The Future of Creativity: Towards Human Capital 3.0

The Long View: A Shift in Human Capital & Creativity

With the advances in AI, we're witnessing a paradigm shift in human capital, defined by Adam Smith in The Wealth of Nations as the acquired and useful abilities of society's members. This shift is extending beyond mere automation to realms of creativity, decision-making, and problem-solving, once considered the exclusive domain of human intellect.

Creativity is a great proxy for human capital.

We're steering towards what we term Human Capital 3.0, mirroring the transformative periods of the Industrial Revolution and the Information Age, each marked by significant technological leaps.

Reflecting on the Past to Predict the Future

Historically, the Industrial Revolution and the Information Age catalyzed profound economic and social transformations. The Industrial Age spanned about 150 years, with “bridge periods” of 30 to 40 years where the world saw intense social and economic reforms, alongside the adoption of new technologies that on the overall, increased productivity. Interesting to note, we are about 70 years into the Information Age (1950s to present day), similar in duration to the First Industrial Revolution.

The Future of Creativity: Towards Human Capital 3.0

Just as the steam engine liberated humans from the limitations of manual labor and the internet democratized information access, we are now entering an era where the automation of creative and intellectual tasks brings massive changes in the workforce and the creation of wealth.

This opens up new vistas of opportunity across various sectors, including

• Media, Entertainment, Gaming, Art (MEGA) — $2.3T industry;

• Product Software Development (PSD) —$800B,

• Marketing and Advertising (MA) —$650B, and

• Research, Education, Consulting (REC) — $450B.

These sectors, with a combined market size exceeding $4.2 trillion, are on the cusp of significant growth and disruption.

The Disruptors & Pioneers

As history shows, productivity leaps accompany the adoption of new technologies. During the American Industrial Revolution, the completion of the first transcontinental railroad in 1869 was a significant milestone, making it easier to transport people, raw materials, and products across the country with steam trains. Notably, the inception of the US patent office in 1790 coincided with the Industrial Revolution, fostering an environment ripe for innovation.

How will AI evolve the nature of human capital in the next 50 years?

As demand for AI talent skyrockets, we may see more human capital deepening, i.e., the allocation of resources to upskill teams and to adopt new technology. There will be incumbents who will fail to move fast enough, leaving room for Disruptors who can 100x their productivity with the right teams. We will also see Pioneers, novel businesses and applications that were not possible prior to this invention cycle. These businesses will reshape our economy and workforce in the decades to come.

Looking Ahead

Our next letter will delve into productivity trends, economic growth, and technological inventions across these periods of invention — the Industrial Revolution and the Information Age —highlighting the significant leaps in GDP per capita and labor productivity that marked the US's rise to global prominence. We'll explore how different countries, like the US, Europe, China, India, and others are responding to AI and transitioning to Human Capital 3.0.