Chapter 4: What Is to Be Done? Prescriptions and Recommendations (Race Against the Machine)

The greatest task before civilization at present is to make machines what they ought to be, the slaves, instead of the masters of men.—Havelock Ellis, 1922

Economic progress comes from constant innovation in which people race with machines. Human and machine collaborate together in a race to produce more, to capture markets, and to beat other teams of humans and machines.

This lesson remains valid and instructive today as machines are winning head-to-head mental contests, not just physical ones. Here again, we observe that things get really interesting once this contest is over and people start racing with machines instead of against them.

The game of chess provides a great example. In 1997, Gary Kasparov, humanity’s most brilliant chess master, lost to Deep Blue, a $10 million specialized supercomputer programmed by a team from IBM. That was big news when it happened, but then developments in the world of chess went back to being reported on and read mainly by chess geeks. As a result, it’s not well known that the best chess player on the planet today is not a computer. Nor is it a human. The best chess player is a team of humans using computers.

How can we implement a “race with machines” strategy? The solution is organizational innovation: co-inventing new organizational structures, processes, and business models that leverage ever-advancing technology and human skills. Joseph Schumpeter, the economist, described this as a process of “creative destruction” and gave entrepreneurs the central role in the development and propagation of the necessary innovations. Entrepreneurs reap rich rewards because what they do, when they do it well, is both incredibly valuable and far too rare.

To put it another way, the stagnation of median wages and polarization of job growth is an opportunity for creative entrepreneurs. They can develop new business models that combine the swelling numbers of mid-skilled workers with ever-cheaper technology to create value. There has never been a worse time to be competing with machines, but there has never been a better time to be a talented entrepreneur.

Apple’s App Store and Google’s Android Marketplace make it easy for people with ideas for mobile applications to create and distribute them.

Threadless lets people create and sell designs for t-shirts. Amazon’s Mechanical Turk makes it easy to find cheap labor to do a breathtaking array of simple, well-defined tasks. Kickstarter flips this model on its head and helps designers and creative artists find sponsors for their projects.

As technology makes it possible for more people to start enterprises on a national or even global scale, more people will be in the position to earn superstar compensation. While winner-take-all economics can lead to vastly disproportionate rewards to the top performer in each market, the key is that there is no automatic ceiling to the number of different markets that can be created. In principle, tens of millions of people could each be a leading performer—even the top expert—in tens of millions of distinct, value-creating fields. Think of them as micro-experts for macro-markets. Technology scholar Thomas Malone calls this the age of hyperspecialization. Digital technologies make it possible to scale that expertise so that we all benefit from those talents and creativity.

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