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One enterprise automating increases its competitive advantage for a while, thus temporarily increasing its profits. However, over time, all enterprises will eit
by lucian1900 5y ago
One enterprise automating increases its competitive advantage for a while, thus temporarily increasing its profits. However, over time, all enterprises will either automate or fail.
Since profits are a portion of the value generated by labour, as the proportion of costs attributed to labour drop, so do profits. There are secondary effects as well, as workers lose their jobs, their wages fall through competition and they can no longer afford to buy the commodities produced.
This phenomenon is well documented historically, as the rate of profit has an overall tendency to drop which is more clearly noticeable after bursts of automation.
https://thenextrecession.wordpress.com/2020/07/25/a-world-rate-of-profit-a-new-approach/ https://thenextrecession.wordpress.com/2020/07/25/a-world-ra...
- anamax 5y ago> Since profits are a portion of the value generated by labour That's simply not true. Profits = revenue - costs. Revenue, what buyers pay, is based on perceived value. That perceived value may come from labor, but it can also come from some mechanical transformation (ie automation). It can even come from something else, such as color. (I'm assuming that red paint costs the same as blue and takes no more labor to apply.)
- robertlagrant 5y agoYou're over-valuing labour. Labour is one thing, but not everything. What you're describing assumes people can't get other jobs, which is not true, and that of competition, which is where multiple parties automate, and so profits decrease (because monopolies are bad).