Why Is It So Difficult to Make Long-Term Predictions?

February 21, 2014, 10:00 AM ET

Why Is It So Difficult to Make Long-Term Predictions?

By Irving Wladawsky-Berger

Guest Contributor

What will the world be like in 2064? Will we be living in a radically different post-singularity world, where machines far surpass humans in intelligence? Or will we continue to co-evolve with and shape our tools, as we have from time immemorial? Will technology advances lead to increased economic inequalities and conflicts, or to major reductions in poverty in a more stable world? Will it be an era of environmental crises and scarce water, food and energy, or will sustainable innovations and worldwide cooperation help us confront global challenges?

These are some of the questions that went through my mind as I read Visit to the World’s Fair of 2014, an article by Isaac Asimov written around the time of the 1964 New York World’s Fair.

Any predictions made by someone like Isaac Asimov have to be taken seriously. He was one of the top science fiction authors of the 20th century, having written classics like the FoundationRobot and Empire series. He was professor of biochemistry at Boston University and a prolific author of popular science books, including The Intelligent Man’s Guide to Science.

As you would expect with any predictions 50 years into the future, he got some things wrong. For example, he wrote that: “By 2014, electroluminescent panels will be in common use. Ceilings and walls will glow softly, and in a variety of colors that will change at the touch of a push button. Suburban houses underground, with easily controlled temperature, free from the vicissitudes of weather, with air cleaned and light controlled, should be fairly common. The surface . . . will be given over to large-scale agriculture, grazing and parklands, with less space wasted on actual human occupancy”

We are clearly far from “free from the vicissitudes of weather,” as evidenced by our tough winter and recent hurricanes. Nor have other predictions come to pass, including experimental fusion-power plants, underwater housing, moon colonies, an increasing number of ground vehicles that travel a foot or two off the ground or transparent cubes for 3D TV viewing.

But, as a number of articles point out, Mr. Asimov got a lot of things quite right.

“Gadgetry will continue to relieve mankind of tedious jobs. . . Robots will neither be common nor very good in 2014, but they will be in existence. . . [miniaturized computers] will serve as the brains of robots . . . Much effort will be put into the designing of vehicles with Robot-brains vehicles that can be set for particular destinations and that will then proceed there without interference by the slow reflexes of a human driver.”

He pretty much anticipated the Internet. “Communications will become sight-sound and you will see as well as hear the person you telephone. The screen can be used not only to see the people you call but also for studying documents and photographs and reading passages from books. Synchronous satellites, hovering in space will make it possible for you to direct-dial any spot on earth, including the weather stations in Antarctica.”

Needless to say, making predictions about the future is very difficult. Some things will change far slower than we anticipate, while disruptive innovations will arise that we have no way of anticipating. A historical perspective may actually be one of the most useful tools for imagining what the world might be like 50 years hence. And, one of the most useful paradigms for understanding long term technology and economic trends is the concept of long, 50-60 year cycles, which economists call Kondratiev waves.

I learned about such long cycles from the works of scholar and writer Carlota Perez, author of the 2002 book, Technological Revolutions and Financial Capital:  The Dynamics of Bubbles and Golden Ages. According to Ms. Perez, over the past couple of centuries, we have had a technology revolution roughly every 60 years, starting with the Industrial Revolution in 1771, which was characterized by the emergence of machines, factories and canals. This was followed by the age of steam and coal, iron and railways which started in 1829; steel and heavy engineering (electrical, chemical, civil and naval) starting in 1875; and the age of the automobile in 1908. Our present information and communications technology age, whose starting point Ms. Perez pegs at 1971, is the fifth such major revolution in that span.

Each such technology wave follows an S-curve. The first 20 to30 years or so, which Ms. Perez calls the installation period, is the time of creative destruction, when new technologies emerge from the lab into the marketplace, entrepreneurs start many new businesses based on these new technologies, and venture capitalists encourage experimentation with new business models and speculation in new money-making schemes. Inevitably, this all leads to the kind of financial bubble and crash we are all quite familiar with from our recent experiences.

After the crash, comes the deployment period, the time of institutional recomposition. The now well accepted technologies become the norm. New paradigms emerge for guiding innovation and for determining winners and losers in the marketplace. Over time, these new paradigms significantly transform the economy and everything around it, as well as re-shaping social behavior and the institutions of society.

These cycles overlap, so at any point in time you are likely to have older, mature technologies advancing slowly in their deployment period, while some disruptive ones may still be brewing in the labs not quite ready to begin their installation period. Things are obviously much more complicated than just old vs new, with different kinds of innovations in various stages in-between. Such dynamics add to the difficulty of long-term predictions.

It’s hard to imagine that today’s really exciting and fast changing innovation will only advance incrementally in its mature stage a few decades later. It’s not surprising that among Mr. Asimov’s not-quite right predictions are underground suburban houses and vehicles traveling one or two feet above ground, as both houses and cars were already in the mature phases of earlier waves.

Some economists, like Robert Gordon from Northwestern University have speculated that the world may have hit an innovation plateau. Kitchens, for example, experienced huge advances between 1900 and the mid-20th century, given the rise of electricity and electric appliances of all kinds. But a kitchen today does not look radically different from one circa the 1964 World’s Fair. Cars and airplanes are similarly not traveling much faster today than 50 years ago. Again, kitchens, appliances, cars and airplanes are improving relatively slowly since they are all products of previous waves. Once they reached a good-enough stage, leading edge innovators and investors moved on to search for the next big thing.

Our experience with long-cycle waves is mostly based on the waves from the industrial age of the past two hundred years. The digital technology wave is still playing out; we are likely at the beginning of the ICT installation period. It’s not clear if the waves in our ICT age will be similar to those of the industrial age or if they will start a whole new pattern. This makes predictions of our long term future even harder.

Getting back to Isaac Asimov, toward the end of his 1964 article he made what I consider his most important prediction:

“The world of A.D. 2014 will have few routine jobs that cannot be done better by some machine than by any human being. Mankind will therefore have become largely a race of machine tenders.Schools will have to be oriented in this direction. . .  Even so, mankind will suffer badly from the disease of boredom, a disease spreading more widely each year and growing in intensity.  This will have serious mental, emotional and sociological consequences, and I dare say that psychiatry will be far and away the most important medical specialty in 2014.  The lucky few who can be involved in creative work of any sort will be the true elite of mankind, for they alone will do more than serve a machine.”

This prediction may not have quite come to pass, but we fear that we may be moving in this direction. It would really be interesting to learn what Mr. Asimov would say today about the prospects for the world in 2064.

Irving Wladawsky-Berger is a former vice-president of technical strategy and innovation at IBM. He is a strategic advisor to Citigroup and is a regular contributor to CIO Journal.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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