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

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