future economy?

Sesshoumaru

I was reading this article today:

http://www.guardian.co.uk/business/2010/dec/30/futurologist-predicts-age-of-robots

and I was just wondering what kind of economic model could we use if the majority of manual labour were to be mechanised within the next 2 to 3 decades? With my limited knowledge of economics, I believe we need consumers and lots of them for our current capitalist model to work? What happens when a large chunk of those consumers have no jobs?

Without going into the technological aspect too much, just assuming robotics and AI does reach a level where most manual labour is mechanised. Would money become meaningless? In a world where raw materials are extracted by mechanised labour and then processed/manufactured into consumer products by robots, would people be simply given equal allocations to the manufacturing resources available?

Just putting this question out there as I'm really curious how our economies would function in this scenario?

whysomoody

Well there is no arguing that currently technology has greatly enhanced in the last few decades, but the wages rate has risen which implies that the demand for labour is higher than previously.
We would just amend the demands for labour and jobs to suit them.

cavedave

I was just wondering what kind of economic model could we use if the majority of manual labour were to be mechanised within the next 2 to 3 decades?

This has already happened. Agricultural labour has gone from 95% of the people to around 2% in America (it is still more here). In the past there was huge employment in jobs that technology has done way with. Coopering and wheel alignment were two huge industries in the past.

The general argument is that ever since the luddites sabotaged the machines in the factory people have been worried about unemployment and this has not happened yet.

I am not sure I agree with that currently. The aim of society probably should be 100% unemployment. I would love to sit around a pool while a robot butler brought me beer. But I am not sure this will happen. The start of Manna gives a good description of how the benefits of automation could bypass most of us.

I think its worth looking at what jobs are likely to be automated soon. I think driving jobs which are about 5% of the economy will be automated much sooner than people think. Construction today is really odd. Imagine buying a car and different people turning up to in front of your house each day to build it in your driveway. there must be some way to manufacture houses in a factory. But people have been talking about this for decades and it is still not that common. Education seems be be undergoing a robot revolution but that could take a long time to become common.

Sesshoumaru

whysomoody wrote: »

Well there is no arguing that currently technology has greatly enhanced in the last few decades, but the wages rate has risen which implies that the demand for labour is higher than previously.
We would just amend the demands for labour and jobs to suit them.

I was reading on Marshall Brains website that Cavedave linked to. I found these sections interesting:

http://www.marshallbrain.com/robots-in-2015.htm

The rise of the robotic nation will not create new jobs for people -- it will create jobs for robots.
In the past, automation has not had this effect. For example, before there were backhoes there were men with shovels. A backhoe replaced a hundred men with shovels. But new businesses and factories sprang up to manufacture the backhoes, and those companies hired people -- many of them former ditch diggers. All of these new businesses and factories tended to employ many of the workers displaced by technology...

Conventional wisdom says that the economy will respond to all of these unemployed workers by creating new jobs for them. But look at our economy today. For the past 40 years, the economy has been generating millions of low-paying service sector jobs that create a large class of employees known as the working poor. 60% of the American workforce makes less than $14 per hour today [ref]. If the economy is going to be creating millions of high-paying, exciting, fulfilling jobs for all of these displaced workers, it would be doing it now. Why can't all of the Wal-Mart/Target/McDonald's/etc. employees who are going to get displaced in 2015 step into their new, exciting, higher-paying jobs right now, instead of waiting? It's because the economy tends not create jobs like that in any sort of volume.

At this moment, instead of creating exciting new jobs, the economy is locked in a race to the bottom. This race is marked by a workplace that continuously creates lower-paying jobs instead of higher-paying ones...

In the first part of the 20th century, productivity gains translated into higher pay and shorter hours for workers. In today's economy it is just the opposite. Jobs at places like McDonald's and Wal-Mart, as well as places like meat packing plants and factories, get fragmented into components that can be performed by any warm body. "Any warm body" means a minimum wage worker. This is what the race to the bottom is all about -- the de-skilling of the workplace has been a fundamental theme of the American job market for the last century. It allows the easy replacement of low-skill workers (e.g. - turnover in the fast food industry is 300 to 400 percent), which means the lowest wages possible. So the U.S. economy is creating millions of minimum wage jobs, and minimum wage jobs are perfect for replacement by robots. The pace of that replacement will be startling to all of us.

The author is discussing the US, but I don't think it is too much different in Ireland. If low skill jobs are mechanised en masse, I don't see these people being employed in assembly lines building/repairing robots. Those jobs themselves are low skill jobs, perfect for a robot to perform.

cavedave wrote:

I am not sure I agree with that currently. The aim of society probably should be 100% unemployment. I would love to sit around a pool while a robot butler brought me beer. But I am not sure this will happen. The start of Manna gives a good description of how the benefits of automation could bypass most of us.

The first chapter of the Manna essay was a very interesting read. The scariest part was how low tech phase 1 could be. I must set aside some time for the rest, I understand there is second half that deals with a society which deals with the mechanisation of the labour force more successfully. Maybe then I'll have a better idea on what sort of economy we could have in the future.

cavedave

Heres another article on the topic

Today, a Japanese company called Fanuc, Ltd., has industrial robots making other industrial robots in a “lights out” factory. (That’s the somewhat unsettling term for a fully automated production facility where you don’t need lights because you don’t need humans.)

It should be good that we can make a house or a car for a fraction of the current price. And I feel automation in the past always improved worker conditions. Even if this automation does just cause temporary sectoral unemployment given the number of people working in retail, transport, building and other potentially automated industries could lead to very high unemployment for a time.

Bicky

I believe it will go the other way.
I often think that so few people in our society actually Produce anything on a day to day basis. The exodus from agriculture/manual labour to the office was swift and paralleled by exponential population growth. These circumstances are only sustainable as long as we have an attainable source of energy to power the machines and create the fertilisers required for modern high intensity agriculture.
If peak oil is realised we could all be out in the fields again

Sesshoumaru

Bicky wrote: »

I believe it will go the other way.
I often think that so few people in our society actually Produce anything on a day to day basis. The exodus from agriculture/manual labour to the office was swift and paralleled by exponential population growth. These circumstances are only sustainable as long as we have an attainable source of energy to power the machines and create the fertilisers required for modern high intensity agriculture.
If peak oil is realised we could all be out in the fields again

As we've seen through the progress of developing nations like China & India, most people don't want to work in fields. So I wouldn't worry about it as most people in the world would probably be dead after numerous resource wars break out.

But I doubt it will come to that, humans are very resourceful when faced with a challenging situation. Work on projects like ITER will eventually bear fruit.

cavedave

There is an interesting piece here arguing that the current recession may be at least partly made worse by technology, particularly the internet.

An Exodus Recession?

the premise is that because it i essentially free to sit around and debate economics on boards pubs and cinemas have more competition.

The main economist I know of who deals with this problem is Marx. Central to Marxism is that capitalism will eventually having the capital producing everything and removing all benefits (and demand) for/from labour. Could Marx turn out to be right that the end state of capitalism is Marxism and this will happen when costs of items and wages decrease severly?

Hasschu

Developments in the US since the Regan era do not augur well for the working class. Middle class is US speak for working class. The US middle class are dropping into the lower levels of the working class as in skilled labour $60,000 p.a. to Walmart greeter $15,000 p.a.. Manufacturing that old standby for high school graduates has been seriously gutted by cheap imports and the bleeding continues without a tourniquet in sight. The top 1% incomes in the US have a larger share of income than the most greedy and dictatorial kings of a bygone age. All this is happening in the home of the brave and the land of the free where they worship their Constitution and Declaration of Independence.
Ireland has socialized the losses of the upper/ruling class in a similar fashion to the US where big business has bought big government.
There is no doubt in my mind but that Marx was a brilliant and original thinker. Conditions now are not what they were in Marx's day, central governments are much more powerful now. I could see conditions where people take to the street as they do in France, Thailand, Korea and some Latin American countries, governments falling as a result. Fate will unfold as it should, the exact way in which it unfolds will surprise us all.