Thursday, 9 August 2012

Robots, tech advances, evolution and economics

Lets construct a thought experiment of a world where 99% of the labour force is unemployed due to advances in digital technology (driverless cars, robots etc etc).

This leaves about 99% (lets assume) capable, reasonable people with no buying power because there is no need for them in the production cycle, thus they have no pay, no money. Hey - they are 'nice' people.

Is there an economic process that works in a practical sense to solve this conundrum?

Yes -or I would not be writing this!

In this hypothetical scenario, as I said above, there are no employees in automated factories and since every step is automated there are no production costs (even maintenance, raw materials, mining, farming, delivery etc are all automated). All production is FREE - robots can do it all - nearly.

In this scenario it may appear that production output could be simply given to human consumers? Would not work. This would prevent Adam Smith's invisible hand from inventing new and improving old products - the human consumer would have no feedback to determine the products he/she receives. It would not work well, if at all. Somehow, the consumer needs to feedback desires into the production system. But how? He/she has no money because they are unemployed.

A human consumer must BUY the products and a human producer (owner) must RECEIVE the incomes.
Both of them will then try to maximize their incomes - that's how we rather pathetic critters work - it evolution.

It is the humans that need to drive the creative process because machines do not have desires or 'wants' and thus cannot (as yet) drive the evolutionary processes forward. Desires and wants drive processes on.

Thus its the consumer who has no income that MUST buy products (not simply be given them) - that is the feedback mechanism to human producers who must 'want' money. Its then the good-old win-win situation. The consumer gets to choose the best product and the producer gets the income from the consumers' spending. We know that works with a bit of regulation and law.

But Consumers Have No Money?
Easy - give them money so they can work hard CHOOSING the best products. Not infinite money because then they would not care what they bought. Limited money.

A National Bank uses QE directly to finance consumers, at a fixed annual rate, who then buy products and services.

Inflation would not occur, if carefully implemented, because although the QE increases the money supply, the buying power of consumers would increase real assets proportionately.

You add more details to this theory (I cannot be nbothered to get all the annoying details correct because I AM UNPAID a helloooo).

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