I could make this really long, but my basic question is how people see fully automated supply chains affecting capitalism, specifically on the issue of economic demand.
Most people would agree that capitalism wasn't really possible in hunter gatherer or subsistence farming conditions. Feudalism wasn't really possible either when technology developed to the point that most people did not have to farm.
Likewise, do people think that capitalism is/will be possible when the basic needs of most people can be achieved without the labor of most people?
In America, many people know the story about how Henry Ford paid his workers high enough wages that they could afford Model Ts. If Henry Ford wanted to produce more cars, he had to hire more workers; he also had to buy more steel (for example), which meant the steel industry had to hire more workers. So, by expanding production he was, necessarily, spontaneously, unintentionally also expanding the market to absorb the new production.
Now imagine that at some unspecified date, Henry Ford 2 wants to build more cars, but instead of hiring more workers, he instead buys more robots. The steel is mined by robots, refined by robots, transported by robots, milled by robots etc. Or, conversely, he wants to produce the same amount of cars, but is able to do so with an ever shrinking workforce. Obviously, if this is happening in other sectors as well, Henry Ford 2 will have a problem; he's producing more cars, but where is the demand going to come from? If in the 20th Century "production creates its own demand," will this be true in the 21st, and what mechanism might accomplish it? Robots don't drive (or buy) cars.
One standard answer is 'service sector jobs,' but it seems that the service sector is having the same conundrum. Law clerks are being replaced by online law libraries and search tools, cashiers are being replaced by automation, professors can broadcast lectures to potentially unlimited audiences of students (and these lectures can be rebroadcast an infinite number of times). There are rumors that software and hardware will soon be advanced enough that cell phones will be able to translate from and to any language; surely this will result in a decline in the number of foreign language teachers. The question is not whether new jobs can be created in the service sector, the question is whether jobs can be created faster than other jobs disappear.
Clearly, America and much of the West has a bad problem with unemployment, but I can't for the life of me imagine what labor intensive new industry or industries will pop up to ameliorate it. As unemployment increases, surely demand must decrease in a free market?
Are the benefits of automation being undermined by the need for salaries to create the demand for production?
Von Mises lived in the 'Fordist' period of capitalism, so have there been any attempts to explore this issue by contemporary Austrians or libertarians?
To Hazlitt we go!
http://jim.com/econ/chap07p1.html
Benjamin:I used to work at a factory which doubled its floor space, increased production by several percent, and actually laid off workers, because the new, more rational floor layout eliminated bottlenecks... what implications does it have for the macro economy if many sectors are able to expand production without expanding or even while reducing salaries paid?
You do realize that you are saying that it is a bad thing that this factory was able to produce goods using less resources than before, right?
I have a question for you. Do you think it would be good for the economy (vague, I know, but answer it as you will) if the government introduced bottlenecks into factories, so that they would require more workers and unemployment could be eliminated? This would then increase incomes and thus demand, making everyone better off, right?
1. Workers for product X are replaced by machinary.
2. Costs of production for product X drop.
3. Prices of product X drop.
4. The money that is saved due to the lower prices of product X can be spent or invested on products A,B, and C.
5. Jobs are created in the industry of products A,B, and C.
6. Standards of living grow due to the more widespread affordability of product X, as well as the innovation in products A,B, and C.
I'm saying that people have been predicting mass unemployment from every new labor saving innovation for 150 years. They've been wrong every time, you're no different.
Even some marxists have abandoned the idea.
Let's say I came along in the year 1000 A.D. I observed how artisans had slightly better techniques than they had in 900 A.D., and I proposed that someday, various technologies like this would improve to such an extent that most people would not have to farm, and that the people who owned the most land would no longer be the dominant social class, but instead, the richest and most powerful people would be the ones with the patents on the new technology.You could have come along for the next 700 years and say "nearly everyone still has to farm, so the theory is bunk. We'll all always have to farm if we want to eat food." Probably most people would have abandoned the theory by the time it became reality.
The theory is that productivity growth is exponential. If this is true, than eventually (soon actually) human labor becomes a trivial input.
Robots stealing our jobs? I'm not worried about that. Now robots stealing our lives and our fortunes. Be warned!
'Men do not change, they unmask themselves' - Germaine de Stael
Benjamin: Here's the theory in graphic format: The theory is that productivity growth is exponential. If this is true, than eventually (soon actually) human labor becomes a trivial input.
Here's the theory in graphic format:
I never thought that there would be a whig interpretation of human productivity. Everyday we supposedly become more and more productive.
Benjamin: The theory is that productivity growth is exponential. If this is true, than eventually (soon actually) human labor becomes a trivial input.
Sweet, it looks like we are already in the "something else" phase. Where are all the robots?
What if we get to the point where robots are nearly indistinguishable from humans in terms of function, but far cheaper in terms of price? All human labor could effectively be replaced by humans, so humans would no longer be needed to work. This will be great for a large part of the population, those that can afford robots. (And I imagine robots would be continually getting cheaper, so many people could afford them.) However, what of those lower income individuals who cannot afford robots, will they rely on charity in a free society in order to survive?
The only solution that I could come up with to this puzzle is to argue that a market for human labor would develop. That is, the human aspect of labor would become a value in itself. Much like people pay a premium now for hand crafted or hand made items, over machine made items. However, this doesn't seem completely satisfying. What are your thoughts?
http://www.google.com/search?hl=en&tbo=p&tbs=vid:1&q=robots+assembly&aq=f&aqi=g2&aql=&oq=&gs_rfai=
(some pretty cool videos)
Cal:What if we get to the point where robots are nearly indistinguishable from humans in terms of function, but far cheaper in terms of price? All human labor could effectively be replaced by humans, so humans would no longer be needed to work. This will be great for a large part of the population, those that can afford robots. (And I imagine robots would be continually getting cheaper, so many people could afford them.) However, what of those lower income individuals who cannot afford robots, will they rely on charity in a free society in order to survive?
What does afford mean? You seem to be assuming this external variable for income, where humans don't need to work, yet still have income. Why do they have incomes? If there's no need to work, the only scarcity is in time and location.
Next, suppose you're right. What is the problem, and why would they rely on charity? They could, you know, farm and build things. That is, they could do actual labor, and with robots being continually cheaper, soon buy a robot, and use it to build more robots.
Is anyone else noticing that Benjamin is ignoring all of the arguments which utterly destroy his? e.g. "before the robots which replace human labor are built, the firms which build the robots need to employ human labor" and "demand for human labor will increase in the service industries as a result of a fully automated manufacturing industry"
Political Atheists Blog
Didn't we already cover this by supposing the effects of a robot economy? The OP is new so perhaps they did not see that thread.
"Look at me, I'm quoting another user to show how wrong I think they are, out of arrogance of my own position. Wait, this is my own quote, oh shi-" ~ Nitroadict
krazy kaju: Is anyone else noticing that Benjamin is ignoring all of the arguments which utterly destroy his? e.g. "before the robots which replace human labor are built, the firms which build the robots need to employ human labor" and "demand for human labor will increase in the service industries as a result of a fully automated manufacturing industry"
This tends to happen a lot in his threads.
Willink: krazy kaju: Is anyone else noticing that Benjamin is ignoring all of the arguments which utterly destroy his? e.g. "before the robots which replace human labor are built, the firms which build the robots need to employ human labor" and "demand for human labor will increase in the service industries as a result of a fully automated manufacturing industry" This tends to happen a lot in his threads.
I called out his less than intelligent arguments in another thread briefly, but others weren't too happy about that. Any bets that he's a migrant from RevLeft?
Nitro: I wouldn't be surprised. Anyone noticed a certain similarity to historical materialism in what he's claiming?
I bet. He couldn't make it any more blatant. Like he'll quote the half of the post that doesn't refute his point, but completely ignore the half that destroys his argument.