Such complaints are normally dismissed as \”Luddism\”. But just because the 19th-century Luddites were wrong about the original industrial revolution destroying jobs and living standards does not mean that their successors must always be wrong. Sensible economists worry about automated manufacturing replacing factory workers, Google\’s autonomous cars replacing lorry and taxi drivers, and automatic online writing and translation services taking on tasks that only humans have been able to perform since the invention of literacy.
It\’s certainly true that what has always happened in economics does not mean that it will always happen. The prime example of this being the Reverend Malthus. He was absolutely spot on correct for all of human history until the very moment that he sat down to write. He\’s been absolutely wrong since then.
However, there\’s good reason to think that the automation of everything isn\’t going to destroy living standards. Indeed, that it cannot in fact destroy them.
Imagine the end state: machines do everything. Machines make the machines that repair the machines that make machines….and we don\’t need to iterate any further back than that I think.
What happens to living standards here?
Clearly, no one has a job. Machines quite literally do everything. The robots act for us, the software writes the scripts and the machines make the 3D holo machines that we watch them on.
What happens to living standards here? They soar, of course. For the cost of everything tracks back, at some point and some remove, to the income of someone. This isn\’t the labour theory of value, rather the labour theory of income. Buy an apple, a TV, a car or a jetplane ticket: all of that money, those costs, track back, somewhere, to the income of someone. Might be a capital income to the financier of the jetplane, might be to the rivetter, to the farmer who grew the apple that fed the rivetter…..but all of the economy eventually flows back to the income of someone or other.
We\’ve now removed all of that requirement for an income, have we not? And competition will do the rest: all of these products of all these machines will be gobsmackingly cheap. To the point of near free in fact. We might even say that true communism will have arrived at this point.
And if we are surrounded by free goods and services what is our standard of living? It\’s sky high, isn\’t it?
There are those out there who insist that all of the income will inevitably flow to those who own the capital. But again, it\’s competition that will see to that. In our mythical world where machines make machines that make machines, all that is necessary is for three or four people to make a machine that makes a machine that…..and we have competition. Absent collusion among the machine makers (and the open software movement shows well enough that there will always be some refusniks from collusion) we end up with goods and services being priced at around and about their cost of production. Which is spit as we\’ve not got to pay any wages.
And if goods and services don\’t cost anything then what\’s the damn problem?
And think back to the last time this happened. When farming mechanised. Sure, lots of people had to go do something else. But what really happened? Did all the money in farming flow to farmers? No, that isn\’t actually what happened, is it? As production costs fell then competition led to falling food prices. So much so that farmers have been on the public teat ever since: far from their getting all the money they\’ve got to be subsidised to survive.
So, will the capitalists end up with all the money as production mechanises? Nope, given competition, it\’ll end up in the pockets of consumers.