The effect of automation is to lessen the need for human engagement in producing something. But automation isn’t free. There is sometimes a decision to invest in a new machine or another employee. Machines are a form of capital. As you own more capital in the form of machines, you have an edge over someone who doesn’t. In the capitalist model, advantages must be exploited as much as possible to remain competitive.
In our society, the difficulty seems to be how to address the problem that less human effort is required. According to supply and demand, this means human labor becomes increasingly worthless because there is so much available. If across the board tremendous scientific breakthroughs resulted in reducing the requirement for human labor by half, in most economies this would result in severe unemployment. While theoretically we could arrange for everyone to work 20 hours instead of 40, what tends to happen is a further stretch of the supply and demand curve. Human labor becomes increasingly worthless, which means those who don’t have investments in capital must be willing to settle for less.
I have not seen an economic system that gracefully handles automation yet, because most people’s compensation is based on effort (time), rather than productivity. Our worst nightmare would be complete automation. Then everyone would starve unless we had an economic system that addressed gains in productivity effectively. Obviously we should all benefit from technology. What surprises me is that we can come up with systems that work so poorly that they are harmed by increases in efficiency.
The effect of automation is to lessen the need for human engagement in producing something. But automation isn’t free. There is sometimes a decision to invest in a new machine or another employee. Machines are a form of capital. As you own more capital in the form of machines, you have an edge over someone who doesn’t. In the capitalist model, advantages must be exploited as much as possible to remain competitive.
In our society, the difficulty seems to be how to address the problem that less human effort is required. According to supply and demand, this means human labor becomes increasingly worthless because there is so much available. If across the board tremendous scientific breakthroughs resulted in reducing the requirement for human labor by half, in most economies this would result in severe unemployment. While theoretically we could arrange for everyone to work 20 hours instead of 40, what tends to happen is a further stretch of the supply and demand curve. Human labor becomes increasingly worthless, which means those who don’t have investments in capital must be willing to settle for less.
I have not seen an economic system that gracefully handles automation yet, because most people’s compensation is based on effort (time), rather than productivity. Our worst nightmare would be complete automation. Then everyone would starve unless we had an economic system that addressed gains in productivity effectively. Obviously we should all benefit from technology. What surprises me is that we can come up with systems that work so poorly that they are harmed by increases in efficiency.