economic multiplier

A very interesting area of study is the evolution of human progress across history based on the accounts of different historians and understanding what were the various engines that powered the underlying progress. The supremacy of human species was largely initiated by their ability to organize large groups of humans as a collective superorganism creating a force multiplier to perform any required action which was possible as humans could construct shared imagined realities in their mind through storytelling to help them effectively work towards a common goal (which I have covered in detail through a previous article - world of intersubjective realities) which we can observe in various form factors across history through tribal communities, nation states, religious groups and business corporations. Another important element of human species supremacy was the ability of tool usage (which I have also covered in detail in another article - tools of coevolution) which acted as an individual force multiplier for elemental organisms to amplify their individual actions in addition to the collective force multiplication factor achieved as a collective superorganism through large scale cooperation. The core outcome of human species supremacy was its ability to ultimately create useful goods and services which benefited humanity as a whole. The ability to coordinate and organize different groups of people eventually led to the profound economic inventions of specialization and trade which helped proliferate the scale and scope of goods and services being produced across the world. We live in a resource-constrained world where both physical and intellectual resources are limited and non-uniformly distributed. The inventions of specialization and trade therefore helped bridge the gaps of our resource-constrained world and helped increase overall rate of production of goods and services. Since intellectual and physical resources are constrained and non-uniformly distributed across the world, the logical step forward was to divide the production of goods and services according to the inherent distribution of intellectual and physical resources of the world where different segments of the world rather than trying produce all goods and services instead spent their limited time on the production of only few goods and services best suited to their resource distribution cluster and then balanced the gap of other necessary goods and services which were not produced through trade. The invention of specialization and trade therefore served as an additional force multiplier for human progress unlocking high economic value which was previously inaccessible enabling humans to produce wider range and magnitude of goods and services. A key requirement for unlocking value through specialization and trade is an open system which allows for free and fast flow of information and resources across geographies allowing for easy cross pollination of abstract ideas and physical materials which can be transformed into new goods and services that further benefit human civilization. Restriction in information and resource flow through trade-blockage in favour of short-term sub-system optimization reduces the total surface area for cross-pollination of existing information and resources for the entire super-system thereby limiting the capabilities of the super-system to invent new useful goods and services which could actually benefit all the individual sub-systems. Capitalism is another powerful economic invention popularized by economist Adam Smith which enabled more efficient distribution of resources to create more useful goods and services. Capitalism is a mechanism to efficiently create more wealth i.e. useful goods and services for the entire super-system by incentivizing and appealing to the self-interest of few highly capable sub-systems to accumulate wealth for themselves. The highly capable sub-systems in the process of increasing their wealth find more efficient ways to convert resources into useful goods and services which benefits the entire super-system. The accumulated wealth can be deployed as capital which is a tool that helps in deciding how to allocate limited labour and raw materials into the production of more useful goods and services. The ultimate currency of producing useful goods and services is specialized labour without which limited raw materials irrespective of their value cannot be converted into finished useful products. So capital can ultimately be viewed as highly distilled labour and capital only possesses value by virtue of its ability to command labour. The productivity of labour to convert raw materials into useful goods and services gets multiplied by technology which is an effort-amplification tool and arguably the most powerful force multiplier where each stage of technological advancements concurrently enhances individual and in turn collective labour capabilities to produce more of the existing goods and services per unit labour and time than what was previously possible and additionally enable creation of a whole new range of goods and services which would not have been possible without technological leverage. Technology creates a self-fulfilling economic loop where some of the new goods and services produced by leveraging technology ultimately serves as new technological leverage which amplifies the labour force to create the next level of new goods and services which in turn would contain new technology which can be leveraged for the next cycle of creation. Each iteration of technology gets subsumed by the labour force constantly evolving them into a form of super-labour which can add endless non-biological extensions to their limited biological hardware and continue enhancing their cognitive and physical capabilities beyond the limits of biological evolution. This can be truly visualized when we view the historical trajectory of human labour which started out in the prehistoric era as a primitive force with possession of opposable thumbs as the only helpful tool to create useful goods and services to now evolving into hyper-capable quasi-cyborgs connected to the vast digital cloud of information through multiple computing devices with access to a vast multitude of tools singularly capable of performing tasks that even a billion prehistoric labourers would not be able to collectively complete. However, technology can be a double edged sword where instead of being used as a tool to amplify our efforts to create new goods and services, it can be used a medium to amplify our consumption of new goods and services which can be problematic as our limited biological hardware is not hardwired for amplified consumption due to which our neural circuits can get severely hijacked damaging our biological state and affecting our ability to create new goods and services thereby paradoxically diminishing the useful leverage provided by technology. Hence, we need to be mindful of the operating nature of technology to ensure it is being correctly channeled to amplify creation over consumption and truly serve as useful non-biological extensions of our limited biological hardware which enhances existing capabilities rather than inhibiting them. Another key element which occupies a separate space in the economic equation is energy as energy is what allows technology to amplify labour. The performing of work needed for the conversion of resources into useful goods and services requires harnessing and expending energy. In the prehistoric era, humans and animals were the sole vessel for performing work where they harnessed chemical energy by consuming food and ultimately expended it through mechanical movements and cognitive processing. The ability to harness more forms of energy in large quantities and the advent of new technologies ultimately created new non-biological vessels like engines, motors and computers which performed all the required mechanical movements and cognitive processing at a much larger scope and scale eliminating the need for human slaves and animal dependence. So technology can be viewed as a channeling mechanism for harnessing the infinite energy of the universe to perform useful work. We are presently in the most advanced stages of technological progression where current technological advancements like AI and humanoid robotics capable of sustainably harnessing and utilizing infinite energy from the universe can theoretically eliminate the need for conventional economic systems by removing the dependence of human labour within the economic loop and provide infinite leverage for each individual human to continuously unlock newer stages of previously inaccessible value in the infinite expanses of the universe.