Robert Skidelsky, “The Rise of the Robots,” Project-syndicate.org, February 19, 2013.Some people complain that Skidelsky is being a Luddite, but that is utterly unfair, as he does not oppose automation per se.
If you accept that market economies have no tendency to full employment equilibrium, then it follows logically that large-scale automation is most likely to cause serious structural unemployment and a chronic aggregate demand shortfall.
And it will not do to say, “oh, well, enough new jobs will be created designing and maintaining the machines.” For a while they might. But the inexorable march of artificial intelligence means that eventually there is no reason why machines will not design and maintain other machines.
Machines will eventually design, manufacture, test and provide maintenance for new generations of machines, with minimal human supervision.
"If one machine can cut necessary human labor by half, why make half of the workforce redundant, rather than employing the same number for half the time? Why not take advantage of automation to reduce the average working week from 40 hours to 30, and then to 20, and then to ten, with each diminishing block of labor time counting as a full time job? This would be possible if the gains from automation were not mostly seized by the rich and powerful, but were distributed fairly instead."
ReplyDeleteI assume he means that people will work only twenty hours, but that their (real) wage will not be cut in half?
Not sure of his exact meaning.
DeleteBut, if real wages were maintained, then, yes, obviously that makes the most sense.
It would be consistent with the last part of the quote, otherwise it would only be a matter of redistribution of income among workers, and not from capital to labor. Interesting.
ReplyDeleteWe've already been doing that. It's called retirement.
ReplyDeleteThe flaw in the argument is the belief that people actually want ever increasing leisure time.
Progressives have a tendency to believe that everybody is a self-starter and that activity will occur spontaneously out of nowhere.
The reality is that most people like to be given something to do and to be given permission to do it. And we'll need to maintain that model for a long time - otherwise those that do will start to resent those that don't. Which is the situation we have with benefits now.
Filling the hours in a world of leisure is a surprisingly difficult task.
Higher productivity through greater use of robots should increase real wages. When people earn higher real wages they may choose to work less and have more leisure. Left to market forces I see no reason why those that who find "filling the hours in a world of leisure a surprisingly difficult task" should not be able to find work - even unskilled work will have relatively high real wages and
DeleteOn average society will get richer as a result of robots - not everyone will benefit though. People who earn higher than average real wages because of a specific skill that can be replaced by robots may see their real wages fall.
It is possible to imagine a world where robots can do everything so that humans can't find jobs ? I don't think so. Even in a science fiction world where robots could do every task better than humans then it would still be possible for humans to do these same tasks and earn their marginal product for doing so and this marginal product in a very capital-intense world still lead to a high real wage. (For example: suppose robots can cut hair. A human could still find work cutting hair at a wage rate less than the cost of running the robot hair-cutter and this wage rate in real terms will still likely be high because of the increase in output potential brought about by the robots.)
"... People who earn higher than average real wages because of a specific skill that can be replaced by robots may see their real wages fall."
DeleteMore than merely that - structural unemployment brought about by automation means an aggregate demand shortfall.
Even if you really believe in Say's law, replacing people with machines (leaving people unemployed and with no or little income) violates Say's law. Who's going to buy all that output made by machines?
Certainly not the owners of capital - because they, by and large, have a much lower marginal propensity to consume.
I can understand how sudden supply or demand shocks combined with market rigidities can cause recessions where goods and services go unsold and to that extent "Say's law" can be said to not be valid.
DeleteHowever when you say "Who's going to buy all that output made by machines?" - I don't see why that should ever be an issue. People only work in order to consume so in a general sense Say's law should hold and there should never be a problem finding people to buy the output. Indeed there should always be a set of prices that the market will seek out so that profits, wages and interest rates are aligned to optimize output and leisure no matter what the relative MPCs of workers and owners of capital.
" People only work in order to consume so in a general sense Say's law should hold and there should never be a problem finding people to buy the output. "
DeleteThat is not true, certainly not as your income rises.
What happened to:
(1) saving
(2) buying financial or real assets on secondary markets?
Your last sentence requires Walrasian GE theory, so here I see an irreconcilable difference between your vision of economics and mine.
"Filling the hours in a world of leisure is a surprisingly difficult task." Yes Neil,agreed.But let us not equate "work" with "wage-labour".But i would dare to say a for a majority of world´s population,not only in third world,even many jobs industrialized modern countries,wage-labour consist of many times ,destructive,alienated repetive work,that a large part of population wan´t to see reduced and some of them even if possible,to be abolished.I think it´s what Lord Skildelsky pointing at in this article.To share,and reduce,the necessary but destructive work as much as possible,with the help of the new technology.And "leisure" from wage-labour,could consist of many times ,very creative "work"even in economic terms.
DeleteThat's because there isn't an acceptable alternative.
DeletePut in place a guaranteed reasonable job, for a living wage that is open to all and the poor work will be immediately competed away.
Yes you will get squeals of anguish from the poor capitalists as their business model collapses. But that's just a bit of hard luck. They'll have to invest in machinery or come up with de-alienated job designs.
But to try and come up with a new utopia where a lot of people have a lot of time on their hands is dangerous - because the vast majority of people can't handle that. They need to have something to do and be told to do it.
A utopia for thinking progressives is a living nightmare for a huge chunk of the population.
There is a reason there are no shortage of recruits for the armed forces.
You can't just guarantee income and expect a standard of living to arise magically. The market didn't work for income. It's even less likely to work for things to do.
Even in a world where some people (somewhat irrationally) want to save out of income with no intention of ever using those savings for consumption then I see no reason why this would be a problem once people's expectations have adjusted to falling nominal prices or an increasing money supply. I'm not sure how "buying financial or real assets on secondary markets?" plays into this.
ReplyDeleteAnd yes, I am quite sure that the "irreconcilable difference between your vision of economics and mine" lies in the fact that I see market processes at work that will tend towards equilibrium if not thwarted by market intervention and you do not.
rob@February 21, 2013 at 1:23 PM
DeleteYou see nothing problematic in the fact people can and do spend their income on assets on secondary markets?
That such spending does not induce demand for goods and services in the way that normal consumption/investment does? That if there is a shortfall in aggregate demand by this non-employment inducing sending, then Say's law is violated?
When people spend their income on used cars or corporate bonds or stocks then the people selling these assets end up with additional cash that (if spent) would add to AD.
DeleteIf not spent then banks would be able to safely increase the money supply to make up the shortfall (this could be done by a CB in a non-free banking system.
http://socialdemocracy21stcentury.blogspot.com/2013/02/world-gdp-versus-total-value-of.html
DeleteAnd it will not do to say, “oh, well, enough new jobs will be created designing and maintaining the machines.”
ReplyDeleteNo, it won't. They don't call them "labor-saving devices" for nothing.
It also will not do to say that economic growth will replace the jobs. If current economic production can be supported by half as many jobs, you need to double the demand/production to justify the same number of jobs. That's what I call a pyramid scheme. Even if (for the sake of argument) we assume boundless resources from cold fusion, asteroid mining, "solartopia," whatever, the alternatives seem to be unemployment as the norm or outrageous affluence as the norm. The latter sounds good, but I would say that most people wouldn't know what to do with all that material abundance. As Neil Wilson points out: Filling the hours in a world of leisure is a surprisingly difficult task. Spending billions of dollars (I'm guessing) is also a surprisingly difficult task. Why else would owners of capital have a much lower marginal propensity to consume? The reality is that most people like to have some fixed amount of walking around money and see how far they can stretch it, and use their personal possessions in ways that challenge and demonstrate their knack for resourcefulness. A utopia for thinking pro-growth lobbyists is a living nightmare for a huge chunk of the population.
Baron Skidelsky says that up to 90% of the workforce could be eliminated in the near future by automation. Who then is going to buy the products and services of the robots if they are unemployed? The goverment will cease to function because they cannot collect taxes from unemployed people.More inactive people will for obvious reasons increase the population. Anarchy will be the word for the day.
ReplyDelete