didn’t have time to talk about COVID-19 and the sensemaking crisis and so forth. The sense-making crisis is predictive of the emergence of a new paradigm. This happens every time. We were having an authoritarian wave right before the digital paradigm emerged. We had this Red Scare and the Communists. All of the various countries in the world were going authoritarian and trying to control their media and using propaganda in a very heavy-handed fashion. In 1964, you had a free speech movement, which was the early bellwether event, which then kicked off a whole long series of sense-making processes that brought about the cultural side of the paradigmatic change.

Robert: We have models that predict that’s where we are now, right? So we have some pretty strong models in political science and so forth that would say, “Here we are at a journalism crisis. That’s happened before, and it’s happened for the same reasons at the same alignment as the last time we were undergoing a cultural revolution, which was roughly a little bit ahead, a little bit of a leading indicator of the technological revolution, which then followed.”

Robert: So that repeat series of events has happened five times in a row, and there’s every reason to think we’re exactly in that juncture now. So we need people like you and me and Michel and so forth to do our job. We’ve got to get together and take the years of experience we’ve spent working on all these great ideas so we can help the public understand where we are and where we’re going to be going and that we shouldn’t be fearful of that and that we should be optimistic.

Jim: Very good. On that note, we will wrap it up. We’ve had some great stuff.

Production services and audio editing by Jared Janes Consulting. Music by Tom Mahler at