Make money doing the work you believe in
Exhaustingly detailed synthesis by Sam D’Amico and Packy McCormick 👏
The central message has been writing on the wall for over a decade now. I first heard it referred to as [Larry] Page’s Law: “Costs converge to cost of raw materials as things get eaten by software.” So it’s ultimately atoms+joules. It’s like commoditization but with the twist that everything ends up resting on the same set of universal bottleneck commodities (I’ve heard the atoms piece referred to as “eigenmaterials” by John Bissell of Origin Materials — the list of a dozen or so includes steel, aluminum, PET, silicon, lithium, cement, nitrogen…).
Page’s Law is more than just a restatement of the principle of commoditization in economics. It’s something like “software creates maximally efficient functional substitution dynamics on the global comparative advantage frontier.” Spolsky’s “commoditize your complement” principle, which Packy and Sam cite here, is the stack-local expression. When software eats a function, it doesn’t just substitute the idiosyncratic hardware/materials used before, it replaces them with the eigenmaterials used for computing hardware. For eg a digital camera is made with the same raw materials as computers mostly (the idiosyncratic “film” is gone).
The crucial substitution-maxxing enabler is “electrify everything” which I first heard from David Roberts in the climate tech conversation ~2016 back when that was a serious conversation.
My own attempt at synthesis was my “REALIST stack” model. Needs updating but I still like the stack diagram in here.
Sam and Packy focus on “cost” but the effect is more profound. When everything is down to a set of eigenmaterials plus energy, the very idea of money gets rebased in energy terms. It was already kinda that way. The dollar is the petrodollar. The rupee is currently the [Russian] petrorupee, which is why it’s a diplomatic pressure lever right now. Bitcoin made the energy-money equation explicit. Now the logic of AI is down to tokens/watt.
Towards the endgame of Page’s law, energy begins to dominate materials. The bulk of the input cost is energy, since the eigenmaterials are mostly bulk materials (how much you can produce is a function of energy not ore etc).
In the renewables world, they talk in terms of EROI (energy ROI) bypassing fiat currency logic. People who do things like putting Bitcoin miners right next to oil fields to feed off what would otherwise be waste gas flaring can live outside of central bank logic.
If this trend continues, more and more of the world’s GDP will rest directly on EROI logic. The materials part will be 90% eigenmaterials. The long tail of specialty materials will still have regular market dynamics. Monetary policy will lose traction.
Even most biological materials (crops, fine organic chemicals) are mostly eigenmaterials (nitrogen, phosphorus) plus energy.
Macroeconomics is turning into a kind of planetary geology, with a bunch of key cycles like nitrogen, carbon etc. You need some plate tectonics to keep those cycles going (which is why Mars is a shithole — no plate tectonics). We’ll see the macroeconomy start to resemble plate tectonics (protocol tectonics?) by the end of the century. Well, not us…most of us will be dead.
The other piece of the argument is some sort of universal functional decomposition where all activity reduces to “intelligence, energy, and dexterity” (an idea they attribute to Isaiah Taylor). This part feels not quite right. Intelligence is now a strong function of energy and no longer fundamental. “Dexterity” here points to robotics, and thence to the fundamental physical phenomenon being harnessed (dense magnetic fields in an eigenmaterial (neodymium) flexibly deployed). But there are dozens more such phenomena. For eg EUV machines are about hitting molten drops of tin with lasers. Jet turbine blades are about growing large nickel-alloy crystals.
Replacing “dexterity” with “action” doesn’t quite cover it. What we want to point to is the full spectrum of fundamental physical phenomena being harnessed. “Embodiment expressivity” of the stack perhaps.
