But what if capitalists DON'T want a large labour supply? What if automation means that what capitalists really want is a very small, highly skilled workforce to control the robots that do all the work? What if paying people enough to live on simply is not cost-effective compared to the running costs of robots? In short, what if the costs of automated production fall to virtually zero?
I don't think I am dreaming this. I've noted previously that forcing down labour costs is one of the ways in which firms avoid the up-front costs of automation. But as automation becomes cheaper, and the efficiency gains from automation become larger, we may reach a situation where employing the majority of people at wages on which they can afford to live simply is not worthwhile. Robots can produce far more for far less.
This creates an interesting problem. The efficiency gains from automating production tend to create an abundance of products, which forces down prices. This sounds like a good thing: if goods and services are cheap and abundant, people can have whatever they want, can't they? Well, not if they are unemployed and have no unearned income. It is all too easy to foresee a nightmare future in which people who have been supplanted by robots scratch out a living from subsistence farming on motorway verges (all other land being farmed by robots), while lorries carrying products they cannot afford to buy flash past on the way to the stores that only those lucky enough to have jobs frequent.
But it wouldn't actually be like that. If only a small number of people can afford to buy the products produced by all these robots, then unless there is a vibrant export market for those products - which requires the majority of people in other countries to be doing rather better than merely surviving on a basic subsistence income - producers have a real problem. They would normally expect increasing efficiencies of production to push up profits, either because demand for products would be sufficient to maintain prices while production costs are falling, or because lower production costs feeding through into lower prices gave them a competitive advantage. But the efficiencies of production created by automating - including, eventually, the low-skill jobs that at the moment are too expensive to automate - may actually result in the destruction of profits. The fact is that robots are brilliant at supply, but they don't create demand. Only humans create demand - and if the majority of humans are so poor that they can only afford basic essentials, the economy will be constrained by lack of demand, not lack of supply. There would be no scarcity of products, at least to start with....but there would be scarcity of the means to obtain them.
by Frances Coppola, Pieria | Read more:
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