Abundance Wins

The story of the 20th century is extraordinary social and economic change driven by abundance. Information technology is a perfect example – computers made information abundant. Just as water will always flow downhill, economics flow toward abundance. Products that can become commoditized and cheap tend to do so, and so companies seeking profits move upstream in search of scarcities. Where abundance drives the cost of something to the floor, value shits to adjacent levels.

Of the top 100 companies in the Fortune 500, only 32 make things you can hold. The other 68 traffic mostly in ideas, not resource processing. Don’t get me wrong – there’s still a lot of money in commodities, but the highest profit margins are usually found where gray matter has been added to things. A few decades ago, the most value was in manufacturing. Then globalization rendered manufacturing a commodity, and the price fell. So the value moved to things that were not (yet) commodities, further away from hand-eye coordination and closer to brain-mouth coordination. Today’s knowledge workers are yesterday’s factory workers moving upstream in search of scarcity.

Chris Anderson, in his book Free: The Future of a Radical Price (2009) discusses this further with the following commentary:

These days that scarcity is what former U.S. labor secretary Robert Reich called “symbolic analysis,” the combination of knowledge, skills, and abstract thinking that defines an effective knowledge worker. The constant challenge is to figure out how best to divide labor between people and computers, and that line is always moving.

As computers are taught to do a human job (like stock trading), the price of that job drops close to zero, and the displaced humans either learn to do something more challenging or they don’t. The first group typically gets paid more than they used to and the second group gets paid less. The first is the opportunity that comes with industries moving toward abundance; the second is the cost. As a society, our job is to move toward abundance; the second is cost. As a society, our job is to try to make the first group bigger than the second.

Abundance thinking is not only discovering what will become cheaper, but also looking for what will become more valuable as a result of that shift, and moving to that. Its engine of growth, something we’ve been riding since even before David Ricardo defined the “comparative advantage” of one country over another in the eighteenth century. Yesterday’s abundance consisted of products from another country with more plentiful resources or cheaper labor. Today’s also consists of products from the land of silicon and glass threads.

Abundance wins and some engineers and engineering organizations will be losers. It is a zero-sum game – a participant’s grain is exactly balanced by losses of another participant. Abundance will always be on the winning side of the equation. As for engineering – we are like the wild salmon. We are in a constant struggle to keep moving upstream away from abundance and toward scarcity. This is fundamentally about the forced movement from the commoditization of abundance to the scarcity of new ideas, innovation, new attitudes about old problems, etc. The Brain-Mouth Era – where lifelong learning, multidisciplinary education, and constant re-training make for strong swimming salmon on the long and difficult journey upstream.