“They took our jobs!” The debate with the Luddites will never end because we are always “just one more machine” away from full, labor killing automation “taking all the jobs.” It didn’t happen with Henry Ford’s factory, and it won’t with Elon Musk’s. I think the best way to explore this subject is to outline exactly what it would take for automation and AI to actually take all “the jobs.” These thoughts have been floating around in my head for awhile and I just need to lay them out.
Labor Economics
Defining some terms for use in my argument:
Labor- Humans creating consumer goods or capital goods often with the assistance of capital goods (even a knife, gloves, or rudimentary tools are considered capital goods, more below).
Capital (and/or capital goods)- Machinery that assists labor in creating consumer goods or other capital goods.
Marginal Analysis- The analysis of the effect something will have on the marginal unit (the additional unit, the last unit, like what would happen if we added one worker vs one machine to the productive process). Marginalism and marginal analysis IS basically economics. Once you understand this, you understand general economics. All prices are marginal prices, all equilibriums are in reference to things that live in the margins. Prices in a marketplace are what people are willing to buy and sell the marginal good for (as opposed to the absolute supply of all goods).
This might act as a good primer for marginal analysis and marginalism: http://www.econlib.org/library/Enc/Marginalism.html
Generally there is a tradeoff between labor and capital in any competitive market. Wages are the market price of labor, and the cost of capital is the cost of any machine, equipment, or anything else that assists in making consumer goods or other capital goods that isn’t labor. The labor and capital tradeoff is in terms of cost and productivity. What is the productivity of each cost? Labor is a cost, capital is a cost, what can produce more based on the cost of each (I’m being repetitive for my own benefit). The productivity of each additional unit is analyzed by an entrepreneur and the employed (mistakes can be made but the market tends to fix those mistakes by financially punishing the entrepreneur or rewarding a competitor).
So in the case of machines replacing labor, the productivity of a machine must be higher than the productivity of labor (again, we are thinking in terms of cost... the productivity per cost... there are mathematical equations out there stating all this but I find it easier just to think it through). An entrepreneur must decide if they want to get a new piece of equipment to aid them in creating goods and services or maybe some more labor. An IT guy, for example, will choose between things like assistive software that can remotely help a consumer, or an extra employee that can make calls to a client’s home. If the cost of labor is too high, remote software might be purchased. A LOT of people have lost their jobs to automation over the years.
The Standard Anti-Luddite Argument
Here’s the thing: though a lot of people have lost jobs to automation, people find other avenues of work. Zero people would be currently employed if this wasn’t the case. Each marginal unemployed worker, each ADDITIONAL unemployed worker, drives down the cost of labor as a whole (with a billion different variables for skill level, etc). As machines replace labor and the economy becomes more productive, labor finds other avenues of work with lower nominal wages (but much higher real wages. Their nominal wages would decrease but the overall productivity of the economy will cause an increase in all goods and services. This increase in all goods and services will make lower nominal wages worth more in real terms. Labor is free to explore, innovate, and sometimes struggle to find uses for itself (I can personally attest to this during bouts of unemployment).
This is the standard argument. Here is my additional argument.
Labor will ALWAYS be part of the formula
Labor will always be part of the formula because labor consumes. Robots and machinery do not consume. The super rich cannot consume everything because of the nature of how rich people become rich in a market economy. Rich people become rich by providing a good and service for MANY MANY people. MANY MANY people must be able to consume for the rich to exist (this is good, not bad). It is impossible for machines to take away the jobs of people NOT because they can’t do the job better, very likely they can, but because the network of cash necessary for a machine to be profitable will not exist if people aren’t working.
A few considerations and fixes people have in mind:
Universal basic income: This will allow for the worst outcome. It will allow machines to produce almost everything and people to consume without the struggle of labor to find uses for itself. Imagine how horrible life would be if there was no struggle, goals, etc. A universal income would work only to create the need for a universal income. It’ll create total reliance on political power, hatred towards outsiders such as immigrants, and will reinforce the idea that government can solve all problems. I love Elon Musk, and he is in favor of this, but that is because of how much power he would accumulate being a titan of automation. We will lose our souls.
Artificial Intelligence: This is where it gets tricky. If artificial intelligence advances to the point where it becomes a consumer of goods and services (as opposed to assisting labor, or being assisted by labor, it uses resources for its own personal ends) it could compete with humans for everything and human labor could be permanently displaced. I am not an expert in AI but this seems to be the only condition in which automation could displace human labor. In the following video called “Humans Need Not Apply,” CGP Grey makes the argument that horses lost their jobs to automobiles and that that is what will happen to human labor. The problem is horses aren’t necessary for the equation. Production and consumption can occur without horses. It can occur without robots. It cannot occur without humans. Humans are the consumers. And suppose robots and AI DO displace all human labor AND there is no universal basic income. What then? People will still want to survive. They will create their own markets without robots and AI. There might possibly be a war for resources.... doomsday. If AI and automation compete for resources with the human population, there will be conflict.
Conclusion
The precondition for the end of humanity is a competing intelligence that seeks the same resources we seek but is vastly more efficient at obtaining those resources.
Come at me with your thoughts!
Also, check out this video. The narrator had to use such language as “labor serving” as opposed to “labor saving” in order to fight off the inevitable Luddite backlash.