Can robots kill capitalism?

Economics Economics Questions
1

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?

2

The robot industry?

3

heh. handcrafted artisan robots?

http://www.youtube.com/watch?v=nvZBtJ-ncEM

4

Sigh. Marx made this exact argument one hundred and fifty years ago. Machines do not “steal people jobs.”

Fallacy. Economics is part of the science of human action, it does not change from generation to generation. Mises theories can be equally applied to all humans, no matter the era.

5

Maybe I’m dense, but I seem to have missed the problem here. Can you explain it to me? If indeed we have production producing more production, and therefore enough goods to meet all our wants, why are you worried about unemployment? We don’t want to work, we work because we want things. If we have everything we want, we can spend our time enjoying it, and reading, and writing, and producing art, and talking, and having sex…why do you want to eliminate unemployment caused by living in Eden?

Now, I don’t think your scenario will come about, but that’s another story.

6

Sigh. Marx made this exact argument one hundred and fifty years ago. Machines do not “steal people jobs.”

Um. Jules Verne wrote about lots of things a hundred and fifty years ago that only became reality very recently. Are you implying that I’m not posting on the internet because someone wrote about it a hundred and fifty years ago? And actually, machines DO steal people jobs, (note the video of the Honda assembly line above: no people! people jobs stolen!) the question is whether new jobs are created faster than old jobs are lost, which has been the case. But “past performance is not necessarily indicative of future results!” Or present realities…

Mises theories can be equally applied…no matter the era

So, what exactly constitutes inflation for a hunter-gatherer? I hope it involves an animal bladder of some sort?

7

If robots produced something, there would still be demand for services provided by human labor. Moreover, prices for manufactured goods would fall precipitously, thereby massively increasing standards of living. Lastly, I’m sure the stockholders of manufacturing companies would be quite happy.

8

I’m sorry, but the ignorance of this statement is just astonishing. Please read Mises before blatantly assuming that economic law is relative with arguments that completely miss the mark.

9

Come with me if you want to live.

10

prices for manufactured goods would fall precipitously

they’d probably fall only marginally in the near term. The Honda robot assembly line is cheaper and more efficient than human labor, that’s why they use it, but it’s not precipitously cheaper, only marginally cheaper. Honda is substituting marginally higher labor costs for marginally lower capital costs, at first at least.

However, if we assume that Honda’s assembly line robots are themselves built by assembly line robots, then in the near term, the amount of economic demand produced by Honda’s activities has dropped precipitously. The prices of Honda cars have dropped marginally, while the demand they create in the larger economy has dropped farther…

Even Honda’s shareholders should do poorly if demand for their cars is shrinking faster than the price is falling…

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?

11

To Hazlitt we go!

http://jim.com/econ/chap07p1.html

12

I’m surprised someone with enough wherewithal to sign up to post on the mises forum would buy into such a Luddite fallacy.

13

What boggles my mind is, for example, how close we are to a self-driving car. GPS can navigate and it’s accuracy is increasing rapidly - cars already have cameras that warn about collisions, RFID chips that can tell cars where other cars are already widely used.

If a self-driving system were developed that was safer and cheaper than a human driver, I would think that the trucking industry for one would try to implement it as fast as possible - I don’t know why it would take more than a few years to a decade to implement. In America, that would mean something like 3.5 million truck drivers unemployed in a decade… Then there’d also be taxi drivers, bus drivers… And it would be global…

In the past I would have bought a CD if I wanted to listen to music, generating a salary for a salesperson at the record store, the guys who build the record stores, the musician, the record exec, the guy in the factory who makes CDs. I don’t pay for music anymore, I listen to what’s available on youtube. And I don’t click on banner ads. I personally don’t use doctors for medical diagnoses much anymore, I can access peer-reviewed medical literature over the internet and read it as well as they can. I don’t even interact with a human when I buy groceries, I use the automated check out. Seems like total automation of the production cycle isn’t so sci-fi these days…

It also seems like unemployment is becoming an increasing problem world-wide:

http://www.upi.com/Business_News/2009/02/15/Unemployment-seen-booming-worldwide/UPI-76531234703868/

PARIS, Feb. 15 (UPI) – Joblessness is booming in France and worldwide, as economic growth has come to a virtual halt in all regions of the globe, economists say.

The global financial crisis has swelled the ranks of the unemployed not only in France and the United States, but also elsewhere in Europe, Asia and the developing world, where the pace of layoffs has caught up after companies that initially resisted deep cuts have followed the lead of their American counterparts, The New York Times reported.

“This is the worst we’ve had since 1929,” Laurent Wauquiez, France’s employment minister, told the Times. “The thing that is new is that it is global, and we are always talking about that. It is in every country, and it makes the whole difference.”

The International Monetary Fund said it expects that by the end of the year, global economic growth will reach its lowest point since the Depression.

Officials say the situation is creating social unrest, with high unemployment rates leading to protests in such countries as Latvia, Chile, Greece, Bulgaria and Iceland, and contributing to strikes in Britain and France.

14

No, if Honda’s machines are built by machines which were built by machines which were built by machines, then those machines would be incredibly cheap due to high supply. That would allow them to lower prices. That would attract consumer demand. The profits that the machine makers and that Honda would reap would ultimately find its way somehow to humans doing service labor (e.g. waiters, clerks, greeters, etc.).

15

Before a machine can replace anybody it must first be designed, built, transported, installed. New jobs are already created before any are lost.

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.

16

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?

17

  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.

18

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.

19

The theory is that productivity growth is exponential. If this is true, than eventually (soon actually) human labor becomes a trivial input.

20

Robots stealing our jobs? I’m not worried about that. Now robots stealing our lives and our fortunes. Be warned!

!(http://scrapetv.com/News/News Pages/Technology/images/skynet-terminator.jpg)