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Interestingly, however, there is one last bastion of economic activity that proved remarkably resistant to the triumph of the market: firms, companies and, later, corporations. Think about it: market-societies, or capitalism, are synonymous with firms, companies, corporations. And yet, quite paradoxically, firms can be thought of as market-free zones. Within their realm, firms (like societies) allocate scarce resources (between different productive activities and processes). Nevertheless they do so by means of some non-price, more often than not hierarchical, mechanism!

they are the last remaining vestiges of pre-capitalist organisation within… capitalism

The miracle of the market, according to Hayek, was that it managed to signal to each what activity is best for herself and for society as a whole without first aggregating all the disparate and local pieces of knowledge that lived in the minds and subconscious of each consumer, each designer, each producer. How does this signalling happen? Hayek’s answer (borrowed from Smith) was devastatingly simple: through the movement of prices

The idea of spontaneous order comes from the Scottish Enlightenment, and in particular David Hume who, famously, argued against Thomas Hobbes’ assumption that, without some Leviathan ruling over us (keeping us “all in awe”), we would end up in a hideous State of Nature in which life would be “nasty, brutish and short”

Hume’s counter-argument was that, in the absence of a system of centralised command, conventions emerge that minimise conflict and organise social activities (including production) in a manner that is most conducive to the Good Life

Hayek’s argument was predicated upon the premise that knowledge is always ‘local’ and all attempts to aggregate it are bound to fail. The world, in his eyes, is too complex for its essence to be distilled in some central node; e.g. the state.

The idea here is that, through this ever-evolving process, people’s capacities, talents and ideas are given the best chance possible to develop and produce synergies that promote the Common Good. It is as if an invisible hand guides Valve’s individual members to decisions that both unleash each person’s potential and serve the company’s collective interest (which does not necessarily coincide with profit maximisation).

Valve differs in that it insists that its employees allocate 100% of their time on projects of their choosing

In contrast, Smith and Hayek concentrate their analysis on a single passion: the passion for profit-making

Hume also believed in a variety of signals, as opposed to Hayek’s exclusive reliance on price signalling

One which, instead of price signals, is based on the signals Valve employees emit to one another by selecting how to allocate their labour time, a decision that is bound up with where to wheel their tables to (i.e. whom to work with and on what)

He pointed out simply and convincingly that the cost of subcontracting a good or service, through some market, may be much larger than the cost of producing that good or service internally. He attributed this difference to transactions costs and explained that they were due to the costs of bargaining (with contractors), of enforcing incomplete contracts (whose incompleteness is due to the fact that some activities and qualities cannot be fully described in a written contract), of imperfect monitoring and asymmetrically distributed information, of keeping trade secrets… secret, etc. In short, contractual obligations can never be perfectly stipulated or enforced, especially when information is scarce and unequally distributed, and this gives rise to transaction costs which can become debilitating unless joint production takes place within the hierarchically structured firm. Optimal corporation size corresponds, in Coase’s scheme of things, to a ‘point’ where the net marginal cost of contracting out a service or good (including transaction costs) tends to zero 

As Coase et al explained in the previous section, the whole point about a corporation is that its internal organisation cannot turn on price signals (for if it could, it would not exist as a corporation but would, instead, contract out all the goods and services internally produced)

Each employee chooses (a) her partners (or team with which she wants to work) and (b) how much time she wants to devote to various competing projects. In making this decision, each Valve employee takes into account not only the attractiveness of projects and teams competing for their time but, also, the decisions of others.

Hume thought that humans are prone to all sorts of incommensurable passions (e.g. the passion for a video game, the passion for chocolate, the passion for social justice) the pursuit of which leads to many different types of conventions that, eventually, make up our jointly produced spontaneous order

Valve is, at least in one way, more radical than a traditional co-operative firm. Co-ops are companies whose ownership is shared equally among its members. Nonetheless, co-ops are usually hierarchical organisations. Democratic perhaps, but hierarchical nonetheless. Managers may be selected through some democratic or consultative process involving members but, once selected, they delegate and command their ‘underlings’ in a manner not at all dissimilar to a standard corporation. At Valve, by contrast, each person manages herself while teams operate on the basis of voluntarism, with collective activities regulated and coordinated spontaneously via the operations of the time allocation-based spontaneous order mechanism described above.

In contrast, co-ops and Valve feature peer-based systems for determining the distribution of a firm’s surplus among employees.

There is one important aspect of Valve that I did not focus on: the link between its horizontal management structure and its ‘vertical’ ownership structure. Valve is a private company owned mostly by few individuals. In that sense, it is an enlightened oligarchy: an oligarchy in that it is owned by a few and enlightened in that those few are not using their property rights to boss people around. The question arises: what happens to the alternative spontaneous order within Valve if some or all of the owners decide to sell up?

One line of reasoning suggests that self-aggrandising individuals who lived in lands of plenty ascended the social ranks by exploiting their surplus - first through feasts or gift-giving, and later by outright dominance

At the group level, argue anthropologists Peter Richerson and Robert Boyd, improved coordination and division of labour allowed more complex societies to outcompete the simpler, more equal societies

From a mechanistic perspective, others argued that once inequality took hold - as when uneven resource-distribution benefited one family more than others - it simply became ever more entrenched. The advent of agriculture and trade resulted in private property, inheritance, and larger trade networks, which perpetuated and compounded economic advantages.

Many theories about the spread of stratified society begin with the idea that inequality is somehow a beneficial cultural trait that imparts efficiencies, motivates innovation and increases the likelihood of survival. But what if the opposite were true?

In a demographic simulation that Omkar Deshpande, Marcus Feldman and I conducted at Stanford University, California, we found that, rather than imparting advantages to the group, unequal access to resources is inherently destabilising and greatly raises the chance of group extinction in stable environments.

Counterintuitively, the fact that inequality was so destabilising caused these societies to spread by creating an incentive to migrate in search of further resources. The rules in our simulation did not allow for migration to already-occupied locations, but it was clear that this would have happened in the real world, leading to conquests of the more stable egalitarian societies - exactly what we see as we look back in history.

In other words, inequality did not spread from group to group because it is an inherently better system for survival, but because it creates demographic instability, which drives migration and conflict and leads to the cultural - or physical - extinction of egalitarian societies.

Egalitarian societies may have fostered selection on a group level for cooperation, altruism and low fertility (which leads to a more stable population), while inequality might exacerbate selection on an individual level for high fertility, competition, aggression, social climbing and other selfish traits.

In a 3D printer today, what you can make is limited by the size of the machine. The geometry is external

is the Lego tower is more accurate than the child because the constraint of assembling the bricks lets you detect and correct errors

That's the exponential scaling for working reliably with unreliable parts

Because the parts have a discrete state, it means in joining them you can detect and correct errors

detect and correct state to correct errors to get an exponential reduction in error, which gives you an exponential increase in complexity

The next one is you can join Lego bricks made out of dissimilar materials.

The last one is when you're done with Lego you don't put it in the trash; you take it apart and reuse it because there's state in the materials. In a forest there's no trash; you die and your parts get disassembled and you're made into new stuff. When you make a 3D print or laser cut, when you're done there's recycling attempts but there's no real notion of reusing the parts

The metrology coming from the parts, detecting and correcting errors, joining dissimilar materials, disconnecting, reusing the components

On the very smallest scale, the most exciting work on digital fabrication is the creation of life from scratch. The cell does everything we're talking about. We've had a great collaboration with the Venter Institute on microfluidic machinery to load designer genomes into cells. One step up from that we're developing tabletop chip fab instead of a billion dollar fab, using discrete assembly of blocks of electronic materials to build things like integrated circuits in a tabletop process

a child can make a Lego structure bigger than themself

There's a series of books by David Gingery on how to make a machine shop starting with charcoal and iron ore.

There are twenty amino acids. With those twenty amino acids you make the motors in the molecular muscles in my arm, you make the light sensors in my eye, you make my neural synapses. The way that works is the twenty amino acids don't encode light sensors, or motors. They’re very basic properties like hydrophobic or hydrophilic. With those twenty properties you can make you. In the same sense, digitizing fabrication in the deep sense means that with about twenty building blocks—conducting, insulating, semiconducting, magnetic, dielectric—you can assemble them to create modern technology

By discretizing those three parts we can make all those 500,000 resistors, and with a few more parts everything else.

Now, there's a casual sense, which means a computer controls something to make something, and then there's the deep sense, which is coding the materials. Intellectually, that difference is everything but now I'm going to explain why it doesn't matter.

Then in turn, the next surprise was they weren't there for research, they weren't there for theses, they wanted to make stuff. I taught additive, subtractive, 2D, 3D, form, function, circuits, programming, all of these skills, not to do the research but just using the existing machines today

What they were answering was the killer app for digital fabrication is personal fabrication, meaning, not making what you can buy at Walmart, it’s making what you can't buy in Walmart, making things for a market of one person

The minicomputer industry completely misread PCs

the Altair was life changing for people like me. It was the first computer you could own as an individual. But it was almost useless

It was hard to use but it brought the cost from a million dollars to 100,000 and the size from a warehouse down to a room. What that meant is a workgroup could have one. When a workgroup can have one it meant Ken Thompson and Dennis Ritchie at Bell Labs could invent UNIX—which all modern operating systems descend from—because they didn't have to get permission from a whole corporation to do it

At the PC stage what happened is graphics, storage, processing, IO, all of the subsystems got put in a box

To line that up with fabrication, MIT's 1952 NC Mill is similar to the million-dollar machines in my lab today. These are the mainframes of fab. You need a big organization to have them. The fab labs I'll tell you about are exactly analogous to the cost and complexity of minicomputers. The machines that make machines I'll tell you about are exactly analogous to the cost and complexity of the hobbyist computers. The research we're doing, which is leading up to the Star Trek Replicator, is what leads to the personal fabricator, which is the integrated unit that makes everything

conducting, resistive, insulating.

The fab lab is 2 tons, a $100,000 investment. It fills a few thousand square feet, 3D scanning and printing, precision machining, you can make circuit boards, molding and casting tooling, computer controlled cutting with a knife, with a laser, large format machining, composite layup, surface mount rework, sensors, actuators, embedded programming— technology to make technology.

Ten years you can just plot this doubling. Today, you can send a design to a fab lab and you need ten different machines to turn the data into something. Twenty years from now, all of that will be in one machine that fits in your pocket.

We've been living with this notion that making stuff is an illiberal art for commercial gain and it's not part of the means of expression. But, in fact, today, 3D printing, micromachining, and microcontroller programming are as expressive as painting paintings or writing sonnets but they're not means of expression from the Renaissance. We can finally fix that boundary between art and artisans

You don't go to a fab lab to get access to the machine; you go to the fab lab to make the machine.

Over the next maybe five years we'll be transitioning from buying machines to using machines to make machines. Self-reproducing machines

But they still have consumables like the motors, and they still cut or squirt. Then the interesting transition comes when we go from cutting or printing to assembling and disassembling, to moving to discretely assembled materials

because if anybody can make anything anywhere, it challenges everything

Now, the biggest surprise for me in this is I thought the research was hard. It's leading to how to make the Star Trek Replicator. The insight now is that's an exercise in embodied computation—computation in materials, programming their construction. Lots of work to come, but we know what to do

And that's when you do tabletop chip fab or make airplanes. That's when technical trash goes away because you can disassemble. 

irritated by the maker movement for the failure in mentoring

At something like a Maker Faire, there's hall after hall of repeated reinventions of bad 3D printers and there isn't an easy process to take people from easy to hard

We started a project out of desperation because we kept failing to succeed in working with existing schools, called the Fab Academy. Now, to understand how that works, MIT is based on scarcity. You assume books are scarce, so you have to go there for the library; you assume tools are scarce, so you have to go there for the machines; you assume people are scarce, so you have to go there to see them; and geography is scarce. It adds up to we can fit a few thousand people at a time. For those few thousand people it works really well. But the planet is a few billion people. We're off by six orders of magnitude. 

Next year we're starting a new class with George Church that we've called "How to Grow Almost Anything", which is using fab labs to make bio labs and then teach biotech in it. What we're doing is we're making a new global kind of university

Amusingly, I went to my friends at Educause about accrediting the Fab Academy and they said, "We love it. Where are you located?" And I said, "Yes" and they said, "No." Meaning, "We're all over the earth." And they said, "We have no mechanism. We're not allowed to do that. There's no notion of global accreditation."

Then they said something really helpful: "Pretend."

Once you have a basic set of tools, you can make all the rest of the tools

The way the Fab Academy works, in computing terms, it's like the Internet. Students have peers in workgroups, with mentors, surrounded by machines in labs locally. Then we connect them globally by video and content sharing and all of that. It's an educational network. There are these critical masses of groups locally and then we connect them globally

You still have Microsoft or IBM now but, with all respect to colleagues there, arguably that's the least interesting part of software

To understand the economic and social implications, look at software and look at music to understand what's happening now for fabrication

There's a core set of skills a place like MIT can do but it alone doesn't scale to a billion people. This is taking the social engineering—the character of MIT—but now doing it on this global scale.

Mainframes didn't go away but what opened up is all these tiers of software development that weren't economically viable

If you look at music development, the most interesting stuff in music isn't the big labels, it's all the tiers of music that weren't viable before

You can make music for yourself, for one, ten, 100, 1,000, a million. If you look at the tracks on your device, music is now in tiers that weren't economically viable before. In that example it's a string of data and it becomes a sound. Now in digital fab, it's a string of data and it becomes a thing.

What is work? For the average person—not the people who write for Edge, but just an average person working—you leave home to go to a place you'd rather not be, doing a repetitive operation you'd rather not do, making something designed by somebody you don't know for somebody you'll never see, to get money to then go home and buy something. But what if you could skip that and just make the thing?

It took about ten years for the dot com industry to realize pretty much across the board you don't directly sell the thing. You sell the benefits of the thing

2016 it's in Shenzhen because they're pivoting from mass manufacturing to enabling personal fabrication. We've set Shenzhen as the goal in 2016 for Fab Lab 2.0, which is fab labs making fab labs

To rewind now, you can send something to Shenzhen and mass manufacture it. There's a more interesting thing you can do, which is you go to market by shipping data and you produce it on demand locally, and so you produce it all around the world.

But their point was a lot of printers producing beautiful pages slowly scales if all the pages are different

In the same sense it scales to fabricate globally by doing it locally, not by shipping the products but shipping the data.

It doesn't replace mass manufacturing but mass manufacturing becomes the least interesting stuff where everybody needs the same thing. Instead, what you open up is all these tiers that weren't viable before

There, they consider IKEA the enemy because IKEA defines your taste. Far away they make furniture and flat pack it and send it to a big box store. Great design sense in Barcelona, but 50 percent youth unemployment. A whole generation can't work. Limited jobs. But ships come in from the harbor, you buy stuff in a big box store. And then after a while, trucks go off to a trash dump. They describe it as products in, trash out. Ships come in with products, trash goes out

The bits come and go, globally connected for knowledge, but the atoms stay in the city.

instead of working to get money to buy products made somewhere else, you can make them locally

The biggest tool is a ShotBot 4'x8'x1' NC mill, and you can make beautiful furniture with it. That's what furniture shops use

Anything IKEA makes you can make in a fab lab

it means you can make many of the things you consume directly rather than this very odd remote economic loop

the most interesting part of the DIY phone projects is if you're making a do-it-yourself phone, you can also start to make the things that the phones talk to. You can start to build your own telco providers where the users provide the network rather than spending lots of money on AT&T or whoever

Traditional manufacturing is exactly replaying the script of the computer companies saying, "That's a toy," and it's shining a light to say this creates entirely new economic activity. The new jobs don't come back to the old factories. The ability to make stuff on demand is creating entirely new jobs

To keep playing that forward, when I was in Barcelona for the meeting of all these labs hosted by the city architect and the city, the mayor, Xavier Trias, pushed a button that started a forty-year countdown to self-sufficiency. Not protectionism

I need high-torque efficient motors with integrated lead screws at low cost, custom-produced on demand. All sorts of the building blocks that let us do what I'm doing currently rest on a global supply chain including China's manufacturing agility

The short-term answer is you can't get rid of them because we need them in the supply chain. But the long-term answer is Shenzhen sees the future isn't mass producing for everybody. That's a transitional stage to producing locally

My description of MIT's core competence is it's a safe place for strange people

The real thing ultimately that's driving the fab labs ... the vacuum we filled is a technical one. The means to make stuff. Nobody was providing that. But in turn, the spaces become magnets. Everybody talks about innovation or knowledge economy, but then most things that label that strangle it. The labs become vehicles for bright inventive people who don't fit locally. You can think about the culture of MIT but on this global scale

My allegiance isn't to any one border, it's to the brainpower of the planet and this is building the infrastructure to scale to that brainpower

If you zoom from transistors to microcode to object code to a program, they don't look like each other. But if we take this room and go from city, state, country, it's hierarchical but you preserve geometry

Computation violates geometry unlike most anything else we do

The reason that's so important for the digital fabrication piece is once we build molecular assemblers to build arbitrary systems, you don't want to then paste a few lines of code in it. You need to overlay computation with geometry. It's leading to this complete do-over of computer science

If you take digital fab, plus the real sense of Internet of Things—not the garbled sense—plus the real future of computing aligning hardware and software, it all adds up to this ability to program reality

I run a giant video infrastructure and I have collaborators all over the world that I see more than many of my colleagues at MIT because we're all too busy on campus. The next Silicon Valley is a network, it's not a place. Invention happens in these networks.

When Edwin Land was kicked out of Polaroid, he made the Rowland Institute, which was making an ideal research institute with the best facilities and the best people and they could do whatever they want. But almost nothing came from it because there was no turnover of the gene pool, there was no evolutionary pressure.  

the wrong way to do research, which is to believe there's a privileged set of people that know more than anybody else and to create a barrier that inhibits communication from the inside to the outside

you need evolutionary pressure, you need traffic, you need to be forced to deal with people you don't think you need to encounter, and you need to recognize that to be disruptive it helps to know what people know

For me the hardest thing isn't the research. That's humming along nicely. It's that we're finding we have to build a completely new kind of social order and that social entrepreneurship—figuring out how you live, learn, work, play—is hard and there's a very small set of people who can do that kind of organizational creation.