Postcapitalism and the Impending Death of Work

[Martell Spy]

19 hours ago, OldGimletEye said:

Okay, supposing I wasn't writing in a parable in order to collapse a much larger and more complex economy into a couple of consumer goods and couple of laborers and a couple of capitalist. Supposing I was telling a literal story. So say the AI machine can produce 30 coconuts per day. Caruso can only eat 20 coconuts per day. So yeah he gives 10 to Clownback everyday because why should care?  (I'm assuming Caruso doesn't have any altruistic motives. Or maybe they are just very very small)

But more realistically the Caruso in our story isn't going just to consume coconuts but a variety of commodities. And perhaps its not likely that he will become so satiated in his consumption that he is willing to give up some of consumption in order to accommodate Clownback.

And while it's true that the shelf life of coconuts is finite, the error here is assuming, that Caruso won't give up some consumption today in order to have more tomorrow.  Supposing Caruso faces a trade off between how many coconuts to have today versus how many to have tomorrow. After making that decision, he orders the AI machine to bring to him X amount of coconuts for current consumption while taking the rest and planting them to grow coconut trees.

Assuming that the Carusos act solely in their own self interest, the threat of a civil war might in fact make them work out a compromise with the Clownbacks.  I'm sure some elites have relented and agreed to some kind of welfare state, in the past, in order to prevent civil wars or revolution.

The welfare state can be thought of as a safety valve that lets out steam, and heads of revolutions, etc. In particular if there is no labor source of income for the general populace. But what if the welfare state is gone, or simply cut to the bone?

A few possibilities of ways to let off steam and also insure that people other than elites survive:

Patronage: Elites grant some sort of income to individuals or groups they sponsor, often artists, scientists, etc.

Curruption: Third-World style corruption, with police, soldiers, and even judges on the take. This is what happens when you cut police officer wages down to below basic living standards. Payments have to be made to get access to government services. Cops and the fire department may not service those that don't pay.

Crime: Drug cartels and the like. 

Power Trades: Basically, the general populace gives increasing levels of power to elites in exchange for basic income. This actually fits with what things some elites have actually said. They write or say things like, "We want to be more free to innovate." Or they say it more plainly, and basically explain they want to be regulated less in exchange for basic income. This of course could lead to a series of deals that eventually destroy democracy, but it may take quite a period of time.

[OldGimletEye]

23 hours ago, Altherion said:

But at this point you've basically guaranteed a revolution -- the lack of products on shelves is one of the few reliable indicators of it.

Perhaps that is the case. And hopefully, the elites here will have what we might call enlightened self interest.

[OldGimletEye]

On 12/9/2017 at 7:32 PM, Martell Spy said:

The welfare state can be thought of as a safety valve that lets out steam, and heads of revolutions, etc. In particular if there is no labor source of income for the general populace. But what if the welfare state is gone, or simply cut to the bone?

I think that would be a grievous mistake. Let me start with:

Now as you know I'm a lefty. But, at this time, I'm kind of indifferent to UBI as I prefer full employment policies, strengthening labor power, job training, higher minimum wage, making sure we have robust social insurance systems, like universal healthcare, good safety nets, and well quite frankly, at this time, calling out the CEO class for much of their shenanigans over the last few years.

But, if this AI thing comes, UBI is something that will likely have to be done.

[OldGimletEye]

On 12/7/2017 at 7:18 PM, maarsen said:

Let's go back to first principles here. Having robots or AI take over all human jobs cannot be self sustaining. Food is grown for people to eat, cars are made for people to get to their jobs, growing food,selling food, making cars.... Once machines or robots start doing such, where does the money come from to keep the machines in electricity? We could just cut out the middleman, so to speak, and have AIs and robots generate electricity so that they can then generate more electricity for more robots and AIs in an endless cycle. Unless you have robots that need entertainment, or decorations to set them apart in status, or exotic materials to maintain them, any economy that replaces human labour with machine labour will founder unless humans have the ability to spend and access the fruits of robotic labour. A guaranteed income is needed.

More on this topic:

I’m a good Keynesian. And as a good Keynesian, I believe money matters in capitalist or market based systems. It’s rather inconceivable that any market based system could have survived or been created without it. Obviously, it speeds up the process of making purchases as trading by barter would be very costly or inefficient. And then of course it serves as a unit of account for all types of commodities and finally it has served as an important store of value. And as a store of value, it has been extremely important, in a world where we have incomplete financial markets, where one simply cannot buy insurance for every possible contingency. People get nervous because somebody forgot to sacrifice a goat and they hold money because they are uncertain what’s going to happen next.

And I believe that most economic output shocks have been demand driven and the most serious economics crises have been on the demand side, rather than the supply side, and these demand driven shocks are intimately tied to monetary problems.

Supposing I have 3 markets. I have a labor market, a goods, market, and a capital services market.

I have a system of prices, like say w,p,r, where w is the wage, p is the price of the commodity good, and r is the price of capital services.

I have the following excess demand functions

wD(w) – wS(w) = z1

pD(p) – pS(p) = z2

rD(r) – rS(r) = z3

By Walras law, z1 + z2 + z3 = 0. There can be here no general gluts. If the supply of labor is greater than the demand, then the excess demand for goods or excess demand for capital services or both have to be positive.

Now supposing I have 4 markets. This one includes money. So I have something like:

wD(w) – wS(w) = z1

pD(p) – pS(p) = z2

rD(r) – rS(r) = z3

mD(m) – mS(m) = z4

In this case, there can be a “general glut” if there is an excess demand for money, meaning there can be an excess of supply of labor, an excess supply of commodities, and an excess supply of capital services.

John Stuart Mill recognized this point early on as he was writing about the dispute over Says Law. He wrote:

"Those who have... affirmed that there was an excess of all commodities, never pretended that money was one of these commodities.... What it amounted to was, that persons in general, at that particular time, from a general expectation of being called upon to meet sudden demands, liked better to possess money than any other commodity. Money, consequently, was in request, and all other commodities were in comparative disrepute....

The result is, that all commodities fall in price, or become unsaleable.... [A]s there may be a temporary excess of any one article considered separately, so may there of commodities generally, not in consequence of over-production, but of a want of commercial confidence…"

Now Mill believed that prices would adjust quickly enough to quickly eliminate “general gluts” caused by the excess demand for money or safe financial assets. He was wrong about that.

Money matters. It matters a lot in demand side fluctuations.

But, the point, I want to make is that I don’t think, that lack of spending by laborers because they are displaced AI technology, will destroy a system of capitalism that is for the benefit of  the owners of AI technology and perhaps a few managerial and professional elite. Through out the history of capitalism, owners of capital have always relied on labor as a factor of production. And when monetary shennigans hit, it resulted in disequlibrium in the output market and in the labor markets ie a “general glut”.

Now I’m deeply suspicious of “structural” stories as I don’t believe that RBC  phlogiston explains most business cycles and of course we all probably remember the CEO Business Clowntable spreading fairy tales about a “skills gap”,  another “structural” story when clearly any one in their right mind was aware the main issue was lack of aggregate demand.

But, this AI technology thing, is potentially a very structural story as AI technology could be a perfectly substitutable, or nearly so, input to production for labor. It won’t be a mere complement as past technology has been, but a complete substitute. If that happens surely laborers will stop spending money and surely that will cause a drop in aggregate demand and those businesses that mostly make commodities for the labor class will go out of business. But, I don’t think this will cause the fall necessarily of markets, as what may emerge is simply markets where the owners of AI technology trade with each other or those few professional elites that they employ.

This brave new world I imagine will still use money, but it will look a lot like what Say, Ricardo, and Marx (yes apparently Marx didn’t believe in general gluts) imagined rather than what Keynes and Malthus had imagined as sudden surges for the demand for safe assets or money, won’t lead to disequilibrium on the labor markets, driving down aggregate demand because labor spending won’t matter anyway to the AI owning class.

If of course, UBI gets put in, the world, I guess, would look more like what Say, Ricardo, and Marx imagined as people would probably be less inclined to hold precautionary balances because they won’t be as fearful of labor productivity shocks, loss of employment, or whatever.

But, anyway, yeah, I would be for a UBI because of humanitarian reasons, and because the results could be horrific without it.

[Altherion]

By the way, here's an interesting Atlantic article on the topic:

Quote

Visitors to Henn-na, a restaurant outside Nagasaki, Japan, are greeted by a peculiar sight: their food being prepared by a row of humanoid robots that bear a passing resemblance to the Terminator. The “head chef,” incongruously named Andrew, specializes in okonomiyaki, a Japanese pancake. Using his two long arms, he stirs batter in a metal bowl, then pours it onto a hot grill. While he waits for the batter to cook, he talks cheerily in Japanese about how much he enjoys his job. His robot colleagues, meanwhile, fry donuts, layer soft-serve ice cream into cones, and mix drinks. One made me a gin and tonic.

H.I.S., the company that runs the restaurant, as well as a nearby hotel where robots check guests into their rooms and help with their luggage, turned to automation partly out of necessity. Japan’s population is shrinking, and its economy is booming; the unemployment rate is currently an unprecedented 2.8 percent. “Using robots makes a lot of sense in a country like Japan, where it’s hard to find employees,” CEO Hideo Sawada told me.

Sawada speculates that 70 percent of the jobs at Japan’s hotels will be automated in the next five years. “It takes about a year to two years to get your money back,” he said. “But since you can work them 24 hours a day, and they don’t need vacation, eventually it’s more cost-efficient to use the robot.”

And of course, once the technology is perfected and starts benefiting from economies of scale in Japan, it's only a matter of time before it is exported to the US and Europe. The US doesn't have Japan's population issue, but it could still benefit from automating away the service jobs... especially in cities and states which have a substantially higher minimum wage than the national requirement.

[Bennis of the Brown Shield]

13 hours ago, Altherion said:

But at this point you've basically guaranteed a revolution -- the lack of products on shelves is one of the few reliable indicators of it.

Well, the thing is that a lot of the AI technology than can be just to automate jobs could also be used to supress the masses. Look at this Chinese company to see a pretty disconcerting example of what I'm talking about. 

http://www.scmp.com/magazines/post-magazine/long-reads/article/2123415/doctor-border-guard-policeman-artificial 

Not very easy to organize a revolutionary movement in a society where systems like that (though likely a lot more sophisticated, given that we are talking about the future) are available to the law enforcement and intelligence services. 

[LongRider]

sorry, posted in wrong thread

 

[HexMachina]

Those food servers in Japan are making me think of Sonmi and Cloud Atlas...

[Altherion]

1 hour ago, HelenaExMachina said:

Those food servers in Japan are making me think of Sonmi and Cloud Atlas...

That is a different (and far darker) future. At the moment, there is nothing human-like about these machines. That is, all they do is make food and have no more chance of developing emotions or intelligence than your laptop or cellphone (arguably less). As the Chinese AI company leader said, this form of automation will replace jobs, but it's not the most likely place for intelligence to arise.

[OldGimletEye]

Likely very relevant.

https://www.project-syndicate.org/commentary/automation-displaced-workers-transition-by-laura-tyson-and-susan-lund-2017-12

Quote

These marvelous new technologies promise higher productivity, greater efficiency, and more safety, flexibility, and convenience. But they are also stoking fears about their effects on jobs, skills, and wages. Feeding these fears is a recent study by the University of Oxford’s Carl Frey and Michael Osborne, and another by the McKinsey Global Institute (MGI), which find that large shares of employment in both developing and developed countries could technically be automated. History and economic theory, however, suggest that anxieties about technological unemployment, a term coined by John Maynard Keynes nearly a century ago, are misplaced.

 

Quote

A new MGI report finds that under a moderate scenario for the speed and breadth of automation, about 15% of the global workforce, or 400 million workers, could be displaced between now and 2030. A faster pace of automation would trigger greater displacement.

 

Quote

According to one recent survey, the majority of Americans are concerned that automation will increase income inequality. Their concern appears warranted. As many middle-wage occupations succumb to automation, income polarization in the US and other developed countries is likely to continue. If workers displaced by automation are unable to find new jobs quickly, frictional unemployment will rise, putting downward pressure on wages.

 

Quote

So, what can be done to speed and ease the occupational transitions that automation will compel? For starters, fiscal and monetary policies to sustain full-employment levels of aggregate demand are critical. 

Be prepared to take on 1) The confidence fairy bunch, 2) The inflationistas, and 3) the conservative asset mispricing concern trolls. But, yep, this will be a core piece of policy.

Quote

A second response must be a dramatic expansion and redesign of workforce training programs. Over the past two decades, government outlays for skills training and labor-market adjustment have fallen in most OECD countries. That has been compounded in the US by a sizeable decline in business spending on training as well.

Sounds like private market failure that governments will have to make up.

Quote

These trends must be reversed. Lifelong learning needs to become a reality. Jobs will change as machines take over some tasks, and human activities will require different skills. MGI’s analysis shows that higher-level cognitive abilities – such as logical reasoning, stronger communication skills, and enhanced social and emotional skills – will become more important

Sounds like this will call for some public human capital investment. 

Quote

Instead, nanodegrees and stackable credentials are likely to gain in importance. German-style apprenticeships combining classroom work and practical work, and enabling participants to earn a salary while learning, could be important solutions even for middle-aged displaced workers. Collaboration between companies and educational institutions, as AT&T (on whose board one of the authors serves), Starbucks, and other firms are showing, can provide workers with the new or enhanced skills that are increasingly needed.

 

[Werthead]

All of which sounds great but you have the problem of people being more and more reluctant to retrain as they get older, especially if politicians are pandering to them (as they are also more likely to vote as they get older). A programme to get thousands of ex coal workers retrained for new industries is going begging in the USA because they believe Trump's horseshit that coal mining is going to make a comeback, despite the fact that even if he is right about 60% of the jobs previously done by humans in the industry are now automated and 20-30% could go in the coming years.

[OldGimletEye]

23 hours ago, Werthead said:

All of which sounds great but you have the problem of people being more and more reluctant to retrain as they get older, especially if politicians are pandering to them (as they are also more likely to vote as they get older). A programme to get thousands of ex coal workers retrained for new industries is going begging in the USA because they believe Trump's horseshit that coal mining is going to make a comeback, despite the fact that even if he is right about 60% of the jobs previously done by humans in the industry are now automated and 20-30% could go in the coming years.

Well certainly there is a lot of delusional thinking in the US right now. But I guess saying what ought to be done in situation X is no guarantee it will be done.

And delusional thinking driving bad policy isn't just related to this issue. But, just because you have bunch of clowns, or as we know them here in the US "The Republican Party", doesn't mean you don't try to give solutions to problems.

But, yeah, sure it's completely possible, or maybe even likely, well do something completely insane and buffoonish as we try to deal with this issue.

[Altherion]

13 hours ago, Werthead said:

All of which sounds great but you have the problem of people being more and more reluctant to retrain as they get older, especially if politicians are pandering to them (as they are also more likely to vote as they get older).

Reluctance to retrain is one contributing factor, but it's hardly the only one. Even if everybody was willing to try retraining, there would still be the following issues:

1) Some people would not be able to retrain -- not because they don't want to, but because they simply cannot. If you've ever taught at a university or at least went to one, you've surely noticed that some people are much better at certain topics than others. A significant number of the people trying to retrain (not all, but quite a few) would be worse than almost everyone at the university -- that's why they went into that easily automated career path in the first place.

2) There are not enough positions elsewhere to absorb everyone who needs to change careers.

3) Most well-paid positions which, at least for the moment, are not being automated require significant certification. A coal miner with a high school diploma who wants to be a lawyer or a doctor or an accountant has a long, long educational road ahead of him. Even mid-tier positions such as nursing or teaching require significant certification nowadays. In the US, this is both costly and time consuming.

This is not to say that retraining is impossible. As with most other things involving large samples, there's almost certainly a normal distribution somewhere in there and it is possible to come up with many success stories from the higher end... but I'm not optimistic about the middle and the lower end is pretty much hopeless.

[OldGimletEye]

On 12/12/2017 at 11:16 PM, Altherion said:

snip

I think besides the retraining issue for older workers, another big issue facing them is age discrimination, which is something that will have to be handled.

[Altherion]

17 hours ago, OldGimletEye said:

I think besides the retraining issue for older workers, another big issue facing them is age discrimination, which is something that will have to be handled.

Yes, and there is also the fact that they will be starting all the way at the bottom and many professions are front-loaded with unreasonable working hours which are tolerable (if just barely) for a newly-minted college graduate in his or her early-mid 20s, but don't really work for an adult with a family. It's probably possible to make retraining work for a majority (though far from everyone) given a concerted effort by industry and government, but as things stand, it takes a determined and talented individual to go through this process.

[The Anti-Targ]

If we become a 24/7 society, but everyone only needs to work 20hrs a week to earn a decent income then more people can be absorbed into a shrinking range of jobs that still need to be done by humans.

[Bennis of the Brown Shield]

Another issue is how personal debts will be handled for professionals that have their jobs automated. In the US in particular many of them, especially new graduates, are saddled with huge study loan debts that would be almost impossible to repay if you end up getting a lower wage job, which we could expect happen to many people if widespread automation starts hitting the legal and medical professions for example. The average law school graduate in America has something like $140 000 in study loans by the time of graduation if I recall correctly, and isn't the interest rate for those loans usually around 4-5%*? 

So in addition to jobs retraining, loan forgiveness should probably become a topic for discussion as well. At least in countries like USA where the costs of higher education are individualized.  

 

*For reference, I pay 0,34% in interest on mine. 

 

[Eggegg]

6 minutes ago, Khaleesi did nothing wrong said:

Another issue is how personal debts will be handled for professionals that have their jobs automated. In the US in particular many of them, particularly the young ones, are saddled with huge study loan debts that would be almost impossible to repay if you end up getting a low wage job, which we could expect happen to many people if widespread automation starts hitting the legal and medical professions for example. The average law school graduate in America has something like $140 000 in study loans by the time of graduation if I recall correctly, and isn't the interest rate for those loans usually around 4-5%*? 

So in addition to jobs retraining, loan forgiveness should probably become a topic for discussion as well. At least in countries like USA where the costs of higher education are individualized at the moment. 

 

*For reference, I pay 0,34% in interest on mine. 

 

Thats a good point. The same applies to mortgages in the UK, they terrify me right now. Its basically a bet on your own future being rosier and more wealthy than it is now. But if wages drop across the board or if your job becomes irrelevant and you have to go out and retrain to do something else then you are going to really struggle to pay off your enormous loan, which a lot of people have right now with 25-30 year mortgages. 

9 hours ago, Altherion said:

Yes, and there is also the fact that they will be starting all the way at the bottom and many professions are front-loaded with unreasonable working hours which are tolerable (if just barely) for a newly-minted college graduate in his or her early-mid 20s, but don't really work for an adult with a family. It's probably possible to make retraining work for a majority (though far from everyone) given a concerted effort by industry and government, but as things stand, it takes a determined and talented individual to go through this process.

I think over the years I've learnt that to stay static in one industry is to fall behind. I've had to make 2-3 career changes over the years and train myself in new areas. Although these have all been in tech and so the jump wasn't massive, I still have learnt that I cannot take my career path for granted. I think people are becoming more aware of this fact now, and also seeing older people in more junior positions is becoming more common, but its certainly not easy for people to do. 

 

[Bennis of the Brown Shield]

22 minutes ago, Eggegg said:

Thats a good point. The same applies to mortgages in the UK, they terrify me right now. Its basically a bet on your own future being rosier and more wealthy than it is now. But if wages drop across the board or if your job becomes irrelevant and you have to go out and retrain to do something else then you are going to really struggle to pay off your enormous loan, which a lot of people have right now with 25-30 year mortgages. 
 

Right, mortgages. Those are even more tricky. Should the government pay for those while people are being retrained for other jobs? That would be pricy. On the other hand, I'm not sure how else to handle that issue without causing huge amounts of social and economic disruption. 

[Eggegg]

3 minutes ago, Khaleesi did nothing wrong said:

Right, mortgages. Those are even more tricky. Should the government pay for those while people are being retrained for other jobs? That would be pricy. On the other hand, I'm not sure how else to handle that issue without causing huge amounts of social and economic disruption. 

It would bankrupt the UK most likely! I’d certainly do more to curb over enthusiastic lending and put in tighter controls when looking at future income calculations. People without mortgages will riot if asked to pay for people who do have them