Evolution of Nodes of Coordination
Discussion
Michael Haupt:
"the Bio-revolution in the context of three previous revolutions:
- Agri-revolution (12,000 years ago, which mechanized farming and high-yield crops)
- Indus-revolution (250 years ago, which scaled manufacturing via steam, coal, and automation)
- Digi-revolution (50 years ago, which connected the world through computers, the internet, and data, changing how we share information, run businesses, and automate tasks)
- Bio-revolution (currently emerging, which organizes activity around a defined watershed)
The important observation is that every revolution develops around a node, which is the physical place where the era’s coordination logic materializes or concentrates. Each node also externalizes certain costs.
The Agri-node began with a community settling in a particular place, which held kin, land, water, and labor. That coordination collectively produced surplus for the first time in recorded history. That surplus led to the emergence of the granary, and the granary led to the temple, and the temple gave birth to the state. I want to propose that this coordination node was a specific parcel of soil. Its optimization target was caloric yield per unit of land. Its time horizon was seasonal and generational. The costs the agri-node externalizes is the substrate it depends on: soil depletion, downstream water quality, and the untamed/untouched commons the soil was separated from.
The Indus-node has shifted location over time from the farm to the mill, then to the company that owned the mill, then to the exchange where the shares of the company were traded. By the middle of the nineteenth century, the stock market had become the node because it’s where ownership decouples from operation. The farmer who owns the farm is replaced by the shareholder who owns a claim on a factory the shareholder will never enter, run by managers the shareholder will never meet, producing goods the shareholder may never see.
- What is coordinated is capital, risk, and claims across financial time.
- What is optimized is return on capital.
- What is externalized is anything that isn’t tracked in the accounting department’s record-keeping: labor conditions, biosphere depletion, and the coherence of the communities the labor is drawn from.
The Digi-node is the data center. Personal computers and smartphones and the platforms that run on them are the endpoints, but the data center is where the coordination of attention, behavior, information, and computation happens. Its optimization target is prediction accuracy, which is another name for human coordination at scale. Real-time coordination is the design goal. The length of elapsed time between stimulus and response (a time period once filled by human deliberation and evaluation) is the field the industry is now competing to fill. The cost this form of coordination externalizes is energy and water. The grid is being asked to double its capacity in a decade to serve loads that produce no material good. Hyperscale data centers emerging globally consume watershed capacity at rates that break local hydrological budgets. The state permits this activity because, as we saw from the context-setting, the state thinks like a state (increased revenue) and the market thinks like a market (increased profits). No amount of reasoning or protestation can change the underlying incentives. Prices have shifted from goods to attention, and from capital to compute. Costs have been externalized to communities. This is the bad news.
The observation that comes from the evolution of coordination nodes is the increasing abstraction of the real cost of coordination. Each solved its coordination challenge by displacing those costs onto the substrate the next node would organize. The community’s substrate was soil. The stock market’s substrate is a claim. A claim is a promise about the future written down and made tradable. Claims can be manufactured in unlimited quantities; soil (and all natural capital) cannot — they have biophysical limits.
For two and a half centuries, the stock market’s coordination worked because the biosphere could absorb what the accounting department couldn’t price. The forests were still there, the oceans and all that swam in her remained abundant, and the atmosphere still supported life. The costs the stock market externalized were allocated to substrates that seemed inexhaustible (and in the beginning they were). Now the costs of water and energy (traditionally handled by the state) have been externalized to communities. The substrate below these communities can no longer absorb the cost. This is the point at which societies typically collapse."