Technology: Dystopia or utopia?

Nick Rowe has a great post on technology and labour.  Fundamentally, it states that, one day, increases technology and improving capital will replace labour, destroying demand for labour.  I was discussing a similar issue with Linuxlover on Twitter (and who blogs here).

Both men seemed to imply that such a situation could be a bad thing.  Linux lover told me of the “legion of unemployed”, while Nick mentioned a book that states:

It describes life in the near-future when technology and machines have destroyed the demand for nearly all human labour, except for the labour of a small, highly-educated minority. The vast majority of the population would be unemployed, but for government make-work projects

However, I am not afraid of such an occurrence per see – in fact I am excited.  Why?  What is wrong with me?

I personally believe that we only get a situation where we have “a legion of unemployed” when scarcity is gone – when technology provides all that we desire so that we don’t need to work anymore.

Now you may say – aha, but if only one person owns this technological stock, and if they can produce enough for everyone, why would they?  I would say that if this is the case we have two different “economies”, a single individual with lots of capital who is completely self-sufficient, and a whole bunch of labour with some other capital.  That “second economy” that is excluded from the first will work to create produce, as they are using their scarce resource of time to make goods to provide for their own needs and wants.

In such a situation it would be preferable if the owner of the capital stock simply produced enough for everyone’s wildest desires – but they don’t, ohh well.  The issue here is the lack of a “price signal” to redistribute income.  Guess who could help us … a government 😉

But things can’t be this rosy?

That is true.  If we had a situation where capital could be used to COERCE actions to ENSLAVE individuals then we will have a problem.  And such a structural issue is the domain of political science, not economics.  However, this is the only situation where we get “a legion of unemployed” rather than “a legion of jobless, but perfectly satiated individuals”.

An environment free of coercion and an economy with “legions of unemployed” just aren’t consistent.  An environment with coercion and “legions of unemployed” would be a dystopia.  An environment free of coercion but with no demand for labour – that my friend is a utopia, and is not something we should fear.

As long as our freedoms remain, the day where labour demand does not exist does not frighten me.  In this case Linuxlover and Nick may justifiably feel differently, because they think a corresponding limiting of our freedoms will occur.

Call me an optimist 🙂

Note:  In many ways I would say this is a discussion about the distribution of capital following a increase in capital which reduces the marginal product of most labour.  Very Marxian, very political economy.  Would more than welcome your comments.

  • In a world of almost infinite production at almost zero cost the only thing that will remain finite and desirable for reasons of status is that of personal services. In the same way as a real Gucci remains more desirable than a fake the status value of real human services over fake will always keep human services in demand.

  • btw I just noticed that little [translate] link under your posts. Is that to translate into “plain English”? 😉

  • @Phil Sage (sagenz)

    That is also very much a possibility – as we have something that is scarce and requires labour.

    @Phil Sage (sagenz)

    If only 😀

  • ben

    I think there’s a more fundamental point to be made: historically there is no long run relationship between unemployment and capital accumulation, so your correspondents have a model that is broken. It isn’t clear why capital accumulation from here forward should start producing unemployment – it hasn’t until now.

  • @ben

    I agree that it hasn’t (although one way to view the Great Depression and preceding recessions is through the lens of “positive supply shocks” that temporarily reduced demand for labour). I also agree that this point indicates that the fear may be overblown.

    But, even stating that this is a possibility, and taking the conditions that cause this possibility is given, we can make an argument as to why this isn’t a bad thing.

    Fundamentally, having to work is a COST – if people don’t have to work and we get the same produce this is a good thing. The only problem is, without a functioning market for labour we probably get a poor allocation of resources compared to the current situation.

    Furthermore, even with labour demand remaining, if greater captial does one day reduce the marginal product of labour (which is possible) we get a situation where wages falls while production rises – this may not be seen as welfare maximising.

    As we know, in such a situation the government could transfer resources to make this change “pareto superior”. The best way for this to happen would be through Friedman’s idea of a negative income tax (http://en.wikipedia.org/wiki/Negative_income_tax). This ensures that workers will be indifferent, and that technological improvement would be always pareto superior. Excellent.

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  • there si no way for this to happen. How do you think the governments will react to such a situation with say 60% unemployment. If they don’t come up with solutions they will be forced to step down by the people who had elected them, so I am not afraid of such a future

  • #6 I read in the last few days that one in five US men between age of 25-49 does not have a job. Not all of these people are registered as unemployed but they must have sufficient income to live.

    I could readily see a steady shift to taxation on capital to fund the ever increasing numbers of non diligent through the Negative income tax above. Manufacturing is hollowing out in the developed west. design remains. Services like call centres and administration are being out sourced to developing world.

    It will not be too many decades until what remains is those services where human face to face interaction is the preferred method such as restaurants and retail, high end design and maintenance.

  • Lex

    But capital does enslave people, all the time!

    On another note – the idea that technology will make people unemployed is a false one. It was the philosophy of the luddites of the 19th century – but what happens is that the ones who make a lot of money with technology find new ways to spend their money, and the labour force is shifted towards new leisure industries etc.

  • PhillipFrank

    A situation where we have “a legion of unemployed” rather than “a legion of jobless, but perfectly satiated individuals” will not occur when there is capitalistic society and disparity in capital between individuals and capitalistic society. The result of this disparity will drive wages down as the demand for labour drops until wages equal capital costs.

  • But, even stating that this is a possibility, and taking the conditions that cause this possibility is given, we can make an argument as to why this isn’t a bad thing.