Is technological advancement ultimately compatible with capitalism?

[luiz]

These articles may be, but then are yours any better? In particular I would point out that your chosen field of experts ("[people] with an education in economics") have a spectacularly bad record when it comes to making predictions (cf. real science).

If you really want A reason why this time it is different (TM) then never before has technology threatened the roles of the most educated in society, whereas nowadays AI frequently beats doctors at major parts of their job (link in OP and also one I really like, AI correct 87% at brain tumors and 83% at predicting brain hematoma expansion, vs. 66% and 63% by a team of 15 senor doctors. http://www.xinhuanet.com/english/2018-06/30/c_137292451.htm). This seems catagorically different from the agricultural and industrial addvances we have seen before. Computers, potentially tied to robots, have the potential of doing just about anything a human can do and much more. This has not been the case before.

That's not strictly true, though. Many educated jobs were also killed by technology. Remember the flight engineers that used to be on commercial planes?

 

[luiz]

Big picture, the economists are right. These exact complaints were made as machines could do the work of dozens or even hundreds of human workers were invented and used in production. Other things for people to do kept coming up, though.

The problem is that this process created serious social dislocation. And the economists gloss over all this with the phrase "in the long run." As far as they're concerned the English people smashing the machines were just idiots living in the past. Which goes to show that the lessons haven't been learned. And any economist saying automation isn't anything to worry about should be ignored.

Now, the reddit thread cutlass posted doesn't exactly say it's nothing to worry about, but I think it seriously downplays the concerns.

This is also true. On the long term, and in average, technology progress will be a net positive and won't cause more unemployment.

It's the same with free trade, or immigration for that matter: on the long term and in average it's very hard to argue that they're not a net positive (except in some specific cases like mass migration of very poor people to a country with a very generous welfare system). But we cannot ignore that on the short and medium terms there are also negative consequences, there are winners and losers and people who might lose a lot. This needs to be taken into consideration too.

 

[AmazonQueen]

Capitalism requires consumption as much as it needs productivity, so surely capitalism will find ways to allow people to continue consuming. Either by creating new kinds of jobs, or by creating a welfare paradise.

Those articles are pie in the sky. They aren't analyzing things for which they have evidence. They are assuming things to be true based on the priors of the people writing or interviewed for them. Technology has always displaced labor. And labor has always found different jobs.

The fundamental difference now is that the better jobs are requiring more and better education. And the government is increasingly making certain that that education is unavailable. So what we see is not that jobs won't exist, but that many people may not, for the reason of a policy choice, be ready for them.

In my experience the worse jobs are now requiring more and more education. Executive Officer in the Civil Service used to be a typical A-Level job after leaving school, now you're unlikely to get the same job without a degree. When I was working in a call centre maybe 20-25% of the people there had degrees. 2 of the people I trained with had engineering degrees. This summer I saw an advert for graduates looking to work as teaching assistants. Just as many jobs for college dropouts as before. Still need delivery drivers, fast food restaurant staff, cleaners etc.

The best jobs are still there and likely to be for the forseeable future but the middle ground is disappearing. Manufacturing has gone overseas or been largely automated. Automation and online are cutting a swathe of retail jobs. Computerisation has wiped out a lot of clerical and secretarial jobs. Its coming for the accountants next. A lot of their work doesn't require high intelligence, just accuracy and attention to detail, and a computer will always do that better than a human.

 

[Narz]

This is also true. On the long term, and in average, technology progress will be a net positive and won't cause more unemployment.

It's the same with free trade, or immigration for that matter: on the long term and in average it's very hard to argue that they're not a net positive (except in some specific cases like mass migration of very poor people to a country with a very generous welfare system)

What gives you your supreme confidence in this matter?

 

[luiz]

What gives you your supreme confidence in this matter?

Human nature, logic...

As I said, the nature of employment might change. But at the end of the day humans have ever evolving needs, so the notion that technology will at some stage "provide for every need" and make all work (broadly defined) obsolete is silly. I mean, what we consider as basic needs today are orders of magnitude more than what a medieval peasant would.

Technology will continue to empower us to do more, and thus we will have even greater "wants", and people will need to work in order to deliver on those wants.

Work, as in doing stuff to get some other stuff, won't disappear as long as we are human.

 

[stinkubus]

Well first off I don't trust economists, can you give me good reason I should? What has been their greatest success? Second, there seems to be a difference of opinion with people more closely linked to the actual technology development http://www.pewinternet.org/files/2014/08/Future-of-AI-Robotics-and-Jobs.pdf, for the moment I will weight their view higher (I have absolutely no expertise in either area and am completely open to either view).

Keynes' General Theory and Friedman's A Monetary History of the United States are the profession's greatest success stories. The understanding gained from these two works has led to significant mitigation of the effects of the business cycle for those who are lucky enough to live in first world nations.

In the event technology increases the efficiency of capital/decreases the efficiency of labor the government steps in to fill the void with fiscal stimulus. On the monetary front we now understand that bank failures create a viscous cycle which left unchecked result in economic calamity and that market "discipline" is in fact the worst means of curbing the excesses of the financial services industries.

To answer the question posed by the OP: most economic models treat technological advancement as an exogenous variable. This means it is determined independent of the economic system in place. Technological advancement is therefore considered "compatible" with laissez-faire to full blow Marxism and everything between.

The only real question becomes what to do about the structural problem of those who are either temporarily or permanently put out of work by such advances. The short answer is "give them money".

 

[Lexicus]

Friedman's A Monetary History of the United States

Am flabbergasted that you included this is one of economics' two "success stories" when almost every word in this book is wrong.

 

[SS-18 ICBM]

I think the dislocation from this at least has the potential to be worse than that associated with the shift from a rural to an urban civilization.

Is that even finished yet? I remember reading about urbanization percentages are still bound to increase in the next few decades and we still seem to be grappling with the consequences of dying rural economies.

Capitalism requires consumption as much as it needs productivity, so surely capitalism will find ways to allow people to continue consuming. Either by creating new kinds of jobs, or by creating a welfare paradise.

Or the it could be the automatons owned by other rich people doing the consumption.

 

[Lexicus]

Is that even finished yet? I remember reading about urbanization percentages are still bound to increase in the next few decades and we still seem to be grappling with the consequences of dying rural economies.

Well, globally it is not but in the "advanced" economies tiny percentages of the population are engaged in agriculture and majority of the population lives in cities, so yes.

 

[stinkubus]

Am flabbergasted that you included this is one of economics' two "success stories" when almost every word in this book is wrong.

The durable lesson was "don't let the banking system collapse." Friedman's academic work was mostly at odds with the garbage he spewed in his second career as a right wing ideologue.

 

[luiz]

Am flabbergasted that you included this is one of economics' two "success stories" when almost every word in this book is wrong.

What was so wrong in that book?

 

[Birdjaguar]

Being a Fortnite tutor is a job now.

 

[miaasma]

capitalism isn't really compatible with anything except for widespread human suffering

 

[Lexicus]

The durable lesson was "don't let the banking system collapse." Friedman's academic work was mostly at odds with the garbage he spewed in his second career as a right wing ideologue.

Well, "don't let the banking system collapse" was a 'durable lesson' that was learned in the 1930s, it wasn't like no one realized that before he published that book.

The important point here is that Monetarist theory is all wrong - central banks don't actually control the money supply!

 

[stinkubus]

Well, "don't let the banking system collapse" was a 'durable lesson' that was learned in the 1930s, it wasn't like no one realized that before he published that book.

The important point here is that Monetarist theory is all wrong - central banks don't actually control the money supply!

Given the bank regulation that has been going on in our lifetimes I'd say the lesson wasn't internalized quite as well as you think.

Central banks can't control the supply of money in the sense that they can manipulate the precise quantity in circulation, but they most certainly can prevent contraction of the money supply and set upper bounds on its growth.

 

[Lexicus]

Given the bank regulation that has been going on in our lifetimes I'd say the lesson wasn't internalized quite as well as you think.

The book gave a fairly large boost to the deregulators because the main thrust of its argument is that the Fed, not the private banking system, was responsible for the Depression. The essence of monetarist theory is that unregulated markets generate stable prices, and that it's only interventions by ("well-meaning", some of them generously concede) governments that distort prices by increasing the money supply too fast and lead to inflation.

This picture is totally, disastrously, absolutely wrong.

Central banks can't control the supply of money in the sense that they can manipulate the precise quantity in circulation, but they most certainly can prevent contraction of the money supply and set upper bounds on its growth.

This is true; they can indirectly control the money supply by acting as the lender of last resort and by controlling some of the conditions under which banks lend money. But monetarists mostly don't want them to do this.

 

[Hygro]

Capitalism is the first system to maintain progressive and steady tech growth so while I don't know about "ultimately" like there might need be some transition, it's certainly the most compatible system already-proven to date.

This is also true. On the long term, and in average, technology progress will be a net positive and won't cause more unemployment.

As long as human wants are unlimited in either direction (more/bigger and precise/better) and we have a money economy then technology will have nothing to do with long term employment levels because employment is a function of money and wants.

 

[luiz]

As long as human wants are unlimited in either direction (more/bigger and precise/better) and we have a money economy then technology will have nothing to do with long term employment levels because employment is a function of money and wants.

Yeah. That's why I said won't cause more unemployment, not will reduce unemployment

I agree with your take.

 

[Birdjaguar]

capitalism isn't really compatible with anything except for widespread human suffering

Yes, the world was a paradise of human joy prior to the evil ways of capitalism. Greed didn't exist and charity was the world's watchword.

 

[miaasma]

Yes, the world was a paradise of human joy prior to the evil ways of capitalism. Greed didn't exist and charity was the world's watchword.

what a wonderfully lazy extrapolation