We’re Less Than a Decade From the Next Economic System

Throughout this series, I’ve described the world we want: machine labor on demand, scarcity engineered away, communities that own their own infrastructure, parties and guilds instead of corporations, and the things themselves instead of a check.

In one line: universal basic goods and services, powered by universal machine labor on demand, distributed by universal basic capital.

That last phrase came up in Parts 1, 5 and 6. Below, it becomes the ownership form the next system has to codify.

The obvious question is how we get there.

How do we get there?

Probably in stages: we dedicate machine labor on demand to critical services first, then to critical goods as robots and materials production scale, and finally the organizational shift to parties and guilds as corporations hire fewer people and become inefficient means of organizing people.

In this part, I want to do two things.

First, look backward at the major systems of power humans have lived under: how long it took to move from one to the next, and what actually caused each change.

Second, use that pattern to see where we are now, and how soon the next system arrives.

Systems, not empires

The investor Ray Dalio spent years studying 500 years of history for his book Principles for Dealing with the Changing World Order.

His conclusion is that monetary, political, and geopolitical orders rise and collapse in a repeating pattern he calls the Big Cycle, which he’s described as typically lasting about 75 years, give or take about 30.

He’s argued for years that the United States is deep in Stage 5 of that cycle, the stage before breakdown, marked by bad finances, big wealth gaps, and rising conflict.

Dalio tracked who held power over time: starting with the Dutch, then the British, then the Americans.

Why don’t we track something different: what kind of power did they hold? How has the system itself changed over time?

What was scarce, who controlled it, how did the state pay for itself, and how did each system give way to the next?

Historians argue about exactly when each of these systems started and ended, so treat the dates below as rough markers.

The systems that ran the world

1. Foraging bands

For most of human history, people lived in small bands that hunted, gathered, and shared. Power was personal and limited, because there was little surplus to control.

Tax base: none. There was no state to fund. Food was shared across the band, and everyone was expected to pitch in.

Held onto power: nobody did, for long. The band ganged up on anyone who tried to boss the others around, with ridicule, shunning and, in extreme cases, worse. The anthropologist Christopher Boehm calls it a “reverse dominance hierarchy.”

How it ended: As the last Ice Age ended and the climate stabilized, people in several places began domesticating plants and animals, starting around 9500 BCE in the Fertile Crescent.

Farming created something new: a storable surplus. And a surplus needs someone to guard it, count it, and eventually tax it. The first states appeared around 3100 BCE.

Transition length: roughly 6,000 years, from the first farms to the first states.

2. Agrarian empires

For the next few thousand years, power came from controlling land and the people who worked it. Empires from Egypt to Rome ran on grain, conquest, and, in many cases, slavery.

Tax base: tribute in grain, land taxes, and forced labor.

Held onto power: armies, plus the claim that rulers governed by the will of the gods, from Egypt’s divine pharaohs to China’s Mandate of Heaven.

How it ended (in Western Europe): The Western Roman Empire overextended, debased its currency, suffered waves of plague, and gradually lost the ability to collect taxes across its territory.

When central taxation collapsed, power fragmented into the hands of local landholders. Rome fell in 476. By around 900 to 1000, a new order had taken shape.

Transition length: roughly 400 to 500 years.

3. Feudalism

Under feudalism, land was granted in exchange for military service, and most people were serfs bound to the land, owing their lords labor and a share of their crops.

Tax base: labor services, rents paid in kind, and church tithes.

Held onto power: sworn loyalty. Vassals pledged military service to their lords in an oath of homage), and castles and the Church held the order in place.

How it ended: A shock, then a squeeze. The Black Death (1347 to 1351) killed perhaps a third to half of Europe’s population, and suddenly labor was scarce.

Lords tried to freeze wages by law, with England’s Statute of Labourers in 1351, and failed. Peasants revolted in 1381. Serfdom slowly dissolved in the West as workers moved to whoever paid most.

Meanwhile, new trade routes opened, and merchants built a new tool for pooling capital: the joint-stock company. The English East India Company was chartered in 1600, and the Dutch East India Company in 1602.

A joint-stock company lets many investors pool their money into one venture and split the profits by how many shares they own. If a ship sank, everyone lost a little, instead of one merchant losing everything.

It wasn’t new. England’s Muscovy Company, chartered in 1555, was the first major one. But it took the new trade routes to make it the standard way to fund a voyage.

Transition length: roughly 250 years (about 1350 to 1600).

4. Merchant capitalism

In the age of merchant capitalism, power came from trade: chartered monopolies, navies, colonies, and states that hoarded gold and silver.

Tax base: customs duties and excise taxes, backed by a new invention, permanent public debt. The Bank of England was founded in 1694.

Held onto power: royal charters and navies. England’s East India Company got a monopoly charter in 1600, and later ran armies of its own.

How it ended: Technology changed what was scarce. Machines, and later steam, made power cheap, and the new constraints became capital and workers to run the factories. Enclosure had pushed people off common land and into cities.

Capital from trade financed the first mills. Adam Smith’s Wealth of Nations (1776) gave the new system its ideas.

And the tax base shifted to match: Britain introduced an income tax in 1799 to pay for war with France, and Robert Peel brought it back in 1842, in part so Britain could afford to cut tariffs.

An income tax takes a share of what people earn each year, instead of taxing goods as they cross a border or get sold.

Britain’s first was a wartime experiment, abolished in 1816, a year after Waterloo. Peel’s version stuck, and Britain has had one ever since.

When Britain repealed the Corn Laws in 1846, free-trade industrial capitalism had won. Limited liability followed in the 1850s, making it far easier to raise capital from many small investors.

Limited liability means investors can lose only what they put into a company, never their house or their savings.

Before then, it usually took a royal charter or a special act of Parliament. Britain’s Limited Liability Act of 1855 opened it to ordinary companies.

Transition length: roughly 75 years (from 1771, when the economist Carlota Perez dates the start of the first industrial revolution, to 1846).

5. Laissez-faire industrial capitalism

The age of railways, steel, and electricity concentrated power in the hands of factory owners, railroad barons, and industrial trusts, with little regulation and few protections for workers.

Tax base: mostly tariffs and excise taxes, especially in the United States.

Held onto power: ownership of capital, protected by property law and, at times, private force, as when Pinkerton agents fought striking steelworkers at Homestead in 1892.

How it ended: Mass production (the Model T arrived in 1908) changed the economy, and then a string of shocks broke the old order: World War I, the Great Depression, and World War II.

Ideas and prototypes that had been waiting got adopted fast. The US created a permanent federal income tax with the 16th Amendment and founded the Federal Reserve, both in 1913, then created Social Security and its payroll tax in 1935.

Both had been tried before. The US first taxed income in 1861, to pay for the Civil War, and again in 1894, until the Supreme Court struck it down the next year. The 16th Amendment settled the question.

Social Security is insurance for old age. Workers pay in through a payroll tax while they work, and draw a pension once they stop.

Germany had built the first national version in 1889, under Otto von Bismarck. The Depression made it standard in the US.

The Bretton Woods agreement rebuilt the global monetary order in 1944. Dalio marks 1929 to 1945 as the last great breakdown period of his Big Cycle.

Transition length: roughly 30 years (1914 to 1945).

6. Managed capitalism

After World War II came big corporations, big unions, and big government, balancing one another. This was the golden age of the mass-production revolution.

Tax base: a progressive income tax with high top rates, a significant corporate tax, and payroll taxes.

Held onto power: a bargain. Big business, big labor, and big government kept each other in check, as in the 1950 Treaty of Detroit, which traded labor peace at General Motors for pensions and health care.

How it ended: In 1971, Intel released its first microprocessor, which Carlota Perez marks as the start of the information revolution, and the US ended the dollar’s convertibility to gold.

Oil shocks in 1973 and 1979 brought stagflation, and the managed model couldn’t fix it.

Again, ideas were waiting. In 1970, Milton Friedman had argued that the social responsibility of business is to increase its profits, and that became the doctrine of shareholder primacy.

Shareholder primacy is the idea that a company exists mainly to make money for its owners, the shareholders, so its managers should be judged by the stock price.

It wasn’t new either. In 1919, Michigan’s Supreme Court ruled in Dodge v. Ford Motor Co. that a company is run “primarily for the profit of the stockholders.” The crises of the 1970s made the idea standard.

Margaret Thatcher (1979) and Ronald Reagan (1981) cut taxes and deregulated, and the fall of the Berlin Wall in 1989 ended the main alternative.

I’m arguing something different: the social responsibility of society is to create abundant universal basic goods and services, in service of maximum human agency and safety, so that human society can flourish until the end of time.

Transition length: roughly 18 years (1971 to 1989).

7. Financial and information capitalism

This is the system we live in now. Power comes from capital markets, platforms, and data.

Tax base: wages, through income and payroll taxes, with capital taxed far more lightly.

The economists Daron Acemoglu, Andrea Manera, and Pascual Restrepo estimate that effective taxes on US labor run 25.5% to 33.5%, while equipment and software now face effective rates of about 5%, after a run of tax laws from 2002 through 2017.

Held onto power: owning the markets and platforms everyone else depends on, where network effects make the biggest players bigger.

Hold onto that last fact. It matters for everything that follows.

The pattern

Line up the transitions and two things jump out.

The first is speed. Roughly 6,000 years, then 450, then 250, then 75, then 30, then 18. The four modern transitions, from the end of feudalism onward, average about 93 years.

But the average hides the trend: since the end of feudalism, each transition has taken somewhere between roughly a third and a little over half as long as the one before. If that holds, the next one takes roughly 5 to 11 years.

The second is that every transition ran on the same five mechanisms.

1. A new technology changes what’s scarce. Each time, something becomes abundant, and something else becomes the new bottleneck.

Farming made food abundant, but it made fertile land scarce.

The Black Death made land abundant, but it made labor scarce.

Machines, and later steam, made power abundant, but they made capital and factory workers scarce.

The microprocessor made information abundant, but it made attention scarce.

AI is making intelligence abundant, and robots will soon do the same for labor. That makes energy and materials the new bottleneck.

2. The old tax base erodes, and debt piles up. Rome debased its coins. Feudal lords lost their rents when serfs left.

Britain replaced tariffs with an income tax. In every case since the first states, the system’s finances broke down before the system did.

3. A shock breaks the old institutions. Plague, war, depression, inflation. The shock doesn’t create the new system. It removes the old one’s ability to resist.

4. Prototypes lying around get adopted. The joint-stock company, limited liability, the income tax, Social Security, shareholder primacy: each existed, at least as an idea or an experiment, before the crisis that made it standard.

In every transition, the people with working prototypes ready got to shape what came next.

5. The new system codifies a new ownership form and a new tax base. Land for service. Charters for trade.

Shares for factories. Wages for the income tax. Each system decided who owns what, and how the state pays for itself.

Do you see the pattern? You can’t predict shocks on a schedule, but you can have prototypes ready for when they come.

Where we are now

Run today against those five mechanisms, and every one is already in motion.

Technology: The British-Venezuelan economist Carlota Perez has spent decades studying how technological revolutions remake economies.

In her 2002 book, Technological Revolutions and Financial Capital, she traces five of them since 1771, from the first factory mills to the microprocessor, and finds the same shape every time.

First comes a 20-to-30-year installation period, when the new technology gets built out and money floods in. Then a crash and a turning point. Then a 20-to-30-year deployment period, when it spreads through the whole economy.

AI is either the full deployment of the information age or the start of a new revolution. Either way, ChatGPT’s release in November 2022 looks a lot like what Perez calls the visible “big bang” of a new paradigm.

Tax base and debt: The Congressional Budget Office (CBO) reported a $2.0 trillion federal deficit for fiscal 2026. Debt held by the public ended the year at about 100% of GDP, and interest cost about $1.1 trillion, more than defense.

Not only that, but CBO projects debt rising to 120% of GDP by 2036.

Meanwhile, the tax base is built on human labor, the very thing machines are about to replace.

Dalio also tracks a second cycle, the Big Debt Cycle, which he puts at about 80 years.

It starts with sound money, when borrowing pays for things that produce more than enough income to repay it. It ends in a bubble, when borrowing mostly buys assets and the paper wealth outgrows the real wealth underneath. Dalio places the United States near the end of that cycle.

Economist Richard Werner offers the simplest test for which kind of debt you have: what does the money buy? Credit that pays for new goods and services grows the economy. Credit that pays for existing assets just inflates their prices.

Good debt builds things. The next system has to reward building.

Shock: Dalio has warned that the US may be moving from Stage 5 into Stage 6, his name for breakdown. A pandemic already hit in 2020. The next shock could be a debt crisis, a war, or simply mass displacement from AI.

What do you know. We have the makings of all three!

Prototypes: This is the one we control, and the one this series is about.

Codification: Not yet. Which means the shape of the next system is still up for grabs.

Here’s what I’d codify. The new ownership form is universal basic capital: everyone owns a share of the machines that make their essentials.

Each resident holds one equal share that can’t be sold, through their town’s trust. I lay out the full design in Part 5: Every Town Can Own Its Own Power Plant and Chip Fab.

It matters because when machines do the work, whoever owns them owns most of what the economy produces.

The industrial age’s form was shares you could buy and sell. This one is a share everyone holds and nobody can sell.

For the full design, read my whitepaper, The Information Economy, or its plain-English version, Keep Money, Add a Second Ledger.

It also tells us how to roll this out. In 2026, Google DeepMind’s economists Julian Jacobs and Alex Imas rated eleven policies for an AI economy.

Universal basic capital scored highest of all on agency and on ownership of the gains, and second from the bottom on feasibility, because nothing like it has been tried before.

So they recommend a sequence. Expand unemployment insurance, the earned income tax credit, and apprenticeships first.

Turn the tax credit into a negative income tax if wages fall. And keep universal basic capital designed and ready, to deploy once labor’s share of income keeps falling.

My roadmap, in Plan for the Bad Transition, follows that sequence, with one change.

Their version is a share in a national fund of stocks and bonds. Mine is a share in the machines that make your essentials, built in pilot towns first, so it’s ready by the time it’s needed.

If the current handover (the part of the transition we’re in now) started somewhere around 2020 to 2022 and runs 5 to 11 years, the next system gets codified somewhere between the late 2020s and the early 2030s. That’s within the next decade.

Codified isn’t finished, though. After every past transition came decades of deployment, as the new system spread into everyday life. This time, I expect the next system itself to be short: a bridge to what comes after it.

That lines up with the phases I’ve sketched in earlier writing: a scarcity phase (where we are now), a transition phase from roughly now to 2040 (the next system, likely extremely short and transitory), and an abundance phase after that (what this new system prepares for).

Abundance here means what Donella Meadows and her co-authors called global equilibrium in The Limits to Growth (1972): a world where “the basic material needs of each person on earth are satisfied.” Enough for everyone, within the planet’s limits, not endless growth.

That’s why the system I’m proposing has to be built piece by piece during the transition, so it’s in place by the time abundance arrives.

Paying for the transition

Every system had a tax base that matched its source of value: grain from farmers, labor from serfs, duties from trade, income from wages.

Our tax base still leans on wages. That works as long as humans do most of the work. It breaks as soon as machines do.

So the tax base has to shift too: off human labor, and toward capital and the things that stay scarce.

I lay out how in Every Spending Bill Should Show Up on Your Paycheck, where one formula sets the rate each year and capital pays more than wages.

Something ready

Every system of power before ours ended. The feudal lords didn’t plan for the plague, and the industrial barons didn’t plan for the Depression.

The old system was always going to fall. What came next depended on what was ready to replace it.

This series is my attempt to have something ready.

If you’ve read this far, you’ve seen the whole map: the world we want, machine labor on demand, scarcity engineered away, communities that own their infrastructure, parties and guilds, and the things themselves instead of a check.

Now we have a rough sense of how long it might take, and what to build first.

The road itself, stage by stage, has its own part: what changes, what to build, what to watch, and the safety net that switches on along the way. That’s Part 19: Plan for the Bad Transition.

One question is left, and it’s the one most people ask first: if machines do the work, what am I for? That’s Part 8: AI Will Kill Packaged Meaning. Let It.

The window is opening. Let’s build.