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.