Welcome to CIGS / Introducing The CIGS Blog.

Welcome to the Center for Innovation, Growth and Society or CIGS, the Silicon Valley home of the Institute for New Economic Thinking (INET). The Center’s purpose is to focus on the new economic thinking that is specific to deep technological advances that potentially have the power to rewrite the rules of markets and our lives. 

Here at the CIGS blog, we will be sharing insights gleaned from the CIGS community of Technologists, Economists and Academics engaged with the development of the new economics of Deep Technology (or DeepTech). At CIGS, we define DeepTech as the subset of innovative technology that can reasonably be expected to rewrite the fabric of individual, work and family life or even civil society as a whole. 

Center for Innovation, Growth and discusses Antitrust Policy and Big Tech

After a year of convening smaller targeted meetings in Silicon Valley, INET’s Center for Innovation, Growth and Society held its first conference on February 5th, 2019.  Entitled “Too Deep to Fail: Big Tech and Civil Society” the gathering brought together economists, legal scholars and tech leaders to explore increasing levels of economic concentration, in particular in the tech sector. 

Pictured, from left to right: Open Markets Institute legal director Sandeep Vaheesan, Stanford University economics professor Anat Admati, and Stanford University political science professor Margaret Levi

“With new concerns over technology platforms arising at an increasing rate, it is essential that technologists, regulators, legal scholars, economists, and consumer advocates have an impartial place to work constructively towards better solutions. CIGS and INET were happy that we were in a position to meet that need and the response of the various communities was better than we could have hoped for” said Pia Malaney the Center’s director who led the meeting for CIGS/INET.

Rising levels of inequality, threats to free speech and even the political fabric of our democracy have been laid at the doorstep of tech giants like Facebook, Google, and Amazon. While there have been increasing calls for regulation it has been pointed out by legal scholar Lina Khan that traditional antitrust regulations are focused on competition as seen in traditional markets, using the standard of “price competition” to determine monopoly power.  What does this mean when the “price” on some of these products, e.g. search, are set at zero but the anti-competitive practices take place in a different area?  There is a clear need to rethink our regulatory structures to address the changing nature of economic concentration in firms that span different markets, where monopoly power may one product may be used to drive traffic to a different product.

The conference highlighted the need for collaboration between Society, Tech, Academia and Regulation (STAR) in order to effectively address the social, political and economic ramifications of economic concentration in an industry often characterized by increasing returns to scale. 

The Innovation of Economics Requires a New Economics of Innovation

By Pia Malaney

In Silicon Valley one often hears discussion about the “AI Steering Problem”: While we can program our artificial intelligence with desired skills and abilities, how do we program it with the right motivation? As AI develops rapidly and innovation increasingly changes the nature of the world we live in, there is another problem we increasingly need to address: How do we steer markets in the face of a rapidly changing economy?

As driverless cars begin to appear on our streets, we understand that trucking as a profession may have its days numbered. As smart contracts get increasingly sophisticated, what will the lawyers’ role be? Medical students reading the writing on the wall are increasingly avoiding certain fields like radiology where machines are often more insightful than human eyes. As technology changes the nature of production, it is no longer just blue-collar jobs that are under threat; the entire structure of the economy is challenged by reorientation. The big question before us now is whether we will step back and allow markets to adapt as they will to rapidly changing technology, or if economists and policy makers, like the technologists, will actively try to address the market steering problem.

The changes being wrought by technology to traditional markets are deep. To name just a few:
• Will the notion of XaaS, or X as a Service, increasingly shift us from ‘stock’ to ‘flow’ concepts as we build a sharing economy?
• As 3D printing begins to convert private goods into public goods, will what was seen as an exception to a market economy increasingly become the norm, undermining the applicability of standard market models?
• Silicon Valley is coming to see the world in terms of an abundance economy as opposed to a scarcity economy; as we shift to a Virtual World will we indeed see greater non-rivalry for goods?
• As artificial general intelligence is developed and robots take over a range of jobs, do the traditional distinctions between labor and capital become increasingly blurred?
• As blockchain technology further develops the use of smart contracts, will the role of governments as enforcers of contracts become less significant?

From the perspective of technology, our current institutions can be seen as clusters running our economic, legal, and cultural code. While economists are partial to the notion of the so-called invisible hand driving markets, we have in fact put robust structures in place to help guide our markets and institutions. The Federal Reserve, for example, can be seen as a modern day Mechanical Turk, with it’s behind the scenes machinations to ensure smooth functioning of our economy. In many ways, though, it feels as if the world of technology is trying to run 21st century code on 20th century institutions. Rather than relying on markets and other institutions to adapt automatically to the changes being wrought by technology, we need to think about how to steer markets to ensure they serve souls rather than treating souls as sub-routines and factors of production.

As we develop economic models as representations of the changing world, it becomes apparent that just like Molière’s bourgeois gentleman, who had been speaking prose his whole life without knowing it, technologists have been speaking and inventing economics all this time. It is now time to build the bridge between academic economics and technologists as we work to formalize what innovators have been developing organically and give voice to these structures that have become increasingly powerful in our lives.

The mission of the Center for Innovation, Growth and Society is to organically co-develop the economics of deep innovation alongside the innovations and innovators themselves.

The economics of the future is already here, it is just unevenly curated. If we get it right we will steer towards a hopeful humanistic future. If we don’t, our technology may steer us according to old maps at accelerating speeds. Let’s get it right.