and the increasingly questionable future of civilisation.
The pub was warm and Greg, who had been studying atmospheric circulation for most of the afternoon, suggested it was probably the accumulated thermal output of seven people drinking beer and explaining things they didn’t entirely understand.
“Six,” said Tony. “There are six of us.”
“Seven if you count the barman.”
“He’s not listening.”
“Doesn’t mean he’s not productive.”
Outside, the November sky had adopted that peculiar Norwegian shade of bluegrey in which the clouds, mountains and fjord appear to have entered into an agreement not to distinguish themselves, while inside the Australians were losing a Test match again on television, which was at least something recognisable in a world increasingly determined to become unfamiliar.
“Fuck me,” said Tony. “What a series, though. Absolutely magnificent until the last day, and then the whole bloody batting order thought they might be late late for the Sunday flight.”
“South Africa bowled well,” said Kelly.
“Yeh, not an explanation for eleven grown men forgetting that the whole f*cking point of the game is to score runs while not getting out.”
Anna looked up.
“Careful, Tony, you’ll start sounding like Marcin. He’s at the bar, explaining to the barman that the current price of beer is a failure of economic theory, costs 5 kroner a liter to produce and goes through so many fucking middle men that we are paying 30 times that for a small fucking glass”
Marcin returned with six glasses, a newspaper, and an expression suggesting he’d discovered an error in the foundations of Western civilisation but had decided to have a drink before reporting it.
“Four fucking terawatt-hours,” he announced.
“Six beers,” Tony replied. “And thank Christ for that.”
“New fucking data-centre proposals. If they eventually build and operate the whole thing at full capacity. Think about it. Four terawatt-hours represents an enormous quantity of physical work, whether you use it to run machinery, produce chemicals, operate trains, heat buildings or process information. It’s not some abstract number you can move between columns in a spreadsheet and assume everything comes out the same. You have to produce it somewhere, deliver it somewhere, and use it when it’s available, and every part of that process represents real infrastructure, materials, labour and natural resources.”
“Yes,” said Kelly. “Which is why electricity costs money.”
“Of course it costs money, but paying money for something doesn’t automatically mean you have paid for everything involved in making it available, or for what happens elsewhere when you use it. That’s the bit I find interesting. We’ve spent generations building an electricity system, and along comes someone with a business plan involving several thousand cabinets of extremely expensive electronics and says he’d like a substantial share of it, preferably at a predictable price, with reliable supply and a grid connection before the machines become obsolete.”
“That’s called investment,” said Isobel.
“Yes, and I have absolutely nothing against investment, provided we remember that investing money isn’t the same thing as creating the resources the investment requires. You can raise ten billion dollars tomorrow, build a factory to manufacture chips, buy a piece of land, put up a warehouse and issue a press release announcing that you’ve constructed the future, but when you turn the switch on you still need electricity, and the electricity doesn’t give a shit about your valuation.”
Tony raised his glass.
“Now there’s a slogan for the prospectus.”
Anna pulled the newspaper across the table and studied the picture of an industrial development surrounded by the sort of immaculate green forest normally included in architectural renderings just before somebody removes it.
“Here’s what I don’t understand,” she said. “Norway spent the better part of a century turning falling water into an industrial advantage, and it was a bloody sensible thing to do because once you’ve built the dams, turbines and transmission networks, you’ve got an extraordinary productive system that can keep delivering electricity for generations with maintenance and renewal. That system became part of the foundation of a society, supporting industry, jobs and public revenue, and now we’re treating access to its output as though it were simply another commodity to be auctioned to whoever arrives with the largest financial projection.”
“That’s how markets allocate scarce resources,” said Kelly.
“Yes, Kelly, I know that’s how markets allocate scarce resources. The question is whether the market knows what the resource is scarce for. Because there’s a fairly important difference between allocating electricity efficiently among competing consumers and deciding whether society ought to commit an increasing portion of its physical capacity to a particular activity in the first place.”
“Markets signal what people value.”
“Markets signal what people are willing and able to pay, which is related to what people value but not identical to it, otherwise the bloke who owns a superyacht would be demonstrating that his third swimming pool is more socially valuable than a village hospital, and we’d have to congratulate him on his extraordinary contribution to public health.”
Tony nodded.
“To be fair, if the hospital was on the yacht, you could probably charge quite a lot.”
“Please don’t give them ideas.”
Marcin had begun drawing something on a beer mat.
“Look, the marginal electricity price isn’t the villain here. In fact, marginal pricing is quite a clever way to coordinate a complicated system, because generators bid into the market, demand has to be met, and the marginal accepted offer helps establish the clearing price. The trouble begins when we take a mechanism designed to coordinate supply and demand and start treating its outcomes as a complete theory of human welfare.”
“How so?” asked Isobel.
“Well, imagine we’re using twenty-nine terawatt-hours annually in a region, and somebody proposes adding another four. If the supply system can’t expand quickly enough, or transmission constraints prevent additional electricity from arriving, then the added demand can push the marginal price upwards, which means the new consumer hasn’t merely purchased four terawatt-hours at the market price; it may also have changed the price paid by everyone else who is exposed to that market.”
“Which is why we build more capacity,” said Kelly.
“Certainly, and if you can build it in time, at a reasonable cost, then excellent. But what happens if you can’t? The new demand is physically real from the moment the machines start running, while the new generating capacity might be ten years away, assuming somebody has actually proposed building it rather than merely including it in a slide labelled ‘Strategic Energy Partnership’.”
Tony looked interested.
“Strategic Energy Partnership. Is that what you call a power station before you’ve built it?”
“More or less.”
“And once you’ve built it?”
“An asset.”
“And if you never build it?”
“An opportunity.”
“Fucking marvellous.”
Marcin continued.
“Suppose the extra demand increases electricity prices by five øre per kilowatt-hour. Across twenty-nine terawatt-hours, that’s 1.45 billion kroner in additional annual electricity expenditure at unchanged consumption, although of course you’d need to consider contracts, changes in demand, and where the extra revenue goes before calling that the social cost. Some of that money goes to publicly owned producers, which matters enormously in Norway. But you still have households and existing firms facing higher costs, and potentially industrial activity becoming less competitive. The market doesn’t necessarily make the new investor compensate everybody who loses from those effects.”
Kelly frowned.
“But you’re talking about a price effect that might happen, not something we’ve actually calculated for this particular plant.”
“Correct, which is why we shouldn’t pretend a hypothetical five-øre increase is a precise forecast. The point is the mechanism. Even a relatively small change in a widely applied electricity price can shift a surprisingly large amount of money, and when politicians announce a massive new consumer without discussing that consequence, they’re telling us everything about the investment and remarkably little about its cost.”
Tony examined the beer mat.
“So what you’re saying is that the bloke buying the last sausage can make everyone else’s sausages more expensive.”
“Marcin, I’ve had a few. The analogy is operating at the absolute limit of my available processing capacity, and frankly I don’t think the grid connection can handle anything more sophisticated.”
Greg turned his phone around to reveal an extraordinary arrangement of swirling colours over the Northern Hemisphere.
“Speaking of systems that aren’t doing what they’re supposed to, the polar vortex has apparently decided against forming a respectable vortex.”
“Looks like the Australian batting order,” said Anna. “A lot of movement, no coherent structure, and absolutely no indication that anyone knows where they’re supposed to be.”
“That’s not fair,” said Tony. “The polar vortex can play spin.”
Greg swiped to another chart.
“And look at the Pacific. The warm-water anomaly around the developing El Niño is getting rather extraordinary, and there’s this interesting atmospheric wedge over California that I haven’t quite worked out.”
Anna studied the screen.
“It’s remarkable, really. We’re clever enough to model the atmosphere, oceans and climate with extraordinary detail, and yet we’re still finding new ways for the system to surprise us.”
“That’s science,” said Greg. “You keep improving the description because the system doesn’t care how confident you were about the last one.”
Marcin looked up from his beer mat.
“Which is exactly what bothers me about the data-centre investment forecasts. We’ve got an energy system embedded in an enormous physical environment with constraints we can measure but not wish away, and meanwhile people are constructing exponential revenue projections based on computing equipment that hasn’t been manufactured, powered by electricity that hasn’t necessarily been secured, to satisfy demand that hasn’t yet materialised.”
Kelly sighed.
“Oh, for fuck’s sake, Marcin, we were enjoying the weather.”
Isobel took the pen from Marcin. “Right, I’ve got a better question. What exactly happens to the computing equipment after five years?”
“It depends,” said Kelly. “Some gets reused, some gets resold, some gets repurposed for less demanding workloads, and some gets recycled.”
“Which is perfectly reasonable,” said Anna. “Nobody’s arguing that every computer vanishes into a hole after five years. But we should acknowledge that the most advanced computing hardware has a comparatively short economic life, while the infrastructure supporting it can last for decades, and that creates a rather interesting mismatch between the duration of the physical investment and the duration of the commercial opportunity.”
“Explain,” said Tony.
“Well, imagine your great great grandfather helped build a hydroelectric power station, by fucking hand, which was an extraordinary achievement and a great fusking investment because its output might support productive activity for centuries. Your grandfather helped expand the transmission network, also a long-lived investment, and now our generation is told that we urgently need more grid capacity to operate a collection of advanced processors that might be commercially outdated before the transmission project has finished commissioning.”
“Right.”
“So we invest in the transmission line, build the data centre, install the chips and run them, and five years later somebody announces a new processor that performs the same calculations at a fraction of the cost, which is wonderful technologically, except the financial model now requires the operator to replace much of the equipment to remain competitive, and that replacement requires another round of manufacturing, materials, energy and capital.”
“Which produces better technology,” said Kelly.
“So we build a dam that lasts a hundred years, then use it to power a computer that lasts five years, which helps us design another computer that lasts five years, which helps us advertise the next computer that lasts five years, and every time we do that somebody announces another technological revolution?”
“That’s one possible trajectory.”
“And if the computer spends most of its time making pictures of dogs wearing sunglasses?”
“Then we’d want to ask whether the social value of those pictures justifies the resources consumed.”
Tony considered this for a moment.
“Actually, I reckon we’re asking the wrong fucking question. How many times can you do it?”
“Do what?” asked Kelly.
“Replace the fucking computers. Because every time you replace them, somebody’s got to dig up the materials, refine them, manufacture the components, build the chips, ship the whole lot around the planet and then run the bloody things using electricity that has to come from somewhere. And apparently the plan is to keep doing this indefinitely, with more computers each time, because if you don’t grow faster than last year the shareholders start behaving like you’ve run over their fucking pet fucking poodle.”
“Well, technology becomes more efficient,” said Isobel.
“Of course it does, and that’s magnificent, but if every improvement in efficiency leads to use twice as fucking much building twice as many machines, what exactly have we saved? We’ve invented a better bucket and immediately decided to carry ten times as much water, and when somebody asks why we’re using so much fucking water, we explain that the buckets are getting more efficient.”
Marcin put his glass down.
“That’s actually the crucial distinction. Efficiency improvements reduce the resource intensity of an activity, but whether total resource consumption falls depends on what happens to the scale of the activity. You can halve the energy required for a calculation and still double total energy consumption if the number of calculations grows fourfold. There’s no contradiction in that. The problem comes when the reduction in energy per calculation is presented as evidence of environmental progress without examining the growth in total demand.”
“And here’s where it gets properly fucking ridiculous,” Anna continued. “We already know the planet has limits. This isn’t some fringe theory being scribbled on a beer mat by people who’ve had too much to drink. We’ve spent decades measuring what human activity is doing to the climate, ecosystems, oceans, freshwater, land and the chemical composition of the environment, and the scientists are telling us that we’ve already moved outside the safe operating space for seven of the nine planetary boundaries.”
“Seven?” asked Tony.
“Seven. The 2026 assessment confirms it. Climate change, biosphere integrity, land-system change, freshwater, nitrogen and phosphorus cycles, novel entities and ocean acidification. Seven systems already beyond their assessed boundaries, with pressures worsening. That’s not saying seven irreversible tipping points have already occurred, but it does mean we’re pushing systems that support human civilisation beyond their established safe ranges.”
“Jesus fuckign wept”
“Did he, actually he probably fucking f\did with the thorns and the vinegar and the fucking great big javleing through him, anyway having established that incovenient truth, what does the global financial system decide we urgently need? More enormous buildings full of electronics, more electricity consumption, more mining, more manufacturing and an investment cycle that requires the machines to be replaced every few years because the next generation of machines is better at doing whatever the previous generation was doing.”
Kelly leaned forward.
“You’re mixing up the effects of the entire global economy with a single industry. AI isn’t responsible for crossing seven planetary boundaries.”
“Nobody said it was, Kelly. That’s precisely why the context matters. If you were living in a world with abundant unused ecological capacity, you might reasonably evaluate a new industry’s resource requirements rather differently. But we’re not. We’re already outside several critical limits, we’re struggling to reduce the pressures that put us there, and along comes a new industrial expansion whose advocates appear to believe that the relevant environmental question is whether the building has a green roof, a renewable electricity contract and will make the owners rich enough to build a bunker i arsing New Zealand in which to “avoid” the fruits of their own fucking labours”
Tony pointed at the newspaper.
“And a fucking picture of a tree.”
“Sometimes two trees,” smirked Isobel.
“Exactly,” Anna replied. “We’ve turned the existence of a sustainability report into evidence of sustainability, which is rather like treating a doctor’s invoice as proof of fucking remission.”
Marcin was smiling now.
“Oh yes and the entire investment model assumes that expanding future production is desirable because expanding future production generates expanding future income, but it doesn’t adequately distinguish between production that increases our long-term capacity to live well and production that merely accelerates the turnover of resources. If you consume more materials today to manufacture equipment that becomes obsolete tomorrow, then replace it with more materials the following day, you can generate a great deal of economic activity without necessarily leaving society with more durable productive capacity.”
“That’s the fucking model though isn’t it, the one that has made us all fucking wealthy, consumer capitalism,” said Kelly.
“Yes, and it becomes particularly interesting when the rate of material turnover accelerates while the ecological capacity to support that turnover is already under pressure. Because at some point the physical cost of maintaining the system begins to matter more than its financial valuation, and no amount of clever accounting will persuade a copper deposit to contain more copper or a damaged ecosystem to recover faster.”
Tony shook his head.
“So we’re digging up the planet to build machines that tell us how to dig up the planet more efficiently. And if we do it good enough, we can dig up even more of it.”
“Fucking Brilliant. We are running out of shit because we have fucking eaten it all then we’ve invented a machine that helps us run out of things faster, and apparently the people responsible are being offered stock options.”
Greg had been quiet for several minutes, staring at a diagram of the Pacific Ocean.
“There’s something similar going on with the climate,” he said. “Not exactly the same mechanism, obviously, but the mistake is familiar. People talk about a planetary boundary as though it’s a line painted on the road and the moment you cross it, something explodes, when in reality you’re changing the conditions under which a complex system operates, and those changes can interact, amplify one another or make the system less resilient to whatever happens next.”
“Like the polar vortex?” asked Tony.
“Yes, although don’t start claiming that every unusual vortex pattern proves we’ve passed a particular tipping point, because that’s not how attribution works. But look at the scale of what we’re discussing. We have enormous stores of heat in the oceans, changing circulation patterns, and these increasingly unusual configurations of temperature and atmospheric pressure, and meanwhile somebody’s investment presentation is assuming that the world in 2040 will behave exactly like the world in 2020, except everyone will have four artificial-intelligence subscriptions.”
“Five,” said Kelly. “One for the dog.”
“Yeh and the dog gets the AI sunglasses with a premium subscription and has a billion fucking followers that watch him lick his balls and chase the occasional cat”
Anna laughed.
“But that’s the extraordinary asymmetry, isn’t it? We discount future ecological damage because it occurs outside the investment horizon, while simultaneously capitalising decades of imagined future earnings because those happen to support the share price today. The future is apparently too uncertain to justify paying for the consequences of our actions, but sufficiently certain to justify borrowing trillions against revenues we haven’t earned.”
Marcin raised his glass.
“Now that is a genuinely remarkable achievement of modern finance. We’ve managed to invent a future that is simultaneously worthless when it contains costs and extraordinarily valuable when it contains profits.”
“Schrödinger’s uncertainty but with Pandoras fucking box” said Tony.
Kelly was looking increasingly irritated.
“All right, suppose we accept that unlimited material expansion isn’t possible. That still doesn’t mean investment in AI is inherently wasteful. If the technology delivers major efficiency gains across industry, science and infrastructure, it could help reduce precisely the pressures you’re talking about.”
“Absolutely,” said Anna. “And I’d be delighted if it did. But notice what you’ve just said. You’ve described a technology that might reduce our material requirements, which is potentially wonderful, and then you’ve implicitly assumed that those reductions will actually be taken as reductions rather than used to justify further expansion. That’s not a technological question, Kelly. That’s an economic and political one.”
“How?”
“Because imagine AI helps an aluminium smelter reduce its electricity consumption by ten percent,” said Anna. “Sounds wonderful, doesn’t it? Except we’ve first got to build the computers, manufacture the chips, train the models, run the optimisation and maintain the infrastructure, all of which requires energy and materials. So before we congratulate ourselves on saving electricity, perhaps we ought to subtract everything we consumed making the saving possible.”
“And if there’s still a saving?” asked Kelly.
“Excellent. Then we’ve genuinely improved the efficiency of the smelter. But now what happens to the electricity we’ve saved?”
“It becomes available for other uses and the market immediately allocates that electricity to another data centre, which requires another collection of computers, which need another round of materials, manufacturing and energy, then we’ve used our efficiency improvement to support an entirely new consumption cycle. The smelter becomes more efficient, the data centre becomes more profitable, economic activity increases, and we announce another victory for green technology, while the total electricity consumption of the system may not have fallen by a single kilowatt-hour.”
Marcin leaned forward.
“And here’s the particularly absurd bit. We could end up investing increasing quantities of energy and materials in technologies designed to save energy and materials, only to use the savings to finance the next generation of technologies, which promise to save even more energy and materials. At some point you have to ask whether we’re actually reducing our physical demands or simply accelerating the circulation of resources through an increasingly elaborate machine.”
Tony stared at him.
“So we’re using energy to build computers that save energy so we can use the saved energy to build more computers?”
“Potentially.”
“And then we call the whole thing an energy transition?”
“Well, the transition part is certainly accurate.”.
“There’s another problem with the assumption that technology automatically saves resources. As extraction becomes more difficult, poorer-quality ores require more material to be moved and processed, infrastructure becomes harder to build in congested environments, and ecological constraints can increase the physical effort required to obtain the same useful output. Innovation can offset those costs, sometimes spectacularly, but it doesn’t abolish them. If the overall economy keeps expanding resource throughput faster than efficiency improves, you can end up using more physical resources to deliver progressively smaller marginal improvements.”
“Which,” said Tony, “means we work harder to get less, then use some of what we’ve got left to build computers that tell us we’re getting richer.”
“Well, you might be getting richer financially.”
“That’s the fucking problem, Marcin. We’ve got a system that can register the consumption of its own foundations as wealth creation. If you cut down a forest, sell the timber, build a data centre and use the electricity to generate financial transactions, you’ve created economic activity at every stage, but the accounting doesn’t automatically tell you whether the forest, the electricity and the materials were worth more to society than the thing you’ve built.”
“Reminds me of that old saying from the 70’s,” said Greg. “When the last tree has been cut down, the last river poisoned and the last fish caught, only then will we realise that you can’t eat money.”
“Exactly,” said Anna. “Except we’ve improved on the original idea. We no longer have to wait until the last tree is cut down, because we can now calculate its future financial value, securitise the expected revenue from cutting it down, borrow against that valuation and distribute the proceeds to shareholders long before anyone discovers there isn’t a fucking forest left.”
“And when we run out of fish?” asked Tony.
“We’ll invest in artificial intelligence to develop a more efficient fishing industry.”
“Without fish?”
“That’s a supply-side problem, Tony. The financial projections are excellent.”
“Well, that’s reassuring. Can we eat the projections?”
“Not even with chips,” said Greg.
“And that,” said Isobel, “is why economics distinguishes gross output from net benefits, and why environmental economics exists.”
“Yes, but when do those distinctions actually make it into the investment decision?” Anna asked. “Because we have sophisticated methods for estimating social costs, externalities and opportunity costs, and yet the political announcement still begins with the number of billions being invested, as though the expenditure itself were the objective.”
Tony stared at the newspaper.
“Thirty billion dollars!”
“Wonderful.”
“Five thousand jobs!”
“Fantastic.”
“Four terawatt-hours!”
“Excellent.”
“What’s it produce?”
There was a pause.
“Growth,” said Greg.
“Growth in what?”
“Investment.”
“Investment in what?”
“Capacity.”
“Capacity for what?”
“Growth.”
Tony put his head in his hands.
“Jesus fucking Christ. It’s a circular reference with a planning permit.”
Isobel had been studying her phone.
“There’s something you haven’t mentioned, though. Who actually owns these companies?”
“Shareholders,” said Kelly.
“Yes, but who are the shareholders?”
“Investment funds, institutions, individuals, pension funds, sovereign wealth funds, the companies’ founders and all sorts of others.”
“Exactly,” said Anna. “And this is where the whole story gets particularly absurd, because we keep talking about private capital as though it’s a mysterious substance that belongs exclusively to a small group of wealthy individuals, when a substantial proportion of the financial system is actually managing the accumulated savings of ordinary people.”
Marcin nodded.
“Pension funds, retirement accounts, insurance reserves, sovereign wealth funds. Enormous pools of capital, ultimately connected to the incomes and savings of workers, distributed through layers of financial institutions and invested according to mandates that largely prioritise financial returns.”
“Which is sensible,” said Kelly. “People need their pensions to grow.”
“Of course they do. Nobody wants their retirement savings managed according to Tony’s theory of sausages. But now consider the possibility that those savings are invested in companies whose financial returns depend partly on expanding the consumption of scarce resources, raising costs elsewhere in the economy and externalising environmental consequences into a future those same pension beneficiaries will have to inhabit.”
“Hang on,” said Isobel. “Pension funds also benefit when the investments perform well, and owning shares in a technology company isn’t the same as directly financing every data centre it builds. We shouldn’t confuse ownership, capital-market exposure and project financing.”
“Absolutely,” said Marcin. “But the exposure is real. Look at Norway’s sovereign wealth fund: enormous holdings in Nvidia, Microsoft, Alphabet and other technology companies. The public is participating financially in the sector’s fortunes whether or not it approves of every underlying capital investment.” Norges Bank Investment Management
Tony frowned.
“So, let me get this straight. I work for forty years, some of my income ends up in a pension fund, the pension fund buys shares in companies whose valuations depend on selling more computing power, those companies build more computers, the computers need more electricity, the electricity gets more expensive, my household bills go up, and my pension fund tells me it’s had a brilliant year because the technology shares have gone through the roof?”
“That’s a possible combination of outcomes,” said Isobel. “Although the financial gains and costs won’t be distributed equally, and some of the investment might genuinely create significant value.”
“Fine. But I still have to pay the electricity bill now, and I might not see the pension gains for twenty years, assuming the valuation survives that long.”
“Correct.”
“And if the investment turns out to have been a massive speculative bubble?”
“The investments could lose value.”
“So I can pay more for electricity while the bubble inflates, and then lose some of my pension when it bursts?”
“Potentially.”
“And the infrastructure?”
“Some of it remains useful. Some might be stranded or repurposed.”
“And the bloke who got paid fifty million dollars for arranging the investment?”
“Well, his compensation depends on the arrangement.”
Tony sat back.
“That’s very reassuring. I’d hate to think the poor bastard was exposed to any unnecessary financial uncertainty.””Only a theory, of course,” said Marcin, “but if we expect our collective financial wealth to grow faster than inflation indefinitely, then that additional purchasing power must ultimately be supported by something real. Better productivity, more useful production, redistribution, or perhaps the consumption of resources whose depletion we’re not properly accounting for. You can’t have everyone becoming wealthier in real terms merely because everyone owns a financial asset that somebody else expects to appreciate.”
Anna nodded.
“And we know we’re depleting natural capital. We know we’re degrading ecosystems, exhausting resources and pushing planetary systems beyond safe boundaries. So isn’t it reasonable to suspect that some of the gap between reported financial wealth creation and actual improvements in our collective productive capacity is being financed by consuming the very foundations of that capacity?”
“How much?” asked Kelly.
“That’s the question. We don’t know, because we haven’t properly included the depreciation of natural capital in the accounts. But the fact that we can’t calculate the full cost doesn’t mean the cost disappears. It means we’ve built an economic system in which we can recognise the income from liquidating our inheritance without recognising the loss of the inheritance itself.”
Tony looked at his beer.
“So the pension fund reports a seven percent return, inflation’s three percent, and we’re all delighted with our four percent increase in real wealth. But nobody’s worked out how much of that four percent came from actually making the world more productive, and how much came from flogging off bits of the planet.”
“Precisely,” said Anna.
“And then we invest the proceeds in computers that help us flog off the remaining bits more efficiently.”
“Well, that’s one possible business model.”
“Fuck me. At least the computers are getting smarter.”
Anna laughed, but then became serious and shook her head. “There’s something even more fucked up about this. We keep talking about the future as though it’s some great mystery, something we’re going to discover when we get there, but we’re already building it, and we’re building it with our own fucking money.”
“What do you mean?” asked Kelly.
“Look at where the financial incentives lead. Pharmaceutical companies can make fortunes from treating chronic disease, which is fine when they’re developing medicines that help people, but it also creates an incentive to protect lucrative treatment markets and maximise revenue from soma. Private prisons can make money from keeping people incarcerated, and in some places those prisoners provide cheap or coerced labour. Defence contractors make money supplying wars, and governments can restrict protests against the very policies and institutions that sustain these arrangements. Each activity can be defended separately, with a perfectly respectable explanation of the economic benefits, legal requirements or national interest involved.”
“Those aren’t all the same thing,” said Isobel. “Medicines save lives, and sometimes defence spending is necessary.”
“Of course they’re not the same thing. That’s not the fucking point. The point is that we’ve created financial incentives that can reward the continuation of problems as readily as their solution. A sick person becomes a revenue stream, a prisoner becomes a commercial asset, a war becomes an order book, and ecological destruction becomes a profitable transaction. And then we bundle the whole lot into investment portfolios, give them respectable names, report the returns and tell ordinary people their pensions are performing beautifully.”
Tony looked at her.
“So we’re investing our retirement savings in a future we might not particularly want to retire into.”
“Exactly. And we don’t even have to imagine some elaborate dystopian future where everything’s owned by corporations and human suffering is monetised, because we can already see examples of it happening. We’re just very good at looking at each transaction separately and calling it economic activity, rather than looking at the cumulative result and asking what sort of fucking world we’re creating.”
Marcin nodded.
“And the remarkable thing is that nobody necessarily has to intend the outcome. The investor wants a return, the fund manager wants to beat the benchmark, the corporation wants to increase earnings, and the government wants economic growth. Everyone can be doing exactly what their institution rewards them for doing, while the aggregate result is something none of them would particularly want to live in.”
Tony took a long drink.
“So the future isn’t something we’re waiting for.”
“No,” said Anna. “We’re funding it, Greg’s pension is invest in the modern day salvery of private prisons, I personally know must of the current crop of pollies are privately speculating in the weapons industry we are collectively funding the construction of.”
“Fuck you Greg!” Tony was staring at his beer again. “So we’ve created an enormous machine in which everyone is responsible for their own little bit, and nobody is responsible for what the whole fucking thing does.”
“That,” said Anna, “is a better description of the problem than most corporate sustainability reports I’ve read.”
Greg had found an advertisement for an investment conference.
“Future Wealth Summit,” he read. “Unlocking the exponential opportunities of artificial intelligence. Luxury networking experience, exclusive investor access, transformational leadership.”
“Any mention of electricity?”
“No.”
“Planetary boundaries?”
“No.”
“Resource depletion?”
“No.”
“Social infrastructure?”
“No.”
“Complimentary champagne?”
“Apparently.”
“Well, thank fuck someone’s got their priorities straight.”
Tony scratched his head.
“How much of this is actually investment in new productive capacity, and how much is just buying claims on existing capacity?”
“Depends on the transaction. Some funds go directly into new equipment and infrastructure, some buy existing assets, and some change hands in secondary markets without directly financing new production. But the valuation of those assets can influence financing conditions and subsequent investment, which creates a complicated relationship between financial-market activity and real capital formation.”
“Right. So we could have trillions of dollars circulating around ownership of things that already exist, while everyone congratulates themselves on the amount of investment taking place.”
“Certainly possible.”
“And the workers?”
“They keep working.”
“And the resources?”
“They keep getting consumed.”
“And the financial assets?”
“Hopefully they appreciate.”
Marcin smiled.
Anna pulled the newspaper back across the table.
“Here’s what really bothers me. Imagine what we could do with even a fraction of the resources being committed to this enormous expansion of computational capacity. We could modernise electricity networks, develop better energy storage, build public transport systems, improve housing efficiency, invest in hospitals and education, rebuild degraded ecosystems, develop genuinely circular industrial processes and strengthen the infrastructure that allows societies to become more productive with fewer physical inputs.”
“All of which requires capital,” said Kelly.
“Yes, and capital is not the thing we’re short of in the financial sense,” said Anna. “We’re extraordinarily good at saving collectively. Pension funds, sovereign wealth funds, insurance reserves, retirement savings — there’s an astonishing amount of money accumulated on behalf of ordinary people. The problem is that some of the most valuable investments we could make as a society don’t produce financial returns that private investors can capture as easily or as quickly as the returns from owning a profitable platform.”
“That’s why governments invest in public goods,” said Kelly.
“Exactly,” said Anna. “Except governments increasingly behave as though public investment is an unfortunate expense while private investment is inherently a blessing. Build a hospital and somebody asks how we can possibly afford it; announce a multibillion-dollar data centre and everyone gets invited to a ceremony with hard hats and a photographer.”
Tony laughed.
“And the hospital has to demonstrate its value for money.”
“Naturally,” said Anna. “Preferably with a detailed business case showing discounted future benefits, while the data centre gets described as a strategic opportunity because the investors say they’ve got thirty billion dollars.”
“Which they might not even have yet, but plan to borrow from us while siphoning enough to buy themselves another new fucking luxury cabin.” said Tony.
“Precisely. But the number gets into the newspaper anyway.”
Marcin leaned forward.
“And that’s where things get interesting, because the moment you suggest that society should invest collectively and retain the benefits collectively, somebody starts shouting about socialism.”
“Well, there are rather significant historical examples of socialism going badly wrong,” said Isobel.
“Of course there are, and there are plenty of examples of capitalism going badly wrong too, but that’s not what we’re discussing. Nobody’s proposing that we nationalise the local bakery and establish a five-year plan for sausage rolls. We’re asking why it’s considered perfectly sensible for millions of workers to pool their savings, invest them through enormous financial institutions and expect a return, but somehow dangerously ideological to suggest that the same people might collectively own more of decision making behind the infrastructure their savings help finance.”
Tony looked up.
“Hang on. Isn’t that what Norway’s already done with the oil fund?”
“Among other things,” said Anna. “Norway’s a particularly interesting example because the country has managed to combine private enterprise with substantial public ownership, collective savings and a relatively comprehensive welfare state, without everybody having to wear the same trousers or queue for potatoes.”
“Although,” said Greg, “some of the trousers are fairly similar.”
“That’s fashion, Greg, dont forget white shoes are in this year, and ice bathing.”
“But there’s a peculiar inconsistency in how we talk about collective investment. When ordinary people pool their savings in pension funds and those funds buy shares in private companies, that’s capitalism working beautifully. When ordinary people pool their resources through taxation to build a hospital, railway or electricity system, that’s government expenditure, which we’re repeatedly told we need to control. And when somebody suggests that the public should receive an enduring financial return from infrastructure it financed, instead of merely providing the conditions under which somebody else earns a return, suddenly we’re discussing the dangers of socialism.”
“THE RED THREAT!” announced Tony, raising his beer.
“Precisely,” said Anna. “Apparently the same collective resources become ideologically suspicious depending on who receives the dividend.”
Kelly shook her head.
“That’s a bit simplistic. Private investors take risks, allocate capital and provide incentives that governments don’t always manage very well. Public ownership isn’t automatically more efficient or more equitable.”
“Absolutely,” said Anna. “And private ownership isn’t automatically more efficient either, most of that argument is based on propganda rather than fact, especially when the returns depend on controlling access to something society has already built. That’s why you need to look at what each arrangement actually produces, rather than treating ownership as a substitute for thinking.”
Tony scratched his head.
“So if the government builds a dam with public money, that’s an excellent investment in national development.”
“Potentially.”
“And if the government sells the dam to private investors, who then charge everyone for using the electricity, that’s market reform.”
“Depending on the circumstances.”
“And if the public says perhaps we’d rather keep the dam and receive the return ourselves, that’s socialism?”
“Apparently.”
“Fuck me. So the electricity doesn’t change, the turbines don’t change, the river doesn’t change, but somehow the political system becomes dangerous when the people who paid for the bloody thing want to keep the profits.”
Greg nodded gravely.
“Could be worse. They might ask for affordable housing.”
“Jesus Christ, Greg. Don’t say that out loud.”
Anna was laughing now.
“But seriously, that’s the problem with the whole red-scare argument. It turns perfectly ordinary questions about fairness, ownership and the distribution of benefits into an ideological battlefield, so instead of discussing whether a particular investment produces a worthwhile return for society, everyone gets stuck arguing about whether the government is coming to confiscate their toothbrush. Or who is woke, or what woke even means.”
“Divide and conquer, how woke is woke enough without being too woke is a legitimate concern,” said Tony.
“That’s what they said about the dams. Originally they were meant to revert to the people of Norway after the intitial investment was paid off but the EU stole them and gave them to the Germans which then installed cabels to Germany where they could get a better price.”
Marcin leaned forward. “Of course that is secret squirrel, just like how the Americans told Norway they could develope their own oil industry but only if they invested the funds in the global market.”
“And every conspriracy distracts us from the actual economic question, which is how to organise investment so that it expands real productive capacity, distributes the resulting opportunities reasonably fairly, and preserves the physical resources on which future production depends. Sometimes private investment will achieve that very effectively. Sometimes public investment will. Sometimes a mixture works best. But pretending the answer can be determined by attaching an ideological label to the ownership structure is rather childish.”
“Like blasting a car into space, childish and/or boorish,” said Isobel. “Although there are genuine trade-offs. Public institutions can make poor investment decisions, private firms can create tremendous social value, and neither ownership model eliminates the need for accountability.”
“Exactly,” said Anna. “Which brings us straight back to the bloody data centre. We have a collectively developed electricity system, a finite quantity of available power and a proposal to commit a substantial portion of it to an investment whose private returns might be enormous. Fine. But the public has every reason to ask whether the total benefits justify the resources consumed, what happens to electricity prices, and whether there are better uses for the same infrastructure. And where their fucking slice of the fucking cake is!”
“And who bears which costs,” added Kelly. “I’ve got absolutely no problem with some clever bastard getting rich because he’s invented something useful. Flying cars, cheap batteries, a machine that folds fitted sheets, whatever. If somebody comes up with a genuinely brilliant idea and makes a fortune from it, good on them. But there should be a fucking cap.”
“A cap on what?” asked Kelly. “Income? Wealth? Company ownership? Because those are rather different things.”
Marcin smiled.
“There’s an interesting distinction between rewarding innovation and allowing the rewards of past innovation to compound into permanent economic power. The first provides incentives to create something useful. The second can eventually provide the means to control markets, purchase competitors, influence regulation and extract returns from assets someone else created.”
“Exactly,” said Anna. “And that’s where the collective comes back into the argument, because nobody invents a flying car in isolation. Somebody educated the engineers, somebody developed the materials, somebody built the roads and electricity networks, and generations of scientists contributed knowledge without which the whole thing would still be a particularly ambitious bicycle. The inventor may deserve an enormous reward, but the invention also depends on an enormous collective inheritance.”
“So where would you set the cap?” asked Kelly.
Greg looked up from his phone.
“So the bloke gets his flying car, his mansion, his yacht and his private island, but eventually somebody says that’s quite enough?”
“Not necessarily quite enough,” said Anna. “But perhaps enough that the next increment of wealth ought to deliver a considerably greater return to the society that helped make it possible.”
Tony nodded.
“And if he doesn’t like that, he can always fly his fucking car somewhere else.”
“Where?” asked Greg.
“Well, that’s the beauty of a flying car, isn’t it?”
Greg’s phone buzzed.”Polar vortex update?”
“Know what I like about weather, Greg?”
“What?”
“It doesn’t give a shit about shareholder value.”
Anna laughed.
“That’s actually quite important. The climate system isn’t negotiating with us about what level of resource consumption will produce a reasonable return on investment. Neither are the oceans, the soils or the biosphere. We can understand those systems, alter our behaviour and develop technologies that reduce our impacts, but we can’t instruct them to maintain stable conditions because our pension models require seven percent annual growth.”
“Could try,” said Tony.
“Write a letter to the Pacific.”
“Dear Pacific, please maintain current operating conditions until 2050, as our infrastructure investments assume no material changes to sea level, circulation patterns, fish stocks or extreme weather. Yours sincerely, Global Asset Management. Please find attached our sustainability statement.”
“Printed on recycled paper.”
“Containing pictures of the trees.”
Greg was laughing so hard he nearly spilled his beer.
“Actually,” said Marcin, “that’s the central absurdity of discounting. We treat the future as increasingly insignificant in present-value calculations, while simultaneously expecting it to remain sufficiently stable to support the cash flows we’re discounting. We reduce the value of future ecological damage because it’s distant, then assume the productive economy continues to operate over that same period as though those damages don’t accumulate.”
“The fuck you say, rather convenient,” said Isobel.
“Extraordinarily. Almost built in, And when the damages become more immediate, we discover that the cost of adapting to them requires investment, which is counted as economic activity, so even the consequences of environmental degradation can contribute positively to measured GDP.”
Tony was shaking his head.
“So if a storm destroys a town, rebuilding the town creates economic activity.”
“Yes, GDP doesn’t count the destruction as a negative production flow and assumes resources are infinite.”
“And if we build out of materials that required more energy because the easier resources have been depleted even more economic activity.”
Tony stared at the ceiling.
“Fucking hell. We’ve invented an accounting system that can mistake running in circles for travelling somewhere.”
There was a long silence, interrupted by Angus and Julia Stone coming through the speakers and the barman announcing that the kitchen was closing.
Tony looked at the remaining chips.
“Well, there’s a practical demonstration of finite resources… when the last chip is gone,” said Kelly.
Anna took a drink. Marcin was looking at Tony’s drawing of the hydroelectric dam.
“I think there’s an even simpler way to think about it. Every generation inherits a set of physical possibilities from the preceding one: knowledge, infrastructure, natural systems, productive capacity and institutions. Some of those possibilities were created through enormous collective effort over centuries, and others are simply the conditions that make life possible. The purpose of development ought to be to expand the useful possibilities available to future generations, rather than maximise the rate at which we can convert inherited resources into present financial income.”
“That’s rather good,” said Isobel.
“It’s not complicated. We should be asking whether our activities leave the next generation better equipped to live well, rather than whether the activities create additional market transactions.”
“And the difference,” Anna added, “is that financial wealth is a claim on future production, while physical wealth includes the actual capacity to produce. We can increase financial claims much faster than we increase productive capacity, and if we get carried away, we end up with an enormous quantity of money competing for resources that don’t exist in sufficient quantities to satisfy all the claims.”
Tony looked up.
“Like musical chairs.”
“Precisely.”
“Except every time the music stops, somebody takes away a chair.”
“Potentially.”
“And the investors keep selling tickets.”
“Yes.”
“And the tickets become more valuable because there are fewer chairs.”
“Under certain conditions.”
“And then some bastard invents a digital chair.”
“Tony—”
“Which he sells for a million dollars, even though nobody can sit on it.”
Kelly burst out laughing.
“Actually, I reckon that’s the thing. We’re sitting here arguing about what humanity should be doing with all this incredible technology, and the answer ought to be reasonably simple. Build the things that make life better, stop building quite so much pointless shit, and try not to use up everything the next generation needs just because some bloke in a suit has worked out how to make a fortune from it.”
“And while we’re at it, perhaps we could stop treating anyone who questions an investment as though they’re opposed to progress. If somebody proposes building a four-terawatt-hour computer farm in a country with an extraordinary industrial energy system, it’s perfectly reasonable to ask what we’re giving up, what we’re getting back, and whether the thing is going to be useful long enough to justify all the materials and energy we’re committing to it.”
Anna smiled.
“Now you’re talking.”
“And if the answer is that we’re going to use generations of collectively developed infrastructure to create a privately profitable collection of increasingly obsolete machines that mainly produce more demand for increasingly obsolete machines, then perhaps somebody should have the courage to say that’s a fucking stupid way to organise an economy. Even if the share price goes up”
The conversation drifted back towards the cricket, the suspicious Pacific wedge, the collapsing polar vortex and the possibility of spending a month in Japan without discussing the electricity consumption of the Shinkansen, although Marcin remained convinced that the trains deserved at least some attention.
Outside, the snow kept falling, the river continued running towards the fjord, and somewhere upstream the turbines were turning inside a hydroelectric power station built by people who had understood that the point of infrastructure was to make things possible long after the people who built it were gone.
Tony looked at his empty glass.
“There’s something else, you know.”
“What now?” asked Anna.
“If we’ve got seven planetary boundaries already outside their safe ranges, and we’re still building an economic system that needs more materials, more electricity, more equipment replacement and more consumption every year just to satisfy the growth projections, then at some point we’ve got to ask whether we’re actually getting wealthier or just getting better at spending our inheritance.”
Marcin nodded.
“And that’s the question nobody particularly wants on the investment prospectus.”
“Why not?”
“Because the answer might be that the next generation is going to have to live with fewer possibilities than we inherited because we let the shittiest builders manage construction, can’t do anything worthwhile, become a politician, can’t do hard maths, become an economist, can’t build, architecture, can’t talk to girls, raping fucking misognist with a following, can’t do anything at all well, fuck, better make that cunt president”
The barman called last orders and this time nobody asked who was paying the marginal price.
