3.1 - Motivations and Economics
Technology is not at the point yet where production systems can operate without people. They are needed for a wide variety of physical and mental tasks. Additionally, meeting the needs and desires of people is the point of having production systems. However, people are complex beings, and groups of people form complex systems. People often don't fully understand themselves and why they do things, and understand even less about how they function as groups. People can be taught and trained, but they can't be designed the way hardware can. So we need to understand people well enough to account for their abilities and needs in our designs. The study of how people interact in groups is known as Social Science. It is a large field of study, for which a list of topics can be found in an Outline of Social Science on Wikipedia. In this book, we will limit ourselves to aspects of social science that relate to seed factories and self-expanding production.
As agents with free will, people need enough motivation to build self-expanding production systems, including seed factories, or to build them in preference to conventional factories. Otherwise they will not put in the effort to do so. So we first look at personal and social reasons that would motivate people to work on such systems. Building such systems requires other inputs besides direct human effort. An incomplete list of these inputs includes land, tools, materials, energy, funding, and information. Economics studies how such inputs get applied to supply goods and services, and economic reasons are also an important motivator for people and society as a whole. So we look at that subject next.
We can group motivations into personal reasons that can cause individuals to take action, and social reasons that can cause larger groups to do things, even if some members don't have enough cause on their own. People and groups differ individually from other people and groups, and people as a class differ from groups as a class. The motivations we present here will not all apply to everyone or all groups. For some people and groups they will not apply at all, and so they will be entirely uninterested in such production systems. Universal interest isn't needed to build them. We only need enough people that are interested and motivated to make them happen.
People have basic biological needs which motivate them. For example, when you are hungry, you are motivated to prepare a meal or go to a restaurant. Most people have the foresight to take action before these needs become immediate. So we do things like work at a job to earn money for stocking the pantry or going out to eat. If biological needs can be met with less work via self-expanding production (i.e. seed factories), that would be a reason to take action and build them. Necessity is a strong driver. If jobs are being replaced by smart tools (automation, robotics, and AI) which don't need people to run them, people may be driven to meet their needs directly rather than through a job. This includes using smart tools for themselves.
People also have psychological drives that are not biological necessities, but nonetheless motivate them. These include desires for autonomy, fairness, inclusion, improvement, purpose, and respect. To the extent self-expanding systems can help meet these desires, people would also be motivated to build them. Finally, there are intellectual reasons where such systems are better than current industry in some way, and therefore should be built. For example, they may use more renewable energy and recycled materials and are therefore better for the environment.
Humans are Social Animals, and so they form groups and interact regularly with each other. They do so beyond the basic biological functions of mating and parenting necessary to continue the species. We create a vast array of social groups, from extended families and neighbors who exchange favors, to complex formal and legal organizations like governments and large corporations. Nearly everyone belongs to multiple groups, either willingly or by necessity. Groups can have rationales and motivations different from their members. For example, most people don't want to die, but an army by its nature exposes it's members to a higher risk of death.
Individuals may produce certain things for themselves, such as woodworking to make their own furniture. Self-expanding production, though, is complicated enough to need a variety of skills and equipment, beyond what one individual can typically supply. If they want that kind of production, they can form informal or formal groups of various kinds. This allows them to gather the needed resources and skills to carry out all the required tasks. Some examples of increasing formality are:
- A trading network where people exchange products and skilled work on an informal basis when needed,
- A cooperative organization that more regularly pools funds and efforts towards larger equipment and workshops, and
- Formal business organizations operated for profit on a continuous basis.
These kinds of groups need reasons at the group level, beyond those of individuals, to involve themselves with seed factories and similar types of production systems. Motivations at a group level can include anything from fellowship, economic advantage, to the public good.
Economics is the social science concerned with the factors that determine the production, distribution, and consumption of goods and services. People need physical goods like food, shelter, and water. They also have desires for things beyond these basics, like education, health care, and entertainment. These are generally services provided by other people. Modern civilization is complex enough that it is not efficient to try and do everything for yourself. So people generally specialize in a particular task, or work for an organization which is specialized. They then trade for the things they need and want, but do not supply for themselves. The trade value of these things is high enough that most people need to spend much of their time during their "working years" to obtain them. Direct trade of one good for another, known as Barter imposes the added work of searching for matching wants, where each trader wants what the other has. It is more efficient to work for a generally accepted intermediate good - Money. Money in turn is traded for the other goods and services. It is easier to find people who will trade for money than than to match a pair of wants in a barter trade, requiring less work searching.
Economics is a complicated enough subject to have entire university departments devoted to it, so we will not provide a full discussion of it here. We instead highlight a few concepts that are relevant to production systems, and refer you to a Detailed Outline of the subject for more information.
Exponential Growth in mathematics is when the change in a function with respect to time is proportional to the current value. It can be expressed as the formula
where x0 is the value at time zero, r is the growth rate per time interval, such as 5% or 0.05, t is a variable time, and xt is the value of x at time t. In economics this is usually known as Compound Interest, where the interest rate is the percentage growth per time, usually years. The compounding refers to each year's absolute increase depending on the sum of the original amount and prior year's accumulated interest, which increases each year. So the growth rate in absolute terms increases constantly, while the rate as a percentage per time stays the same. Exponential growth occurs in other fields like biology and physics, but the relevance for our discussion are factories that can make new equipment at a rate proportional to their size.
The cost of many goods is high because the output quantity is linear with the input effort. For example, in construction, it takes about the same amount of work to build the next house as it did the last one. If you plant some acorns, however, you can eventually end up with an entire forest of oak trees. This is an exponentially larger result from a fixed amount of work. This is because while growing, the amount of sunlight and materials a tree can convert is proportional to leaf area it has. The leaf area, in turn, is part of the tree which grows each year. Individual trees have size and age limits, so the growth is continued by the tree making more acorns to start more trees. If we apply this process of growth, self-expansion and reproduction to non-biological production systems, it fundamentally alters the return from a given amount of work from linear to exponential. This is a strong motivation to develop factories which can grow and replicate in this fashion.
In finance and investment it is well understood that a constant interest rate leads to exponential growth in money terms if reinvested. But that growth depends on the work of other people. The output from their work is still mostly linear, and therefore limited. The only ways for society as a whole to grow exponentially are through biology - increased population and exploiting agriculture, or through production systems that mimic biology in copying themselves. Since population and our effects on the Earth's environment are reaching unsustainable levels, that leaves only production systems as a route to sustainability and growth.
Categories of Production
Unless you happen to enjoy watching a complicated factory operate as entertainment, a self-expanding factory would be built to fill some economic purpose, typically end products and services that people want. When such a factory uses some of its output for maintenance and growth, not all of the outputs can be end products. For purposes of design and analysis, we can then divide the output into Internal Production, for use by the factory itself, and External Production, destined for end users or for sale. Internal production can further be divided into Maintenance, items needed to sustain operations like power supply and repair parts, and Growth, items which are used for expansion. Whatever part of production not used for maintenance and growth is available to end users. The portion assigned to external production can be divided into Private Production, which is destined for the factory owners, and Market Production, which is destined for sale.
How to divide up the production outputs is mostly a matter of choice for the factory owners. The exception is maintenance of operations, which is required if they don't want the factory to break down or wear out. The owners can choose a growth strategy which uses most of the outputs for expansion, and defers end-use private and market production until later. They can also choose a more balanced approach of some growth and some end-use outputs. A no-growth strategy which devotes all available outputs to end-uses is not very different from conventional factories, and removes most of the reason to use the seed factory approach.
In business finance, Operating Margin is operating income divided by operating revenues, usually expressed as a percentage. It is a measure of how much surplus or profit a business generates by its operations, before considering finance and capital. Operating margins greater than zero are needed for a conventional business to continue operating. For a self-expanding factory, much of the output can be used internally for growth, or directly by the owners. In that case net income and revenue may not be meaningful measures, because much of the output isn't sold.
For this type of production, we can instead define Production Margins in units other than money. These kinds of measures would give a better perspective on how well such a factory is doing. The External Margin is the ratio of external production (as defined above) to total production. It is a measure of how much output can leave the factory, and can be measured in terms of energy, mass, parts count, or other units. A conventional example is a nuclear power plant. Some of the electricity it produces is used by the plant itself for lighting and equipment. The external margin in energy terms is the percentage of total electricity that can be sent outside the plant to customers. The Total Margin for a factory adds the portion used for growth to the external margin. This leaves out maintenance, which are items consumed to keep the factory running. Total margin represents the surplus the factory produces over what it needs to keep running. Like conventional operating margin, total margin needs to be above zero to keep operating. Otherwise the factory is being consumed faster than it is being replaced, and eventually will stop working.
An ideal self-expanding factory would not only make all its own parts, but grow and expand its range of outputs without added labor, and without supplies from outside its own land area. So growth would be "free" in terms of input costs. Continuing production would only need to pay for raw materials, so the business operating margin in money terms would be very high. This ideal most likely cannot be reached, for a number of reasons. They include the level of automation technology, rare materials not found locally, and the difficulty and cost of trying to make every kind of part internally. Some labor and outside supplies would be used, and therefore there are some costs for growth above the costs for production operations.
The fraction of parts and materials a real factory can supply internally reduces the initial start-up cost, expansion costs, and later production costs of the mature factory into which it grows. For example, assume a seed factory starts at 10% the size of the final factory and initially can produce 60% of the parts for expansion. It then grows to producing 90% of of its parts at full size. The total capital cost will then be about 75% lower than building the mature factory directly. The higher ratio of outputs to capital cost is a strong economic reason to develop seed factories.
In economics, Workforce Productivity is defined as the value of the outputs divided by the hours of labor required to make them. An ideal automated factory would only need a human to press "Make" on a computer screen, and then wait for the product to be finished. Therefore workforce productivity would be extremely high. Smart tools (automation, robotics, and artificial intelligence) are not at that level yet. Even so, self-expanding production systems can be designed to use smart tools, and upgraded to use more as new software and hardware is added for growth. An example of a currently developing technology is self-driving vehicles, which could be applied to robotic vehicles in a factory. The early stages of the factory may use people to manually move parts and materials, then upgrade to powered machines like forklifts. Eventually these can be upgraded to robotic vehicles without drivers.
If the various steps in the production process are physically close to each other, and under coordinated control, then more smart tools can be used than with traditional geographically separated special purpose factories. For example, an industrial park may have buildings with different owners doing different production tasks. But their proximity allows easy communication and automated transfer of physical items. The overall increased output relative to human labor is another strong economic reason to develop the seed factory concept.
Besides the standard measure of productivity in terms of value, we can also apply other measures of output, such as mass, relative to labor required. The Productivity Ratio, is how much more a self-expanding and smart factory can output compared to a conventional factory that does not have those features. For a factory which makes much of its own capital equipment, we can define a System Productivity measure which includes the embodied labor in the equipment. Thus system productivity = (total output)/(direct production labor + capital equipment labor).