Future Economics that Could Change (Almost) Everything

Over the past two centuries, accelerating technology has given people many more of the goods of commerce than their ancestors enjoyed. There is more technology in the pipeline, so barring interruptions this trend seems likely to continue. However, in this article, I conjecture that technology’s economic implications are due for a rough change. I conjecture that we will continue to develop more and better goods, but that the productivity of most (but not all) of humanity is about to plummet ¹ because those creatures of ridicule, the Luddites, will turn out to be right after all.

The Luddites, named after Ned Ludd, were members of an early labor movement in England who were concerned about loss of jobs due to the introduction, at the beginning of the Industrial Revolution, of machines that could spin thread and weave cloth. ² The Luddites have become a textbook case of fallacy ³ because for many years, teaming human workers with machines has increased job opportunities and raised salaries rather than the other way around. Some people were hurt by the introduction of power looms—those who were unable to transition to better jobs. However, the net effect was an increase in productivity that resulted in more for almost everybody, and because of that “more for everybody,” most displaced workers have been able to move on to other jobs for which humans were better suited, and salaries have increased because there was more to go around.

Although the Luddites’ concerns may have been premature, they may soon lose their status as fallacy. If machines become better than humans at almost everything, there will remain fewer and fewer jobs that require a human presence. It is hard to see how there will be enough jobs to employ the entire world population, which now exceeds seven billion.^4,5

The Luddites were wrong for two hundred years because there were always enough types of work that machines could not do to employ most willing workers. For this to be no longer true, it is not necessary that machines surpass us in everything, only in almost everything. Some argue that there are many jobs that machines will never do. They may be right about a few. ⁶ However, many jobs long considered to be impossible for machines may prove otherwise. Some industrial robots can already recognize and manipulate objects based on their characteristics and position. ⁷ It seems likely that machines with really good perception, a good model of the physics of the world, and a gentle touch could fold clothes, put away dishes, change diapers, and apply bandages. ⁸ Truly intelligent machines could also do intellectual work. For example, IBM is applying the technology in Watson, the machine that defeated human champions at Jeopardy, to analyze human diseases and advise human doctors. ⁹ Intellectual work could include fixing, designing, and building other machines. For example integrated circuit chip design is already done largely by computers. ¹⁰ As consumers, we are often disappointed when we reach a machine on the telephone, but as machines become smarter, we may soon be disappointed when we reach a human who speaks with an unfamiliar accent or is less likely to have the right answer.

To supplant humans, machine costs need only be less than the living human wage for the human who does the same work, or indeed machine costs can be more than that and still replace workers if the workers are paid more than the minimum. The national minimum wage in the United States (currently $7.25 per hour, or roughly $14,000 per year for one shift) is already more that the average yearly cost of buying and operating fairly smart machines. Computers are available for a few hundred dollars. The Baxter robot, illustrated in two of the videos referenced in Note 7, sells for $22,000 ¹¹ and should be able to work more or less 24/7 for several years.

Yet, machines that can do almost everything better than humans are not necessarily a tragedy. IBM used to have the slogan, “Machines should work. People should think.” All we have to do is to tweak that last word: “Machines should work. People should play.” This is no tragedy so long as most humans can retire to do better things and let machines do the work that humans no longer want to do. It is especially not a tragedy if the word “play” is redefined to include the activity of fitting things and situations to human purposes, an activity we should be able to do better than robots because it requires human purposes. However, to do this, it will be necessary to fundamentally alter the global economic system, and we will need to come up with new standards for judging excellence in human achievement.

Richard Nixon had an answer for the economic system. He proposed a negative income tax to give a living income to those who could not find jobs.^12,13 Some might find this a departure from capitalism. Stipulating that capitalism has been a great economic engine, I believe in capitalism for socialistic reasons, that is, because a great economic engine is the best way to meet the needs of ordinary people. If capitalism no longer provides for ordinary people, it loses much of its justification. Perhaps, to keep people from starving, humanity will need the inefficiency of socialism to provide make-work jobs. But make-work is no fun. Another option is stock ownership, which could solve this problem and still retain a capitalist flavor.

The present generation inherited the modern world based on the inventions of our ancestors. A capitalist-flavored solution might be to issue each citizen an inalienable share of stock based on their fair share of the productivity bequeathed by our ancestors, a share that pays a dividend on which a prudent citizen can live. Those who wish to contribute more and earn more could do so by discovering and exploiting the creative interstices where humans can still contribute more than machines. Such interstices do and will continue to exist.

A current example is music, an area where machines can already provide most of what we want better than humans. Today, anyone who wants music can tune to a radio station, or play a CD or an MP3. The music they will hear has (usually) been created and recorded by humans, but it requires very little more human effort for a billion people rather than one or a hundred to listen to it. In the language of economics, the marginal cost—that is, the cost of an extra listener, the cost that mainly determines the value of things—is close to zero. There are distribution costs, but for radio and for MP3s, these costs are very low. Popular music available from machines was recorded by the best human musicians and therefore sounds better technically than the music produced by the vast majority of human musicians who are not the best in the world. However, live musicians of average skill and even disk jockeys playing recorded music still add something to a performance and are still in demand. A person choosing what type of music to play, and the special quality added to music by human performers—particularly in live settings—enhances listeners’ enjoyment, and intensifies their reactions to the feeling of the music and to the significance of its performance on this occasion. However, it seems unlikely that things like performing live music in competition with recordings can support seven billion humans. ⁵

If only a little human work is needed, it might be done by volunteers. The hacker ethic shows how this might work. I mean good hackers—the ones who create open-source software. Open-source-software creators are generally paid nothing for their work except in the form of prestige and/or the satisfaction of having created something that is neat, well made, and useful—in the best case useful to many people. Another example of people who work for free is those who serve in voluntary organizations that cannot afford to pay salaries.

Still, there will be some jobs, even in a robot economy, that could pay a living wage, or even a sultan’s salary. However smart robots may become, we will still want real humans in leadership positions to represent human desires, and we will be willing to pay them when those positions are important. Real sports are human sports, so folks like Babe Ruth will still have jobs in the human leagues, the only leagues that really count. ¹⁴ Or consider acting—There are already CGI (computer-generated image) movie stars, for example, Shrek and Buzz Lightyear. CGI can be expected to become more realistic, but the knowledge that real humans were employed provides a better sense of reality—even in the case of Shrek, voiced by Mike Myers, and Buzz, voiced by Tim Allen.

However, it seems unlikely that all of humanity can become stars of music, politics, sports, movies, or commerce. Still, they might become the stars of their own lives. Everyone cannot be Babe Ruth, but everyone who is not physically limited can play baseball on a local sandlot. Even if physically limited, there are similar adaptive games. Great teachers of the past—Jesus, Socrates, Gandhi—taught us how to be human. Even given computers with great wisdom, we will need humans to show us how to use that wisdom in a human way. Great teachers do their work through great students. There is room for an unlimited number of those.

The economic issue is how to justify a living wage for all of this. Justifying and financing a lifelong salary, stipend, or dividend may be just the thing that society must do to make this vision work. At the level of society as a whole, financing all of this should be achievable because we will have the fruits of a greatly expanded productivity with which to work.

The picture of humanity retiring to do better things seems attractive. However, the transition will be rough. Old ways die hard. Some conservatives will no doubt demand that people work for a living even when that becomes impossible for most. Arrangements that work for a small percentage who are unemployed may need to be adjusted as that percentage increases. New ways of distributing benefits will disadvantage those with hereditary wealth and status who would rather retain their existing benefits. Financing benefits for the unemployed will require unpopular arrangements, like taxes. It may help that in the long run, those who pay taxes will be better off. There is more profit in a world of happy consumers than in a world of starving rebels. ¹⁵

If we do not provide a living wage, many may be forced to pursue suboptimal strategies, scratching out a bare living from meager ground because they have no money to buy the output from massive machines that are thousands of times more efficient. A few may prefer this lifestyle, but I conjecture that most will not. It will require the advocacy of creative futurists to invent the new social arrangements, new social ethics, and new human goals that will be needed to let us take the fullest advantage of the potential new possibilities.¹⁶

It would be nice to get this right. The future may bring surprises. As a minor example, imagine enormously creative robots unable to apply their creativity because they stay busy spinning their wheels generating enormously complex intellectual property claims for their own innovations, claims that hamstring the billions of other robots that might easily generate but cannot use the same “proprietary” ideas. To prevent this, we may want to tweak the intellectual property laws. Achieving this vision will require a bunch of tweaks, more work for insightful futurists and creative citizens.

If we get this right, the Luddite fear of machines may remain a fallacy.