Smart cities, or rummaging in the waste heap of culture

My editorial

I am trying to put together my four big ideas. I mean, I think they are big. I feel small when I consider them. Anyway, they are: smart cities, Fintech, renewable energies, and collective intelligence. I am putting them together in the framework of a business plan. The business concept I am entertaining, and which, let’s face it, makes a piece of entertaining for my internal curious ape, is the following: investing in the development of a smart city, with a strong component of renewable energies supplanting fossil fuels, and financing this development partly or totally, with FinTech tools, i.e. mostly with something like a cryptocurrency as well as with a local platform for financial transactions. The whole thing is supposed to have collective intelligence, i.e. with time, the efficiency in using resources should increase in time, on the condition that some institutions of collective life emerge in that smart city. Sounds incredible, doesn’t it? It doesn’t? Right, maybe I should explain it a little bit.

A smart city is defined by the extensive use of digital technologies, in order to optimize the local use of resources. Digital technologies age relatively quickly, as compared to technologies that make the ‘hard’ urban infrastructure. If, in a piece of urban infrastructure, we have an amount KH of capital invested in the hard infrastructure, and an amount KS invested in the smart technologies with a strong digital component, the rate of depreciation D(KH) of the capital invested in KH will be much lower than D(KS) invested in KS.

Mathematically,

[D(KS)/ KS] > [D(KH)/ KH]

and the ‘>’ in this case really means business.

The rate of depreciation in any technology depends on the pace that new technologies come into the game, thus on the pace of research and development. The ‘depends’, here, works in a self-reinforcing loop: the faster my technologies age, the more research I do to replace them with new ones, and so my next technologies age even faster, and so I put metaphorical ginger in the metaphorical ass of my research lab and I come with even more advanced technologies at even faster a pace, and so the loop spirals up. One day, in the future, as I will be coming back home from work, the technology embodied in my apartment will be one generation more advanced than the one I left there in the morning. I will have a subscription with a technology change company, which, for a monthly lump fee, will assure smooth technological change in my place. Analytically, it means that the residual difference in the rates of depreciation, or [D(KS)/ KS] – [D(KH)/ KH] , will widen.

On the grounds of the research I did in 2017, I can stake three hypotheses as for the development of smart cities. Hypothesis #1 says that the relative infusion of urban infrastructure with advanced and quickly ageing technologies will generate increasing amounts of highly liquid assets, monetary balances included, in the aggregate balance sheets of smart cities  (see Financial Equilibrium in the Presence of Technological Change Journal of Economics Library, Volume 4 (2), June 20, s. 160 – 171 and Technological Change as a Monetary Phenomenon Economics World, May-June 2018, Vol. 6, No. 3, 203-216 ). This, in turn, means that the smarter the city, the more financial assets it will need, kind of around and at hand, in order to function smoothly as a social structure.

On the other hand, in my hypothesis #2, I claim that the relatively fast pace of technological change associated with smart cities will pump up the use of energy per capita, but the reciprocal push, namely from energy-intensity to innovation-intensity will be much weaker, and this particular loop is likely to stabilize itself relatively quickly in some sort of energy-innovation standstill (see Technological change as intelligent, energy-maximizing adaptation Journal of Economic and Social Thought, Volume 4 September 3  ). Mind you, I am a bit less definitive on this one than on hypothesis #1. This is something I found out to exist, in human civilisation, as a statistically significant correlation. Yet, in the precise case of smart cities, I still have to put my finger on the exact phenomena, likely corresponding to the hypothesis. Intuitively, I can see some kind of social change. The very transformation of an ordinary (i.e. dumb) urban infrastructure into a smart one means, initially, lots of construction and engineering work being done, just to put the new infrastructure in place. That means additional consumption of energy. Those advanced technologies embodied in the tissues of the smart cities will tend to be advanced for a consistently shortening amount of time, and as they will be replaced, more and more frequently, with consecutive generations of technological youth. All that process will result in the consumption of energy spiralling up in the particular field of technological change itself. Still, my research suggests some kind of standstill, in that particular respect, coming into place quite quickly. I am thinking about our basic triad in energy consumption. If we imagined our total consumption of energy, I mean as civilisation, as a round cake, one third of that cake would correspond to household consumption, one third to transportation, and the remaining third to the overall industrial activity. With that pattern of technological change, which I have just sketched regarding smart cities, the cake would go somehow more to industrial activity, especially as said activity should, technically, contribute to energy efficiency in households and in transports. I can roughly assume that the spiral of more energy being consumed in the process of changing for more energy-efficient technologies can find some kind of standstill in the proportions between that particular consumption of energy, on the one hand, and the household & transport use. I mean, scrapping the bottom of the energy barrel just in order to install consecutive generations of smart technologies is the kind of strategy, which can quickly turn dumb.

Anyway, the development of smart cities, as I see it, is likely to disrupt the geography of energy consumption in the overall spatial structure of human settlement. Smart cities, although energy-smart, are likely to need, on the long run, more energy to run. Yet, I am focusing on another phenomenon, now. Following in the footsteps of Paul Krugman (see Krugman 1991[1];  Krugman 1998[2]), and on the grounds of my own research ( see Settlement by energy – Can Renewable Energies Sustain Our Civilisation? International Journal of Energy and Environmental Research, Vol.5, No.3, pp.1-18  ) I am formulating hypothesis #3: if the financial loop named in hypothesis #1, and the engineering loop from hypothesis #2 come together, the development of smart cities will create a different geography of human settlement. Places, which will turn into smart (and continuously smarter) cities will attract people at faster a pace than places with relatively weaker a drive towards getting smarter. Still, that change in the geography of our civilisation will be quite idiosyncratic. My own research (the link above) suggests that countries differ strongly in the relative importance of, respectively, access to food and access to energy, in the shaping of social geography. Some of those local idiosyncrasies can come as quite a bit of a surprise. Bulgaria or Estonia, for example, are likely to rebuild their urban tissue on the grounds of local access to energy. People will flock around watermills, solar panels, maybe around cold fusion. On the other hand, in Germany, Iran or Mexico, where my research indicates more importance attached to food, the new geography of smart human settlement is likely to gravitate towards highly efficient farming places.

Now, there is another thing, which I am just putting my finger on, not even enough to call it a hypothesis. Here is the thing: money gets hoarded faster and more easily than fixed assets. We can observe that the growing monetization of the global economy (more money being supplied per unit of real output) is correlated with increasing social inequalities . If, in a smart and ever smarter city, more financial assets are being around, it is likely to create a steeper social hierarchy. In those smart cities, the distance from the bottom to the top of the local social hierarchy is likely to be greater than in other places. I know, I know, it does not exactly sound politically correct. Smart cities are supposed to be egalitarian, and make us live happily ever after. Still, my internal curious ape is what it is, i.e. a nearly pathologically frantic piece of mental activity in me, and it just can’t help rummaging in the waste heap of culture. And you probably know that thing about waste heaps: people tend to throw things, there, which they wouldn’t show to friends who drop by.

I am working on making science fun and fruitful, and I intend to make it a business of mine. I am doing by best to stay consistent in documenting my research in a hopefully interesting form. Right now, I am at the stage of crowdfunding. You can consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?

[1] Krugman, P., 1991, Increasing Returns and Economic Geography, The Journal of Political Economy, Volume 99, Issue 3 (Jun. 1991), pp. 483 – 499

[2] Krugman, P., 1998, What’s New About The New Economic Geography?, Oxford Review of Economic Policy, vol. 14, no. 2, pp. 7 – 17

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