Would like to hear about automation?

Automation is displacing more jobs each day. This tendency will increase as we approach singularity. Some people, such as Ray Kurzweil, think this will happen as early as 2035. My personal fear is a disruption in the circular flow of economy : households provide labour, and corporations provide goods and services. Profesor Ha Joon Chang believes such a quandary can be solved through a social arrangement and that in the long run such thing will be solved ( see link ) , I have my qualms. Even if a social arrangement can be made, but then the problem becomes how to force the government into enact such changes, for it is not uncommon to see the government act on its own benefit while leaving a large sector of the society marginalized.

Reference Ha-Joon Chang: "Economics: The User's Guide" | Talks at Google (44:30 to 47:45)

Official response from submitted

The only reason thinkers work hard to show that social problems can be solved is because defenders of the status quo - that has failed to solve the problem - insist that the failure is because the problem cannot be solved. Automation is an easily and readily "solved" problem. Throughout history, societies have achieved and incorporated technical change that replaced human labor with various kinds of tools and machines. Capitalism is noteworthy because it has achieved a high rate of technical change if and when it was profitable to do so; it has failed to achieve technical progress when and where profits were not high enough to induce them.

Think of it this way. Imagine a technical change that enables 50 workers to do in a day what before required 100 workers. For simplicity assume further that all wages and non-labor costs were the same and that the output quantity and price were likewise the same (i.e. unchanged). Two alternative possibilities present themselves in this example. For profit, the employer will typically fire 50 workers and install the technical change; his profit rises because he has cut his labor costs in half. The alternative that serves the workers instead of profit would be for all 100 workers to keep their jobs but work exactly half the hours per day that they did before. Their wages would not change, nor would the employer's profit. The technical change would have delivered leisure to the workers without reducing their incomes. If automation were managed for the workers - ie. a socialist approach one might say - it would be welcomed (not resisted) by them and would benefit more and more needy people than what raised profits do. But capitalism controls, directs, and limits technical change/automation to serve its needs while claiming that the resulting unemployment, suffering, etc is somehow intrinsic to technology/automation per se rather than how it is installed and for whose benefit.


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  • commented 2016-12-05 15:26:26 -0500
    Third option would be: Part of employers profit from new tech use would go into a “Labor-Tech Fund” for education-income-assistance for workers “laid off” due to “progress”. Could be national or regional or industry specific or ? Let’s discuss this!
  • tagged this with Important 2016-12-05 15:26:25 -0500
  • responded with submitted 2016-12-04 18:17:07 -0500
  • published this page in Ask Prof. Wolff 2016-12-04 16:17:34 -0500

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