It just seems inconsistant that a laborer at the “x factory” gets paid say $15 an hour while he is producing 300 “product x” that will each be valued at $100. If the whole economy were based this way, there’d be no purchasing power save for a few factory owners.
More interesting to ponder… what happens when one gets into the iRobot situation and the robots produce everything, all while fixing themselves and maintaining “factory x”? Will all the wealth simply concentrate into the hands of the people designing robots or will we reject robots doing the work for us because we can’t pay anyone to do the work?
You example of a factory laborer being the one that “produces” the product isn’t accurate. There are many people involved in the production of a product. It starts with the people designing the product, producing the materials, transporting the materials, building the factory, installing and maintaining the machines that run the assembly lines, human resources to hire the laborer, and sales to sell the product etc… You are making a (fairly common) mistake of believing that because the factory laborerer is the visible one making the final assembly of the product that he or she produced the whole think That is simply not true.
The whole economy is based the way that you describe. Money moves around in a ginat interconnected web in which producers and consumers are not distinct entities. Every company and working individual works and consumes and the roles often reverse themselves even among same the relationship.
Okay… I wrote a reply to this a little while ago, but my browser managed to crash and eat it. Let’s try it again.
First off, yes, the cost of the labor of various different kind of people is one of the main factors in our economy, along with capital, natural resources, and technology. For anyone who is employed by someone else, or self-employed in a business that essentially sells their own labor to various clients, the market value of that person’s labor is going to be determined by a number of factors, including their education, possibly such factors as work ethic, intelligence, creativity… current conditions in their industry, the mood of labor unions… and the list goes on further. What is inconsistent about any of this?
Shag is quite right in pointing out that whoever is responsible for producing and selling these items (let’s call them widgets) has a lot of costs involved aside from factory worker labor… transportation, design, the capital cost of factory machines, and hiring other people to take care of such requirements as running the factory payroll and making sure that working conditions are safe. I’d also like to point out that the person who’s responsible for producing the widgets is not necessarily the same as the factory owner… maybe the factory owner is just a contractor who’s providing the labor to someone else at an agreed-upon rate, but that’s a side note.
If the widgets cannot sell for more than the total costs involved in producing them, then obviously the business is not viable, and if costs cannot be effectively cut, everyone involved including the factory workers will be out of a job. If sales bring in just about as much money as costs, then the business is more or less viable and the owners take a marginal loss or make a small profit, or maybe break even exactly. If they sell for MUCH more than total costs, and there isn’t any patent or secret on the widget design, then somebody else is going to try to get into the same business, maybe open up a new factory, which will increase demand for factory labor and quite possibly increase the pay for the factory workers.
Why are you saying that only factory owners would have purchasing power? The manufacturing industry doesn’t work quite as you described, and the entire economy pretty much works the same way all over. The factory workers have purchasing power, to start with, because they don’t really need or want more than at most a few of the thousands of widgets that they produce every week. They take the six hundred dollars they make (assuming that there’s a 40 hour work week at the factory, times 15 bucks an hour,) and spend it on other things… their mortgage payments, food, clothes, and maybe saving up for an ipod.
In the robots situation… if there are robots that can do the work of some of the factory workers, then whoever’s running the factory has to make a choice between the costs of labor and investing money in some long-term capital. If he chooses the robots, then there will be some economic dislocation of factory workers who don’t really have other marketable skills, but the economy as a whole will not be greatly affected. More people work in service than manufacturing now anyway… and there’s always going to be ways for people to contribute to the economy that machines won’t be able to take over yet.
I’ll add here that, by training and temperament, I’m more likely to be someone trying to teach the robot how to fasten a nut to a screw than a factory worker. But I suspect that everyone can look at their job and say, “Hey, I’m making much more money for my company [saving my company much more money] than they’re paying me.” Which is normally because we don’t really think of all the other people who are involved, and all the things that a company has to pay other companies, and the government, for.
Shag, you offer a good point to say that automation and mass production creates jobs, which they do (and often higher paying too). However, my point was to stress that the technology is actually doing more and more work and humans doing less. Perhaps my “factory x” wasn’t the greatest example, so here’s another that shows that technology is replacing the total amount of work we have to do.
Take a blacksmith, and say it takes him 2 hours to fasion a hammer. Today, the hammers are made through factory labor and are much higher quality. Even though there may be many people working on a hammer as it passes through an assembly line, the amount of man-hours spent per each hammer is far less than 2.
And this switch in giving our work to the machines has, as you said, lead to a mass shift of labor into the service sector. But can we not agree that there are practical limits to the number of services an average person can consume? And cannot, as technology increases, more and more services (work) be given to machines (like wal-marts distribution centers using rfid tags and robotic forklifts).
Those are all very good points. So… I guess the question is ‘what next’. I personally believe that there are economic fields that labour will also move through as the service sector becomes more and more automated… the more intellectual and creative jobs, for instance. Social problems with this shift in the more capitalist countries will probably arise, though, for a couple of reasons…
Higher levels of education necessary to meet requirements for these jobs will create catch-22s, as long as advanced education is at the expense of the student – poorer families will not be able to afford the education required to win jobs. (educational mortgages might represent a partial solution to this problem – student loans which are repaid over time once employment has been found. Several people with a college education here on the dope are probably familiar with student loan payments. )
These jobs might well be suited to a smaller segment of the population, in terms of temperament and natural aptitude, than manufacturing or service work.
Possibly, well-to-do economic elites might begin to object to efforts to include the ‘lower classes’ into types of work that have traditionally been not as open to them… once the technological economy is robust enough to make sure that the wealthy have everything that they could want, will they really care if the unemployes masses are suffering??
Personally, I’d like to see the capitalist economic model begin to slip away as technological economic development reaches the point such that requirements of life and other common goods are no longer a scarcity… to the point where it isn’t logistically NECESSARY for a large sector of the population to work in order to make sure that there is enough for everybody. (Am I being utopian enough yet? ) Maybe one day, when the robots are smart enough to do most of the gruntwork for us, the people who can find a job that fufills them and suits their abilities can work, and other people can simply do what they want to do without worrying about if somebody is willing to pay them for it – and that second person wouldn’t be entitled to more than trivially less share of what is available than the first. It sounds kind of ‘way out there’ to type it like that… but maybe it sounds good too?
So the straight foreward answer to my question is that given a certain level of technology, there is no logical answer for having the economy which we possess presently (other than it is a tradition)?
And like you say, people will start needing to get a better education to survive because the economy has switched bases from a scarcity in man-power (which is now abundant due to machines) to thinking-power.
One just has to feel sorry for the implications of such a system, as we become an economy more and more dependent on ‘thinking-power’, what happens to those that are willing to work hard, but haven’t had the luck to be given a good brain (they can’t all work at Good-Will).
Capitalism simply allocates resources based on people’s desires and ability to earn resources efficiently. It would still be able to apply, at elast as far as producing thigns from other people. And we would have to posit an amazing amount of advancement to actually eliminate (or even nearly eliminate) human involvement.
It already has. A fair portion of the human race is good for little more than ditch-digging right now.
If they truly are hard-working, they’ll probably do just fine. In our current age, when brainpower is said to be so important, it’s remarkable how well those of average smarts and great persistence do vs. those who are really bright and rather lazy. In my circle of acquaintance, the set of really smart people and the set of really successful people have some overlap; but not one of the really successful is short of energy or persistence.
I disagree slightly… it depends upon what we would consider a necessary job. If you consider anything related to subsistence (let’s just say food and shelter and healthcare and education), we really only need a very small percentage of the populace to be working. In America, even with the system’s copious amounts of waste in the form of repetitive designs of products, we have less than 20% of the populous working in the manufacturing industry. Go into to the future 20 years and I bet we’ll start to have cheap robots do even more in assembly lines.
Capitalism is also based on the scarcity of a product, and therefore automatically creates a lower class (like the 3rd world). If you look at computer piracy (a machine that easily creates an abundance), there are all kinds of laws that must be passed in order to insure a scarcity of a product.
It’s a mystery, isn’t it? Suppose the x was fresh air; an organic machine in the form of a seed would be supplied by the boss. The plant produces fresh air, the factory worker (or watchman) needs only to plant a seed and perform maintenence perchance once a month. MAGIC! Yet nobody has put a price on oxygen.
As our technology increases, human labor is being replaced with a watchman that oversees production, not necessarily taking direct part in the process.
Now, I grant you that the ‘boss’ does provide the machinery, materials, ect… and I wish I would have included the claus in my initial statement. And because of our love-hate relationship for spending and working, we actually create more work for ourselves because we need the newest and greatest car/hammer/product x availiable.
) Maybe one day, when the robots are smart enough to do most of the gruntwork for us, the people who can find a job that fufills them and suits their abilities can work, and other people can simply do what they want to do without worrying about if somebody is willing to pay them for it – and that second person wouldn’t be entitled to more than trivially less share of what is available than the first. It sounds kind of ‘way out there’ to type it like that… but maybe it sounds good too?