Is that the future of the labour market, a myriad of “self-employed” entrepreneurs offering services in order to gain income – income that creates a claim on resources that are largely created by capital/machines.
The laws are:
- Law #1: People will get jobs doing things that computers can’t do.
- Law #2: A global market place will result in lower pay and fewer opportunities for many careers. (But also in cheaper and better products and a higher standard of living for American consumers.)
- Law #3: Professional people will more likely be freelancers and less likely to have a steady job.
Where does this come from? Say that a lot of the fundamental things we consume, both in terms of manufacturing and primary goods, can be mechanized extremely cheaply – with virtually no labour input. In that case, investment in the machines and their maintenance is extremely valuable – and owners will as a result be willing to pay a significant sum (in terms of resources) to those who in turn look after the machines.
If only a very small number of people are required to look after and build the machines, then the rest of society has to move into roles where they do one of two things:
- Serve a secondary market of people without access to capital – say making food for their own small group of people, or making clothing.
- Offer a service to the owners of capital and the group of people who are looking after it.
In that case, there is likely to be a very very large service sector with a small base of labour manufacturing and primary production that is very productive/capital intensive.
Now why would we expect entrepreneurs, why wouldn’t we see massive scale in the service industry like we have in the other sectors? Well, generally, services don’t fit the “scale” model – economies of scale do not exist in service industries, and as given the value of heterogeniety in the service industry the flexibility of small firms/entrepreneurs would be vital. Lets not forget the internet either, which has reduced the cost of entry into service industries and increased competition.
In a situation where capital is very heavily concentrated (both in terms of physical and human capital – given that a small number of people in the service industry will also have significant talent and be able to extract far more rent than others), I see a role for significant redistribution and a minimum income in this type of environment. As the constraint of scarcity is loosened, the idea of having a government to help ensure a minimum standard of living really becomes more important. The question is, how far along that road are we now?