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I'd like to offer some quotes from the book "Economics in one lesson", a book from the 40s that is still very relevant today. Specifically, from the chapter cal

I'd like to offer some quotes from the book "Economics in one lesson", a book from the 40s that is still very relevant today. Specifically, from the chapter called "The curse of machinery": Among the most viable of all economic delusions is the belief that machines on net balance create unemployment. Let us turn to Adam Smith’s Wealth of Nations. The first chapter [...] is called “Of the division of labor,” and on the second page of this first chapter the author tells us that a workman unacquainted with the use of machinery employed in pin-making “could scarce make one pin a day, and certainly not twenty,” but with the use of this machinery he can make 4,800 pins a day. In the pin-making industry there was already, if machines merely throw men out of jobs, 99.98 percent unemployment. Arkwright invented his cotton-spinning machinery in 1760. At the time it was estimated that there were in England 5,200 spinners using spinning wheels, and 2,700 weavers - in all 7,900 persons engaged in the production of cotton textiles. The introduction of Arkwright’s invention was opposed on the ground that it threatened the livelihood of the workers, and the opposition had to be put down by force. Yet in 1787 [...] the number of persons actually involved in the spinning and weaving of cotton had risen from 7,900 to 320,000, an increase of 4,400 percent. [...] Technophobes will assert: “That may have been all very well in the past, but today conditions are fundamentally different; and now we simply cannot afford to develop any more labor-saving machines.” If it were indeed true that the introduction of labor-saving machinery is a cause of constantly mounting unemployment and misery, the logical conclusion to be drawn would be revolutionary, not only in the technical field but for our whole concept of civilization. Not only should we have to regard all further technical progress as a calamity; we should have to regard all past technical progress with equal horror. There is also an absolute sense in which machines may be said to have enormously increased the number of jobs. The population of the world today is four times as great as in the middle of the 18th century, before the Industrial Revolution had got well under way. Machines may be said to have given birth to this increased population; for without the machines, the world would not have been able to support it. Three out of every four of us, therefore, may be said to owe not only our jobs but our very lives to the machines.

mandem 10y ago
Greater abundance devalues the relative productivity of labour to machinery. But in the contemporary case, there is not enough demand (ie. low/no economic/population growth in the rich world) to valorise the greater abundance, hence the relative devaluation of labour is to a much greater extent. In the same way that computers can beat the best human chess and go players, machines are beating a large (and ever increasing) proportion of human labour. This is lost ground. We will end up doing labour for 'fun' (ie. non-economic ends) since we cannot compete on economic grounds.
- andrenth 10y ago
  But in the contemporary case, there is not enough demand This is a strong assertion to be made, especially in general like that. There is not enough demand of what, specifically? I agree that current interventionist economic policies are restricting growth, but to conclude from this that "there's not enough demand" is incorrect in my opinion. machines are beating a large (and ever increasing) proportion of human labour Just like the cotton-spinning machinery did in the past. We could not compete with it either, and yet the result has been more productivity, hence more jobs, better wages and the ability to support a larger world population. I think a big part of this misunderstanding comes from the idea that we are competing with the machines when we are in fact making use of them.
js8 10y ago
This is a pretty good theory but it lies on certain implicit assumptions that are becoming untrue. One is that there is abundance of energy and resources to exploit, so there is always more to be done (demand for labor) to transform it. But with automatization, we are coming to a state where limitation of economic activity is not labor, but resource consumption (mainly energy). Also, what is the definition of job? But what the people worrying about automation are saying, there will not be more jobs that satisfy both of these conditions: (1) Economic efficiency - the job is required to sustain the same level of production. (2) Sustenance - the job must be capable to give person doing it enough money so he can live on it and participate in society. For instance, we can always create jobs that break the condition (1), because we can always have more people being security guards or checking expense reports. Or we can always create jobs that break the condition (2), you know, you can always be a personal servant to somebody for really miserable pay. I would actually argue that we are well past the point where (1) is true. But since our societies are so obsessed with jobs, we cannot really openly admit it.
- andrenth 10y ago
  I'm not sure if I understood your points correctly. There is always more to be done. There is not a fixed set of things humanity needs that will one day be fulfilled. We didn't know we wanted cars, computers and smartphones until they were invented. This is regardless of scarcity, possibly even because of it (scarcity of resources will drive the need to be more efficient handling them). I also don't understand your two points since (1) automation increases efficiency and thus production levels and (2) as a result of that increased productivity, there is a raise in wages.
  - AstralStorm 10y ago
    The part you're missing is that a higher wage is given to one person rather than many people, that you need capital to produce (hey, we need more chips, so now everyone with a hammer makes one). Can you actually make a car? How many people are involved in making a Honda Civic vs Ford Model T?
    - 10y ago

mandem 10y ago

Greater abundance devalues the relative productivity of labour to machinery. But in the contemporary case, there is not enough demand (ie. low/no economic/population growth in the rich world) to valorise the greater abundance, hence the relative devaluation of labour is to a much greater extent. In the same way that computers can beat the best human chess and go players, machines are beating a large (and ever increasing) proportion of human labour. This is lost ground. We will end up doing labour for 'fun' (ie. non-economic ends) since we cannot compete on economic grounds.

andrenth 10y ago
But in the contemporary case, there is not enough demand This is a strong assertion to be made, especially in general like that. There is not enough demand of what, specifically? I agree that current interventionist economic policies are restricting growth, but to conclude from this that "there's not enough demand" is incorrect in my opinion. machines are beating a large (and ever increasing) proportion of human labour Just like the cotton-spinning machinery did in the past. We could not compete with it either, and yet the result has been more productivity, hence more jobs, better wages and the ability to support a larger world population. I think a big part of this misunderstanding comes from the idea that we are competing with the machines when we are in fact making use of them.

js8 10y ago

This is a pretty good theory but it lies on certain implicit assumptions that are becoming untrue. One is that there is abundance of energy and resources to exploit, so there is always more to be done (demand for labor) to transform it. But with automatization, we are coming to a state where limitation of economic activity is not labor, but resource consumption (mainly energy). Also, what is the definition of job? But what the people worrying about automation are saying, there will not be more jobs that satisfy both of these conditions: (1) Economic efficiency - the job is required to sustain the same level of production. (2) Sustenance - the job must be capable to give person doing it enough money so he can live on it and participate in society. For instance, we can always create jobs that break the condition (1), because we can always have more people being security guards or checking expense reports. Or we can always create jobs that break the condition (2), you know, you can always be a personal servant to somebody for really miserable pay. I would actually argue that we are well past the point where (1) is true. But since our societies are so obsessed with jobs, we cannot really openly admit it.

andrenth 10y ago
I'm not sure if I understood your points correctly. There is always more to be done. There is not a fixed set of things humanity needs that will one day be fulfilled. We didn't know we wanted cars, computers and smartphones until they were invented. This is regardless of scarcity, possibly even because of it (scarcity of resources will drive the need to be more efficient handling them). I also don't understand your two points since (1) automation increases efficiency and thus production levels and (2) as a result of that increased productivity, there is a raise in wages.
- AstralStorm 10y ago
  The part you're missing is that a higher wage is given to one person rather than many people, that you need capital to produce (hey, we need more chips, so now everyone with a hammer makes one). Can you actually make a car? How many people are involved in making a Honda Civic vs Ford Model T?
  - 10y ago