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Those are reasons not to automate, but they're not arguments against automation. If there is too much automation in an economy (across industries) then there ar

Those are reasons not to automate, but they're not arguments against automation. If there is too much automation in an economy (across industries) then there are fewer people available to buy products that are being made. From a Marxian point of view, purchase of automation machinery is part of the cycle of capital crises, and contributes to the tendency for the rate of profit to fall for the employer of automation, because he extracts less surplus value, as machinery embodies dead labour and only has the running cost of 'replenishing' this labour by replacement of its parts or general maintenace of it, these costs coming out of the surplus value extracted anyway. There's a wonderful little essay by Ernest Mandel on the effects of automation on the amount of wage labour employed in his own time (the 80s), why this occurs, and how capitalism deals with automation versus how a Socialist mode of production might do so: https://www.marxists.org/archive/mandel/1985/xx/future.html https://www.marxists.org/archive/mandel/1985/xx/future.html Edit: a relevant little quote follows. "Japanese socialists [7] have tried to study the effects of new technologies especially on the automobile industry. Also stressing qualitative aspects of the changes (loss of skills, increase in accidents, emergence of new layers of workers and of skills etc.), the authors find a reduction of shop floor workers of around 10% at the most highly ‘robotised’ automobile plant in Japan, Nissan’s Myrayama Plant, between September 1974 and January 1982, accompanied however, by small increases in white-collar personnel. Even the Japanese ‘company unions’ seem worried by these developments, ‘life-long employment’ still the rule in Japan notwithstanding (Japan Economic Journal, February 21, 1984)."

stephengillie 9y ago
Why does this remind me of the famous Henry Ford quote about doubling his employees pay, so they could afford to buy the cars they made?
- ge96 9y ago
  This reminds me of that time I asked in an economics class how you make money. In the case of Ford he pays his workers who turn around and give it back to him? So you need money coming in from external sources right ie. Other countries. What I was asking about is the process of taking something that costs x and charging 3x to make the profit. Where does the 2X come from doesn't that result in debt. I understand you're paying for time that you didn't spend/resources. But it's like swishing water around in a bucket right without external input? Probably a dumb question but also doesn't help my professor barely spoke English and I stuttered over the word "Inevitably" haha
  - tene 9y ago
    I'm not at all an economist, and I expect I'll make some mistakes here, but I can think of two things that might be relevant to your question here. First is https://en.wikipedia.org/wiki/Deflation#Scarcity_of_official_money https://en.wikipedia.org/wiki/Deflation#Scarcity_of_official... which is that as you can produce more value for lower cost, with nothing else compensating, then things become cheaper. It's the value of things that's "made" in Ford's factory, not the money. If, hypothetically, you had a completely fixed money supply, then you wouldn't get money from nowhere; instead the price of everything else in the market just goes down. There are some reasons to not prefer deflation, so to counteract this the government prints more money. For another example (I think?), look at Bitcoin, where there's been massive deflation because the growth in value has far outpaced the rate of new bitcoins added to the economy by mining. I'm less certain about the second thing, but I think that debt (and banks?) increase the (effective?) money supply. If you borrow money from a bank (or debt directly from a company for goods or services) to build a new house, then you've acquired a valuable new asset, the laborers you paid acquired new currency, so the total economy can exceed the number of bills that have been printed and are physically in circulation. There's a lot there that I'm not sure about, and there's plenty of further fascinating questions that follow on from there that I don't know anything about, but I hope that helps you understand some things about how production and the money supply work!
    - varjag 9y ago
      From a bank's perspective, a loan is an investment/asset, so should probably be a part of what is called M2 or M3 money. EDIT: Wikipedia seems to agree: https://en.wikipedia.org/wiki/Money_supply#Fractional-reserve_banking https://en.wikipedia.org/wiki/Money_supply#Fractional-reserv... > Whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of money is created. This new type of money is what makes up the non-M0 components in the M1-M3 statistics.
    - ge96 9y ago
      Is bitcoin undergoing deflation? (asking because I'm not sure) it's going to be worth $5,000 soon it looks like I thought deflation is the opposite of that where there's so much it's worthless. I just assume we get money from other countries. And provided we (people in the US) accept dollars from each other then it keeps going. Yeah it's confusing I'm definitely not an economist myself haha. edit: thanks

stephengillie 9y ago

Why does this remind me of the famous Henry Ford quote about doubling his employees pay, so they could afford to buy the cars they made?

ge96 9y ago
This reminds me of that time I asked in an economics class how you make money. In the case of Ford he pays his workers who turn around and give it back to him? So you need money coming in from external sources right ie. Other countries. What I was asking about is the process of taking something that costs x and charging 3x to make the profit. Where does the 2X come from doesn't that result in debt. I understand you're paying for time that you didn't spend/resources. But it's like swishing water around in a bucket right without external input? Probably a dumb question but also doesn't help my professor barely spoke English and I stuttered over the word "Inevitably" haha
- tene 9y ago
  I'm not at all an economist, and I expect I'll make some mistakes here, but I can think of two things that might be relevant to your question here. First is https://en.wikipedia.org/wiki/Deflation#Scarcity_of_official_money https://en.wikipedia.org/wiki/Deflation#Scarcity_of_official... which is that as you can produce more value for lower cost, with nothing else compensating, then things become cheaper. It's the value of things that's "made" in Ford's factory, not the money. If, hypothetically, you had a completely fixed money supply, then you wouldn't get money from nowhere; instead the price of everything else in the market just goes down. There are some reasons to not prefer deflation, so to counteract this the government prints more money. For another example (I think?), look at Bitcoin, where there's been massive deflation because the growth in value has far outpaced the rate of new bitcoins added to the economy by mining. I'm less certain about the second thing, but I think that debt (and banks?) increase the (effective?) money supply. If you borrow money from a bank (or debt directly from a company for goods or services) to build a new house, then you've acquired a valuable new asset, the laborers you paid acquired new currency, so the total economy can exceed the number of bills that have been printed and are physically in circulation. There's a lot there that I'm not sure about, and there's plenty of further fascinating questions that follow on from there that I don't know anything about, but I hope that helps you understand some things about how production and the money supply work!
  - varjag 9y ago
    From a bank's perspective, a loan is an investment/asset, so should probably be a part of what is called M2 or M3 money. EDIT: Wikipedia seems to agree: https://en.wikipedia.org/wiki/Money_supply#Fractional-reserve_banking https://en.wikipedia.org/wiki/Money_supply#Fractional-reserv... > Whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of money is created. This new type of money is what makes up the non-M0 components in the M1-M3 statistics.
  - ge96 9y ago
    Is bitcoin undergoing deflation? (asking because I'm not sure) it's going to be worth $5,000 soon it looks like I thought deflation is the opposite of that where there's so much it's worthless. I just assume we get money from other countries. And provided we (people in the US) accept dollars from each other then it keeps going. Yeah it's confusing I'm definitely not an economist myself haha. edit: thanks