This is an argument I've been making for many years myself. In the
debate about automation and job destruction it is commonly overlooked
that labor and capital are in the same boat when it comes to long-term
impact because production capability itself is becoming a commodity.
Machines aren't just getting smarter, they're getting smaller, more
adaptive, progressively lower in minimum necessary production volumes,
and cheaper. You can now initiate more kinds of production 'out of
pocket' than ever before. You can now competitively manufacture more
things in the space of a four car garage than ever before. You can now
approach a conventional middle-class standard of living based on
entirely local and personal production and open source designs.
Corporations are beginning to abandon the ownership of their own means
to production in favor of job-shops because as that production capacity
becomes more of a commodity the cost of money and the adaptability lost
to amortization becomes the chief drag on market competitiveness. The
volume of consumer goods produced in job shops went past that from
traditional factories in the year 2000, and it never went back. The
factory--and the traditional capital creating it--is already an
anachronism. This brings us to the core premise of Post-Industrial
futurism; that the paradigms of the Industrial Age are being eroded by
the evolution of the very technologies on which they depend. This is the
ultimate crisis of Capitalism; the eventual obsolescence of capital
itself by the automation it cultivated as value shifts away from
material goods and the means to make them and becomes virtualized,
integral to design. The product has no value. The real value is in the
'spime'. Already corporations are increasingly obsessed with litigation,
intellectual property, whittling-away at the First Sale Doctrine, and
limiting the rights and controlling the behavior of the consumer as
means to maintain market share.
The long-term evolution of production and distribution is a transition
to localization, networking, production-on-demand, increasing reliance
on management automation through quantitative analysis, increasing
cost-transparency, and eventual integration into the infrastructure of
the built habitat as a kind of municipal utility. The global economy
will shift from trading in goods to trading in commodity refined
materials and modular parts. As labor is factored out of production,
cost of production becomes more transparent, market prices capitulate
and fall except where they can leverage the value of exclusive design
and designer prestige. 'Brand' manufacturers will increasingly take on
the aspect of ateliers--design studios. The next Apple will be composed
of a relative handful of people whose chief jobs are design,
development, and the management of spimes with all production owned by
someone else and local to the consumer. The next Ford or Toyota will
assemble cars on demand at the dealership--maybe generic dealerships.
(an overlooked impact of electric cars and the electric power train is
their ability to radically drive the number of components in a car down.
Tomorrow's car might have less than 100 parts and go together like a
desktop PC!)
So Capital is running out of things to do, the paradigm or money is
failing, and the model Westphalian state is running out of people to
tax, while, now evolved to accommodate Industrial Age paradigms, having
no other mechanism to define, capture, and collectivize surplus social
productivity to do anything with. (are you going to conscript labor off
the street to make fighter jets?) The state and the monetary system have
been very closely wedded through the Industrial Age, premised on a
concept of extracting and collectivizing monetary capital as societal
debt to gift to elites to create the means of production, and now their
common paradigms are breaking-down. To continue to exist government will
have to devise a new basis of economics--a new paradigm by which to
define resource collectivization and a rationalization for it--or (more
likely) a new economy will emerge stigmergically by the logic intrinsic
to the underlying technology and the compulsion of people to make things
work day-to-day. This is why, when I talk about basic income myself, I
talk about two forms of it. An 'institutional' basic income--that is
disbursed as money and administered by some kind of bureaucratic
institution--and an 'integral' basic income that's built into the
'firmware' of the infrastructure of the built habitat and disbursed as
on-demand access to goods based on a systemic quantitative analysis of
demand. Long-term, we are likely to evolve toward that integral form as
local communities are compelled to take on increasing responsibility for
keeping daily life going as the state increasingly fails them and people
discover the at-hand means/technology to do that in their now local
production capacity.
All these things add up to a picture of a very different lifestyle in
the future that I don't think we communicate too well right now. This is
why I've been very interested in the notion of using the approach of
Living Museums in a future context to illustrate future lifestyle and am
working on projects like the Open House documentary to showcase open
source living.
On 11/9/15 4:52 AM, [email protected] wrote:
---------- Forwarded message ----------
From: *Chris Quigley* <[email protected] <mailto:[email protected]>>
Date: Mon, Nov 9, 2015 at 6:33 PM
Subject: Fwd: Excellent Art By Charles Smith
To: Michel Bauwens <[email protected]
<mailto:[email protected]>>
Michel,
Thought this might be of interest.
Kind regards,
Christopher
---------------------------------------------------------------------------------------------
*Musings <http://www.oftwominds.com/musings-sample.html> My Books
<http://www.oftwominds.com/CHS-books.html> Archives
<http://www.oftwominds.com/archives.html> Books/Films
<http://www.oftwominds.com/books.html>*
------------------------------------------------------------------------
*Automation Doesn't Just Destroy Jobs--It Destroys Profits, Too*
<http://www.oftwominds.com/blognov15/automation-profits11-15.html>
/November 9, 2015/
/The idea that taxing the owners of robots and software will fund
guaranteed incomes for all is not anchored in reality./
*Automation is upending the global order by eliminating human labor on
an unprecedented scale--and the status quo has no reality-based
solution to this wholesale loss of jobs.*
Two recent articles highlighted the profound consequences of advances
in robotics and AI (artificial intelligence) on employment: four
fundamentals of workplace automation
<http://www.mckinsey.com//Insights/Business_Technology/Four_fundamentals_of_workplace_automation> and
Robots may shatter the global economic order within a decade
<http://www.telegraph.co.uk/finance/economics/11978542/Robots-may-shatter-the-global-economic-order-within-a-decade.html> as
the pace of automation innovation has gone from linear to parabolic
(via Mish).
*The status quo apologists/punditry have offered two magical-thinking
solutions to the sweeping destruction of jobs across the entire
spectrum of paid work*:
1. Tax the robots (or owners of robots) and use the revenues to pay a
guaranteed income to everyone who is unemployed or underemployed.
2. Let the price of labor fall to the point that everyone has a job of
some sort, even if the pay is minimal.
Neither one is remotely practical, for reasons I will explain today
and tomorrow.
*Today, let's examine the misguided fantasy that automation/robotics
will generate enormous profits for the owners of robots.* Here's the
problem in a nutshell:
*As automation eats jobs, it also eats profits, since automation turns
labor, goods and services into commodities.* When something is
commoditized, the price drops because the goods and services are
interchangeable and can be produced almost anywhere.
Owners must move commoditized production to low-tax regions if they
want to retain any profit at all.
*Big profits flow from scarcity, i.e. when demand exceeds supply.* If
supply exceeds demand, prices fall and profits vanish.
(Monopoly is a state-enforced scarcity. In our state-cartel economy,
there are many monopolies or quasi-monopolies. While eliminating these
would lower costs, that wouldn't reverse the wholesale destruction of
jobs and profits--it would only speed the process up.)
*The other problem the "tax the robots and everything will be funded"
crowd overlooks is the falling cost of software and robots lowers the
barriers to competition*: nothing destroys profits like wave after
wave of hungry competitors entering a field.
The cost of automation and robotics is falling dramatically. This
lowers the cost of entry for smaller, hungrier, more nimble
competitors, and lowers the cost of increasing production. When
virtually any small manufacturer can buy robots for less than the
wages of a human laborer, where's the scarcity necessary to generate
profits?
The parts needed to assemble a $45 tablet are dropping in price, and
the profit margins on those parts is razor-thin because they’re
commodities. Software such as the Android operating system is free,
and many of the software libraries needed to assemble new software are
also free.
*Automation increases supply and lowers costs. Both are deadly to
profits.*
*Here’s the core problem with the idea that taxing the owners of
robots and software will fund guaranteed incomes for all:* the more
labor, goods and services are automated/commoditized, the lower the
profits.
The current narrative assumes more wealth will be created by the
digital destruction of industries and jobs, but real-world examples
suggest the exact opposite: the music industry has seen revenues fall
in half as digital technology ate its way through the sector.
A $14 billion industry is now a $7 billion industry. Profits and
payroll taxes collected from the industry have plummeted. So much for
the fantasy that technology always creates more jobs than it destroys.
As subscription music services replace sales of songs and albums,
revenues will continue to decline even as consumers have greater
access to more products. In other words, the destruction of sales,
employment and profits is far from over.
*Examples of such radical reductions in paid labor abound in daily
life.* To take one small example, our refrigerator recently failed.
The motor was running but the compartment wasn’t being cooled. Rather
than replace the appliance for hundreds of dollars or hire a high-cost
repair service, I looked online, diagnosed the problem as a faulty
sensor, watched a tutorial on YouTube (what I call /YouTube
University/), ordered a new sensor for less than $20 online and
completed the repair at no cost beyond a half-hour of labor, which
cost me nothing in terms of cash spent.
The profit earned by YouTube was minimal, as was the profit of the
firms that manufactured the sensor and shipped it. The sales and
profits that were bypassed by using nearly-free digital tools were an
order of magnitude higher.
I was recently interviewed via Skype by an online journalist with
millions of views of his YouTube channel. A decade ago when he worked
in mainstream TV journalism, an interview required costly,
time-consuming travel (for the crew or the subject), a sound engineer,
a camera operator, the talent (interviewer), editor and managerial
review. These six jobs have been rolled into one with digital tools,
and travel has been eliminated entirely.
Some will argue that the quality of the video and sound isn’t as high,
but the quality of the user experience is ultimately based on the
viewer’s display, which is increasingly a phone or tablet. So in terms
of utility, value and impact, the product (i.e. output) produced by
one person replaces the conventional media product that required six
people.
My own solo digital content business would have required a handful of
people (if not more) only a decade ago. With digital tools and
services, it now requires just one person. Those of us who must work
with digital tools to survive know firsthand that what once required a
handful of workers must now be produced by one person if we hope to
earn even a marginally middle-class income.
Multiply an appliance that doesn’t need to be replaced and a repair
service that doesn’t need to be hired, a half-dozen positions replaced
by one part-time job, a fully functional commodity tablet that costs
10% of the high-profit brand and you understand why profits will
plummet as software eats the world.
*These are not starry-eyed examples based on projections; these are
real-world examples of widely available digital technologies
destroying costs, sales and profits on a massive scale.*
Some observers have suggested taxing wealth rather than profits to
fund the super welfare state of /guaranteed income for all./ But the
value of assets ultimately rests on their ability to generate a
profit. As profits fall, wealth may be more chimerical than these
observers believe.
Tomorrow we'll look at the rising costs of human labor and explore why
this trend will persist even as labor becomes increasingly surplus.
--
Eric Hunting
[email protected]
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