Friday, 14 July 2017

O Robot, Where Art Thou?

“The bourgeoisie cannot exist without constantly revolutionizing the instruments of production,” Karl Marx and Friedrich Engels declared in The Communist Manifesto. To Marx, capitalism was oppressive, immiserating and dehumanizing but, in the final analysis, progressive because the technological leaps it entailed paved the way for a rational, socialist society.

Nearly a hundred years later another economist, Joseph Schumpeter, made a very similar point, but this time from a pro-capitalist perspective. He referred to the “gale of creative destruction … that incessantly revolutionizes the economic structure from within, incessantly destroying the old one and incessantly creating a new one”.

The sociologist Randall Collins, whose essay on the cognitively astute robots that will progressively decimate middle class employment I reviewed in part one, relies on the same intuition. Capitalist competition dictates that the replacement of human labour with machines will inexorably go on for the next 20, 100 or theoretically 1,000 years, he claims, unless something extrinsic to the system calls time on capitalist competition.

However, capitalist competition isn’t proving as revolutionary as it’s supposed to be. Were the digital/robot revolution to be merrily scything through the analogue economy, this would show up in soaring productivity figures, which measure output per worker. In reality, productivity in the advanced capitalist countries has rarely been lower. It currents stands at 0.3%, down from the 1% of the pre-crisis years. And nothing like the 5% achieved in the 1960s and early ‘70s. In Britain, productivity fell by 0.5% in the first three months of 2017. And the productivity enigma is not limited to advanced economies – regions like Latin America show similar inertia. The gale of creative destruction has turned into an oppressive stillness.

Equally, unemployment shows scant signs of the robot revolution. If robots were stealing all the jobs, thousands of people would find themselves surplus to requirements. The official unemployment rate is 4.8% in the UK and 4.7% in the US. Assuredly, these figures need to be read in the light of the millions who have given up looking for work or are economically inactive, but they do not appear to mask steadily rising structural unemployment caused by technological displacement.

And the jobs being ‘created’ are not ones entailing the supervision of machines; they are menial. The number of hand car washes in Britain now stands at 20,000 while their mechanised equivalent, the rollover cash wash, has halved in number in ten years. In the words of one commentator, this is “a kind of reverse industrialisation”.

Collins himself notes that the “biggest area of job growth in rich countries has been low-skilled service jobs, where it is cheaper to hire human labour than to automate.” In the US, he says, one of the most impressive employment growth areas is (as of 2013 when he was writing) tattoo parlours.

This is not to claim that new technologies are not being conceived or realised. Most people, by now, have heard of 3-D printing, self-driving cars and nano-technology. But they are not being utilised in the economy. This is not a new development, though perhaps it is new for capitalism. The steam engine was invented during the Roman Empire but was not commercially exploited until the 18th century.

David Graeber attributes part of the reason for technological stagnation to the corporate form. In Marx’s London, says Graeber, scientific and technological innovation was the order of the day because individual capitalists, rather than conglomerates, dominated. But in the 20th century, corporations gradually extended their iron grip and creativity declined.

There is something to be said for this. The point of a corporation is not to encourage competition but stamp it out – to achieve monopoly and restrict entry to the market to other firms. Once market dominance has been achieved, you then aim to maximise take-up of your products (two or three of the same gadget for everyone) and to restrict labour costs (by moving your production to China for example). But technological innovation brought by a rival company breathing down your neck is less desirable.

However, I don’t think this tells the whole story. The really glaring declines in productivity have occurred after the 2008 financial crisis. The official story is that government stepped to make sure credit continued to flow through the system and to set the private economy back on the virtuous path of self-regulation. But in reality what emerged was the simulacrum of a competitive system, and one particularly ill-suited to technological innovation. The priority was to preserve the system, and that overriding aim sacrificed what technological dynamism there was.

It’s undisputed that what characterised the world economic system before 2008 was overwhelming debt – debt miring banks, corporations and subsequently governments, debt asphyxiating consumers as wages failed to grow. But far from falling after the crisis, debt has continued to mount. In 2015 it was revealed that global debt had risen by over 40% since 2008, climbing to $57 trillion. Ultra-low interest rates throughout the world have made that debt manageable (by minimising interest payments) even while it continues to mount.

But this ‘preservationism’ has facilitated the after-life of a growing number of ‘zombie’ companies – firms so much in debt that their income only covers the interest payments they have to make. According to the OECD, across nine European economies (including the UK), between 5 and 20% of the total sum of private capital is sunk in zombie companies. It is estimated that there are between 108,000 and 160,000 such undead companies in the UK. And there are presumably many more near zombies. It no accident that genuine technological innovation is the preserve of a few mega corporations, such as Apple, who are awash with cash. Most companies don’t want to risk investment in untried technology.

This might explain the growth of menial, low paid, temporary work rather than robotic technology. Such work guarantees profit but requires minimal capital investment in new equipment. According to Adair Turner, the former head of the UK’s Low Pay Commission, “there is something about the economy which – left to itself – will proliferate very, very low paid jobs.” But, of course, the economy has not been ‘left to itself’ – its financial system has been subject to a multi-trillion dollar bail-out and central banks across the world are still in the process of ‘tapering down’ a Quantitative Easing programme that has created $12.3 trillion out of thin air.

This economic settlement also indicates that the scenario painted by Randall Collins – one where capitalist competition ordains the rapid robotization of the economy, throwing 50 or 70% of people out of work by mid-century – will take much longer to come to pass, if it does at all. A new and deeper financial crisis will almost certainly get their first.

However, there is, at root, something strange about dreading technological progress – desultory or transformative. Collins’ nightmarish near-future – where a tiny elite owns all the automated businesses and computer equipment and the vast majority of people fight over the scant number of jobs serving them – is peculiar to a very particular kind of social structure. One in which a person’s livelihood is dependent on whether they can make themselves useful to the ‘productive apparatus’. In these circumstances, being displaced by a machine is clearly very threatening.

But automation loses its menace if people’s income is divorced from work; if the income they receive to live on has nothing to do with their ability to sell themselves to an employer, or the capacity of a machine to perform a task more efficiently than a human can. Once this practical and conceptual breakthrough has been made, far from being something to be dreaded, technology acquires a very different complexion. It becomes something to be welcomed.

The thinker who most embodied this leap in understanding was Murray Bookchin. Back in 1965 (its five decades old lineage revealing in itself) he wrote an essay entitled Toward a Liberatory Technology that belied contemporary attitudes of ‘deep pessimism’ and fatalism towards the effects of technology. “After thousands of years of tortuous development,” Bookchin wrote, “the countries of the Western world (and potentially all countries) are confronted by the possibility of a materially abundant, almost workless era in which most of the means of life can be provided by machines.”

The real issue to Bookchin was not whether this technically transformed economy could eliminate repetitive and thankless toil, “but whether it can help to humanize society”. Technology, he claimed, did not have to enslave humanity or result in legions of passive automatons mesmerized by gadgets. It could just easily facilitate a revival of craftsmanship, producing products that people can personalise themselves or freeing them to pursue ‘unproductive’ activities.

But the primary liberatory potential of technology lay in the fact that it could give people the free time and energy to manage society themselves. Past revolutions, such as the French or the Russian, had shown tantalising glimpses of this possibility. The Parisian sections of 1789 or the Petrograd soviets (councils) of 1917 were democratic assemblies which everyone could attend and participate in the hitherto privileged act of ‘policy making’. However, the brute fact that these societies were mired in conditions of material scarcity meant, said Bookchin, that the mass of people had to return to the role of mute wage slaves reproducing the means of subsistence, while “the reins of power fell into the hands of political ‘professionals’”.

Future society – and specifically the robotized society predicted by Collins – has no such restraints. It is only the outcome of a perverse social structure that, in a material environment where robots and computers carry out the vast majority of work, people fight among themselves for the right to serve the elite. Nor is it inevitable that, as Collins predicts, that post-capitalist society oscillates between the bureaucratic oppression of central planning and market capitalism. Fully automated luxury communism can not only facilitate a self-managed society but also satisfy myriad wants far better than the Stalinist planned economies of the post-war years. “From the moment toil is reduced to the barest possible minimum or disappears entirely,” said Bookchin, “the problems of survival pass into the problems of life, and technology itself passes from being the servant of man’s immediate needs to being the partner of his (sic) creativity.”

I think three things are becoming increasingly clear: (i) Automation determined by capitalist competition will magnify current inequalities of wealth and power, leading to a dystopian future (ii) Far from revolutionizing the ‘productive forces’, the corporate, debt-riddled, state-reliant economy that has emerged from the 2008 global financial crisis is proving conspicuously bad at instituting technological innovation, preferring old-fashioned exploitation of human labour, and (iii) A post-capitalist society can choose which technologies to expedite, without any concern about the consequences of throwing people out of work. It can also facilitate enduring democratic self-management for the first time in history. Given (i) and (ii) are not remotely desirable and will likely precipitate huge conflict and war, getting to (iii), however difficult, is the only rational course of action.

Monday, 10 July 2017

Will automation spell doom for capitalism?

Capitalism is doomed and, you’ll be pleased to hear, will go the way of the dinosaurs sooner than you think. That’s the conclusion of one of the essays in the book, Does Capitalism Have a Future? The author, Randall Collins, predicts the demise of capitalism in the next 30 to 50 years. So if you’re 20 now, by the time you hit late middle age you may well be living through a tumultuous, revolutionary period or possibly inhabiting a post-capitalist economic system.

The culprit is not one of the usual suspects – not financialisation leading to deeper and more frequent economic crises or a declining rate of profit – but something simpler and even more inexorable. The force in question is automation and Collins says it will seriously eat into ‘communicative labour’ in the near future – his essay is called, ‘The End of Middle Class Work: No More Escapes’.

Mechanisation – labour-saving innovations that enable businesses to produce more at lower cost and thus reduce the need to employ people – has decimated skilled working class jobs over the past forty years, says Collins. Manufacturing employment in advanced capitalist countries has declined from an average of 40% of the workforce, to just 15%.

The Robots are coming

But mechanisation has now been joined by robotization and computerization, which have the potential to automate away not just repetitive, manual tasks, but cognitive work as well. Thus managerial and professional jobs, the provinces of people who have largely benefitted from the changes of the last 40 years, will start to crumble.

Computerization is still in its youth, says Collins, but as it develops the process of technological displacement of jobs will ‘become more extreme with each passing decade’. In time we will see the arrival of ‘humanoid robots that would take over upper working class and middle class skilled work, and then displace managers and expert professionals as well.”

Such developments will cause structural unemployment of 50% or more. In these circumstances governments will undergo a fiscal crisis (a vanishing number of people will be paying income tax of any significance) and there will be mounting pressure for a ‘revolutionary overturn of the property system.’ A tiny elite of robot owners will receive all the profits ‘leaving the great bulk of the population to scrap among themselves for jobs servicing the elite and their machines.’  This won’t be, in John Major’s immortal phrase, a ‘society at ease with itself’.

Will Basic Income come to the rescue?

The lion’s share of Collins’ essay is concerned with rebutting various escape routes from technological displacement that have worked in the past but aren’t going to in the future. These include the replacement of the lost jobs with new ones in different sectors, globalisation or the endless expansion of education. Interestingly, one escape route that Collins doesn’t consider is Basic Income. But Basic Income is precisely the solution that will be tried in the face of technological onslaught. Indeed, it is being advocated now, and not just by itinerant thinkers but by Silicon Valley overlords.

However, there is one conspicuous obstacle that will dog Basic Income if the robot scenario sketched by Collins comes to pass. To actually ensure that this hi-tech future doesn’t turn into a dystopian nightmare, the basic income would have to get at a far higher level than many currently think feasible.  As Collins says, if middle class jobs going to be lost, then so is the income that goes with them. This implies, if it is going to substitute for the vanished spending power, a basic income ‘max’ set at £25/£30k a year or maybe even more.

But that will mean an increased financial burden on the government at a time when its revenue from income tax is being severely curtailed because all the middle class jobs are disappearing. To make that burden bearable, and to avoid the governmental fiscal crisis that Collins says historically has always presaged revolution, the robot-owning corporations would have to be willing to be subjected to extremely high tax rates. This is still the case even if the governments of the mid-21st century develop the spines so obviously lacking now and close down the zero per cent tax havens that currently harbour $32 trillion.

This is possible; enlightened self-interest may hold sway. But it’s also conceivable that the small number of corporations that lay down the law in this future society (and given the capitalist tendency to monopoly, we can safely assume it will be a few behemoths) may decide that it’s in their financial interest to simply repress, through massive police forces and surveillance, the vast majority of people. 

They will be left, as Collins imagines, to ‘scrap among themselves’ for jobs servicing the elite. And kept in line, should they think of rebelling, by state and private security forces controlled by massive resource-rich corporations. There is no guarantee this option won’t be chosen. You don’t have to look into history for long to find examples of slave states that lasted thousands of years.

But the mere fact that the elite running this future society will have this kind of choice before them indicates, to me, a flaw in basic income scenarios. Basic income is usually conceived as a kind of painless balm that is applied to society in order to stop the disastrous scenarios – of mass destitution caused by the disappearance of well-paid work – that would come to pass if things were left develop freely. That is, basic income, of itself, does nothing about vast inequality of wealth and ownership that exist now and will, if trends continue, become ever more extreme. It merely, hopefully, nullifies their effects.

The mirage of capitalist competition

Collins regards the transition to a non-market based, centrally-planned economy in the mid-21st century as almost dictated by circumstances. Reality will ultimately come to govern whatever wayward desires people have. “All the ethnic, religious, lifestyle and other conflicts will only be so much noise, stringing along the crisis until finally an alignment of mobilized political forces comes about that solves the crisis by post-capitalist transition,” he says.

Short of jettisoning capitalism, this looming confrontation cannot be averted. “There is no intrinsic end to this process of replacing humans with computers and other machines,” Collins writes. “The displacement of human work will go on not just for the next twenty years but the next hundred, even the next thousand years – unless something extrinsic happens to change the underlying mechanism driving technological displacement of work: capitalist competition.”

However, there is one problem with this scenario. Far from steaming ahead, as it theoretically should be, technological advancement is crawling along. Productivity measures output per worker and were automation to be busily rewiring the entire economy, productivity would be shooting ahead – machines (if they are ready to be utilised in the economy) being far more efficient than the average human. In fact the opposite is the case. Productivity growth in advanced economies is currently a risible 0.3% a year, compared to 1% before the 2008 crisis, which in turn pales next to the 5% attained in the 1960s and ‘70s. In the UK, productivity fell by 0.5% in the first three months of 2017. Capital investment, often the precursor to productivity growth, is likewise feeble. It collapsed after 2008 and has been falling steadily for the past three decades in any case.

Which leads to a subversive question – if technological advancement, the hallmark of capitalist competition, isn’t happening, are we actually living in a capitalist economy?

Part two to follow

Tuesday, 6 June 2017

What would a Labour government mean?

There have now been two UK General Election opinion polls which place the Labour party at 40%, with the Conservatives just ahead. Admittedly these are by polling companies which weight more favourably to Labour than others do. It’s quite conceivable that when the election actually occurs in two days’ time, the Conservatives will emerge with a healthy majority. But it’s also possible that by some strange alchemy what was unthinkable a month ago actually comes to pass and the greatest upset in British political history happens.

So it’s worth examining what would be good about an unashamedly social democratic Labour government, where it would likely fail and why, when all is said and done, the mere whiff of a Corbyn-led Labour government is a once in a generation (or maybe once in a lifetime) opportunity that is worth straining every tendon in your body to realise.

What a Labour government would achieve

For more than forty years a seemingly unimpeachable neoliberal dogma has held sway in most corners of the world. That dogma holds that cutting tax rates for corporations and the wealthy will spur investment and economic growth. I call it a dogma for good reason, in that it’s utterly impervious to evidence. Economic growth and rates of investment were far higher the benighted social democratic decades of the 1960s and ‘70s. But the incessant march to cut corporate tax rates has blindly continued. According to the US-based Tax Foundation the worldwide average corporate tax rate declined from 30% in 2003 to 22.5% last year.

There is a flip side to this dogma. Because cutting high end tax rates strangles government revenue and balloons public debt (in the 1980s in America the arch conservative Ronald Reagan doubled public debt), it is usually accompanied by its unloved sibling – austerity. Austerity began in the 1990s under Bill Clinton in the US and was aggressively promoted by international organisations like the OECD and IMF. It was temporarily suspended during the financialised boom years of the early 2000s but returned with avengeance when that all turned to dust after 2008. Austerity was supposed to be a short, sharp shock in Britain but has now become ensconced as a permanent feature of the political landscape.

A Labour government would, for the first time in decades in the West, diverge from this political straitjacket. It would raise corporate tax rates to 26% and hike capital gains tax. It would increase public investment, fund the NHS properly and ditch austerity.

A Corbyn-led Labour government would also abandon the austerity playbook of disciplining those at the bottom of the pile – in the hope that such imposed realism trickles up through the rest of society. A Labour government is committed to ending the work capability assessment and the confetti spraying of benefit sanctions. With one in three workers in Britain suffering precarious employment conditions, it’s possible that a different attitude would take hold – one that doesn’t see workers as mere labour costs, to be treated and disposed of as quarterly profit forecasts dictate.

Where a Labour government might fail

There is however a Keynesian backdrop to Labour’s plans which, in truth, rings hollow. The rise in public investment, funnelled through a National Investment Bank, would substitute for moribund private investment which is at a 50 year low. This kind of public investment would create profit opportunities and lead to increased economic growth, so the thinking goes. Hence tax increases on the wealthy are not simply about fairness and redistribution but would have beneficial and lasting effects on the whole of society.  This is the entrepreneurial state in full bloom.

But if the lure of profit is what drives private investment can the state act as a surrogate when profit-making opportunities are not immediately apparent? Corporate investment is a much larger part of the economy than public investment, and if corporate investment refuses to budge, the state cannot take its place unless the government is willing to countenance a much larger role in the economy. And I don’t see that on Corbyn’s horizon. Hence the question of why private investment is so low needs to be asked.

And timing is crucial. It is nine years since the last recession and many economists warn that another is imminent. According to one non-mainstream economist, Steve Keen, ‘a capitalist economy can no better avoid another financial crisis than a dog can avoid picking up fleas’. If another crash hits, the centrepiece of Labour’s plans – the National Investment Bank – may become swiftly redundant as money is diverted into unemployment benefits and other ‘automatic stabilisers’. Though I would much rather that Corbyn be at the helm in the event of a downturn than the usual suspects. It’s possible, then, that emergency action may be aimed at helping ordinary people, not just banks and major shareholders.

However, despite these caveats, I still think that …

A Labour government now could be a major historical turning point

It’s now close to a decade since the financial crisis – the biggest economic downturn since the Great Depression of the ‘30s – hit. There have been two kinds of elitist political reactions since. One has been to oversee massive intervention in the economy in order to bail out those responsible and protect their financial assets through 12 trillion dollars’ worth of money creation. A race to the bottom has ensued to make sure the ‘wealth creators’ don’t feel scorned. For the vast majority, by contrast, this political dispensation has ordained the pain of austerity and laissez-faire capitalism. The other reaction has been to recognise the huge undercurrent of discontent but displace the wrath onto immigrants, other countries and ‘scroungers’.

Should Corbyn deny the Conservatives a majority on June the 8th, it will be evidence that a palpably different path to those currently on offer has a reservoir of support. The mere fact that 35 or 40% of the public will have knowingly decided they want something different to the prescriptions decreed as inevitable by the mainstream media and governments across the world is something that cannot be erased. 

Corbyn may fail miserably. Or his government may turn out to be a crushing disappointment. Greece happened after all. Few left-wing governments have been successes. But now, of all times, we need to see for ourselves. And once something as disruptive as a Corbyn surge happens to a schlerotic political system such as this one, no matter what transpires subsequently, things never return entirely to the status quo. What happens on Thursday will have ramifications far beyond these shores.

Vote Labour.

Thursday, 11 May 2017

Failing better

In 2013, David Graeber tried to analyse the attitudes of global elites towards the social movements bubbling up beneath them. The first principle was: “under no conditions can alternatives, or anyone proposing alternatives, be seen to experience success,”

It might seem strange to imagine that the social democratic policies of Jeremy Corbyn provoke such fear and loathing, or even that they constitute an ‘alternative’, but I think they do inspire a form of dread.  We all know about his terrible approval ratings but level of vituperation directed at Corbyn from journalists and centrist politicians betrays something else. Such people find his policies – reversing swingeing tax cuts for corporations and the top 5% (partial recompense for the financial asset boosting free lunch known as Quantitative Easing), re-nationalising the railways and not selling arms to repressive regimes  – deeply threatening.

In their eyes, not only must Corbyn not ‘experience success’, he must be seen to fail catastrophically. He – and everything he has come to represent – must crash and burn, so British politics can return to the comfort zone of one centrist neoliberal arguing with a more right-wing neoliberal about how they manage economic decline.

So we must see that he doesn’t.

This is not about Labour winning the General Election. They are almost certain to lose. Opinion polls can be wrong but not that wrong. The one thing that has palpably changed from two years ago is that UKIP voters have migrated to the Tories. Prising that coalition apart in this election, in which Brexit is the dominant issue, is a herculean task.

However, how Labour loses is of vital importance. The party must be able to demonstrate that it is tapping into the enormous discontent and exasperation about the way this country is set up and the direction it is headed. As many have noticed, in polls, Labour is ahead, substantially ahead in fact, of the Tories among the under 40s. These non-middle aged people are feeling the brunt of what is happening in British society – wages falling by over 10% in a decade, unaffordable house prices and the travails of private renting, and a benefits system that represents a punishment, not a welfare, state. Older people, by contrast, are by and large insulated. They often own property and live on generous private pensions which have vanished for people coming after them, and don’t have to work for a living. However, they are much more likely to vote, and the propensity to vote is behind the Conservatives’ huge opinion poll leads.

This would seem to be an intractable problem for the Labour party in the absence of a fresh financial crisis that fundamentally changes the rule of the game. As things stand, all it can do it try to eat in to Tories’ older coalition and launch the mother of all campaigns to get (relatively) younger people to register to vote and actually do so.

Beyond that it can lay claim to the support of the legions of self-employed people and small businesses as opposed to big business. Loyalty to corporations above all else, which miraculously survived the financial crash, was one of the grievous faults of the last Labour government. Policies such as binding arbitration for late payments and the right for workers to buy firms that are sold or floated on the stock exchange need to be brought centre stage. For a party formed as movement of private sector workers, it is utterly inept for Labour to either conflate the interests of owners with employees or retreat into its public sector comfort zone.

If Labour loses the election but does so with an increased share of the vote compared to 2015, there is hope. If it secures the active backing of the pre-middle aged portion of the population, it can plausibly claim to represent the future. But if it crashes catastrophically, the New Labour old guard will ride, however unfairly, on a wave of vindication and Yvette ‘work capability assessment’ Cooper or someone like her will become leader. The robotization of British politics will then be complete. “Ever tried. Ever failed. No matter,” said the playwright Samuel Beckett. “Fail again. Fail better.”