ravochol posted on Sat, Oct 16 2010 6:07 PM

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In case you haven't heard, the software giant Google has debuted a new fully automated, driver-less car. Not only are the prototypes fully functional, they have also already logged a combined 140,000 miles of unassisted driving on U.S. roads. Google itself estimates that the system may be ready for full-scale production in eight years, before the decade is even out.

An eight-year period may seem overly optimistic, but it actually makes a lot of sense in context of computer systems. An observed phenomenon known as 'Moore's Law' states that the processing power of a standard desktop computer roughly doubles every two years, for the same cost. If Moore's law remains constant, then by 2020, the standard desktop should have the processing power of somewhere between the mind of a monkey and of a human -  in other words, more than enough power to navigate traffic with the right software.

What does this mean for the economy?  On the one hand, it will mean more efficient roads, lower costs of transportation, and cheaper costs of goods. On the other hand, there are an estimated 3.5 million truck drivers currently employed in the U.S., and this field is one of few which offers prospects of a middle-class income without a college degree. On top of this, consider the hundreds of thousands of bus, taxi and limousine drivers -  and that similar technology will likely be simultaneously be rolled out for shipping, rail, forklift, crane operations, etc (indeed, to small degrees it already has).

You might remember how a few years ago, a GPS unit or a smart-phone were extravagant luxuries, but now are so common as to be unremarkable.  There is no reason to believe that driver-less car technology will not be adopted with similar speed. Unlike smart phones, however, automated driving will cause massive and simultaneous layoffs.

If this were only happening in the transportation sector, I would not argue that it constitutes a paradigm shift in economics. This trend is however driven by computing speed, which is applicable to the great majority of fields and sectors. In other words, job destruction is and will be happening more rapidly than job creation in the majority of economic fields. The Google Car is a case in point -  reportedly, only 15 engineers are responsible for the creation of its working prototypes, while it may someday soon make 15 million or more jobs obsolete around the world.

In the twentieth century, increased production by capitalists required increased labor forces, and increased payrolls, which created an automatic feed-back loop where more production led to more economic demand, and so on. Computer technology, and to a lesser degree other advances, are breaking this feedback loop.

This is presenting us with an entirely new economic paradigm, where production of goods is only loosely linked to human labor, and it is presenting us with two divergent paths as a species.

The first path is where 20th century economic paradigms remain in place long after their practical obsolescence, and consumption of goods remains rigidly connected to production or ownership. In this world, there are fewer and fewer decent jobs available except to a technocratic elite, and corporate cyborg-like entities compete with one another to enrich a shrinking ownership class to the exclusion of the growing underclass. If you look, you can see evidence of this taking place all around you.

In the second path, productivity gains are partially socialized while markets remain free -  in other words, a portion of the increased productivity made possible by the new technologies is redistributed into a guaranteed national income, or welfare which is available to all, permanently, regardless of ability or even desire to find employment. In this world, work becomes wholly a choice, as subsistence is possible and even guaranteed regardless, but markets remain free and wealth accumulation is otherwise uninhibited, except through nominal (and possibly decreasing) tax rates. A musician for example could choose to charge at his concerts and become wealthier (or afford better equipment), or play for free and subsist happily on his guaranteed income.  A capitalist could accumulate major holdings of industry, become world famous, accumulate toys and properties, be a player in the advancements in the latest fields, and he could also rest assured knowing that even if all his investments go bankrupt tomorrow, he can still live a full and comfortable life without the charity of others.

In any case, it is doubtful that millions of truck drivers unemployed en masse will take it lying down, or be content with a few months of unemployment checks and little prospects beyond that. Which direction society takes is likely to depend heavily on politics. Democratic nations (in the sense of nations which implement the desires of the majority as polivy, as distinguished from nations with mere formalities like elections) will tend toward the second path, while nations where money decides policy will tend towards the first, and the morass of third-worldism.

In neither case will there be top down, Soviet style control of the economy - in both cases markets will be free, on the one hand free to command humans, and on the other hand free to serve humanity. But one thing which is clear is that 20th Century paradigms will not work for understanding 21st Century economic crises, and these crises will not be resolved until the economically-minded stop looking towards long-dead theorists of long dead economic systems, and start looking at the object in front of their face they are typing into.