What if this time is different? What if technology and automation create a world where human labor is uneconomical? What if we become so productive that there are too few jobs to go around? I’m pretty skeptical, but what if?
I’ll return to Keynes, in his 1930 essay:
“We are suffering just now from a bad attack of economic pessimism. It is common to hear people say that the epoch of enormous economic progress which characterised the nineteenth century is over[1]; that the rapid improvement in the standard of life is now going to slow down…I believe that this is a wildly mistaken interpretation…We forget that in 1929 the physical output was greater than ever before.
…the very rapidity of these changes is…bringing difficult problems to solve…namely…unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses…But this is only a temporary phase of maladjustment. All this means in the long run that mankind is solving its economic problem.”
Basically, too little work to go around due to efficient production? Great! Problem solved. This seems to be a fairly radical viewpoint; look at popular writings on automation and work, you would think it is a bad thing that robots could do our work for us. In reality, it would be a historic accomplishment. However, this long run outcome would raise its own, new problems.
As David Autor states in his recent paper:
“if human labor is indeed rendered superfluous by automation, then our chief economic problem will be one of distribution, not of scarcity…we would have vast aggregate wealth but a serious challenge in determining who owns it and how to share it.”
I still can’t imagine a world where no human labor is needed at all. However, if human labor becomes uneconomical in production, we would have to rely on capital income (the return on ownership of robots for example). But capital ownership is highly concentrated. If we do not change our system in response to the effective elimination of wage income, our society would be split between rich capital owners, and an impoverished class with no ability to earn income beyond working for their own subsistence[2].
In short, in this what-if future, capitalism will cease to be the aggregate utility maximizing system and therefore must be discarded by economists (for the whole point of the science is to find the utility maximizing way to use our resources). Instead we would need to distribute ownership of capital (aka the means of production) among everyone, so that, in our future without scarcity, no one goes wanting.
Inequality would become unjustifiable as well. In 1944, the socialist economist Abba Lerner developed a simple equation of aggregate utility maximization, based on the concept of marginal utility. A poor person gains a greater marginal increase in utility from an additional dollar than a rich person. If you take that dollar from a rich person and give it to a poor person aggregate utility is therefore increased; this will go on until everyone has an equal amount of wealth.
The equation is true in and of itself, but it ignores human behavior and incentives. Nearly all economists regard some level of inequality as necessary to incentive economical behavior. For example, a sector that is producing too little given the demand for its output will have higher profits, enriching its capital owners relative to the rest of the economy but also incentivizing increased production.
But robots do not require such incentives; they can simply be programmed. Ownership of capital could be spread among all humans to do with what they want over their lives. And we could provide a basic income for those who still fuck up. This means humans can take greater risks in life, potentially incentivizing entrepreneurship rather than dependency. The consumption and savings choices of humans will still guide production to respond to human wants in a utility maximizing manner.
In a sense, we would all be rich, but even better. As Keynes put it (back in 1930 again):
But honestly I doubt it. I think there will always be work for humans to specialize in and other work for robots to specialize in. Humans always want more; our valuation systems are based on relativity. We will always derive utility by being better off than someone else, and envy those who are better off than us. It is for these reasons that as a society, despite us arguably banishing scarcity in an absolute sense already, we still want more to consume and can live with the continued unnecessary existence of poverty.
1. lol it's the same "this time is different" crap from before.
2. Ok ok, so our global society is kinda like that already but absolute poverty is still falling after a couple decades of record breaking declines and however bad it is now, it would get worse in the transition to the “what-if” scenario above.
But robots do not require such incentives; they can simply be programmed. Ownership of capital could be spread among all humans to do with what they want over their lives. And we could provide a basic income for those who still fuck up. This means humans can take greater risks in life, potentially incentivizing entrepreneurship rather than dependency. The consumption and savings choices of humans will still guide production to respond to human wants in a utility maximizing manner.
In a sense, we would all be rich, but even better. As Keynes put it (back in 1930 again):
“To judge from the behaviour and the achievements of the wealthy classes to-day in any quarter of the world, the outlook is very depressing! For these are, so to speak, our advance guard…they have most of them failed disastrously…to solve the problem which has been set them…
When the accumulation of wealth is no longer of high social importance…We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession…will be recognised for what it is, a somewhat disgusting morbidity…
All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard…
But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.”
But honestly I doubt it. I think there will always be work for humans to specialize in and other work for robots to specialize in. Humans always want more; our valuation systems are based on relativity. We will always derive utility by being better off than someone else, and envy those who are better off than us. It is for these reasons that as a society, despite us arguably banishing scarcity in an absolute sense already, we still want more to consume and can live with the continued unnecessary existence of poverty.
1. lol it's the same "this time is different" crap from before.
2. Ok ok, so our global society is kinda like that already but absolute poverty is still falling after a couple decades of record breaking declines and however bad it is now, it would get worse in the transition to the “what-if” scenario above.
No comments:
Post a Comment