What is the capitalist answer to automation?

Question

While we are not currently at total automation, we are inching closer. An Oxford Study from 2013 indicates by 2033 upwards of 45% of our job force could be automated. This automation, causing a reduced need for work (thus wages) might cause (over time) capitalism to die. While there may be other possible reasons/ways capitalism may collapse, my main objective is to seek how capitalism could save itself from the reduction work/wages resulting from automation, assuming it's possible.

Capitalism (goods are owned by private individuals/businesses). People/workers buy those goods. Business automate functions to compete resulting in a better bottom line with less labor. Less labor, less money to buy goods... and so on. Eventually reaching a tipping point of little/no people being able to buy said goods.

If possible, how would capitalism prevent us from reaching that tipping point?

Sources:

• The end of capitalism has begun
• The Future of Employment

I would cite more, but limited to two links.

Answer 1

In 1800, more than 90% of everyone were farmers. Modernly in the United States, which is a net exporter of food, less than 5% of everyone are employed on farms. That's a reduction of 85%, much higher than 45%. Far from causing the end of capitalism, it launched the industrial age.

In short, the capitalist answer is that there is always something else that people could be doing. Police departments could hire more police. Hospitals could hire more nurses. Automation leads to higher wages which leads to more consumption of other things: maid services; landscaping; construction; other things that don't have names because we haven't created them yet.

When I was young, we had a refrigerator, oven, washer, dryer, phone, television, and several radios. We added a microwave, a computer, and a VCR. Now, that VCR is already obsolete and replaced by Blu Ray players and DVRs (or the internet). And people each have their own phone, computer, and television (which may also be the phone or computer).

Capitalism can't tell what the future holds. But looking at the past, it can guess that the future holds something. Because our previous responses to automation has always been to find new and different things to do.

Answer 2

The answer from a capitalist's point of view is fairly straight forward. As demand for certain types of labor fall, demand for other types of labor will increase and workers will need to gain skills in other areas in order to maintain employment or for their own businesses to succeed.

A comment to your question alludes to this. There used to be a huge buggy whip manufacturing industry when horse buggies were the standard for transport. Today that industry has (mostly) died out. Capitalists would argue this is a Good Thing™, because there is nowhere near the level of demand for as many buggy whips so producing them in large supply today would be a giant waste of time and energy. This scenario is what proponents argue is one of the major selling points of capitalism: because of the decentralized nature driving market decisions, the market itself can react much more efficiently to changes in reality than any centralized government planning office could. A government could come up with a few solutions that may or may not work, but the market itself can try millions of solutions to a demand in parallel and what works will survive.

In terms of automation, I don't think any capitalists have all the answers (simply though because they happen to be a subset of people and I don't think any group of people have all the answers), but if they do they probably won't be sharing them publicly until after their IPO. In less abstract terms, all this means is that a different form of labor will evolve. What that is is really anyone's guess, but it's better to leave it to the market to decide rather than have a bureaucrat decide for you.

Answer 3

In 1930 John Maynard Keynes published the essay Economic possibilities for our grandchildren where he discussed technological unemployment ("unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour"). He proposed to solve the problem by working fewer hours:

[W]e shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!

So say you have a factory with ten workers and you automate four jobs. There are two things you can do: fire four people, or keep everyone and reduce their working hours by 40%.

Keynes' 1930 prediction hasn't come to pass – yet, and it may never (interesting view on why it hasn't), but it's one reasonably famous proposal to solve the problem which could still be called "capitalist" (unlike e.g. basic income and some other proposals).

Answer 4

It doesn't have one. Full automation in a capitalist society will naturally evolve towards a dystopia without intervention from outside the economy.

When a machine is smart enough, and can do the job of a human at lower resource consumption than the human, there is simply no reason to employ a human. So far, machines have not been smart enough, and people have been able to adapt to new jobs at a faster rate than machines can.

Note that machines do not have to reach truly self aware or even particularly scary levels of intelligence to be able to as a group specialize in some new work opportunity faster than typical humans can (remembering that 'typical humans' are the kind of people who keep reality TV afloat). THAT will be the downfall. Each human needs to learn individually, but all robot replacements learn and benefit from each others' experience in parallel, and work at 100% from the first minute. Each human has variance in their performance, but a machine works like... well, a machine.

Answer 5

I'm not sure if Tim Burton is a Capitalist or not, but he gave a really good illustration of what tends to happen over time in his version of Charlie and the Chocolate Factory

• Charlie's father works capping toothpaste tubes
• The factory buys a machine to cap the tubes. Charlie's father is fired
• At the end of the movie, Charlie's father is the man who repairs the machine that replaced him

Capitalism's chief feature is that it self-levels. For instance, if you produce a good that is too expensive, nobody will buy it. Henry Ford realized that and began to produce cars at scale (which drove the cost down) and paid his workers enough so they could afford to buy the product they make. Today, perhaps half of every car is produced by automation and Ford still sells lots of cars.

Remember, the goal is consumption of goods and services, not creating jobs (which is purely a political goal). I found this comment to be insightful

Luddites have constantly engaged in the fallacy of looking at jobs as an end in itself, rather than facilitating consumption as the real end. Production is merely a means to the end of consumption and the real objective is to produce the most goods and services with the minimum effort. This fallacy becomes extremely apparent if you consider a simple case of a single person on an island. Obviously his objective is to build himself a nice house, grow himself enough food, build enough nice things for himself etc. with minimum effort. His goal is most certainly not to work 40 or 60 hours a week irrespective of what that labor produces. His goal is to produce the maximum set of things that he wants or needs with the minimum effort. He would be overjoyed if robots did 97.5% of his work needing him to work only 1 hour a week. Nothing fundamentally changes when multiple people are involved who do a relatively more complex form of barter using a money system to trade with one another and produce those set of items that they enjoy a comparative advantage in producing and trade with others to get access to other items that they have no comparative advantage in producing.

About 70% of the US was engaged in agriculture in the 18th century and luddites always feared automation in agriculture resulting in loss of jobs. Today about 2% of the US is engaged in agriculture since the average agriculture worker has his productivity greatly enhanced by technology, and the remaining human capital has been freed to engage in other productive endeavors.

Robots replacing human jobs will have the exact same effect as what technology has had so far when it destroyed human jobs, which is improve overall human productivity, leading to higher real incomes and greater prosperity.

Answer 6

Capitalism doesn't have an answer, and doesn't need an answer. What people always forget when they worry about automation is that prices for things get less. At the turn of the century, people would pay 43% of their income on food, just to stay alive! That has gone down to about 5% now due to automation! (I can't find a source chart for before 1920's.)

What will happen when people can furnish their entire home by visiting the dollar store? (They can already do that.) They will have more money left over for other things: entertainment, sports, services, creativity, travel, etc. Maybe people will only work 1 day a week to survive? Maybe they will work 5 and live like royalty did in the nineteenth century?

Answer 7

While labor is marginally valuable there is no problem. Fewer apple pickers needed means we've freed up people to be beekeepers. Fewer beekeepers needed means we've freed up people to be carpenters. And so on.

The imagined danger is when labor is not marginally valuable. When there is nothing productive a person with a free day could do that would cover the cost of living a day. A capitalist might laugh at this possibility and offer you a job at a not quite competitive wage, proving pretty clearly that day is not today.

And thinking a ahead on a whole system level is not expected of a capitalist, but if they did they might say something like: If a person alone can't earn his daily bread how was food found to feed him to adulthood? We will have reached the carrying capacity of the system and population growth ahead of resource growth is expected to be bad. Let him look for charity.

Answer 8

More hair dressers!

As the primary production industries employ fewer and fewer people, service industries grow to take up the slack.

There will always be a market for having a real flesh-and-blood person use their time on you. It feels good, and will always be in demand.

In the old days rich people had servants to wait upon their every need. Including needs other people simply didn't have, like help getting dressed.

These days it is more common to go to a restaurant, hair dresser or some other place and pay the people there for their time and attention. (And, I guess, their actual work)

Look for example at the role of the "store greeter". I think most people would agree that this person does not do anything productive. They still have a job, they still earn wages and they still buy other goods.

Look forward to a future of more store greeters.

Answer 9

The answer is that even when machines can do anything, they are not necessarily the best ways to do it.

Many developing countries do manually many things that we automated away ages ago. And it makes perfect sense: in those countries, wages are so low that paying for a machine actually wouldn't get your investment back. Automation only kicks in when labor is scarce; if it isn't, and wages stay low, then humans will keep being the cheapest machine.

The problem arises when labor is locally scarce despite mounting unemployment; for instance because of unionization, minimum wages, or people not having the required skills, or monopolies being allowed to keep prices high on necessities. But that's a problem for politicians to solve.

Without political interference, price of food and building will go down so much (thanks precisely to automation), compared to what skilled technicians and machine owners make, that humans will always be cheaper at something.

Of course it depends if you like such a world.

Answer 10

A simple examination of history should put this fallacy to rest.

Automation has been replacing manual labor for as long as manual labor to accomplish a specific task has been performed, at least several thousand years. And most of us still have jobs, despite the automation and a growing population. How did that happen, despite all the predictions of gloom and doom?

Probably the first bit of automation was the animal drawn plow. One person with an ox drawn plow could cultivate the same amount as many people with hand tools. Did that put the many people out of work? No, it did not - now that everyone wasn't engaged in food production, some could specialize in more advanced fields, like building better plows, breaking oxen to harness, building and operating wagons to transport all that extra food, or what have you.

Moving forward, consider the case of Ned Ludd, a weaver in late 1700's England, who smashed up some automated knitting machines. Granted, Ludd appears to have been a ne'er do well who was championed for the wrong reason, but the coming of the automated loom as opposed to hand spinning yarn did not put everyone out of work.

The automated loom dropped the price of clothing to the point where more people bought clothes more frequently, creating more jobs at the automated factory, plus more jobs to meet the increased demand for wool and cotton, plus more jobs to transport the raw goods and finished clothing into the new stores with new jobs to sell the clothing to meet the increased demand...

Eli Whitney automated two manual processes: extraction of cotton (the cotton gin) and a standardized firearm production line (previously, guns had been pretty much handmade). Both reduced the number of people necessary for the task, neither ended up putting people out of work. Drop the price of the item being produced, demand goes way up, production goes up, more jobs, and more jobs to supply those factories, and to transport the goods.

Arguably, the coming of the steam railroad put a lot of horse drawn wagon operators out of a job. But, the steam railroad so boosted commerce in general that there were plenty of jobs to go around.

And, one of the most ironic cases of automation and job loss: Henry Ford's auto production line. Ford automated much of the process of building an automobile, previously done by hand. Ford dropped the price of a car by an order of magnitude, by lowering labor costs. Did this eliminate jobs? In fact, it did the complete opposite. Ford's pay of $5/day for work on his automated assembly lines essentially created the middle class, and in the process, Ford created a lot of customers... for his cars. More cars sold meant more demand for metal (more mining/smelting jobs), more demand for gasoline (jobs drilling, refining, and selling gas), more need for repair (jobs repairing automobiles)... it just kept growing. The cheap automobile made a lot of new jobs possible that weren't efficient before, like traveling salesman, delivery person, etc...

Finally, let's look at a contemporary situation. E-commerce. It is putting some brick and mortar stores out of business. Oh, dear, that's automation killing jobs, right? In fact, the opposite has happened. E-commerce relies on delivery, with UPS and FedEx seeing explosive growth in delivery. More jobs. The websites must be maintained - being a good web developer today is a fairly lucrative occupation. E-commerce with its lower prices and greater selection has increased sales, which increases production, which increases jobs elsewhere.

For as long as civilization has existed, automation has been eliminating jobs. If you look at previous examples, not by today's standards, but within the context of their time, you should be able to see that for every job that automation eliminates, the results of the automation creates more than one job.

Automation is not only not detrimental to employment, it is mandatory for increased employment.

Answer 11

I don't profess to know the answer, but I have just begun reading Thomas Piketty's Capital (2014). I will report back when I get a bit further.

One thing I think we can safely assume, however, is that whatever society results, it will be far less egalitarian that that of the late-twentieth century. "Economic equality" was I believe an unusual circumstance in world history associated with an age of mass manual production.

Given the continuation of the trends of the last couple of decades Europe and America are almost certainly heading to become oligarchic societies presided over by the top 1% of "earners".

China may be the new egalitarian utopia until it too succumbs to the same trends.

Answer 12

Most of the answers here are optimistic, and assume there's a correct (or at least reasonable or workable) answer. Those are perfectly good answers, but... given many choices people don't always choose wisely. In which spirit, several stupid answers that seem to have been used before:

1. Busywork and time waster jobs. Work behaving like a gas that expands to fill however much time is allotted for it. Water coolers and expense accounts.

2. Lower pay. When people are too efficient at working, (not behaving like an ideal gas), pay them less, and maybe they'll do a worse job, and thus need more hours to pay their bills. Of course the money saved on wages would have to go somewhere, which becomes the rich man's burden.

3. Move workplaces further from the home. More commuting means more work to pay for the commute, babysitters and day-care.

4. Credentialism. In order to do the same job, upgrade the degrees, certifications and credentials required. More working to pay for more schooling. Make credentials harder to get, and easier to lose -- creating a bonding culture of fear, and plenty of openings for the next round.

5. Propaganda. More demand for liars to reassure the public as things go sour. Perhaps all of the people can be fooled all of the time if only enough of those people work hard enough at it. Entertainment forever.

6. Raise norms, and create more crime by outlawing and pathologizing more things. More police, prisons, and doctors are needed to fight these novel crimes and syndromes.

7. Warfare. Nations X & Y can blame each other for their problems, and break each others windows and bones, and eventually create full employment for the surviving glaziers, bonesetters and undertakers.

8. Conquest. Work can be spread quite thin for nations whose reach exceeds their grasp.

Answer 13

Prostitution and absolutism. As automation grows and control over resources remains in few hands, workers need to refocus on endeavors that are interesting to those in control of the resources. Capitalism only rewards success, so the idea of people in general turning to pursuit of arts and learning will not work out, in particular since reproductive media obliterate the need for most live performers (in antique times before literacy, it was a job description to learn all of Homer's available works by heart and travel reciting them, preserving them until people were actually writing them down).

Workers will be interesting for those things which cannot be readily automated. Sex will be one thing, and of course humiliation (either in connection with sex or as a value of its own) will be another that gives power over resources a special value not easily had otherwise.

It's not like empires based on similar principles have not been around previously. They went under in decadency numerous times in history, not able to keep up with less terminal forms of human societies.

But this time, capitalism is globalized, so it may stay the sole survivor.

Answer 14

Machines are learning to think like humans and work like humans. That means that it doesn't matter what new jobs they come up with. If a human can do it, so can a machine. It can be even reversed, there may be jobs that can solely be done by a machine!

By the way. A.I.s are proven to be able to think creative, so they will be able to program themselfes. So how much more is a human worth in working power compared to a machine? Its Zero. Its even negative, since machines don't want vacation, don't want to be paid, just need to be sustained.

You simply do not need humans to work in industries anymore. So nobody is paid and either all food is free (good luck convincing those who own/command the machines to give out free stuff) or you have to become a farmer to survive.

You can say the gap between rich and poor will come to it's final form. Those with the machines will have ALL power and the rest will have NOTHING.

So I bet with time even the management will die out (either a war against the machines or somehting other, humanity always found a way to kill of a lot of folks) so what will count?

In a society that only consists of machines, there will be competition. The more efficient a machine is, the more worthy it is of being used as a blueprint for the next generation of its profession. So ultimately this society will evolve to a complete machine (or human-machine hybrid) society that strifes for efficiency (at least that would make sense since the base requirement for all that exists is sustaining that existence, either through reproduction or immortality)

Answer 15

An answer by capitalism is a form of universal basic income to deal with automation and allow people to pursue creative pursuits and new ways to use resources instead of traditional industrial industries. While some call UBI a 'socialist' idea (and some socialist thinkers like Bertrand Arthur William Russell, British socialist activist William Morris, and socialist candidate for President of France Benoit Hamon have supported UBI. In fact, there is a form of UBI in socialism called a social dividend based on Marxist theory that says any surplus made by society should go back to the common worker), many capitalists support it as way to give people the money they need for basic survival even with the rise of automation. Austrian economist Friedrich Hayek, a major advocate of free-market economics and capitalism, supported UBI and economist Nobel Prize winner Milton Friedman (a capitalist) came up with a form of UBI called a negative income tax where tax dollars are paid to people of lower socioeconomic classes to sustain themselves.

Even with automation, people could still participate in the economy with creative pursuits like writing or providing services for those who simply prefer a human interaction with their services, but automation with UBI (according to advocates) would be able to help even the playing field without completely abolishing the ability for someone to hold private property in a market economy.

Answer 16

From a micro perspective, a capitalist will continue his labor / automation trade off based on marginal profitability. Because that's the only way for him to max his profits.

To out it another way, the substitution will yield the highest income for the labor, at the expensive of the maximum displaced labor.

This leads to a macro scenario whereby the goods and services produced by the capitalist may face a shortage of demand as consumers being increasingly priced out of the employment mkt.

But that's a case the individual capitalists cannot be expected to deal with. This calls for a socialist solution , for example tax on automation, ....

Answer 17

Interesting discussion. Here is an answer that hasn't been proposed: Exploration. When technology advances to the point we can automate all of Earth's industries, then that same technology will find a way to efficiently mine the Moon, Mars, and the asteroids for raw materials. It will also find a better source of energy than we currently use (solar, nuclear fusion, etc.) to accommodate the increased demand for energy to power all these robots.

With access to more raw materials and energy, we will finally have the means, and the reason, to explore Mars and the rest of the planets, and eventually terraforming them to suit us. Some will be happy to live a life of leisure back on Earth, some will want the opportunity to explore the solar system and beyond. That will require hard work and man's ingenuity, exploration can't just be pawned off on robots. We may explore the depths of the ocean as well, building cities underwater. We may even take a few thousand people and put them in sleeper ships and ship them off to other stars.

Finally.

Answer 18

The question is a strange one. There is no "capitalist" answer. Capitalism is really just people being free to trade with each other absent outside interference, not a system designed to have answers to various questions. A better question is, "What happens in a pure capitalist system when machines become more efficient than humans at nearly everything?" A disaster is what happens. The few people who own the machines and the resources use those machines for their own benefit and everyone else starves.

But we don't have any pure capitalist systems where machines might take over. In this world any government of an technologically advanced society that provides the basic law enforcement required for a capitalist system also provides a social safety net. As machines replace more people, people whose skills are limited enough that they aren't more efficient than a machine in any job they might do, the safety net expands. That's the answer.

Answer 19

First of, automation of jobs is a very real thing and its good to have talk that provisions our collective reaction to it. Since noone (suprisingly) mentioned this concept already. The faster we draw ourselves near automation the more essential the concept of Universal Basic Income becomes more apparent as a solution. UBI would be a promise of equal opportunity, not equal outcome, a new starting line set above the poverty line. With basic income, all income from paid work (after taxes) is earned as additional income so that everyone is always better off in terms of total income through any amount of employment — whether full time, part time or gig. Thus basic income does not introduce a disincentive to work. It removes the existing disincentive to work that conditional welfare creates. This of course also covers the people unable to work because their work has been automated, until and if they decide to re-educate themselves in another field of expertise, in case their minimum guaranteed income isn't good enough for them.

Perhaps best of all, the automation of low-demand jobs becomes further incentivized through the rising of wages. The work that people refuse to do for less than a machine would cost to do it becomes a job for machines. And thanks to those replaced workers having a basic income, they aren’t just left standing in the cold in the job market’s ongoing game of musical chairs. They are instead better enabled to find new work, paid or unpaid, full-time or part-time, that works best for them.

Check this article the above quote is from, for more on the subject as well as more citations

As well as this enlightening TED Talk

Answer 20

Let's first put things in the proper perspective here. The machines and computers that are available today may look impressive, they certainly have made a lots of jobs redundant, but they are no match for a human being using its full intellect. When it comes to fully automatized systems, we're not even at insect level capabilities. A recent test with a drone trying to fly and navigate around obstacles had a performance that's a bit worse than what bees are capable off. Here we need to consider that the drone was controlled remotely by a large supercomputer, while a bee carries its own brain while flying.

So, we must first properly interpret the facts about the redundant jobs. This is clearly not due to technology approaching human level capabilities, it's simply a matter of there being large numbers of people who are employed to perform extremely trivial tasks. If 6 people are doing a job that for 85% is trivial work, but it also involves 15% higher cognitive abilities, then it may be possible to automate the tasks and keep only one person who will then be primarily engaged with doing the tasks involving the higher cognitive abilities.

The people who've lost their jobs will then have to find a new job, but they may need to be re-educated for that. They are, after all, humans with brains which are enormously more powerful than bee brains, which in turn are enormously more powerful than the machines that replaced them. So, the capitalist system isn't really under threat here.

Suppose that as technology advances, we do get into the situation where machines can start to rival human beings in all of their capabilities. In such a scenario you have to consider why intelligent systems that would likely start to resemble humans more and more, would be bothered to do our work. They'll have their own interests and will therefore need to be part of a capitalist system themselves.

So, in the end it will boil down to humans being replaced by a new machine version of humans. And if they become superior to us, then you won't get into the situation where all humans are out of work because all our work will be automated. Far from it, from the perspective of the machines we'll be the dumb machines who will be forced to do all the work in exchange for our primary needs.

Answer 21

Relying on welfare

Capitalism doesn't need to prevent us from that tipping point. Many economic systems in the world are only partly capitalistic with strong safety nets, taxation and redistribution of wealth including a provision of basic needs. See high welfare states like Danmark, Sweden, France, ...

Automation as driver of capitalism

Using machines you can produce more and more with less and less people. You only needed to invest capital into buying the equipment. That was actually a driver of capitalism and surely will continue being a driver. Somebody needs to buy all these robots who will do the work in the future.

Really cheap prices

Just look at the production costs of an Iphone in China and then at the selling price in the US? Many products can be produced en masse and really cheap, using automation probably even cheaper. So even though there might be less money to buy goods with the people because of lower employment, you might still be able to buy more products than before if prices fall enough.

More free time

We may not need to work 40-60 hours every week. 20 hours every second week might be enough to concentrate on family, hobbies, individual skills,...

Taxation

Taxes are an integral part of probably every government. By taxation of automation and redistribution of wealth you could probably quite easily achieve many different distributions of wealth. It mostly depends on what you want???

The real question:

How will total consumption and inequality develop in the future?

I don't know. I think everything is possible and it largely depends on what we want. Automation will only be one factor, maybe not even the deciding one. Among other factors are communication, education, politics, religion, wars, ...

There are natural limits though to how much one can consume and also on how much earth can provide (even with automation).

Answer 22

Capitalism is not an ideological system, it is a series of relationships between people. Relational systems lack consciousness, and thus intent. We can't speak about the intentions of capitalism, rather we should look to past instances.

Does technology in capital generally automate existing practices? No. It causes breaks through the foundation of new methods of highly profitable exploitation. Frame weavers continued to work until they worked themselves into the grave—machine loom weavers were young women and children, with rape and brutality enforcing labour discipline which frame weaving male heads of household would murder over. Similarly Soviet MTS were used primarily on sovkhoz not kholkoz, and the workers in the declining industry were forced into new disruptive urban and resource industries. Coal miners do not retrain as computer operators: open cut mines mechanise with new "surface," labour. Google doesn't employ redundantly secretaries.

Now this could be either painful dislocation, or it could be permanent technical unemployment. Or it could be worker resistance to loss of geographic communities.

The wage rate could be lowered, making certain functions profitable: bicycle food delivery.

Existing technical relations could Ben reproduced in low wage regions: Bangladeshi garment work.

However, the general expansion of service labour without loss of pay can only come about IF the per capita wages increase in real terms. There are too few bosses to employ hairdressers: fellow hairdressers must buy haircuts.

The alternative Keynes posits of a 3 hour day, no loss in pay, would require a massive contraction in profits generally. Historically capitalists have had to be forced by unions or states forced by unions to lower the working week without loss of pay. Many western union movements are moribund or terminal.

Automation will result in massive disruptions, it could result in permanent emiseration, this emiseration could be exported, and productivity growth could change the goods bundle without changing real wages in positive %gdp/capita terms.

There is an out: if there is currently something not a commodity, but which could require labour in mass to produce, rate stars of profit and employment could be saved by the "enclosure" of this new field. This could be an existing thing not done for profit, childcare recently (reliant on female wage differentials white / pink collar); or, it could an entirely new desire.