Jon's Soapbox
Taking Automation Trends to Their Conclusion - An All Capital Based Economy
(posted 6/3/2017) - Historically economies have evolved from groups of humans trading labor services, physical property, or promissory contracts in some form of market environment. As societies grow so do the markets; and regional economies come into being. Around the world today nation-states and city-states exist, each with market economies whose means of production is derived from human labor and individual, state, or corporate owned capital.
The accelerating force of automation is set to disrupt the current ratios of labor and capital in most markets. The trends are clear, the economic value of labor could shrink to near zero over the coming decades.
The question economists and politicians around the world should be asking is "how should society and the market-place change in response to this trend"?
I previously put a toe into these waters with a look at what a Universal Basic Income (UBI) might look like in the US link is here. I'd now like to take a step into the future and try to visualize a stable society with full automation (near 100% capital based means of production).
What would it mean if our airlines and trucks were all automated? If cabs, buses, and trains were automated; if even street sanitation and maintenance was done by automatons? What if most everyone shopped via internet, without clerks and retail stores? What if dining out typically involved automatons waiting tables, and preparing food? What if all legal assistance, contract negotiations, and civil courts were largely based on Artificial Intelligence - accessing huge public databases to make decisions? Medical diagnosis and perhaps treatments could easily fall to these same AI and automaton constructs. What if the classrooms of tomorrow are automated?
Any human function provided as 'labor for remuneration' becomes a cost function - which burgeoning AI and automaton could replace at lower cost and/or higher efficiency over time. In our current market models there must be a demand based on willingness and ability to 'pay' for goods and services. If most of future humanity has no 'labor' income they must either be owners of capital or be subsidized by their society, or both.
This naturally leads to the introduction of UBI (see above). It also naturally leads to automation co-ops where groups own much of the capital that they regularly use to meet their needs. This could lead to a rather efficient loop in which the market becomes a Janus like entity - one consumes according to one's ownership rights. Individuals might decide to reduce their consumption for a time so as to 'purchase' more capital share. Future increased consumption for such an individual then becomes possible.
One could conceive of financial markets in which every member of society owned some amount of capital and received the traditional benefits of a growing economy (more shares, increased valuation of shares, and/or interest credits).
What do all these unemployed citizens do with their time if they are not selling their labor? People enjoy enterprise in one form or another. Some will focus on community projects, some on growing their personal capital base (a classic business entrepeneur); some will focus on building political consensus. Others will focus on education and exploration of the real world. You get the idea, people are people and will occupy themselves with the world as they always have.
Our societies will evolve with increased automation and many possible paths lead to massive economic and civil disruption (eg, famines, wars). Maybe automation trends and social responses should be a major topic going forward. What do you think?