How Build Wealth in the New Economy

@CharlieLongren

TLDR: In order to build wealth in the Knowledge Age, we will utilize attention in ways that are similar to the way capital was used in the Industrial Age.

The past is no indicator of the future, but the past does provide the best metrics for predicting future outcomes. In order to predict the ways people will build wealth in the future, it is important that we look at the ways it was done in the past. In the Industrial Age physical capital was the scarce resource. In the Knowledge Age, attention is the most scarce resource, so if we examine how people accumulated and created value with physical capital in the Industrial Age, we should be able to make constructive predictions about how to accumulate and create value with attention in the Knowledge Age.

At the most granular level, we can trade our attention for goods and services through employment. Employment is how most individuals have earned a living in the Industrial Age, and it is likely how most individuals will earn in the Knowledge Age. I think the key difference will be that in the Knowledge Age most individuals will be employed to aggregate and preserve attention rather than capital.

The individual's attention is limited and has subjective value, much like physical capital.10 acres of farmland and an office building have different values to different individuals in society. Likewise, a doctor’s attention and a computer programmer’s attention both have value that is limited and subjective. Because of the limitations and subjectivity of a single individual’s attention, it is highly unlikely that trading our individual attention for goods will be an effective way to build wealth going forward.1

For people who are not born into an abundance of capital, it is important that we find ways to accumulate wealth other than trading our attention for a wage. Again, we can examine the ways physical capital has been effectively used in the Industrial Age, and make reasonable conclusions about how to most effectively use attention in the Knowledge Age. In the Industrial Age wealth was built through either creating value for society or providing capital to those who create value. I predict that the primary ways to create value in the Knowledge Age will be to save individuals time, to aggregate attention, or to be effective at allocating attention.

Actions that increase the amount of time society has will have similar impact as the same actions did in the Industrial Age. However, the marginal cost of deploying time saving technology has decreased to near zero because of digital technology. This means that time saving businesses will start to look different than they did in the Industrial Age. It is possible that software replaces many of the time saving industries of the Industrial Age. Lawyers, diagnosticians, and financial services professionals are all currently seeing large parts of their industries digitized and automated. In the Knowledge Age building better software will be the primary way to save an individual's time, therefore it will be a common way that individuals build wealth.

Aggregating attention in the Knowledge Age is the same as aggregating capital in the Industrial Age. In order to create an establishment it is important to aggregate the most scarce resource and deploy that resource effectively. An entity can aggregate attention by building communities. While in the Industrial Age organizations attracted people by offering them the capital, in the Knowledge Age the only way to attract great people will be to offer them a place to find and/or fulfill their purpose. When we realize that attention is our most scarce and valuable resource, we are less likely to trade our attention for capital alone. Entities who are able to build communities are likely to be the wealthiest among us in an attention economy.

Lastly, entities who effectively allocate aggregated attention provide an essential service to society. In the Industrial Age, allocators of capital were investors, traders, and venture capitalists. Though allocators of attention in the Knowledge Age may have the same titles they are unlikely to have the same function because the nature of capital and the nature of attention are fundamentally different. Physical capital is tangible and attention is ethereal. Future allocators of attention will need the ability to recognize where that attention is best deployed, and they will also need the ability to craft compelling narratives. I believe that allocators of capital will continue to be society’s best “earners” because recognizing where to best deploy resources and crafting compelling stories are both uncommon talents.

We can predict that creating value for society through actions like saving time, aggregating attention, and allocating attention will be the one of the primary ways to build wealth. Another way will be to provide aggregated attention to individuals who create value. Many organizations have spent the past decade building platforms that aggregate the world's attention. Most of those platforms sell that attention to the highest bidders in the form of advertising. In the future, it is possible that those platforms will be able to lend or invest their attention in individuals and organizations that are otherwise creating value. For example, Twitter has implemented Lightning Network tipping on the platform. Since the Lightning Network is not a company or organization but is instead open source software, Twitter's implementation of the network is akin to an investment in the future of the technology rather than a business partnership or consumer relationship. It is likely that companies who aggregate attention will enter into similar relationships going forward. In the Knowledge Age, lending and investing attention will be important tools for building and maintaining wealth.

1 Using sound money makes it much easier to build wealth by trading your attention for a wage, conversely, in an economy where most individuals use unsound money (such as the world economy at present) it will be nearly impossible to build wealth by simply trading attention for currency.