Coming Soon: An Autonomous Digital Economy
Coming Soon: An Autonomous Digital Economy
In this week’s Letter from London, we discuss why we believe an Autonomous Digital Economy is coming soon and why it represents a dramatic upgrade to global economic activity — and how we are positioning capital for it beginning with the software aspects which area already outlining and enabling an Autonomous Digital Economy.
We believe the future state is one in which humans are no longer the primary drivers of economic core processes. Instead, powerful new agents built on sophisticated computing platforms and shaped by powerful algorithms and software programs will drive most economic activity. With human interaction much diminished, and in some cases unnecessary.
That is a strange and uncomfortable sentence. It is also, we think, the natural conclusion of a trend that has run for two million years. This letter lays out why we hold that view, what it implies for the structure of society and the balance of power between nations, and — most importantly for our investors — where we are putting capital to be ready for it.
What is an Economy?
Strip away the jargon and an economy is simply a system by which goods and services are provisioned to a group of people. How do humans get what they need — food, shelter, energy — and what they want, from a haircut to a legal opinion? Every economic arrangement in history is just a different answer to that one question.
Seen this way, the history of the economy is not a story of money or markets. It is a story about who, or what, does the productive work. And on that single axis, the entire arc of human history points in one direction: abstraction of human labor and its replacement with digitalization.
This is not a new conviction for us. Over four decades of building, advising, and investing in technology companies across Silicon Valley, our founders Alison Davis and Matthew Le Merle became persuaded that the world was crossing into a genuinely new epoch — and they set the argument down in a series of books, The Fifth Era, Build Your Fortune in the Fifth Era, and Corporate Innovation in the Fifth Era.
In these books they named what was coming the Fifth Era, situating it as the successor to the four great economic ages that preceded it: the hunter-gatherer, agrarian, mercantile, and industrial eras. The core claim was that disruptive technological innovation would reorder every industry and shift wealth to a new set of players — and that most people who had prospered in the prior eras were not prepared for this coming period of transition between eras. That without careful preparation most players, including the world’s largest companies, would be losers rather than winners in the coming decades.
Years later, we are more convinced than ever, and we can now see further than we could then. What began as a thesis about an age of unprecedented innovation has, with the arrival of genuinely autonomous machines, resolved into something sharper and more specific.
The First Four Eras
Without taking too long, let’s briefly recap the four prior eras of human activity, before discussing the Fifth Era that is now upon us:
The Hunter-Gatherer Era. Small nomadic bands survived by foraging plants and hunting wild animals, with no permanent settlements or property. The key technology was stone tools, and later the control of fire. The work was done by human muscle.
The Agrarian Era. Humans settled in one place to farm domesticated crops and livestock, enabling villages, land ownership, social hierarchies, and the first civilizations. The key technology was the plow, alongside irrigation and domestication. Tools were able to magnify human labor, and new approaches allowed for the expansion of communities into city and eventually national units.
The Mercantile Era. Wealth shifted to those who moved goods across long distances through trade, exploration, and early capitalism, organized around merchant city-states, trading companies, and colonial empires. Some of the key technologies included ocean-going sailing ships, along with the printing press and double-entry bookkeeping. The work was done by human networks moving goods around the world enabling the Columbian exchange and the opening up of every continent.
The Industrial Era. Mass production in factories, powered by fossil fuels and organized around large hierarchical corporations and nation-states, created urban wage-labor economies and consumer goods at scale. Key technologies included the steam engine and later internal combustion engine, greatly magnifying the scale and scope of work performed. The age of computing arrived within the construct of the Industrial Era but was more about leveling up pre-existing industrial era approaches, than substituting them with new device driven processes.
Read those four eras in sequence and the throughline is unmistakable:
human muscle → human labor on domesticated land → human networks moving goods → humans operating machines
At every step, the human moves further (e.g., is ‘abstracted’) from the raw physical task and closer to merely directing it. The machines get more capable; the human contribution gets more abstract and leveraged.
Now we are increasing replacing human effort all together as a result of the multi-decade process of digitalization.
The question is what happens when this process of transformation is extended to its logical end.
The Fifth Era: An Autonomous Digital Economy
We are now entering the Fifth Era. While there are many areas of innovation under the umbrella of the Fifth Era which are accelerating including compounding innovations in life sciences and biotechnology and the rise of a non-carbon reliant global energy solution, these are not our areas of focus. For us, the central thesis of the Fifth Era is digitalization.
Digitalization is driving a new era in which human labor will increasingly be replaced with autonomous device labor. It does not necessarily mean that humans do no work. Just as moving from mortar to clicks has still not displaced all mortar even after 40 years of electronic commerce, so it is quite possible that we will be in a hybrid world for decades to come.
However, as a thought experiment, go to the far future and imagine if the human work component had diminished to be the minor not major driver of the global economy.
In such an Autonomous Digital Economy, machines and software might become the primary providers of goods and services.
Autonomous systems, AI agents, and robotics could perform the production, distribution, and decision-making that humans once did.
The role of humans would presumably shift decisively — from performing labor to ownership, direction, and design.
The enabling technologies would be artificial intelligence, robotics, and autonomous software agents, with the Internet and Blockchain as core infrastructure.
This would represent a qualitative break from the prior eras in each of which the human was still the driver of the productive process. For the first time, in the extreme case, the provisioning of the economy might be decoupled from human labor altogether.
While imagining a fully device driven future is perhaps a little futuristic, it may give more clarity to how we think about investing today, and predicting the likely winners of this time of transition between eras. Some thoughts to consider:
Our strong intuition is that economic activity will eventually be done not just adequately but better by machines than by humans.
If machines can do work quicker, cheaper and faster, then the basis of competition shifts.
Now those that use the most powerful technologies gain competitive advantage, and those that insist on keeping a human in the loop maybe outcompeted by those that do not.
Following this thought process back to the beginning – those that learn fastest how to operate in an Autonomous Digital Economy, will pull ahead of those that wait and set off later. Early learning moves you to a much steeper learning curve.
Consider a recent, smaller version of this story. There were once buildings full of people doing arithmetic by hand to support accounting and data functions. Then the digital spreadsheet arrived — first mainframe computer cards, then Visicalc, Lotus 123, and now Excel. Now imagine running a modern finance function where, by mandate, a human had to manually approve every cell in every model. Even in a system which required a single hand-entered row, that system would as a whole be slower, more error-prone, and uncompetitive against a firm that simply let the software run.
The human-in-the-loop requirement does not protect the human; it sinks the enterprise that carries it.
Take that to its conclusion across every economic task, and you arrive at an Autonomous Digital Economy.
Evolution Not Revolution
The easiest way to dismiss this thesis is to call it a fantasy — another breathless prediction of a robotic future. iRobot, Singularity, Hal all combined into a SciFi fantasy that will never happen in our lifetimes and is too revolutionary to be practically reached.
We think that gets it exactly backwards.
The Autonomous Digital Economy is not a departure from history. It is the continuing evolution of trends that have been underway for eras.
Humans are, far beyond any other species, users of tools. And the defining property of a tool is abstraction — the act of placing layers of machinery between human intent and physical execution, so that the human specifies what should happen while the tool handles how. Every meaningful technology in our history has added a layer of abstraction between us and the task.
Watch the same impulse play out in a single domain — the act of striking a target at a distance:
a thrown rock (direct) → a spear (physical contact abstracted away) → a bow (limited distance abstracted away) → a firearm (mechanics abstracted away) → a guided drone (physical presence abstracted away) → an autonomous system (the decision itself abstracted away)
Each step removes the human further from the physical act, until the human is no longer doing the task at all — only setting the intent behind it. An Autonomous Digital Economy is simply this two-million-year process running to its limit across every task, not just one. Only now we are allowing the devices to substitute rather than leverage up the human labor component.
Framed as evolution rather than revolution, the thesis is far harder to wave away. We are not predicting that humans will suddenly stop being human. We are observing that humans have been removing themselves from their reliance upon their own physical labor since the first stone tool.
The key question to ask is what happens in the next era, and how do you become providers of capital to the likely winners, while avoiding being brought down by the biggest losers during this time of transition.
Is This A Future Worth Wanting?
It is only human to find this prospect unsettling. But it is worth asking what is being lost? Consider if humans are being self-actualized by:
Back breaking days in the fields, factories, or offices doing work that the human body is not well designed for?
Increasingly spending their lives behind desks and constantly in inboxes?
Waking up looking at small screens, doing work on medium screens before relaxing by watching large screens?
Constantly suffering through long commutes and worsening urban traffic?
Enduring cultures of meetings and managerial overhead?
Performing work that exists largely to coordinate other work?
A great deal of modern economic activity is not obviously good for the people performing it. If machines absorb that burden, humans may be freed to pursue the things we have always claimed to value most — art, science, craft, community, family, philosophy, play.
We do not promise this outcome. The economic logic of the Autonomous Digital Economy is indifferent to whether humans find meaning afterward; that is a political and cultural question, not an economic one, and it may be the defining struggle of the century.
But we refuse to ignore a potentially inconvenient truth.
The end of an economy centered primarily on human labor appears to have been the embedded goal of nearly all tools that humans have ever built.
The Objections We Take Seriously
Here are the strongest arguments against our thesis, and why they do not move us off it.
"We have heard this before." Every wave of automation has triggered the same panic, and each time new jobs appeared. True — but prior waves replaced human muscle and routine cognition. The labor that survived was the labor requiring judgment. This wave is aimed precisely at judgment itself. The historical pattern of reabsorption assumed there was always a higher cognitive rung to climb to. The Autonomous Digital Economy contests that assumption.
"Some work requires a human touch." Care, hospitality, therapy, craft — surely these stay human. Perhaps. But they become a shrinking share of economic activity and increasingly a premium, a nostalgia good rather than the engine of the economy. A handmade chair is wonderful and will continue to find its place within society; yet, it is not the future of the furniture industry.
"Regulation will keep humans in the loop." Almost certainly, in many domains — and this is exactly why we believe the time of transition will be decades rather than years, and why jurisdiction becomes an investment variable. But mandated inefficiency is a tax, and taxed systems lose to untaxed ones over a long enough horizon. Regulation shapes the path; we do not think it changes the destination.
"If no one earns wages, who buys the output?" This is the hardest objection, and we will not pretend it is solved. A fully automated economy that immiserates its consumers eats itself. The resolution lies in ownership and distribution — broad equity in the autonomous systems, sovereign and social mechanisms for sharing their output — which is precisely why the “rails of ownership” feature in our investment framework below. The demand-side problem is not a refutation of the thesis. It is its central political consequence and one to take seriously.
Beyond these four objections substantive questions remained unanswered; what is basis for redistribution when the labor theory of value ceases to maintain its previous relevance? How should society share and distribute its resources? These will be difficult questions with which to wrestle.
Societal Implications
The arrival of the Autonomous Digital Economy reshapes the two things that matter most in political economy: who holds wealth, and who holds power.
Inequality, and Piketty taken to the limit. Thomas Piketty observed that when the return on capital exceeds the growth rate of the economy (*r > g*), wealth concentrates in the hands of those who own capital. In an Autonomous Digital Economy this stops being a tendency and becomes the structure of the system. When the autonomous systems dominate the workforce, returns flow almost entirely to the owners of those systems, and the traditional counterweight — the bargaining power of labor — disappears, because labor is no longer in the loop to bargain. The likely result is concentration of wealth at a scale without modern precedent, and a political backlash to match. Any serious allocator must hold this as both a moral concern and a source of regime risk to underwrite against.
Balkanization and the sovereign stack. An Autonomous Digital Economy is a matter of national security, not merely commerce. No serious power will run its economy on autonomous infrastructure it does not control, because dependence on a rival's systems means handing that rival a backdoor "off" switch over your food, energy, finance, and defense. The consequence is deglobalization by necessity: every major bloc — the United States, China, the European Union, India, the Gulf — will move to build a full sovereign stack spanning chips, models, energy, robotics, and biotechnology. For investors this is profound and counterintuitive. The default assumption of the last era was that technology consolidates toward a single global winner. The Autonomous Digital Economy implies the opposite: redundant capital expenditure replicated across spheres of influence, as each bloc rebuilds the entire stack inside its own borders. That is not waste from a geopolitical standpoint. It is sovereignty, and it will be funded accordingly.
How We Are Positioning Capital
This end state may be decades away — quite possibly we will not see its full form until the close of the century. That does not make it un-investable; it makes it the most important question of capital allocation in our lifetimes. A destination this large casts a long shadow, and the early structure of the transition is already visible.
We have spoken to many leading venture investors in the past few months including those we are investors in, and increasingly they are organizing their deployment around the following investment domains and themes.
The convergence of the Internet, artificial intelligence, and blockchain. First and foremost, software has been eating the world for three decades, and AI agents now let software act on the world without supervision. The convergence of the Internet, artificial intelligence, and blockchain produces systems that can not only compute but transact, contract, and coordinate autonomously — the digital nervous system of the end state economy. This is where autonomy is being built first and fastest, and it is our primary focus today. The same intelligence does not stay behind the screen: in time it reaches into atoms, with robotics carrying autonomous systems into manufacturing, logistics, agriculture, construction, and services performed with far fewer human hands. We do not treat that as a separate "physical economy"; it is the same digital economy taking physical form, and as the cost of physical autonomy falls, the share of the real economy it can address rises sharply.
Binding Constraints — energy, compute, and resources. The Autonomous Digital Economy does not run on ideas alone; it runs on power, silicon, and critical raw materials. As intelligence becomes abundant, the scarce inputs become the constraint and therefore the prize: electricity generation and grid capacity, data-center buildout, advanced semiconductors, and the critical minerals beneath all of it. This is the picks-and-shovels layer, and in a deglobalizing world it is being built five times over, once per bloc.
Sovereign and Ownership Infrastructure. If humans shift from labor to ownership, then the machinery of ownership becomes economically important — the rails by which equity in autonomous systems is held, tokenized, distributed, and exchanged. This is also where the sovereign-stack imperative concentrates capital, and where the answer to the demand-side problem will ultimately be engineered. We regard it as the most underappreciated domain of the four. This is also the potential area in which the decentralized autonomous theme of the crypto world may resurface.
As noted, our investment focus is the first of these four areas – the convergence of Internet, blockchain and AI & Agents, and it is here that we are seeing the fastest and broadest value creation at this time. We amplify on this in the next section of this newsletter.
Why the Digital Economy Leads
A thesis that resolves at the end of the century is not, by itself, a place to put money today. So the operative question is one of sequence: which part of the Autonomous Digital Economy arrives first? It begins in software — the digital economy — and works outward into the physical world from there. Four structural forces make that almost certain:
First, the marginal cost of digital distribution tends toward zero. Software is the highest-gross-margin product humanity has ever built. Once written, it can serve one user or a billion at almost no additional cost. Autonomy delivered as software therefore scales at a speed and economics that no factory, fleet, or supply chain can match.
Second, the infrastructure is already built. The "network" of the currently operating digital economy — the fiber laid down during the optical boom of the 1990s, and the cloud and connectivity built atop it since — are already in the ground. Now dense networks of satellites are further increasing network reach and throughput. This network allows new software to reach every consumer and business on Earth at the speed of electrons. Unlike when we first rolled out the Internet, today we do not have to upgrade all the world’s communication infrastructure; the global and mostly borderless distribution layer for digital autonomy is a sunk cost the world has already paid.
Third, cognitive work is the great untouched frontier. The physical world has been contending with machines since the Industrial Revolution; two centuries of mechanization mean the easy gains in physical labor are largely spent. Cognitive work is the opposite. Professions like law, accounting, consulting, and much of administration have seen remarkably little structural disruption in hundreds of years — the tools changed, but a human still did the thinking at every step. That is precisely where autonomous software now bites, and it is an extraordinary field of low-hanging fruit: high-value, high-margin services that have never before faced a non-human competitor.
Software Writing Software. Finally, the most important accelerant is that the principal constraints to software eating the world have just been eliminated. To date, software was written by outstanding software developers who were a critical chokepoint on progress, and it took them time to bring new software to market. Now as Google’s CEO has announced, upwards of 75% of new software is being drafted at very fast speeds by agents that are themselves software. The rate of creation and deployment of software has just been accelerated enormously.
Our journey investing behind the Fifth Era thesis is a thirty-year conversation — one that began when Alison and Matthew led the digital services practices of some of the world's largest consulting firms and worked with the leading minds in the software world from enterprises like Alphabet, Cisco, HP, Intel, and Microsoft.
Our strategy for getting ahead of this overarching trend has been to commit capital at the early stage through our funds-of-funds, and at the mid and late stages through concentrated direct investments — built first on the convergence we identified early: the Internet, blockchain, and artificial intelligence fusing into systems that can not only compute, but transact, contract, and act on their own.
The implications we have set out are, we admit, jarring at first encounter. But they should not be dismissed for being uncomfortable. Viewed as the continuation of a single historical trend — the steady abstraction of humans from their own labor — they demand to be taken seriously. Profound social and political questions remain unanswered, and we do not pretend otherwise. Yet we believe the end state is an economy in which humans abstract themselves entirely from the provision of goods and services. That thesis is playing out now as we stand up an Autonomous Digital Economy; the physical will shortly follow.
What this means for society is a question we will all have to wrestle with. In the meantime, we believe the wise course is to position capital ahead of these structural tailwinds.
Thank you for reading,
Mitchell Mechigian
Partner, London
About Fifth Era
We are entering a period of unprecedented innovation we call the Fifth Era, and every industry and business will be dramatically impacted. We focus on investing into these new innovations. Fifth Era specializes in investment strategies which construct portfolios of hard-to-access funds and direct investments through our investment strategies - AI Access and Blockchain Coinvestors. Fifth Era's investment strategies are now in their 12th year and to date we have invested in a combined portfolio of 1,500+ companies and projects including 80+ unicorns. In the US we are a SEC registered investment advisor, in the UK a FCA appointed representative and our funds are registered in Switzerland. Visit us at www.FifthEra.com to learn more.
SEC Registration does not imply a certain level of skill or training.
“Focused on Innovation”