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My latest Mind and Matter column in the Wall Street Journal is on dematerialisation:

Economic growth is a form of deflation. If the cost of, say, computing power goes down, then the users of computing power acquire more of it for less-and thus attain a higher standard of living. One thing that makes such deflation possible is dematerialization, the reduction in the quantity of stuff needed to produce a product. An iPhone, for example, weighs 1/100th and costs 1/10th as much as an Osborne Executive computer did in 1982, but it has 150 times the processing speed and 100,000 times the memory.

Dematerialization is occurring with all sorts of products. Banking has shrunk to a handful of electrons moving on a cellphone, as have maps, encyclopedias, cameras, books, card games, music, records and letters-none of which now need to occupy physical space of their own. And it’s happening to food, too. In recent decades, wheat straw has shrunk as grain production has grown, because breeders have persuaded the plant to devote more of its energy to making the thing that we value most. Future dematerialization includes the possibility of synthetic meat-produced in a lab without brains, legs or guts.

Dematerialization is one of the reasons that Peter Diamandis and Steven Kotler give for the future’s being “better than you think” in their new book, “Abundance.” Mr. Diamandis founded the X Prizes, which handsomely reward those who reach certain far-minded goals in technology, medicine, energy and ecology. The first X Prize was the $10 million Ansari X Prize, won by Burt Rutan and Paul Allen in 2004 for sending a spacecraft capable of carrying three people 62 miles into space twice within two weeks. A current X Prize will give $10 million to the “first team to sequence 100 human genomes within 10 days for $10,000 or less per genome with an accuracy of no more than one error in every 100,000 bases sequenced.”

As these examples demonstrate, Messrs. Diamandis and Kotler think that individual innovators can and will make huge differences to human living standards. Many of their book’s fascinating examples are drawn from the world of business. Take Iqbal Quadir, who quit his job as a venture capitalist in New York to start a cellphone company in his native Bangladesh, at a time when cellphones cost nearly twice the annual income of the average Bangladeshi. He had the foresight to bet on falling costs and the usefulness of the new technology for the long-isolated rural poor.

Prizes can reward such unexpected developments, whereas all too much funding of research and development merely perpetuates the predictable. Of course, the effect is slightly spoiled if the prize-giver refuses to recognize an unorthodox solution to the problem. This happened with Britain’s famous Longitude Prize of the 18th century, the committee for which notoriously refused for decades to recognize that John Harrison had solved the problem of calculating longitude simply by using a reliable clock.

As well as the X Prizes, Mr. Diamandis is co-founder and chairman of Singularity University, where the futurist Ray Kurzweil’s ideas of exponentially accelerating technology are explored. Despite being unusually optimistic myself about what lies ahead for humanity, I’m not yet convinced that we are about to see almost infinite rates of technological improvement-Mr. Kurzweil’s singularity-resulting, for example, in the indefinite extension of life.

No matter how many prizes we offer, certain growing problems-such as caring for children and the elderly, or policing, or repairing freeways-won’t experience much dematerialization or deflation. And as dematerialized goods and services like communication get cheaper, these problems will increasingly dominate budgets, damping the acceleration. So the future may be bright, but not dazzlingly so.

By Matt Ridley | Tagged:  rational-optimist