Thoughts on Capitalism and Socialism as economic models

[carpedm9587]

So, I've been thinking a lot about something recently: the impact of automation on economic theory. You see, we are entering a new era. We've had the industrial revolution, which created a whole new model and demanded labor to support manufacturing. But now we are entering a new age. The personal computer (IBM) is about 37 years old. Before that hobby computers stretch back another decade or so. Computers have become smaller, more powerful, and more ubiquitous. They have fueled the age of automation - and it is now having a measurable impact on almost all verticals. Banks have fewer tellers because of the ATM. Mining has fewer miners because of automation. Processing ore and oil has fewer employees because of automation. Automobile manufacturing has fewer employees per car produced because of automation.

The trend line is clear - automation will continue to enhance, displace more workers, and help to enhance productivity (which is usually measured against the human workforce). So if the capitalistic model is the continued dominant model, it would seem that we will be seeing a continued move to greater and greater profitability and workforce-related expenses are continually cut - individuals will have a harder time getting jobs. I note that a lot of people applaud the current low unemployment rate. Many of them I saw complain that Obama was crowing about unemployment coming down but ignoring the fact that the workforce participation rate was also coming down. Now they seem to be doing the same thing with Trump. Trump crows about unemployment, but the workforce participation rate, which started dropping in 2002 (before Obama), and started leveling off around 2014, has not adjusted upward since 2014.

As automation continues to dig into jobs, one of two things seem to me to be the inevitable outcome: 1) we continue on the model we have now, the ranks of the unemployed begin to swell, the business owners make money hand-over fist, and the gap between rich and poor continues to widen. After all, we've all seen the economies that arise from major outfits like WalMart and Home Depot and their effect on the small businesses in their area. This phenomenon will continue unabated. Self-scanners have already started replacing cashiers. Eventually we'll be able to pick up an item and walk out of the store without stopping and our credit card will be automatically debited.

Or...alternatively, we will adopt a tax model that says that all business profits are subject to tax (or it could be all $ above subsistence), and we will use that money to fund a basic living wage for everyone. So everyone will have the choice, "do I want to work or not." If the answer is "no," then their quality of life will be "subsistence." Anyone who wants to work more, create a business, and do better than "subsistence" will be able to do so - freely and without encumbrance.

Don't get me wrong - I don't think we're quite there YET - but I don't see to many alternatives. We will either move to an every increasing poverty/wealth gap, or we will have to take steps to address the impact of automation on business, jobs, and income.

Thoughts?

[LeaC]

Offhand, I'm not sure the economy is going to be the biggest issue in that scenario. Don't get me wrong, I like technology, I study it. But I also get a first hand view of the results of long hours with no human interaction- poor social skills, anxiety/depression, unrealistic patterns of thought. I'm more worried about the impact this future will have on mental health, especially when combined with this option:

we will use that money to fund a basic living wage for everyone. So everyone will have the choice, "do I want to work or not." If the answer is "no," then their quality of life will be "subsistence." Anyone who wants to work more, create a business, and do better than "subsistence" will be able to do so - freely and without encumbrance.

Putting aside the practical/economical questions... people need to work, as a psychological necessity. Maybe an artist or a writer would be happy with that scenario, but for the average person unqualified for the needed jobs, this sounds like a living nightmare. You're a useless member of society kept alive on the table scraps of people smarter and more successful than you'll ever be. That's not exactly a meaningful existence. Yet, I'm sure many people will take that deal- and I'm equally sure they'll be miserable with it, leading indulgent and hedonistic lives and unable to explain why they're so unhappy when they have everything they "need". Couple all this with a society where you no longer need to interact with real humans on a daily basis, crumbling social support structures(as is already happening), and you have the makings of a mental health disaster.

I don't know, carpedm, but I wouldn't live in either society you describe. Star Trek always seemed like a depressing universe, at least where your primary option for leisure was virtual reality simulators, and everything else was automated.

[Cow Poke]

Offhand, I'm not sure the economy is going to be the biggest issue in that scenario. Don't get me wrong, I like technology, I study it. But I also get a first hand view of the results of long hours with no human interaction- poor social skills, anxiety/depression, unrealistic patterns of thought. I'm more worried about the impact this future will have on mental health....

And that field will increase substantially....

[carpedm9587]

Offhand, I'm not sure the economy is going to be the biggest issue in that scenario. Don't get me wrong, I like technology, I study it. But I also get a first hand view of the results of long hours with no human interaction- poor social skills, anxiety/depression, unrealistic patterns of thought. I'm more worried about the impact this future will have on mental health, especially when combined with this option:

Putting aside the practical/economical questions... people need to work, as a psychological necessity.

Agreed - but people do not have to work for money. They could work for personal satisfaction - building a home - biking across the country - hiking/climbing - doing volunteer work. We could see the emergence of an entire class of volunteerism we don't see today because most of us have to work to survive.

Maybe an artist or a writer would be happy with that scenario, but for the average person unqualified for the needed jobs, this sounds like a living nightmare. You're a useless member of society kept alive on the table scraps of people smarter and more successful than you'll ever be. That's not exactly a meaningful existence. Yet, I'm sure many people will take that deal- and I'm equally sure they'll be miserable with it, leading indulgent and hedonistic lives and unable to explain why they're so unhappy when they have everything they "need". Couple all this with a society where you no longer need to interact with real humans on a daily basis, crumbling social support structures(as is already happening), and you have the makings of a mental health disaster.

I don't know, carpedm, but I wouldn't live in either society you describe. Star Trek always seemed like a depressing universe, at least where your primary option for leisure was virtual reality simulators, and everything else was automated.

Well - Star Trek is a mythical universe, but I guess any speculation about the future is likewise mythical. I found the "Star Trek" model energizing. The "virtual reality" world of the hollodeck simply made it possible for people to travel instantly anywhere they wished to, interact with novels and stories at a level not possible with a book or TV, or explore ideas in a safe environment. The idea of "hollodeck addiction" was explored in several episodes. But the people using this technology were generally not living in it - they were using it to relax when they were not otherwise working. Imagine being able to end a shift for a job (which you choose to do because you want to), and in a matter of minutes be on any beach or mountain in the world - exploring.

I find it odd that you think any of this is "ugly." Yes - there will always be those who choose idleness and a life unfulfilled. They exist today. But I do not believe the majority of people act this way. Indeed, when provided the means - most people use those means to better themselves and find new ways to enhance and expand their lives.

But the alternative is REALLY ugly - a world in which paying jobs exist for only a fraction of the population - and the majority of people are living in poverty and desperation - unable to lift themselves out because the jobs simply don't exist. Meanwhile, those lucky enough to be born into wealth, or to own (in whole or in part) major conglomerates, continue to grow in wealth because most of the production is being done by machines that need maintenance - but not a regular salary. This is where we are heading. Indeed - we have already seen it beginning. We are only at the very start - but every indication is that automation will continue to grow. Companies are not going to improve productivity by getting employees to operate more efficiently - they are going to do so by reducing the number of employees they need to do the work - moving everything it is possible to move to automation.

• Airlines - Kiosks
• Banks - ATMs
• Automobiles - Robot Assemblers
• Mining - Ore extractors
• Manufacturing - automated assembly lines
• Hotels - App-based check-in/out
• Restaurants - table-based ordering and payment systems with embedded games
• Retail - self-checkout systems, RFIDs, digital payment systems
• Media - AI-driven news stories

These are all happening - and increasing in frequency. They are an inevitable consequence of the intersection of capitalism and computer-driven automation. This tide is not going to be stopped...

[LeaC]

Agreed - but people do not have to work for money. They could work for personal satisfaction - building a home - biking across the country - hiking/climbing - doing volunteer work. We could see the emergence of an entire class of volunteerism we don't see today because most of us have to work to survive.

In theory, they could. In practice, I don't believe most will. People need to see some purpose for their efforts- if you tied volunteerism to their subsistence living, or radically changed the culture where "unemployed" volunteers were highly respected, then maybe. But given the option between doing thankless work for other people or not doing anything at all(and your quality of life is unchanged either way), the path of least resistance is always preferable.

Well - Star Trek is a mythical universe, but I guess any speculation about the future is likewise mythical. I found the "Star Trek" model energizing. The "virtual reality" world of the hollodeck simply made it possible for people to travel instantly anywhere they wished to, interact with novels and stories at a level not possible with a book or TV, or explore ideas in a safe environment. The idea of "hollodeck addiction" was explored in several episodes. But the people using this technology were generally not living in it - they were using it to relax when they were not otherwise working. Imagine being able to end a shift for a job (which you choose to do because you want to), and in a matter of minutes be on any beach or mountain in the world - exploring.

But none of that is real. One of the more disturbing holodeck-related episodes I remember was where Geordi creates a simulation of a female engineer to collaborate on a problem, then gets angry with the real engineer when she discovers his creepy program. There's no moral lesson in that from the show- she forgives him, they end as friends. The danger of creating of simulated world or a simulated person is that it all conforms to your specifications, with no need to challenge yourself. Not having fun anymore? Change the program. There were a couple episodes that dealt with this problem, but overall it was presented as an idyllic fantasy escape.

So, being on a real mountain or beach: It's hard, or at least inconvenient sometimes. There's too many people, or it's polluted, or there's jellyfish, or you step on a sharp rock. Does that happen in a fantasy world? Well, I know that if I were programming a game, I'd make it fun. I'd want people to play it, and thus, the reward factor would always be greater than the drawbacks or the boring parts. You can't guarantee that in real life. And yet, I think it's those boring, inconvenient parts that make us appreciate the good parts.

I find it odd that you think any of this is "ugly." Yes - there will always be those who choose idleness and a life unfulfilled. They exist today. But I do not believe the majority of people act this way. Indeed, when provided the means - most people use those means to better themselves and find new ways to enhance and expand their lives.

It's not that people would choose idleness, it's of falling into despair. Without struggle, there's no reason to make their world(and the world around them) a better place. Going back to the beach example, if the real beach is polluted, there's motivation to clean it. If the virtual simulation of a beach is, then find a different one to virtually visit.

But the alternative is REALLY ugly - a world in which paying jobs exist for only a fraction of the population - and the majority of people are living in poverty and desperation - unable to lift themselves out because the jobs simply don't exist. Meanwhile, those lucky enough to be born into wealth, or to own (in whole or in part) major conglomerates, continue to grow in wealth because most of the production is being done by machines that need maintenance - but not a regular salary. This is where we are heading. Indeed - we have already seen it beginning. We are only at the very start - but every indication is that automation will continue to grow. Companies are not going to improve productivity by getting employees to operate more efficiently - they are going to do so by reducing the number of employees they need to do the work - moving everything it is possible to move to automation.

Yes, and I agree this is also a problem. But your solution is flawed when it doesn't take into consideration the quality of life someone lives, and how we value what they do- and they have to do something. I would rather go back to smaller, community-based settings, where food and services are provided locally to as great a degree as possible. Our current model is unsustainable anyway, and increasing automation won't fix that problem.

Media - AI-driven news stories

As if the media wasn't already terrible...

These are all happening - and increasing in frequency. They are an inevitable consequence of the intersection of capitalism and computer-driven automation. This tide is not going to be stopped...

In other words, the problems we have now are only going to get worse. I agree.

[Starlight]

As automation continues to dig into jobs, one of two things seem to me to be the inevitable outcome: 1) we continue on the model we have now, the ranks of the unemployed begin to swell, the business owners make money hand-over fist, and the gap between rich and poor continues to widen. After all, we've all seen the economies that arise from major outfits like WalMart and Home Depot and their effect on the small businesses in their area. This phenomenon will continue unabated. Self-scanners have already started replacing cashiers. Eventually we'll be able to pick up an item and walk out of the store without stopping and our credit card will be automatically debited.

There have been previous instances in history where it has seemed like technology would make lots of people unemployed. (e.g. the invention of automated looms in the industrial revolution meaning 1 person could do all the weaving that it had previously taken dozens of people to do) And instead what happened was that the people simply got different jobs.

Back at the beginning of agriculture every family in the village had to work the land in order to get enough food at harvest to survive, but with modern inventions such as tractors / irrigation / pesticides / improved crops, the average farmer can now produce enough food to feed ~150 families. Those 150 families rather than becoming unemployed as their farming is no longer required, have instead gone on to do other jobs producing other goods and services, so the total production of society is much much higher in total.

So while it is certainly possible that this time will in fact be different, and this time the displaced people won't be able to get different jobs, I haven't seen any good arguments to that effect.

Or...alternatively, we will adopt a tax model that says that all business profits are subject to tax (or it could be all $ above subsistence), and we will use that money to fund a basic living wage for everyone.

Didn't you tell me two days ago in the other thread that you didn't think business profits should be taxed when I said they should?

I would personally tend to use a wealth tax to fund a basic income if I were setting policy. Nearly all wealth in the world exists in two places which each comprise about 50% of total wealth (pretty much everything else put together is a rounding error by comparison): (1) Urban real estate, (2) Stock markets. So a fairly straightforward policy would be to stick a ~1-5% per annum tax on the value of all property and all stocks, and pool that money and dish it out to everyone equally as a universal income (that's easier than trying to tax wealth directly as people can hide total wealth in many and various ways).

[Mountain Man]

I'm rather fond of the saying "Capitalism is a terrible economic system; it just happens to be better than anything else we've tried."

[Starlight]

I'm rather fond of the saying "Capitalism is a terrible economic system; it just happens to be better than anything else we've tried."

I don't totally disagree with that, so I'm a bit of a fan of trying new things to explore possibilities of better systems. Democracy, likewise, seems to be the least-bad system, but we should always be trying to improve it.

One of the ideas that I think shows the most promise for improving capitalism in the future is through bringing democracy into the workplace. If, instead of businesses being run solely in top-down fashion, there was to be more democracy in the workplace, where the workers together can vote on their management and vote on workplace policies, that would seem to me to solve many of the worst parts of capitalism. The workers are not going to vote to relocate their own factory to China, or to pour toxins into the river their town uses for drinking water, or that they be paid the minimum wage while the CEO gets $20m.

[Sparko]

So, I've been thinking a lot about something recently: the impact of automation on economic theory. You see, we are entering a new era. We've had the industrial revolution, which created a whole new model and demanded labor to support manufacturing. But now we are entering a new age. The personal computer (IBM) is about 37 years old. Before that hobby computers stretch back another decade or so. Computers have become smaller, more powerful, and more ubiquitous. They have fueled the age of automation - and it is now having a measurable impact on almost all verticals. Banks have fewer tellers because of the ATM. Mining has fewer miners because of automation. Processing ore and oil has fewer employees because of automation. Automobile manufacturing has fewer employees per car produced because of automation.

The trend line is clear - automation will continue to enhance, displace more workers, and help to enhance productivity (which is usually measured against the human workforce). So if the capitalistic model is the continued dominant model, it would seem that we will be seeing a continued move to greater and greater profitability and workforce-related expenses are continually cut - individuals will have a harder time getting jobs. I note that a lot of people applaud the current low unemployment rate. Many of them I saw complain that Obama was crowing about unemployment coming down but ignoring the fact that the workforce participation rate was also coming down. Now they seem to be doing the same thing with Trump. Trump crows about unemployment, but the workforce participation rate, which started dropping in 2002 (before Obama), and started leveling off around 2014, has not adjusted upward since 2014.

As automation continues to dig into jobs, one of two things seem to me to be the inevitable outcome: 1) we continue on the model we have now, the ranks of the unemployed begin to swell, the business owners make money hand-over fist, and the gap between rich and poor continues to widen. After all, we've all seen the economies that arise from major outfits like WalMart and Home Depot and their effect on the small businesses in their area. This phenomenon will continue unabated. Self-scanners have already started replacing cashiers. Eventually we'll be able to pick up an item and walk out of the store without stopping and our credit card will be automatically debited.

Or...alternatively, we will adopt a tax model that says that all business profits are subject to tax (or it could be all $ above subsistence), and we will use that money to fund a basic living wage for everyone. So everyone will have the choice, "do I want to work or not." If the answer is "no," then their quality of life will be "subsistence." Anyone who wants to work more, create a business, and do better than "subsistence" will be able to do so - freely and without encumbrance.

Don't get me wrong - I don't think we're quite there YET - but I don't see to many alternatives. We will either move to an every increasing poverty/wealth gap, or we will have to take steps to address the impact of automation on business, jobs, and income.

Thoughts?

Thoughts? That this is the same argument that were being made at the beginning of the 20th Century about how automation would put everyone out of work.

What actually happened is that automation did make some jobs obsolete, but opened up entirely new fields and careers. It also allowed greater production per person. Because of automation our country had a period of unheard of economic growth and job growth in the 20th Century.


The same will happen with computerized automation.

Here is a film about the 1939 World's fair. Start watching at 24:30. You will be amazed at how little the arguments have changed in 80 years.

[Sparko]

There have been previous instances in history where it has seemed like technology would make lots of people unemployed. (e.g. the invention of automated looms in the industrial revolution meaning 1 person could do all the weaving that it had previously taken dozens of people to do) And instead what happened was that the people simply got different jobs.

The world must be coming to an end. Starlight and I agree on something. The video I posted above is actually talking about the automated looms.

[Cow Poke]

The world must be coming to an end. Starlight and I agree on something.

Be afraid. Be VERY afraid!

[Mountain Man]

Democracy, likewise, seems to be the least-bad system, but we should always be trying to improve it.

Democracy in its purest form is actually a pretty terrible system. As Thomas Jefferson noted, it's a system where 51% of the people can agree to suppress the rights of the other 49%. It's why our Founding Fathers were very careful to avoid it.

[Cow Poke]

Democracy in its purest form is actually a pretty terrible system. As Thomas Jefferson noted, it's a system where 51% of the people can agree to suppress the rights of the other 49%. It's why our Founding Fathers were very careful to avoid it.

There are many examples where a pure democracy would be catastrophic for the minority.

[carpedm9587]

Thoughts? That this is the same argument that were being made at the beginning of the 20th Century about how automation would put everyone out of work.

What actually happened is that automation did make some jobs obsolete, but opened up entirely new fields and careers. It also allowed greater production per person. Because of automation our country had a period of unheard of economic growth and job growth in the 20th Century.


The same will happen with computerized automation.

Here is a film about the 1939 World's fair. Start watching at 24:30. You will be amazed at how little the arguments have changed in 80 years.

Sparko - the beginning of the 20th century did not see anywhere near the kind of automation we are seeing now - because now we have something that did not exist then: intelligent machines. As these machines continue to penetrate every vertical, the impact will continue to increase. So it seems to me we have either a massive increase in the wealth gap (which we are already seeing), or we have the beginning of an opportunity for work as a choice - not a requirement.

Of course - if you are right - then new jobs will open and neither of these things will manifest. I'd be curious to know what "new jobs" you think could open up as a result of the automation we are seeing now?

[Cow Poke]

Of course - if you are right - then new jobs will open and neither of these things will manifest. I'd be curious to know what "new jobs" you think could open up as a result of the automation we are seeing now?

Baby Boomers are aging - there will be much more need for diaper changers.