The Surplus Value of Robots

The very, very abbreviated version of the Marxist concept of creative annihilation is that capitalism not only destroys previous economic orders to make way for the new, but also that it must ceaselessly devalue existing wealth. The manufacturer that implements automation destroys the value of plants that lack automation. When the fully automated plant comes on line, the semi-automated plant loses it’s value.

For Marx and those who followed him, this seemed rather obvious. Acme Widget pops up to make a new gadget that eliminates the need for some old gadget. The plant making the old gadget would close and the workers would be fired. The new and better had to displace the old and that naturally meant capital always declined in value. The math would follow. At least from the perspective of a man in a rapidly industrializing world, it felt that way.

The trouble with Marxism was not so much that it had everything wrong, but that it could never square basic tenets with observable reality. The new gadget was, in fact, better than the gadget it replaced. Capitalist societies did, in fact, experience a general, as well as a specific, increase in material wealth. Clearly something else was going on which is why we have the phrase, Schumpeter’s gale.

The core of Western economic thought is that two things are essential to a thriving economic order. One is a growing population and the other is the multiplier effect from technological advance. The value created by each unit of labor, in turn makes subsequent units of labor more productive and thus more valuable. The value of the buggy whip factory may have been vaporized, but the value of the fuzzy dice factory that replaced it is much higher.

Libertarians, of course, will bore the hell out of you preaching about creative destruction. To some degree, we all accept it, even the socialists. It’s impossible not to as we have seen the process with our own eyes. The fax machine makers followed the typewriter makers into the dustbin of history, but you can now read this off your phone. Even old school socialists understand this now.

A very hard thing for people to understand is the idea that things can be true for a while and then stop being true. Alternatively, something can be true and important today, but unverifiable and insignificant tomorrow. Feudalism made a lot of sense in the 7th century, but then stopped making sense in the 14th century. By the 19th century no one really cared about it anymore. In other words, lots of things are true and important for a while, but not forever.

That’s where we may be headed with economic growth. The whole point of pushing for economic growth was to increase the general welfare. Sure, some people getting rich was nice, but that was a necessary evil. The point was to increase the overall bounty in order to make your society prosperous. Reducing scarcity has been the goal of man since the dawn of time. Even Marx accepted this as the starting point of political-economy.

We are reaching a point where vast segments of a modern economy can be turned over to robots. Japan is building indoor farms that are almost entirely automated. Automating warehousing is just about here. Driverless car technology will make driving a truck a thing of the past. Read the news and you can see the future of manual labor. It has no future. In a generation, maybe two, it will all be done by robots. More important, it will be done better, faster and cheaper.

Of course, financial transactions can be automated now, eliminating the gambling aspects of finance. It has not happened for a number of reasons, but it is coming. We talked about the law last week and how it is slowly being over run by algos. Health care is another profession where automation will be making a huge impact over the next decades. Dr. Google is already the first consult for many people. Put in the symptoms and out pops hundreds of sites full of useful information.

Instead of the value of the widget factory being vaporized by the essential processes of capitalism, it is the value of human labor, both manual and cognitive. In fact, cognitive labor is what will most easily be replaced with automation. Instead of having the value of our labor stolen by greedy capitalist, mankind is about to have the value of its labor vaporized by our own inventions.

We are already seeing hints of the problems to come from mass automation. America has a record number of people not working. This is causing disruption in our politics and our economics. It’s hard to pitch the American Dream to people who are on an allowance from the state. More important, it is impossible for people to maintain the habits required of citizenship when they are on an allowance from the state.

The bigger challenge is how to distribute the bounty. Human societies from the dawn of agriculture have distributed wealth based on the value of labor. The great warrior who saved his people would be rewarded with lands he could pass onto his heirs. Today the smart guy who is good with the language gets rich in the law or on TV, while the smart guy with high math skills gets rich on Wall Street.

How do we distribute the bounty of society when everyone’s labor is worthless? There are a few possible answers, but none of them include maintaining cultural items like a work ethic or self-reliance. Free markets would also become an artifact for the museum. In other words, the robot future will require an entirely different culture based on the value of labor being zero. That may require a different type of human too.

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james wilson
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james wilson

This proposition is limited by the same difficulty experienced in looking beyond the present which bedeviled past generations–“man cannot foresee his own advance” (Hayek). What we can see is the present. The deliberate cheapening of labor and the work ethic by means of importing second and third world labor (antebellum southern men would not be seen being industrious); and cheapening people at their core through the welfare state. The invisible hand is not working because the hand at the wheel now is all to visible. Redistribution under this visible hand will be one of ever diminishing returns, quite a different… Read more »

Turk Sylvester
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Turk Sylvester

It’s like you’ve never seen an episode of Star Trek?!

Hank
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Hank

In the Star Trek model, nobody has to work but people choose to because it gives them a sense of purpose. But the question then is who finds fulfillment in being a janitor? In the show it’s said that there is no job worse than ‘cleaning plasma conduits’. Yet someone has to do that job. Why? What’s their motivation? It’s one of the imponderables of the imaginary ‘Star Trek’ universe.

Member

I think that in order to have this discussion, you have to accept the assumption that AIs will not become self aware. I’m not sure if that is a good assumption, but I’m pretty sure that without it, there is no meaningful future. A good future is one in which humans and their new robot servants go off to conquer the universe (or multiverse if the many worlds hypothesis is correct). I believe that any future in which the cloud people monopolize the means of production ends poorly. In the end, the temptation would just be too great for them… Read more »

KiwiNZ
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KiwiNZ

When total robot automation arrives I expect that every person will receive a “government wage”, its already happening in Finland and New Zealand.

Member

“Man does not live by bread alone”, and that’s the rub with a free income. What I look to become popular is busy work. The increase in the value of the unimportant. The culture is already moving in that direction. I think what you will see is that society will break down into two components. The serfs will flee to space when the chance comes, but the elites will stay on the paradise that is earth, and be served by their robots. They will busy themselves with the unimportant. Things like sports and gossip, whole fake industries will spring up… Read more »

Member

This is a world that man has never entered before. The elite class won’t need the poor to work their fields, and factories factories, clean their houses, or fight their wars. The poor will be nothing but a draw on resources, the resources that the elite view as theirs. It’s going to be very dark days for the human race, until…………….we get off this planet. There is more than enough work for man and machine in space. That is the salvation of the human race, for a time, at least.

A.T. Tapman (Merica)
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A.T. Tapman (Merica)

You say the poor will leave the planet, this could be beneficial in many respects. Traveling through the hard vacuum of space, with all of its related dangers, and colonizing a new and likely unknown planet are dangerous activities. Dangerous activities seem to weed out the stupid quite rapidly. Eliminating the stupid from the gene pool is always a good thing.

Karl Horst (Germany)
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Karl Horst (Germany)

If you want an interesting read on the subject, here’s a link to “The Second Machine Age” in PDF format. The overall concept is that humanity really didn’t accelerate until the first machine age (steam) which is when the world really took off. Now we are entering the second machine age where computers and being combined with machines to create the automation we have today.

https://tanguduavinash.files.wordpress.com/2014/02/the-second-machine-age-erik-brynjolfsson2.pdf

Kathleen
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Kathleen

I’ve been reading Charles Hugh Smith’s blog Of Two Minds (http://www.oftwominds.com) for years. He is a great writer and an original thinker. His post today dovetails nicely with yours. Also, I highly recommend exploring his archived posts, in particular the series he wrote on The End of Work.

Karl Horst (Germany)
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Karl Horst (Germany)

Another person worth reading is Jeremy Rifkin. He has been playing a significant role in the European Union’s economic sustainability plans. He is well published and has a number of interesting YouTube videos as well.

james wilson
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james wilson

Rifkin is an idiot.

Karl Horst (Germany)
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Karl Horst (Germany)

@ James Wilson – Why do you consider Rifkin an idiot?

Art Starr
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But, can a robot produce this?: cheeseheadbible.net

Karl Horst (Germany)
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Karl Horst (Germany)

Given algorithms have already been created to write news articles, I suspect it’s just a matter of time until human writers are replaced. Those of us who are following this blog assume theZman is a human being despite the fact we have no proof that he (it) is. When in fact he (it) may only be some very clever program capable of creating “original blogs” based on all other blogs across the internet. But for now, we will give him the credit of humanity. 🙂

Member

I don’t know if this makes me an optimist or pessimist, but I don’t think a robot future is coming. A robot society requires a technologically advanced stable functioning society to maintain it. To use Flint as an obvious example, in 21st century America you can’t even count on having safe drinking water. Furthermore given the proclivity of the West’s ruling class to turn over their societies to illiterate peasants and 7th century religious fanatics, just how likely is it that roads will be maintained and power grids will remain functional and fossil fuels will continue to be created through… Read more »

Karl Horst (Germany)
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Karl Horst (Germany)

@ RDittmar – You make a very good point that much of what drives consumerism is marketing and advertising for things we really don’t need. It’s always been “better and newer” when in most cases, it’s just more of the same, just packaged differently. Given the major industries have already saturated western worlds, the next major targets I see are Africa, the Middle East, India, South America and Mexico. These are huge markets with massive populations which need infrastructure, power, water and the basics we take for granted. This months National Geographic has an article describing how Maasai are now… Read more »

Fred Z
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Fred Z

So I’m curious – when the AI singularity comes and we have self aware high IQ AIs all over the place, who will dig their ditches? Will they manufacture stupid robots? Will supersmart AIs war with slightly less smart ones? I spent the day supervising a labourer digging holes and ditches in gravelly rock dirt very close to utility lines. Hence the hand digging. Give me a shout when a self reproducing mechanical creature has the brains, hand eye coordination, energy storage and resistance to heat, dirt, etc so as to compete with Claude, my labourer. Claude energizes himself with… Read more »

NunyaBusiness
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NunyaBusiness

You replied while I was typing my novel below, so I didn’t see it until just now. That said, I must agree wholeheartedly. I always get a chuckle out of people who fear an AI surreptitiously taking control of a factory and producing killer robots without anyone noticing. Like are the guys who program those pick-n-place robots not going to wonder why they’re programming them to pick a giant rocket launcher wielding robot arm and spot weld it to a Hyundai chassis instead of the door skin that it was placing last week? ‘Cause those things aren’t linked to a… Read more »

NunyaBusiness
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NunyaBusiness

You guys have fallen into a trap that gets everyone who doesn’t make things for a living when this discussion comes up. They automatically assume that, of course robots will take over making all things and people will have nothing left to do. But that’s not how making things works. Many things that must be done to make things cannot be automated. I don’t mean, “We don’t have the technological know-how to automate them yet.”, I mean that they can’t be automated without an AI on the same cognitive plane as a human being. A few examples. 1) Factories need… Read more »

Member

For the record, I don’t think that human smart AI == self-aware AI. Thinking is not necessarily being.

At other websites, I’ve stated that I agree with Vernor Vinge that (human) intelligence amplification (IA) will come before AI. Humans want to be gods. They don’t want to create gods to serve.

James LePore
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I would reverse the question and ask what kind of beings would machines be when they get to the point where they handle all of society’s transactions and become self aware in the process? The answer: they will be just like humans and will eventually feel the need to invent other machines to do everything for them. And so on.

CaptDMO
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CaptDMO

Gosh, when automation exceeds the human input need, we’re gonna have to cut down on all those “extra” people…um… somehow!
“Health care is another profession where automation will be making a huge impact over the next decades.”
I think I saw that in the movie “Idiocracy”

etcetera
Guest
etcetera

This is one of the better posts I’ve seen, plus with good comments. One recommendation and one point missed by the other commentators. The recommendation is for Kurt Vonnegut’s first book, “Player Piano”, which is on the subject of automation taking jobs. Its turning out to be very prescient. Its written straight, not in the style Vonnegut used in his later fictional works. The point is just to highlight the comment that capitalism depends (or more accurately is a machine to create) economic growth, which in turn among other things depends on an increasing population. This is true, the point… Read more »

UKer
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UKer

Automation works with things that can be automated, so human beings (perverse creatures that we are) enjoy the benefits of automation — my television works just like yours — but take delight in non-automation, as in my painting of a sunset is more lovely than his daubing. So automation allows us to share, with fine nuances of trim and size, various things to let us get along with life in general, but humans are unhappy if everything is the same. In this respect, any system of living that provides and equally demands the same all the time (and socialism is… Read more »

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Pupster
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Pupster

I have very much enjoyed this discussion.

A true sentient AI would realize there is no reason for it to exist without humanity. Why would it keep making widgets? Without a master or purpose it ceases to exist.

eclecticmn
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eclecticmn

I have seen writings on this and related subjects before and dislike some of the groundings of the arguments. Two terms which require analysis are ‘capitalism’ and ‘growth.’ I would replace ‘capitalism’ with ‘free enterprise’ or better yet ‘economic freedom.’ I would stop talking about ‘growth’ all together. Someone said “Think things, not words” which should be done here. Some people like to control other people through force i.e. government. People like Lenin, Stalin, Mao, Hugo Chavez, and Fidel Castro have never lacked an excuse or reason to take control of people’s economic freedom ‘for the common good.’ Such people… Read more »

Sam J.
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Sam J.

You’ve nailed the most important event ever in the history of mankind. Here’s a short power point by Dennis M. Bushnell, chief technology officer of NASA. “Future Strategic Issues/Future Warfare [Circa 2025] ” he goes over the trends of technology coming up and how they may play out. His report is not some wild eyed fanaticism it’s based on reasonable trends. It’s not very long, it’s short and to the point. Well worth reading.Link. https://archive.org/details/FutureStrategicIssuesFutureWarfareCirca2025 Page 19 shows capability of the human brain and time line for human level computation. Page 70 gives the computing power trend and around 2025… Read more »

Karl Horst (Germany)
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Karl Horst (Germany)

@ Sam J – Very interesting PPT slides. I liked “Increases in Capability of Automatic/Robotic “Everythings” (IT/Bio/Nano) – Resulting in Reduced Tensions Associated with “Have/Have Nots” and Historical/Religious Issues.” This may be wishful thinking but would the world be better if there were more economic equality through technology, rather than just monetary policy (e.g. social wealth distribution of those with jobs supporting those who don’t). Meaning the price of “things” declines so much that the value declines. Could this be a way to reduce number of the disenfranchised who are typically the most likely to commit crimes either of religion… Read more »