Thursday, September 08, 2016

Total automation under capitalism?

1. Introduction
"Primitive communism is a concept originating from Karl Marx and Friedrich Engels who argued that hunter-gatherer societies were traditionally based on egalitarian social relations and common ownership." (Wikipedia).
We know more today about the cultural and material poverty of hunter-gatherer societies and the frequently brutal xenophobic warfare between tribes driven by Malthusian pressures.

But hunter-gatherers looked down upon early farmer societies, seeing gross inequalities, intense, lengthy and servile labour and an absence of freedom for the majority.

They were right.

The dream of human utopia, the vision which drives social change, is that of an enlightened return to that dawn-era of human equality. A best-case bountiful environment back then of plants, fruit and plentiful game is to be replaced by a sophisticated automation-economy which provides for every need: food, shelter, transport, communications, entertainment and so on.

So productive is this imagined future robotic economy that products are produced at need and no money is involved. Hunter-gatherers did not have to 'pay' to pluck fruit from a wild bush or to hunt animals.

Our future machines are self-producing and self-maintaining. They can be freely used by interested groups to build stadiums, new kinds of computers, rocket ships or to embark upon great projects such as colonising Mars.

Speculative as this sounds, it's not beyond extrapolation from our current technological base; a century might do it. In the jargon, it's called 'development of the productive forces' towards abundance.

But what happens as we move inexorably towards total automation under capitalism?

2. Michael Roberts's three-part series

Noted Marxist economist Michael Roberts has an excellent analysis, starting here.

3. Peter Cooper's Model

Peter Cooper (heteconomist) had an extremely useful post about this back in 2011 entitled "Implications of a Purely Mechanized Economy" which I'm going to discuss in detail.

Peter starts like this:
“It is well known that in Marx’s theory of commodity production, labor is the source of all new value. The means of production merely pass on their already existing value to new commodities. [...]

“It is critical to recognize that Marx’s argument applies to value, not physical output or wealth. He is not suggesting that labor is the only source of physical output or wealth. Nature, other animals and machines all clearly create new physical output and wealth, as does labor. The argument, rather, is that only labor translates into new value. The plant, machinery and raw materials used up in the production period only pass on their preexisting value (actually, their prices).

"Nature, in contrast, does not transfer any value to output. Instead, private property rights give owners of natural resources a legal entitlement to a payment of rent, which comes out of the surplus value created in the production period."
This is a really important point, at the heart of Marx's theory. When a wild tree produces grapes (from thin air) which you eat, value has been created for sure. A use-value.

What has not been created is the kind of value which mediates and regulates commodity exchange via the market, called exchange-value. There is no market!

Exchange-value is a social construct, it is constructed through the human activity of equitably implementing the market exchange of commodities, the normal mode of distribution of goods and services in a capitalist society.
“Of the new value that is created in the production period, some goes to workers as wages and some goes to capitalists and other social groups as surplus value. Specifically, surplus labor – the labor carried out in excess of what is required to produce the equivalent of the value paid to workers in wages and salaries – is the basis of surplus value in Marx’s theory. In aggregate, surplus value equals profit, prior to its distribution among various recipients. Some of it will go to rentiers as rent or creditors as interest income.

“Considering that surplus labor is the sole origin of surplus value in Marx’s theory, it is interesting to reflect on an extreme scenario in which the entire production of the economy becomes purely mechanized. Marx’s theory suggests that, in this scenario, capitalism must have ceased to exist! The reason is that there would be no production of surplus value (profit) in such a system, making it unviable for capitalists.

“But what does it mean to say that a purely mechanized economy could not be a capitalist economy? After all, even in such a society, surely we humans would still be doing some things that were not mechanized. So what would be going on?

“It would simply mean that this human activity (labor) was no longer being treated as value production and that our human capacity to work or create (labor power) was no longer being treated as a commodity.

“In such a system, there might still be a requirement to work in order to gain access to material needs, and there might still be authoritarian measures used to direct production. However, it would not be capitalism. The surplus would not take the form of value, but simply its physical form – the material output produced in excess of the needs of social reproduction.

“Equally possible is that we might choose to organize our activities in such a way that income was no longer tied to work. Material needs could be met through the free distribution of the output of mechanized production processes. Required resources and facilities for human endeavors could be made freely available. Human activity could then be genuinely free and associations between individuals voluntary.

Highly Mechanized Production Under Capitalism

“For capitalism to remain despite a high degree of mechanization, it would instead be necessary that at least some human activity continued to be value production. That would require that some human endeavors were only enabled within the context of value production, just as is the case in our present society.

“In the absence of a basic income guarantee, there would be an onus on the government to ensure demand remained sufficient to sustain high levels of employment. Otherwise, in the midst of such plenty, periodic episodes of mass unemployment, especially if continuing for sustained periods, would likely result in extreme social conflict.

“If human activity remained commodified – i.e. capitalist social relations remained in place – capitalists would retain significant ownership and control of the means of production, including the purely robotized or mechanized production processes. Surplus value would continue to be created out of the employment of labor under capitalist conditions. Just as now, all capitalists would compete for a share out of aggregate profit, irrespective of how much surplus value was created in their own sectors.

“The reason for this, in Marx’s theory, is that competition tends to equalize the rate of profit realized by different sectors, even though it is the least capital-intensive sectors (least efficient sectors) that produce the most surplus value (because proportionately they outlay more on the employment of workers than means of production).
I going to replace Cooper's symbols with their spelled-out meanings to make reading a little easier.
“Briefly, for Marx, the [exchange] value of a commodity equals c + v + s. Here: c is ‘constant capital’, the value (or dollar amount) outlaid for the means of production used up in producing the commodity; v is ‘variable capital’, the sum of value outlaid for the employment of labor; and s is ‘surplus value’, the amount of value produced by workers in excess of the amount (v) outlaid on their employment.

“Marx argued that in exchange there would be a tendency for commodities to sell at their ‘prices of production’, 'price', rather than their values. These are the prices that would ensure all sectors received the same rate of profit. They are equal to c + v + profit, [ie cost + profit].

"Prices of production differ from values whenever surplus-value s differs from profit. In sectors with an above average ‘organic composition of capital’ (c/v), profit  > surplus-value and price > value.

"The reverse is true of sectors with an organic composition of capital below the average. In this way, competition causes surplus value to be transferred from sectors with below average compositions of capital to those with above average compositions.

“In aggregate, however, Marx maintained that total value equals total price (the sum of all values equals the sum of all prices), surplus-value equals profit, and the value rate of profit equals the rate of profit.

"In effect, the creation of aggregate surplus value in production determines the amount of aggregate profit that can be realized in exchange, with competition between capitalists merely causing a transfer of surplus value between sectors according to their compositions of capital.

“For example, if the economy were divided into two sectors, one completely mechanized and the other employing a combination of labor and means of production, the situation might look something like this (for simplicity, I have assumed all means of production are used up each period so that there is no fixed capital):
Here I'm replacing Cooper's spreadsheet with my own copy: same numbers, easier to read labels. Note that in his simple model, there are just two commodities produced in the time period of production - one by the Robot sector (completely automated) and one by the Mixed sector (with some human input).

Robot and Mixed Capitalist economy producing two commodities, each of value 100
“In this example, production in the robot sector occurs entirely without labor. Over the period, $100 worth of robots and other means of production, including raw materials, is used up, passing on $100 to the final value. No new value is produced in this sector, and therefore no surplus value. It is simply the already existing value of the means of production that is passed on to the final value.

"The robots, if able to learn, could be getting smarter and smarter throughout the period, thereby enabling larger and larger material output. But in value terms, there is no new value produced, because the amount paid by capitalists for the means of production will reflect costs of production and the rate of profit, not the material output produced by the means of production.

“In the mixed sector, $20 of value is passed on to the final commodity through the using up of means of production and $80 of new value is created through the employment of labor. Capitalists appropriate $40 as surplus value.

“As already noted, competition between the sectors and between capitalists tends to equalize the profit rate in each sector (in the example, it is 25% in each sector and in the economy as a whole). This is argued to occur as a result of capitalists seeking out the highest return for their investment. If one sector offered a higher rate of profit than the other, investment dollars would flow into the more lucrative sector until no further advantage could be obtained, assuming competitive conditions, which, for Marx, following classical political economy, entails free mobility of money capital.

“The example illustrates that capitalists in the mixed sector do not get to keep the entire surplus value, even though that is the sector in which the surplus value is actually produced. Instead, total price in the robot sector rises above total value produced in that sector ($125 > $100) and total price in the mixed sector falls below total value produced ($75 < $100).

"In Marx's theory, this tendential equalization of profit rates ensures that technical innovation and mechanization are not discouraged by operation of the 'law of value' (value based on labor time). It means that innovators are not penalized in terms of profit for minimizing their use of labor (minimizing their amount of new value production). It provides a competitive impetus to economize on the use of society's labor time.

The Social Possibilities are Open

“Since it is technically possible for capitalism to continue even in a highly mechanized economy provided human activity remains commodified, the social ramifications of increasing mechanization are an open question. Increasing mechanization makes it possible at some point to sever the connection between work and income entirely. That would seem to offer the greatest potential for human freedom and creativity.

“Yet, there is no inevitability that this option will be taken unless general populations actively press for this social progression. Those with the greatest stake in the existing system may persist in their efforts largely to confine employment opportunities (and access to infrastructure and productive facilities) to the sphere of capitalist social relations. General populations might be persuaded to go along with this state of affairs provided there was sufficient class compromise to ensure that real wages and general living standards rose more or less in line with productivity improvements.

“Nevertheless, with material needs so easily met, the absurdity of such a social relation, in which much of human potentiality can only be expressed on terms acceptable to the capitalist class, may well become increasingly apparent over time. For this reason, there are probably grounds for optimism that, ultimately, some kind of basic income scheme or non-monetary type of guaranteed access to material needs and facilities will emerge provided we put our collective foot down and demand it. If there had been the political will, it probably could already have happened.”

4. The model as automation becomes dominant

Peter Cooper's model has additional mileage. What happens to capitalist production as the mixed sector declines and the total-automation sector continues to grow?

Let's start by halving all the numbers so that the total value of the two commodities produced in this model economy is exactly 100. Rates of surplus-value and profit remain the same.

Value parameters halved so that total economy (2 commodities) is of size 100

Now dramatically reduce the constant and variable capital assigned to the Mixed sector. That is, put most of the capital invested in machinery and raw materials into the robotic sector, and employ very few people. In numbers, we have 90% of the produced value  invested in robots, 2%  invested as constant capital in the Mixed sector, 4% invested as wages and the capitalists appropriate 4% as surplus value.

Here's the spreadsheet.

Wages are now only 4% of the economy

As you can see, due to the enormous organic composition of capital (c/v = 92/4 = 23) and in the absence of any increase in the rate of surplus value (s/v = 100%), the rate of profit has crashed to 4%. The Mixed sector commodity price at 6.25 is only slightly above the cost of 6.

Doing the maths shows that as the mixed contribution (ie the amount of employed labour) tends to zero, surplus value also tends to zero and price tends to cost leading to zero profits. At this point, capitalism simply can't work.

5. The experience of total automation for the mass of non-capitalists

What would that be like for the great mass of people who are not owners of the vast amounts of capital sloshing precariously around here? 

In the comments on his post, Peter Cooper observed:
“In narrow material terms, a purely mechanized economy could generate considerable growth in material output over time. Machines might be creating more and better machines that create more and better machines, etc. No new ‘value’ (appropriated labor) would be created, but material output would be increasing.

“The living of our lives in the broadest sense – our thinking, learning, communicating, interacting, creating, working, playing, etc. – could be developing in a very dynamic fashion with the aid of technology. The potential, in this sense, seems unlimited. As one example, interactive virtual reality technology provides access to a wide range of experiences, albeit vicarious, that would not otherwise be accessible. As an aid to imagination or to physical, emotional and intellectual development, the possibilities seem endless.

“I think the real question is whether human activity – life in the broadest sense – has been freed completely from the production of value. Even once we have been freed, we will still be living and experiencing life, including pursuing vocations we find interesting. It’s just that our activities won’t be dictated by value relations.

“Regarding the risk of human redundancy, I am not familiar with the theoretical limits to artificial intelligence – for example, whether some kind of robot consciousness is possible and, if so, in what sense – but even if robots were able to reach a point where they could live life better than us, this would not remove our own desire to live life. I don’t think our own experiences would become redundant just because robots might be capable of greater experiences.

“Technology often seems ominous under capitalism because it is a threat to our employment prospects as wage labor or undermines the profitability of past investments that relied on older technologies. But that is a defect of capitalism, not of technology. Technology provides the potential for better lives for humans and other species. It is an open question whether we will be able to organize ourselves socially in a way that enables us really to benefit from these opportunities.

“I would also question the notion of redundancy in a post-capitalist society. From the perspective of capitalist value production, a worker’s existence is only justified to the extent it enables the production of new value, either immediately through the expenditure of living labor or potentially as a member of the reserve army of labor. But the day we end value production will hopefully also be the day we reject this justification for a person’s life. Hopefully it will be the day we recognize that life needs no justification.

“I have always liked the saying, “we work to live, not live to work”. Unfortunately, it is not really true for many people under capitalism. However, post capitalism, I hope we can do better, and say, “we live for its own sake, and work if we want”.

“It is not that I am necessarily optimistic about the future. I am just suggesting that the social possibilities are open.”

6. The transition to post-capitalism

We have some prior experience with abundant goods produced at zero marginal cost. Remember the saga of MP3 music files?

There was originally a small cottage industry (around Napster) of people downloading digitised music for free. After a while, pretty much everyone was sharing music files with their friends and families. And so the (secondary) production and distribution of music was taken out of capitalist relations of production: communism in music had arrived.

The first recourse of the capitalist providers of commoditised music was to resort to the power of the state. People were prosecuted, as was Napster. But the masses were too many, the activity too widely-practised and the threats ultimately unenforceable.

In the next iteration, legal and cheapish channels of digitised, downloadable music were provided. Many people were persuaded on moral grounds to use these. After all, communism in the means of general consumption hadn't arrived; musicians had to eat!

Some musicians rebased their revenue streams around live performances or hold-in-the-hand artwork. Streaming developed, which was more easily monetisable. And in the background, people continued to rip/download and share music tracks for free with impunity.

7. The wonderful 3D printer/fabricator

I think this is an interesting template for a possible future.

Suppose a philanthropic billionaire develops the ultimate 3D printer/fabricator. Using sunlight, water, air + scrap materials, it can synthesise food, drinks, shelter, transportation and most other basic and quite sophisticated needs. The machines can also self-reproduce if so instructed.

Think of it as a super-fast-growing tree-analogue - indeed, it might be the result of genetic technology.

The billionaire donates this machine to the world for free. What happens next?

Like the MP3 scenario, I imagine that an idealistic network of early adopters would take up this machine and remove themselves entirely from the capitalist economy. Thus sustained and as in Paul Mason's vision of the future, they would no doubt work on endless open-source improvements.

The capitalists see a sharp decline in the wage-labour force. If you don't want to work, perhaps you don't have to. (There are some issues in this scenario to do with land rights - all land is owned by someone and no-one's making much more of it - but let me skirt over these.)

No doubt some capitalists will make use of these wonderful machines to create a totally-automated robotic sector of the capitalist economy, as Paul Cooper discussed above, but it's in competition with the non-capitalist economy which produces only use values.

Notice in this scenario, which is very bottom-up, the automated printer/fabricators are so competent that coordination issues usually addressed by the capitalist market and which have proved so troublesome for Marxists ('central planning') are largely non-existent.

Insofar as there are big projects which require coordination, these could be done by voluntary associations of those interested.

Tempting as it is to say that the capitalist state would attempt to outlaw these machines and 'restore order', I think that in most cases the balance of forces would be against them. Potential abundance is just too compelling and in this scenario, too easy to accomplish.

Other scenarios are alluded to by Cooper above, including a basic income while the capitalist economy is still completing its work of increasing the productive forces.

8. Conclusions

The left finds itself in a century-old dilemma. The reformist left wants to manage capitalism by using control of the capitalist state to tilt the scales a little more towards the interests of the masses; the revolutionary left wants to abolish the capitalist state and the dominance of capitalist relations of production and exchange, and institute central planning based on workers councils instead, as Lenin and Trotsky envisaged.

The former promises at best limited, quantitative gains while the latter looks completely implausible.

Capitalism is the best social system ever devised for increasing standards of living, productivity and the forces of production. The problem is that its motivation and driving force is capital expansion, not human welfare.

That works for quite a lot of the people whose labour power is required to do that mission, but ignores many more who are economically superfluous. It's usually not malicious - it's just that they don't have a specific capability to be useful right now, or the purchasing power to get noticed.

I suspect Marx was right when he suggested that capitalism could only be surpassed when it was obvious to the mass of people that it was no longer the best way to develop the productive forces in the interests of everyone, and where a superior alternative was also obvious.

This suggests that it's been no accident that capitalism continues to reign supreme, even giving a new lease of life to countries such as Russia and China. The conditions just aren't here yet.

But as long as capitalism continues to drive technological progress, brighter prospects will emerge ahead.


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  1. I wonder whether this analysis, and Marx in general, overplays the "cottage industry" style AI economic empowerment of individuals (armed with 3D - even 4D (!) printers), versus the needs and residual power of the State.

    "Insofar as there are big projects which require coordination, these could be done by voluntary associations of those interested" - might still undervalue the big projects and their need to be financed and managed somehow (the HS2's and CrossRails, etc). Also Capitalists don't stop: we have endless attempts to "de-neutralise" the Internet; and plans are afoot to mine the Asteroids and send privately funded Probes to Proxima b. Looks like Capitalism is going to get there first!

    1. I've said in other posts that some kind of state and 'police force' will be a feature of all future human societies. There are just too many potential conflicts of interest. Engels said something similar. But it's not a capitalist state if the economy is post-capitalist.


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