Here is a Brief Answer to Robert Henderson’s Doom Scenario

In an earlier post on this Blog, Robert Henderson argues that technological progress will end by making us poorer and generally less secure. I disagree.

Let it be supposed:

1. That Plutonia is a closed economy, without saving or investment;
2. That it has a single employer, Megacorp plc;
3. That the only production cost of Megacorp is labour;
4. That the only output of Megacorp is an item called “consumer goods.”

Let it be further supposed that, every week, Megacorp pays out £100 in wages, and collects this back in payment for “consumer goods.”

Let it now be supposed that Megacorp is magically equipped with robots, so that it can dispense with human labour. In the first subsequent week of trading, Megacorp will sell “consumer goods” for £100. This money will now be retained in its accounts. In the second week, it must drop the price of “consumer goods” to zero, or cease trading. In either case, a new equilibrium will have been achieved – mass-starvation or work-free consumption. That will be a political choice. Bearing in mind that hungry people, in all but the most total states, tend to make their voices heard, it is not hard to see what the choice will be.

Let us now introduce reality to the model. Suppose that a number of industrial enterprises, in a country like England, completely automate, so that they no longer need ordinary labour. To cut out unnecessary steps in the analysis, we can further assume that demand for their output is inelastic. The prices of their output will fall – or, to be precise, will continue their existing tendency towards convergence with average cost.

In the short term, this will be hard for the unemployed workers. However, for a long time, robots will not be perfect substitutes for all kinds of labour; and the release of workers from one sector will make them available for employment in other sectors, that might expand now that some prices have fallen, or for employment in other sectors that are now able to come into being.

Even for the unemployed workers, some prices will have fallen, thereby increasing living standards. Landowners and investors will also benefit from their own unaffected factor payments. At the same time, people will still be needed for marketing and selling of output. People still need to decide what is to be produced and to find ways of persuading others to buy it.

Let us now suppose that more and more enterprises completely automate over time, and that the robots become more sophisticated. There will be an obvious fall in demand for employed labour – though with some continued human input at the strategic level, and possibly at others. However, prices will continuously fall. The tendency will be towards an economy in which former workers will become largely self-sufficient – there is no shortage of land, or limit to its productivity, given sufficient technology – providing an insignificant share of whatever they produce in exchange for rock bottom manufactured goods. The sellers of manufactured goods might have to accept things like flattery and applause from their customers. They might take this directly. More likely, they will pay for it, thereby providing a circular flow sufficient to buy their goods.

Or goods will be provided free, but will carry paid advertising from religious or ethical organisations.

Whatever the case, in such an economy, it will be hard to see who gains most.

The above assumes a corporatised economy. An alternative model will begin with largely self-sufficient households, possessed of cheap and easily reproduced technology, trading their specialised surplus with each other.

In either case, the final state will be one approximating to the Greek and Roman ideal of dignified leisure. Instead of miserable slaves to do the work, there will be various kinds of machine.

It may be argued that the majority of people are not morally and intellectually fitted to live like gentlemen. That may presently be true. But a few generations of parent-driven genetic engineering, and everyone should be up to exercising and chatting all morning in the gymnasium, hunting in the afternoon, and string quartets in the evening – that or whatever else rich and intelligent people fancy.

Or it may be argued that the technology will be too expensive for ordinary people. There is no reason why this should be so.  In the first place, the price of capital goods is determined by the price of what they help to produce. When the price of final goods is heading towards zero, capital goods are unlikely to be out of reach. In the second place, modern capital goods are like personal computers. They evolve rapidly, and lose most of their value long before they become useless. There will be a brisk second hand market in obsolete but very useful stuff – like in Star Wars.

The argument about the loss of a market economy is also worthless. Extended and omnipresent markets of the sort that emerged in Europe after about 1200 are the best available answer to the problem of scarcity. Take away scarcity, and the need for extended market activity will at least diminish. Markets, however, are only one specialised example of interaction between free people. Interaction in itself will continue for as long as free people wish to mingle with each other.

How we get from here to there depends on political and social structures. We may decorporatise, so that independent households quickly emerge that can take advantage of quickening technological change. Or we may go through a corporatist-social democratic phase, in which the unemployed are given an assured income. Or we may proceed to the kind of total state abundance described in Huxley’s Brave New World. I have my own preferred model for the future. But I see no reason why universal automation should result in mass-starvation.

Oh – one final point. It may be argued that robots will eventually become so sophisticated that they sweep us aside, as in Terminator. This is not likely. More likely is that this sort of technology will be used to enhance human powers, as well as to create semi-sentient humanoids. Give me a civilisation capable of producing machines that look like Arnold Schwarzenegger in his prime, and I shall want my brain put inside one! It isn’t real progress if I have to spend the rest of my rather short life stuck inside dumpy old me, with my crumbling teeth and occasionally aching joints.

24 thoughts on “Here is a Brief Answer to Robert Henderson’s Doom Scenario

  1. People often highlight the ethical implications of cybernetics, but how do we know that they are not just a part of our NATURAL evolution?

    Even quantum theorists are considering the possibility that the universe is digital.

    • Nick – you are assuming that evolution is always beneficial. Extinction is the lot of any species and technology reaching beyond that which humanity can accommodate is a pretty good way of creating an extinction event.,..

      • When I was a boy, I’d occasionally sit through a programme called Joe Ninety. I found it so tiresome, I can no longer recall any of the plots. However, I did much enjoy the basic premise, of expanding the mind by putting on different pairs of spectacles. Indeed, once I’ve been remodelled to look like a permanently young gay porn star – with teeth to match – I want a slot in the back of my neck, so that various expansion cards can be inserted.

        So far as I’m concerned, the biggest problem about the future is that it isn’t here now.

  2. Indeed. Excellent post.

    It would however be remiss of me not to sound like a stuck record by pointing out that much of the fear of leisure- that it would lead to corrupted, useless people- comes from the Puritan influence, a group who very much saw and still see the point of the economy as being to impose labour on idle hands that would otherwise become the devil’s tool. Combined with the Puritan fear of luxury, we end up with the type of thing currently popular with Greens and other pastists, who bemoan too much “consumption” i.e. production while seeking greater labour inputs.

    One of my stories I never get around to writing is a description of this kind of future economy, on the Utopian novel model in which a man or woman from our time wakes up in the future (one of those people who has their body cryogenically frozen at death) and then spends the novel wandering around asking questions and receiving lengthy explanation of Utopia from eternally patient guides.

    One essential aspect to understand I believe is that people in this future will be immortal, eternally youthful, and have complete control of their appearance (in my scenario, biology and nanotechnology result in bodily cells being reconfigurable within practical limits). A great challenge for this century’s scientists is to beat mankind’s great biological curse, ageing and death, and thus to all in tents and porpoises cure the human condition.

    In the previous post, Robert expresses a fear that we would become the eloi. I disagree. I think the future is going to be awesome. It saddens me greatly that I live in one of the final generations before it arrives. They will, I am sure, look back on our lives of labour, decay and sensescence with the same horror as we look on the lives of those who lived through the Black Death. They will wonder how we ever tolerated such miserable lives. Indeed, I wonder how we tolerate them now, and I’m not even an immortal Adonis with a replicator.

    • Well, shit! Why the heck are you spending your precious time here on this website when perhaps the time could be spent on actively building freedom and a better world? Or is posting to this site actually doing that somehow?

  3. Want a new civilisation, Sean? “Discover the Civilisation of the Universe:
    * Consider the very few honest philosophers who have ever lived: Aristotle, Thomas Aquinas, Baruch Spinoza, Adam Smith (economist), John Locke, Ayn Rand, Leonard Peikoff. Consider their struggle against the irrationality of an anticivilisation. They all sensed increasing frustration at their inevitable failures because they too were an integrated part of irrationality — of anticivilisation. They never knew how to leave or even knew that leaving anticivilization was possible. They never considered creating and then entering the Civilization of the Universe. …They too were locked in a fool’s journey within Earth’s black-hole civilisation.”

  4. Sean – you are greatly underestimating the effects and speed of technological advance and not addressing the general problem of scarce resources, both at the global and national level.

    Robots would not have to be able to do all the jobs or even most of the jobs to have a profound effect. Suppose just 40% of jobs vanished with the first General Purposes Robots (Geepees). That would mean twice the unemployment rates suffered by Spain and Greece. Just look at the misery caused by that.

    We can also be sure from our experience with the shape of computer development to date that Geepees will rapidly be enhanced. If they can do 40% of jobs initially you can bet they will be able to do double that in ten years. (and probably much quicker than 10 years).

    “a new equilibrium will have been achieved – mass-starvation or work-free consumption.”

    That comment is interesting for two reasons. First, it assumes that human beings individually and in the mass will behave with restraint or for the public good. We have every reason to believe they will not from all historical and present experience. Elites will always behave selfishly and people generally will look to their own survival and that of those close to them in times of threat,. There are few greater threats than having no income and no prospect of having one.

    Second, the idea of work-free consumption does not stack up without some overall authority allocating that which is to be made and how it is to be consumed, There might be as you say some marginal human manned economy based on individuals or perhaps small cooperatives but that would not provide the means of living. At some point a decision would have to be made by some individual, group or intelligent machine as to who was to have what. Who would decide who is to have ownership of the robots or a universal replicator? Who decide how much of scarce raw materials a person could have? Who would decide strategic matters such as infrastructure building and repair and defence? This could be done on a command economy basis but that is not, I presume, something you would embrace.

    There is a further problem which has not been raised so far. It is the question of property. You wrote “there is no shortage of land, or limit to its productivity, given sufficient technology”. There may or may not be a shortage of land but the land is not communally owned. Nor is other desirable property. Are you suggesting that present ownership rights should be made void?

    Finally, the “sufficient technology” argument is what I would call a blind faith argument. There must be some limit to what can be achieved by technological advance. For example, plants and animals raised for food cannot, however inventive the science, be made to exceed the geometrical limits of their biology. It would not be possible to have fifty feet high cows or twenty foot long pigs because it would be impossible to scale up such animals to such a size because their skeletons would be either too weak or too cumbersome or the operation of their physiology could simply not accommodate itself to such a size.

    • Julius – You wouldn’t have the means to buy anything however cheap. Nor would anyone have the incentive to mass produce anything from a profit motive because there would be no one to buy the goods to generate the profit.

  5. Pingback: Don’t you want ‘progress’? | Orphans of Liberty

  6. Or we could simply observe what is actually happening – I know, I’m a spoilsport. Disappearance of the middle class, an underclass that are serfs living in panopticon, Agenda 21, politically correct, open-prison style cities. Unless, that is, they’re actually living as one of the ever-expanding prison population. A tiny, super-rich, elite who determine the flow of global credit – that mythical “international community” – who decide who lives and who dies. The future is already here, it’s just not widely distributed yet.

    • John Pate – this is precisely what is happening. The elite, which is international, owes no allegiance to any state or nation and is concerned only with its own preservation and privileges.

  7. And while I’m at it, consider this: the most hi tech things have *always* been assembled by minimum wage or slave labour – from V2 rockets in concentration camps in WW2 to iPhones in modern day China. There are some things that robots can’t do because the control algorithms required are too computationally demanding for current and foreseeable computing technology and the dexterity necessary is beyond feasibly deliverable mechanical equipment. A robot body as sophisticated and with the fine motor control of a human body may not ever practically possible at all from an engineering viewpoint. People uniformly underestimate biology even though it’s all around them.

  8. Kalliste-

    Bear in mind that this is a thought experiment more than applied futurism. It’s a useful fiction for exploring economics by applying an extreme case, that being “what if all labour were redundant”. This allows us to think usefully about less extreme cases, in which large quantities of labour are no longer required, as Robert Henderson is concerned about.

    However, if we do consider the actual practicalities of it, we should not be too limited in our thinking. The term “robot” here is standing as a placeholder for technologies in general, that is, any form of automation, rather than 1950s science fiction robots. In reality, for instance, we may use biological technology rather than traditional engineering. Which may raise some interesting ethical questions, regarding what constitutes life, and sentience.

  9. Sean Gabb is exactly right the producers will simply have to sell their goods at a lower price if they see no value in hiring workers. How else would it work.
    Dierdre McCloskey’s book ‘Bourgeois Dignity’ actually talks about the automation phenomenon in the 19th Century Industrial Revolution. The impact of industrialization did not initially decrease the size of the servant class – what it did do was provide them with more and manufactured goods and food and an increased standard of living. People who see a decline today in ‘manufacturing’ should keep that in mind.
    People will work in service jobs – but be able to buy more and more cheap stuff with their low wages. (I suspect that if you inherit a home in an ‘expensive’ area like greater London or NYC, it isn’t actually that expensive to live a comfortable life if you take the time to make your own labor intensive goods and services and buy the mass produced ones.) Other people may not be ‘workers’ but someone will have to sell, market, finance, move, install, service, support, etc. the automation equipment and the good produced. Because productivity is higher – people will spend less money on goods and more on labor intensive services – e.g. education, health care, restaurants, vacations, art, design, massages/salons/personal trainers, etc.
    Some of the comments betray a circular argument – if people invest more in automation to make more money, less money will go to workers, so the firms will make less money, everyone goes bankrupt because of scarce resources. This reminds me of manufacturers and their financier’s fears in late 19th century America – e.g. see Kolko’s Triumph of Conservatism. What actually happened of course is that manufacturers had to cut their prices, the manufacturers’ suppliers cut their costs, or the manufacturer produced more per unit, and workers real wages went up and all people became so wealthy in the USA people were buying their own cars. Of course along the way a lot of investors who invested in cartels which only made financial sense if prices didn’t go down did suffer problems – problems which encouraged regulations to restrict ‘overinvestment’ by competitors with new cheaper capital goods and the creation of a banking system which favored certain investors.

  10. Anders – you are seriously missing the point. There will be no mass manufacture for profit because there will be no profit as people will have no jobs and no income because welfare will vanish because, guess what, the tax base collapses completely.

  11. Robert, you’re really not understanding the economics. You’re basically making the same mistake as the Marxists. It basically comes down to this; if everything is free, you don’t need a job or an income. Intermediate states of automation can be deduced from that point.

    While there is still unsatisfied demand for goods and services (as currently), any worker freed from producing some current good by automation can now manufacture additional goods, and due to the increased supply, the price of goods falls.

    If at some point demand for goods and services saturates (nobody anywhere wants any more stuff than they’re already consuming, but as efficiency continues to improve (i.e. production per capita rises)) then that translates into shorter working hours. Until you reach the extreme hypothetical case of unlimited supply for zero labour input.

    The purpose of the economy is to supply goods, not to employ people. As the cliche goes, “employment is a cost, not a benefit”.

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