'Schumpeter' on Robotics and the Labour Theory of Value

From Amazon

I spent a significant number of years contemplating Marx's version of the Labour Theory of Value, recognising its attraction as the source of what we're able to bring to market (subject to rents of course, such as found things).

And yet: Marx himself indicates that value is not a property of a commodity but an abstract social relationship, established under highly idealised circumstances, in general market transactions. In practice value is not observable, so how can it be causal?

I discovered Joseph Schumpeter's masterly explication and critique of Marx's economic and sociological ideas very late. But that's better than never; with ChatGPT I can actually chat with the master economist himself. Note that our lives did not overlap.

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Exploring Marx and Value Theory: A Conversation with Joseph Schumpeter (ChatGPT)

This is a reconstructed dialogue between myself and the economist "Joseph Schumpeter" (1883–1950), inspired by his seminal work Capitalism, Socialism, and Democracy. In this hypothetical exchange, we use Schumpeter's perspective to explore complex topics such as Marx's labour theory of value and the notion of "social surplus product" within capitalist systems. The aim is to shed light on the unique ways that Marx and Schumpeter approached questions of value and economic growth—and to consider how these ideas might apply to a world of increasing automation.

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Me: So, Joe, I know you’re not fully on board with Marx’s labour theory of value. But how do you feel about the broader idea of the social surplus product?

Schumpeter: Ah, an excellent question! While I certainly take issue with Marx’s labour theory of value as a strict framework, I’m more receptive to the concept of a social surplus product. Marx rightly recognized that societies generate a surplus beyond basic subsistence needs, and this surplus becomes the fuel for investment, growth, and—crucially—innovation.

But here’s where I differ. Marx viewed this surplus as a tool of exploitation, a force driving capitalism toward collapse and class conflict. I, on the other hand, see it as the engine of capitalism’s unique adaptability. In capitalism, this surplus isn’t just appropriated by the capitalist class but reinvested, spurring cycles of what I call “creative destruction.” Capitalism, through this cycle, continually evolves, creating new industries and wealth.

So yes, I find the social surplus concept useful, but I see it as a catalyst for capitalism’s evolution, not its inevitable downfall.

Me: To be fair, you have yourself acknowledged that Marx also emphasised that capitalists are driven to reinvest their appropriated wealth. But on another topic, do you think, then, that Marx was guilty of what we might call “vitalism”? I mean, what would happen to his model if we replaced human workers with equally capable robots who perform all productive labour and maintain themselves? If these robots earned a “wage” to cover their self-maintenance costs, then like any other form of constant capital wouldn’t Marx’s framework imply that no new value could ever be created, even though production continues in all other respects unchanged?

Schumpeter: Ah, yes, this is an insightful question! In a sense, Marx’s model does seem bound to something resembling vitalism. By his account, only human labour can create new value because, for him, human labour uniquely adds surplus value in production. If we replaced workers with robots, who would merely be another form of "constant capital", his model would suggest that no value is generated—only transferred.

This creates a dilemma. The productive process, as you note, remains the same; the output is identical, and profit still exists. So, has anything truly changed?

I would argue that this scenario points to a limitation in Marx’s framework. He insists on tying value creation exclusively to human labour, almost as if labour contained an "animating spirit." It’s as though Marx was implicitly holding onto a vitalistic view of labour, which limits the applicability of his theory in an age where machines increasingly perform complex labour.

Me: So, from your perspective, value creation doesn’t require a human “animating spirit.”

Schumpeter: Precisely. From my perspective, value creation lies in the productive function rather than in human effort alone. Imagine a fully automated system, where robots both maintain themselves and perform all productive tasks. Such a system could indeed generate value—not because of some mysterious property of human labour, but due to its efficient organisation and minimal input costs.

This interpretation sees value not as a product of human labour alone but as an outcome of productive efficiency and innovation. Marx’s model is restricted by this vitalistic assumption, limiting its usefulness in a world that increasingly relies on automation and artificial intelligence.

Me: I read your book, "Capitalism, Socialism and Democracy" with great interest. It's a true tour-de-force: visionary, objective, not at all tribal and steeped in your vast expertise in history, economics and politics. Eighty two years later, I am most struck by your pessimism about capitalism's lack of enduring vitality, and by your misplaced faith in the power of so-called 'rational bureaucracy' to get things done. The collapse of the Soviet model and much else shows how effectively bureaucracy without competition kills progress and allows institutions to be captured by their own elites - to the detriment of wider societal interests. So how would you reappraise the prospects of the future of capitalism if you were writing today?

Schumpeter: When I wrote my book, my central argument was that capitalism’s greatest strength—its capacity for creative destruction—would also sow the seeds of its eventual decline. By relentlessly revolutionizing the means of production, capitalism disrupts not only markets but also the cultural and social fabric that supports its institutions. Over time, I predicted, capitalism would erode the entrepreneurial spirit that made it dynamic, replacing it with a class of managers and bureaucrats who, while efficient, lack the visionary energy to sustain perpetual innovation.

Now, in hindsight, I see that I underestimated the resilience of entrepreneurial capitalism, particularly when tied to democratic institutions and bolstered by global competition. The collapse of the Soviet Union and the stagnation of centralized economies underscore how essential competition and private incentives are to innovation. Bureaucracy alone, far from being a neutral executor of rational plans, often succumbs to sclerosis, inefficiency, and elite capture. The lessons of Kornai’s 'The Socialist System'—a work I would eagerly reference today—make clear how central planning inherently breeds shortages, inefficiency, and corruption due to its structural inability to adapt to complex, dynamic markets.

You are correct that I overestimated the efficacy of rational bureaucracy. My optimism was rooted in the idea that a bureaucratic structure could, at its best, implement policies consistently and rationally. However, what I underestimated—what history has since made painfully clear—is that without the competitive pressures of the market, bureaucracies lack both the incentive and the feedback mechanisms necessary to innovate and respond effectively to change. Instead, they protect their own existence and entrench their elites. This tendency is not limited to socialist states; even in capitalist democracies, public institutions often suffer from a similar ossification, as seen in the inefficiencies of large welfare states and regulatory bodies.

Finally, a word on capitalism’s potential future adversary. If socialism as envisioned by Marx and Lenin is now discredited, a new form of bureaucratic corporatism or "managerialism" may well take its place. The threat to capitalism today lies not in revolutionary upheaval but in the creeping expansion of non-competitive structures—be they state bureaucracies or monopolistic corporations—that stifle innovation and dynamism. The battle for the future, then, is not between capitalism and socialism but between innovation and stagnation, competition and rent-seeking.

"Super-Fab" by Adam Carlton

1: Charity

     They first arrived in charity shops, no-one knew from where. In appearance they were like microwave ovens: cubical things, cavities whose front door came with a screen rather than a metallised window. Soon, however, their true function became apparent: they fabricated things.
     Mrs Chigwell from Bournemouth Children’s Aid took delivery of the parcel. The charity shop was on the high street, one of a cluster. She had been manning the counter for half an hour but business was light. Squally rain outside had deterred passing trade, though as she surveyed the racks of old books and dingy clothes she could see one or two regulars hunkered down at the back, waiting out the heavy morning hours of a long, tedious day.
     The doorbell rang and a young delivery man walked in, staggering under the weight of his package. Mrs Chigwell gave him a tentative smile and beckoned him to place it on the table they used to sort through donations. It seemed quite heavy and cumbersome and at first she thought it might have been a mis-delivery from Amazon. They surely weren’t expecting anything, or at least she hadn’t been told. But Amazon didn’t make those kinds of mistakes, did it?
     Mrs Chigwell beckoned her daughter across to help. She was so proud of Julia. Doctor Julia she reminded herself, with that advanced degree from Imperial College up in London. Julia was down for the holidays, helping her out in the shop. She'd know what to do.
     Julia and her mother carried the box into the kitchen at the back of the store and got it unpacked. The instructions were written in a curious variant of English but were not hard to understand. The first thing to do was to plug the machine into a wall socket.
     Mrs Chigwell smiled. Her passing thought was that they were on the receiving end of a practical joke. It was very elaborate, she thought, could this be something dreamt up by Mr Harris who managed the shop? It was getting near Christmas and at a stretch she could imagine it was the kind of thing he might do, something to lighten the spirits. Could it be fairy-lights?
     Julia read from the instruction flowchart. She mused for a while, trying to make a decision. Finally she said, “I’d like a nice cup of hot chocolate.” Mrs Chigwell openly laughed: her daughter was such a tease. The machine promptly replied--Mrs Chigwell gave a small start of alarm--asking her to open the door and place inside various pieces of food rubbish. It listed the kinds of things it wanted.
     The deplorable state of the kitchen (no-one had cleared up recently) sufficed to provide several slices of stale bread, a plastic bowl of cold, discarded chips and a cup full of water. Mrs Chigwell was again reminded of a microwave as the box hummed, giving out a slight smell of ozone. Five minutes later there was a soft chime and the screen flashed a ready message. Inside Julia found the garbage had been transformed into exactly what she had asked for. She cautiously sampled the piping-hot drink--it turned out to be delicious.
     Children’s Aid in Bournemouth was just one of thousands of outlets which received a ‘Super-Fab’ as they became known. The Internet buckled as people experimented, tested and speculated as to how they worked, racing to confirm that they were indeed trustworthy. A consensus grew that they were the very latest in 3D printers. There were no obvious limits as to what they could produce, provided they got the right raw materials and the result would fit in the box. And they really worked, did just what they advertised.
     So that was the very earliest understanding of the devices. That, and the fact that no-one seemed to know where they had come from.
     Mrs Chigwell set the machine up in a corner of the shop and advertised free food and drinks to the passing homeless people of Bournemouth. The cost to her was volunteer time, power from the mains and leftover rubbish and water which the machine consumed as raw materials. She was not the only one, and in this small way the sum of human happiness increased a trifle in Britain’s run-down towns.

2: Replication

     The machines had an unexpected party piece: they could produce themselves. This was discovered by way of a joke request from Perry Zhang, a student at Manchester University on the second day after the machines surfaced.
     Perry made his humorous suggestion and, to his surprise, was asked to fetch various raw materials. He shoved in some old mobile phones, some plastic water bottles (full) and a few other household items until the machine professed itself happy. After less than ninety minutes the door opened and Perry was able to pull out a number of small rectangular units. After another feed and a further hour, more units became available and thereafter it was a simple matter for Perry to stack these into a cubical shape the same size as the Super-Fab--it turned out there was only one way to do it.
     A faint smell of burning emerged from the assembly as temporary partitions dissolved and internal connections welded tight, and then it became apparent that a second, identical unit calmly squatted in front of Perry. A copy had indeed been fabricated.
     The cost: Perry’s unskilled labour, some surplus electronic devices and other junk and three hours of electricity at the level of a one-bar fire. Perry tested the newly-spawned device until he was sure that it worked correctly, then he gave it to his girlfriend.  He wrote up his experience on his social media page, mentioning that the device had told him it could produce a new Super-Fab of any size at all. Useful, it suggested, for making bigger things.

3: Production

     Bill Jones ran a small factory in Birmingham making clocks. He bought in parts from many suppliers and employed skilled workers and advanced machine tools to create his high-quality products. Since you could buy timing devices from many sources at rock-bottom prices, the clock-making business was precarious. Bill’s enterprise survived in an artisan niche, making quirky, individualistic devices for discerning bohemians and specialist customers.
     Bill was imaginative and a go-getter. He bought a Super-Fab from one of the middlemen-sellers who were rapidly springing up and tested it in a spare workshop next to his office. The machine asked for a sample of the clock Bill intended to duplicate. Bill settled on one of his more intricate and expensive ones, a specialist device the Navy used on submarines. The machine also requested the ’blueprints’ in standard CNC G-Code format.
     After some minutes of analysis, the machine requested a list of low-value raw materials--plastics and metals. Bill was easily able to procure these from the factory stockroom. Soon, after the usual humming and ozone, a duplicate clock emerged. Bill thought that it looked identical to those his factory regularly produced at some considerable expense. He sent it for testing; it passed with flying colours, well within all the tolerances.
     Bill thought long and hard.
     First off, I could get this machine to duplicate itself, he thought. Run a few cycles of that and I’d have a rack of them at next to no cost. Then I could let my highly-trained but expensive production workforce go, just keeping a couple of conscientious but unskilled guys to run the Super-Fabs. My existing machine tools could be recycled as raw materials. Then I could churn out clocks across my product range on demand.
     What would it cost? He thought about it: electricity, waste materials and a few ancillary helpers. His costs would plummet; he would make a fortune. But then he thought some more. His competitors were not stupid; they would surely do the same. The price of commodifying clocks would plunge to their basic cost of manufacture.
     And then he had a further thought: why will my customers need me? They could do this for themselves if they’ve got one of these machines. All they need is a blueprint, a specification and they can get that on the Internet just like I do. So in fact I don’t have a business any more. He immediately called his lawyers and arranged a crash meeting to liquidate his company. Would anyone be mug enough to buy it off him?

4: Macroeconomics I

     The effects of the explosion of Super-Fab numbers on the economy were not long coming. The machines could replace much conventional manufacturing which displaced workers from the labour market in droves. Consequently social-security and unemployment-pay demands had never been greater, yet as tax revenues fell the benefit system couldn’t keep up. In many cases benefits were time-limited--but future job prospects for workers in manufacturing had never been bleaker.
     This could have been catastrophic--except that there were now plenty of charities which would provide any worker or family who needed it with a free Super-Fab. Once they had the machine, plus scraps and an electricity supply, then they could make practically anything they needed. So the lack of wages wasn’t an immediate, life-challenging problem.
     Dependence on electric power was, however, an issue; the national grid itself became brittle. Some workers failed to turn up for work since they didn’t really need a full wage. But others, those expelled from the labour force, were finding it difficult to pay for power and other necessities such as rent.
     People discovered, however, that the machines could produce both solar panels and a highly-efficient battery. A new kind of battery pack (a radioisotope thermoelectric generator?) had been designed by some smart ‘makers’ as they were being called--leftist engineers in the emerging counter-economy.
     Soon networked Super-Fabs were talking to each other, exchanging raw materials and sub-assemblies. Some people of philanthropic bent with access to land used their spaces for giant versions of the Super-Fabs. These could produce artefacts as large as ships or aircraft--or transporters to take these giga-machines to wherever they were needed.

5: Robot

     Small businesses like Bill Jones’s clock factory were soon out of business. But perhaps that had always been expected with the march of automation. More surprising was the demise of service jobs such as plumbers.
     Catherine May was perhaps the first person to discover the astonishing versatility of her miracle box. As the puddle emerged from behind the washing machine she sobbed in despair. She had never been able to find a reliable plumber and this emergency was not to be born!
     A small sound, like a trap door opening, warned Catherine that something else was happening. Strange, vaguely threatening devices were emerging from a hitherto-unsuspected opening in her Super-Fab. Catherine desperately rushed across to her six-month-old child in its high-chair to protect it.
     Such instinctive caution was unnecessary, however. The miniaturised crawling and flying things approached the mass of pipes behind the leaking machine and began to inspect them. Soon a larger device emerged from the front aperture of the Super-Fab: something which had arms built for engineering, something that looked like a traditional science-fiction robot.
     Twenty minutes of clunking and squeaking, replacing and lubricating followed, completed by a small amount of mopping. The devices returned to the Super-Fab to donate their bodies for re-use; the machine announced that the problem was fixed.
     “How do you know?” asked a quavering Mrs May.
     “Everything a plumber knows, I know,” said the device with not a trace of pride, “I’m on the Internet.”
     And so plumbers, hairdressers and other personal-service companies were rendered obsolete--and consequently bankrupt.

6: Macroeconomics II

     Once they were networked and had access to limitless Internet skills, the Super-Fabs were able to substitute for vast swathes of the existing economy. But what about big engineering? What was the story on dams and motorways? These were exemplars of social artefacts, things which it made no sense for any one user to dream up or install even if their Super-Fab had the theoretical capability.
     In fact the Super-Fabs did have the capacity for heavy engineering. The networked devices were soon discovered to be mining, refining and transporting raw materials extremely cheaply--most of the cost was simply power. They would, however, do none of these things by themselves; someone had to request it. That someone could only be government. Private entrepreneurs had no personal use for such monstrosities since they could no longer figure out any way to make money from them.
     Why was that? Because with costs tending to zero, no private company could avoid being undercut by a competitor who could charge even less for the finished product. There had always been a left-wing criticism that some social needs were under-supplied because no capitalist would invest to provide the necessary product.
     The Super-Fabs, however, could produce human necessities at zero cost. They were like the blackberry bushes which grow in the natural world, offering their bounty to anyone who stretches out a hand, their miracle of sun-powered nanotech provided free of charge. The Super-Fabs would always crowd out a capitalist employer who could not price at cost and stay in business.
     Government was all that was left.
     What about the banks and investment? That too was a short story. The banks were impoverished by the drastic shrinkage of the capitalist sector of the economy, the lack of investment opportunities. But the role of money did not vanish. There was still a need for a means of exchange and a store of value. It was noted that the banks had predated capitalism and would outlast it, at least for a while.
     However necessary it might be though, Government was in crisis. Perhaps this refuted the communist ideal, or perhaps it was what Engels had meant by 'the administration of things rather than people'.

7: Governance

     The Prime Minister has arranged a private briefing at a secluded country house in Norfolk. This would have been in month three or four. The house is a fine example of Palladian architecture set in sculpted grounds. It has been rescued from the National Trust by a government which understands the periodic need for a refuge from everyday events.
     The PM sits alone in a large wood-panelled room, savouring the silence. It’s ten o’clock in the morning and the early spring sun sends shallow rays across the finely-mown lawns towards the lake. Birds take their leisure or skim the surface: ducks, he thinks, or perhaps grey geese. It’s hard to be sure at this distance. He sips his coffee and strives to be at one with the landscape. His momentary peace is spoilt by the muffled sound of the door scuffing open, marking the entrance of his civil service science adviser.
     “Who’s on first?” the PM asks.
     “The engineer.”
     “When do we get on to economic policy?”
     “This afternoon.”
     The first expert is wheeled in, a professor at Imperial College. The science advisor points her towards the lectern and its projection screen. The PM dunks a Brontë biscuit in his mud-coloured milky coffee--a secret vice--and sits back expectantly to listen. The engineer has been told to keep it simple. She explains that the Super-Fabs are part machine but mostly organic. Someone has expanded biology to encompass functions which are presently carried out by engines and electronics.
     “For example, mass-spectrometry and data packet routing are carried out by highly-modified biological organelles.”
     The Prime Minister has no idea what this means, so he does that thing politicians do, he changes the subject.
     “Do we know who did this? I mean, could we do this?” he asks.
     “It’s certainly beyond us,” replies the engineer, “It’s the kind of thing people have speculated about--synthetic biology. Probably designed by advanced AI systems. It’s certainly way beyond anything achievable by human experts.”
     “They tell me these Super-Fabs can now reproduce like amoeba,” says the PM, “So how smart are they? Are they spying on us?”
     The professor shakes her head in irritation.
     “Prime Minister, the really important thing here is the breakthrough to human-level intelligence. The AI systems on board these boxes can accomplish everyday tasks, like plumbing or car repairs or hairdressing, better than any human. They’re networked through the Internet and they learn from each other. They synthesise special robots and drones to do jobs and those robots come with a wider variety of sensors than humans ever had. They are so much more advanced than we ever imagined artificial general intelligence would be, surely the result of bootstrapping.”
     The PM doesn’t get this either but thinks it might be important; he glances at his science advisor.
     “She means a succession of AIs each designing a smarter version of themselves. In a few generations you might get to where the Super-Fabs are now. The problem has always been that very first step, the starting-off point. But it looks like someone finally did it.”
     The professor says sorrowfully, “You ask if they’re spying on us. Why on earth would they even bother?”

8: Abundance

     There is an evening debate at the London School of Economics. It's between two leading economists of differing persuasions. Only one will be invited to brief the PM, so the stakes are high. The chair-person addresses the student audience in the vast darkened auditorium.
     “It’s a great economic paradox we see today. The economy is in free-fall, a major contraction with bankruptcies everywhere. Yet people have never been so well provided for. Tonight we will attempt to find out why.”
     The format is a prompted discussion with the chair. The neoclassical guy, a professor based at LSE, opens by explaining that the Super-Fabs have changed the market-structure to such an extent that competition is killing existing businesses.
     “You may remember,” the professor says, addressing the shrouded mass of students, “how in your microeconomics course you were taught about perfect competition. Companies have to accept the market price on offer and a company’s profit is simply the general rate of interest.”
     The chair seeks controversy to liven things up: “But no company wants to be in that kind of a market, with no surplus funds for R&D, no spare capital for anything risky or speculative, no-one making any real money. It’s marginal whether to invest at all in a sector where perfect competition holds sway, isn’t it?”
     The LSE man smiles agreeably, waving his hand, “The Super-Fabs are dragging every sector of the economy into the very model of perfect competition. It's an excellent outcome. It's well-known this is Pareto-optimal for social welfare.”
     The chair mutters, almost inaudibly, “And yet the economy is close to collapse with an investment strike and no tax revenues.”
     “Not so fast,” interjects the heterodox professor from King’s College, taking on her LSE colleague, “All your talk of normal profits hides the fact that workers in a capitalist economy have to produce more value in the working day than they cost in their wages--that’s where the profits come from. But these machines, these Super-Fabs, aren’t paid wages. Once you have one you can produce goods and services at essentially no cost. The machines are even providing their own power supplies now--and sharing raw materials and components.”
     The chair-person hasn't heard this news.
     “Oh yes,” the King’s College professor confirms, “It seems that they’ve started doing those things. And once they show a new capability it spreads pretty fast.”
     The chair-person defends orthodoxy, “You can’t compete with free,” he objects, “No-one will invest. The economy is going to tank--unless,” and here he stares almost wildly at the assembled students, “unless they make the Super-Fabs illegal!”
     The heterodox economist rolls her eyes, “An employer will only invest if they expect to make money, but these machines are zero-cost slaves: both costs and revenues are tending to zero. That kind of competition is making capitalist production impossible. As my bourgeois friend here,” she points to the chair, “correctly states, you can’t compete with free.”
     The chair looks irritated at this faint praise.
     “However we have been here before,” she continues, “We’re transitioning to an economy the ancient Greeks or Romans would have been very familiar with. With automated slaves seeing to production there will still be plenty of administrative tasks, deciding those things which affect vast numbers of people. Greek and Roman politicians were justly famous. And we will have so much more in the way of resources. The Prime Minister may well be lauded as the Cicero of the new age!”
     There is applause at this, although some in the audience perhaps recall that Mr C. came to a rather sticky end.
     The King’s College economist is finishing up. “The Marxists always believed that capitalism would create the conditions for its own supersession. They thought it would have to be something violent like a Leninist proletarian revolution but that has never seemed remotely likely.”
     At this a small group at the back of the room unfurls a red banner adorned with a hammer and sickle and starts to hiss. But they calm down before they can be ejected; even they are interested in where the speaker is going with this.
     “But even Marx, you know, had some inkling of the truth. In his Fragment on Machines he predicted that capitalism would end up replicating and improving on every human ability, both physical and mental, thereby eliminating the need for human workers entirely. Capitalism is finally being vanquished not by the ascendant proletariat but by that class's very departure from the scene. And so we are where we are.”
     Amidst the applause it was enthusiastically agreed that King’s College would brief the Prime Minister.

9: Utopia

     Not every state in the world settled upon a managed transition like those in the advanced economies of the West. There were autocratic regimes which did indeed try to ban the Super-Fabs, imposing draconian penalties for possession. It was as if they had tried to ban breathing the very air itself, so they could maintain the sale of oxygen bottles.
     And so the world turned itself upside-down, roughly and smoothly, becoming a post-capitalist planet. It seemed there were a lot of things that ordinary, decent folk had always wanted to do. And now they had their chance.

10: Mallorca: some months later

     Julia lies on her beach-recliner next to Timothy's, listening to the quiet hissing of the waves. She is already regretting their impulsive hook up.
     Behind them, gleaming white rental apartments front the shoreline. There are no staff. With the complete hegemony of the Super-Fabs, hotels have finally become Le Corbusier's famed machines for living in. Julia beckons a passing beach-minibar for a refreshing chilled fruit cocktail.
     Timothy is from a well-off family--which had meant something tangible before the transition. He's currently working on his doctoral thesis: The Exogeneity of Moral Values within Marxian Ontology at Columbia University. The Old Philosopher’s work has achieved such a comeback over the last year.
     Julia herself is from the other side of the tracks, a sleepy, down-at-heel seaside town in England called Bournemouth. By grit and native talent she worked her way up to an advanced degree in ecology; her thesis on the dynamics of species in competition with each other.
     “Marx was right,” murmurs Timothy, mentally reviewing part of his own great work, “Once scarcity was abolished people were finally able to live up to their true potential.”
     “Yet the Super-Fabs can make guns, drugs and instruments of torture. They can and they do.”
     It’s a familiar argument: is the glass half-full or half-empty? Timothy isn’t really concentrating--these arguments bore him. He simply rolls out the standard rebuttal.
     “Most crimes disappeared when there was abundance. No need to steal, after all. Pretty much every human want is satisfied by something or other in the Super-Fab’s repertoire, there's no need to grab it by cunning, trickery or force. And the people’s police and justice system are perfectly able to mop up the rest, especially given the high-tech surveillance and enforcement kit the Fabs made for them.”
     Julia has been reading the local news reports. Something strange is stirring in the sun-baked volcanic interior of the island. Something which speaks to her professional training.
     “The global network of Super-Fabs now forms a completely-parallel ecology,” she says, “They're mobile and they reproduce. They were designed to serve us but things could easily go a little haywire. Some replication glitch, some programming error or hack would do it. Their and our basic interests are far from totally aligned. After all, God isn’t making much in the way of new territory, are they?”
      She sips her rapidly-warming drink.
     “The Romans were always most scared of a slave revolt, weren't they? That's why their punishments were so draconian.”
     Timothy doesn’t see how any of this could relate to his thesis. It seems orthogonal to the social relations of post-capitalist society, the economics of the transition to fully-automated luxury communism.
     Just scaremongering and doom-speak.
     Julia is not nearly as much fun as he’d hoped.
     Neither of them notices the black shapes emerging from the waves. Alligator-bodies with spectral eyes and laser-mouths crawling in their dozens out of the surf, here to recycle the garbage and claim their world for ever.

END

© Adam Carlton 2019.

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This is a somewhat dramatised view of the inner logic of total automation.

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You will find my collection of short stories, published on Amazon (Kindle and paperback) here:

"Freyja’s Deathbed Conversations: and other stories" (2019)

and my SF novel, also published on Amazon (Kindle and paperback) here:

"Donatien's Children" (2022).

Feel free to purchase both!

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Capitalism is for wimps

File under speculative.

In the days before capitalism (feudalism etc), productivity was static, the Malthusian trap operated and the economy was zero-sum. Basically if you could grab it, or could network well so that you and your mates (normally male kin) could grab it, you were ahead.

This placed a selective premium on males with superior aggression and leadership/followership qualities (such as loyalty) - and females who thought that men with such attributes were good prospects.

There were always wimps of course. Alleles which determine personality, body morphology and aggression are scattered across the autosomes (the 22 pairs of chromosomes which are not X or Y, sex-determining). Many men will have had more feminine bodies and less aggressive demeanour.

Undoubtedly there was also a measure of balancing selection. Wimp niches.

Nevertheless, on aggregate, these were very masculine-feminine gendered societies. Shakespeare's plays give us a clue. How uncomfortable they feel these days!

Don't get me started on the Bible.

Capitalism, dominant over the last centuries, lives in a world of contracts across time and space. Individual capitalists are quite weak: they can't force their customers to buy from them, they can't eliminate the competition by force. (That doesn't stop them trying sometimes, but the system depends upon the majority not succeeding and not even trying: three cheers for effective competition).

What does capitalism select for?

• Intelligence - the ability to conceptualise abstractions
• Affability - getting along with strangers
• Lack of physical aggression - can't do business with guys who beat you up.

Here is the real story of the so-called 'feminisation of society' which has been blamed on the women's movement and feminism. Capitalism's very requirement for feminine psychological attributes has called forth feminism to articulate the roles which women can - and are encouraged to - fill.

Gay men also find many niches, particularly in the media and in areas of high social-interaction.

As manual, blue-collar  work recedes to zero this trend will surely continue. I was looking at the candidates for the next Tory leader and prime minister: Jeremy Hunt, Michael Gove, Rory Stewart.

They'd all be classified historically as wimps.

Has there been time for capitalism to have significantly changed allele frequencies (wimpier men, more assertive women) to optimise psychological fit to its functioning?

Hell, yes!

We're talking about the bubble here, the ruling elite. Not the whole of society. Offspring diffuse in or out.

Outside the bubble, the masses sometimes look like a different species.

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I'm using the term 'masses' here as a synonym for those people not part of the 'smart fraction' (qv). IQs less than 105, say, .. and not so prosocial. It's no accident that politicians such as Trump, Farage and Boris Johnson, who have some rapport with the masses, are never plausibly characterised as wimps.

Wimp-language, aka bubble-speak, characterises them as populists, monsters, unstable, anti-intellectual, uncontrolled.

Sadly, the masses don't seem that impressed by the blueblood wimps.

Will this toxically-masculine breed of populist politicians find a new incarnation of capitalism which can bind the Caliban-Morlock masses back into the fraying project? A new and more successful Blue Labour? Or a socially-conservative one-nationism?

It should be an interesting few years.

---

Further reading: "The Office as Utopia".

Modelling total automation under capitalism (a progress report)

What actually happens to a capitalist economy as automation increases, employees are laid off and the budget for workers' wages tends to zero? It's possible to explore this in a spreadsheet using Marx's equations for expanded capitalist reproduction (which I wrote about here).

You divide the economy into Department 1, which makes machines (capital goods) and Department 2 which makes consumables (wage goods and luxuries). Then you iterate through cycles in which you try to make both Departments more capital-intensive while aggressively laying off workers.

There are some constraints: Department 1 sells Department 2 its machines; Department 2 supplies the consumption needs of workers and capitalists in Department 1. The following quantities need to stay non-negative:

1. Constant capital (machines, factories, raw materials) - c
2. Variable capital (wages) - v
3. Capitalist personal remuneration (dividends) - a
4. Overall sector profits - s  (or p, when adjusted to equalize the rate of profit between Departments).

Additionally the rate of surplus value s/v can't go through the roof. You can't have one worker alone in an enormous factory who works ten minutes to produce the value of their own wage, and then eight hours plus to provide the surplus value which pays for dividends and the next round of automation investment (s/v = ~50). They really wouldn't buy-in to that.

Click on the figures to make the spreadsheets large enough to read. You are not meant to understand what's going on - just to get an impression. More detailed stuff later.

Department 1: s/v tends to infinity while production is anaemic

The problem is this: as automation increases and the number of workers declines in Department 1, those few left have to (unrealistically) produce far more value than their wages to keep the edifice afloat.

Meanwhile the collapse in the number of workers overall leads to a chronic decrease in demand for Department 2's consumer goods. No new machines are being bought: instead there's accelerated depreciation - which destroys surplus value, hitting profits there.

Department 2: this sector begins to collapse

To reiterate: with decreasing demand for wage-goods, Department 2 finds itself losing the value invested in its machines, not buying more. Depreciation hits surplus value making Department 2 increasingly unprofitable.

So far I've been unable to find a combination of parameters which allows capitalism to eliminate all its workers. I'll keep trying ... .

More: Five questions on the last days of capitalism.

---

You ask, why use the framework of Marxist economics? Because orthodox (ie bourgeois) economics has no interest or explanation as to where profit comes from:

"Rent, wages, interest, and profit are the four factor incomes that land, labor, capital, and enterprise provide respectively."

Roughly the idea that if you put some money into 'enterprise' then by some magic it can become larger (profit). Magic is not a good analytic framework for edge cases of capitalist reproduction.

Affiliating to your favoured mode of production

Me, driving along:

"Isn't it interesting. There are three modes of production - the slavery of antiquity, feudalism and bureaucratic socialism - all of which showed extreme stagnation in the development of their productive forces. Productivity stayed low and technological creativity was minimal. Only capitalism has been able to sustain technological progress."

Clare: "I thought you were a Marxist."

"I am."

"But you're just saying the capitalism is better than all the others."

"It is. I'm a Marxist because I think Marx's method is right. He's the only one who really understood how capitalism (and the other modes of production) really worked. It's his utopianism I have a problem with, his starry-eyed view of an entirely socially-determined human nature."

"You can't be a Marxist, not with all those conditions. You don't understand about labels. You're either a Marxist or you're not. You're not. No-one would understand you."

(A pause before I continue).

"I'm still thinking about some kind of token to show that I adhere to a higher ideal, that I'm self-disciplined and ethical. That's what a uniform buys you, or a religious badge showing you're a good Catholic."

"Your hair's short enough. Why don't you get some saffron robes. That would convince people."

"I'm not a Buddhist. I would sign up to philosophical Taoism, but would a Yin-Yang tattoo convince anyone .. wouldn't you just be self-labelling as new-age and flaky?

(I muse).

"I guess I could have a hammer and sickle tattoo, but who these days associates that with iron discipline and a higher morality? Most likely they'd think I was some kind of hipster who ran a microbrewery."

---

What I was really interested in was just why capitalism is such a growth machine, despite human nature's natural inclination to find a quiet rut and enjoy it - certainly not to over-exert oneself for some abstract 'higher common good'.

I know the answer: it's fear. The unique insight of Marx was that a capitalist who doesn't ruthlessly innovate will be outcompeted - and ruined - by their competitors. Without fear, without skin in the game - no progress.

But there's no virtue-advertising insignia which celebrates that insight.

"Kingdom of the Wicked" (Book Two) - Helen Dale

Amazon link

I wrote about book one in November last year: "A high-tech capitalist Imperium in 31 AD".

"I should say 784 ab urbe condita: it seems unlikely that Christianity is going to end up on top when the Roman army is driving around Jerusalem in armoured cars, toting assault rifles. And where a certain Yeshua Ben Yusuf will be on trial for terrorism."

In Helen Dale's two novels, the Romans experienced capitalist lift-off in 212 BC, and by Jesus's time look very much like a modern American occupying force in the Middle-East - with similar issues. At the end of the first book Jesus had been arrested on subversion charges and was about to stand trial, while the zealots have started bombing.

My order has been placed (for 27th May 18).

---

You may think you know what happens next, but do you recall the Roman Empire deploying helicopter gunships?

Michael Roberts: Total Automation under Capitalism

Michael Roberts has a new book out:

Amazon link

Here is what he has to say about the impact of total automation on capitalism (pages 137-141).

"What does this all mean if we enter the extreme (science fiction?) future where robotic technology and AI leads to robots making robots AND robots extracting raw materials and making everything AND carrying out all personal and public services so that human labour is no longer required for ANY task of production at all?

Let's imagine a totally automated process where no human worked in the production process. Surely, value has been added by the conversion of raw materials into goods without humans? Surely, that refutes Marx's claim that only human labour can create value?

In Marx's economic theory, abstract labour is the only source of value and surplus-value. However, in the case of an economy where robots build robots build robots and there is no human labour involved, surely value is still created?

This was the argument of Dmitriev in 1898, in his critique of Marx's value theory. He said that, in a fully automated system, a certain input of machines can create a greater output of machines (or of other commodities). In this case, profit and the rate of profit would be determined exclusively by the technology used (productivity) and not by (abstract) labour. If 10 machines produce 12 machines, the profit is 2 machines and the rate of profit is 2/10, 20%.

Value reduced to use value has nothing to do with Marx's notion of value, which is the monetary expression of abstract labour expended by labourers. If machines could create 'value', this value would be use-value rather than value as the outcome of humans' abstract labour. But, if machines can create 'value', so can an infinity of other factors (animals, the forces of nature, sunspots, etc.) and the determination of value becomes impossible. And if machines supposedly could transfer their use-value to the product, this would immediately crash against the problem of the aggregation of different use-values.

For Marx, machines do not create value. Rather, concrete labour transfers the value of the machines (and, more generally, of the means of production) to the product. They increase human productivity and thus the output per unit of capital invested, while decreasing the quantity of living labour needed for the production of a certain output. Given that only labour creates value, the substitution of the means of production for living labour decreases the quantity of value created per unit of capital invested. ...

The Dmitriev critique confuses the dual nature of value under capitalism: use value and exchange value. There is use value (things and services that people need); and exchange value (the value measured in labour time and appropriated from human labour by the owners of capital and realised by sale on the market). In every commodity under the capitalist mode of production, there is both use value and exchange value. You can't have one without the other under capitalism. But the latter rules the capitalist investment and production process, not the former.

Value (as defined) is specific to capitalism. Sure, living labour can create things and do services (use values). But value is the substance of the capitalist mode of producing things. Capital (the owners) controls the means of production created by labour and will only put them to use in order to appropriate value created by labour. Capital does not create value itself.  So in our hypothetical all-encompassing robot/AI world, productivity (of use values) would tend to infinity while profitability (surplus value to capital value) would tend to zero. ...

This is no longer capitalism. The analogy is more with a slave economy as in ancient Rome. In ancient Rome, over hundreds of years, the formerly predominantly small-holding peasant economy was replaced by slaves in mining, farming and all sorts of other tasks. This happened because the booty of the successful wars that the Roman republic and empire conducted included a mass supply of slave labour.

The cost to the slave owners of these slaves was incredibly cheap (to begin with) compared with employing free labour. The slave owners drove the farmers off their land through a combination of debt demands, requisition in wars and sheer violence. The former peasants and their families were forced into slavery themselves or into the cities, where they scraped a living with menial tasks and skills or begged. The class struggle did not end. The struggle was between the slave-owning aristocrats and the slaves and between the aristocrats and the atomised plebs in the cities.

A fully robot economy means that the owners of the means of production (robots) would have a super-abundant economy of things and services at zero cost (robots making robots making robots). The owners can then just consume. They don't need to make 'profit', just as the aristocrat slave owners in Rome just consumed and did not run businesses to sell commodities to make a profit. So a robotic economy could mean a super-abundant world for all or it could mean a new form of slave society with extreme inequality of wealth and income. It's a social 'choice' or more accurately, it depends of the outcome of the class struggle under capitalism.

The key issue is Marx's law of the tendency of the rate of profit to fall. A rising organic composition of capital leads to a fall in the overall rate of profit engendering recurring crises. If robots and AI do replace human labour at an accelerating rate, that can only intensify that tendency. Well before we get to a robot-all world, capitalism will experience ever-increasing periods of crises and stagnation."

Everything Roberts says here is orthodox Marxist economics and yet there is something missing: the use of the abstract concepts of Marx's theory to reconstruct the concrete phenomena, to discern the details of the actual transition to 'a robot-all world'.

Marx was not a vitalist. He did not think that human protoplasm endowed human labour with some mysterious value-producing quality that mere steel and electronics could never replicate. So what if human workers were everywhere replaced by fabricated androids who also toiled in the factories, were paid wages and consumed ersatz food? Does capitalism still work? [Answer: of course].

If one particular capitalist creates a totally automated factory (or one using purely slave labour which is - in Marxist terms - the same thing) is that incompatible with capitalism? [Answer: of course not].

As more and more capitalists automate their factories, displacing human labour, what is the process which unfolds before them and why? How do they perceive the capitalist economy failing before their eyes?

Or will they rather observe, as Peter Singer writes in his book on Marx: ‘Future capitalists will not find their profits drying up as they dismiss the last workers from their newly-automated factories’ (p. 76).

I outlined some answers here.

"China's Economy: What Everyone Needs to Know" by Arthur R. Kroeber

Amazon link

This book seems the best modern survey of the Chinese economy. I was interested in whether China is still a planned economy (as Michael Roberts has argued: "Xi takes full control of China’s future") or whether it has reverted to capitalism. I also wanted to get a sense of where the modernisation campaign has got to, and the prospects for coming political change.

Kroeber's book is useful for all these questions. It's incredibly well-informed; about as well-written as any book on Chinese political economy could be; and compelling and astute in its observations. As far as I can gather, despite the remarkable growth in the capitalist sector in recent decades (the powerhouse of the economy), the 'dominant heights' of the economy are still politically controlled by the Communist Party. This includes both the SOEs and some of the larger capitalist companies, where the ownership structure is opaque.

Kroeber argues that China has reached the end of its massive extensional period of growth and is now pivoting to intensive growth, relying on worker upskilling, an enhanced service sector, a further increase in the market sector at the expense of the deadbeat SOEs and Chinese leadership in technological innovation. This process is hard to reconcile with Xi's increasingly authoritarian policies (which are themselves driven by the need to break the power of defenders of 'the old ways'). It seems that another kind of pivot will be needed in the early 2020s if growth on the new course is to be sustained.

Kroeber emphasises that China is still, in terms of GDP per head, a poor country. It will take many decades to catch up with the G7 advanced capitalist countries. This is worth remembering when encountering yet another scaremongering article about the imminent Chinese challenge to American global hegemony.

Why Marxists should embrace Capitalism

He doesn't look quite so energised. Outrage fatigue?

Apparently students are embracing Marxism all over again.

But are they embracing the right Marx?

Analytic-Marx, researching at the dawn of large-scale capitalism, tried - and largely succeeded - in understanding scientifically the inner dynamics of capitalism. Like all structured social activities, capitalism can be likened to a game with protocols, with rules.

Marx was the guy who figured them out.

Outrage-Marx was an SJW of his time, looking with horror at the Industrial Revolution and the truly awful conditions of the working class. The sooner capitalism went the way of feudalism the better!

Analytic-Marx was careful to avoid that roadmap. He knew he didn't have one. He also knew that, given the undeveloped level of the forces of production, those outrages were sadly unavoidable. A lesson that liberals would fail to understand regarding Soviet Russia in the nineteen thirties.

---

It is not necessary to understand capitalism to play it. The task for practitioners is to manage it. After Marx and the classical economists figured out the rules, this became the new task for bourgeois economists. Marx was deemed irrelevant because his theories weren't very well-suited to micro- or macroeconomic policies. They were also full of awkward concepts such as surplus value and exploitation.

But even soviet economists, tasked with managing a planned economy, felt the need for western econometric techniques and tools.

---

Like our close primate cousins, humans evolved to favour family (kin) and friends (reciprocal altruism). As groups got a little larger and fortune was distributed unevenly, this resulted in the 'big man' patron-client relationships we saw in antiquity and in modern traditional societies.

It's not very scalable.

People are incapable of personal, manageable relations with too many people. You can't remember their faces and names, let alone where you both stand in the favour bank. For societies to scale, people need to augment their personal relationships with an overarching allegiance to a greater, idealised community. People you don't actually know (although you have expectations of prosocial behaviour).

Some of this we used to call patriotism: often couched in the language of kin (fatherland, motherland) and buttressed by potent symbols and behavioural norms.

Imagined communities take you so far. The mechanisms require hierarchical organisation where 'managers' at each level form kin (deprecated but common) or reciprocal-altruism networks which get stuff done. It's convenient to pretend (particularly in North America) that in organisations of any scale, people are simply atomised, 'empowered' individuals who interwork through formal process. But that isn't true at all.

The ability to successfully amplify family-and-friend-level social solidarity to arbitrarily large social formations is the foundation for asabiyyah. Great things can then be accomplished, but that cohesion has to be real. The retreat of the elite into their own cultural bubble, for example, from where they express disdain and contempt for the masses, is very corrosive.

Anyway, we appear to digress.

---

In the Soviet Union, and the other planned economies, productivity was very low. 'They pretend to pay us, and we pretend to work'. People might be patriotic, but there was no discernible connection between how hard or intelligently anyone worked and overall economic outcomes. The incentive was simply to over-fulfill the plan, yet the plan was too coarse-grained and never accurate. The economy bounced along the bottom.

Under certain conditions (chiefly effective competition) capitalism is very different. Inside a company, people get sucked into a loyalty network (the company is 'us') and via its hierarchy assemble themselves into human-sized reciprocal-altruism groups. Tasks are assigned and there are rewards for success and penalties (up to and including termination) for failure.

Capitalist economies work with the grain of human nature because they engage and reward people at the granularity of their natural family-and-friends groups. They can do that because they are decentralised, and because what people do makes - ultimately - an existential difference.

It's perhaps sad that the prospect of being fired (or at the least, being yelled at) tends to motivate people, but there's also praise and material reward for those who get things right.

---

I read a fair amount of Marxist literature. Some is featured on the sidebar of this blog. I value the economic analysis - often insightful. I also notice a ritualistic quality to the denunciations of capitalism, the tired dogma as to how a planned economy would do so much better.

We tried it. It didn't.

The workers had ample opportunities to 'restore workers' democracy' as those bureaucracies decayed into impotence. They saw no way forward which worked for themselves, their families and their friends.

When Analytic-Marx talked about exploitation, he was simply noting that the social-surplus product produced by workers ends up under the control of the capitalists. He also noted that capitalists are highly-motivated not to spend too much of it 'unproductively' on themselves. They really want to reinvest their surplus to make even more capital - on pain of being outcompeted. (The bad apples get on the news, of course .. or the magazines).

I rather approve of this decentralised model of investment. It's a million times more dynamic than any kind of central bureaucracy, or (heaven help us) committees of workers' soviets making allocation decisions.

[Regarding crises, note that all search algorithms under imperfect information need to backtrack].

---

In the future we will be richer. In the future everyone, like middle-class pensioners today, will have an adequate basic income. In the future we will have an even more productive infrastructure due to enhanced automation.

In the future it will be better, but for a large part of the world it's not bad now. And for the other parts, don't blame capitalism - some intractable problems need levels of technology we don't yet have.

---

And in the remoter future, capitalism won't work at all, because no-one will choose to play the game that way. Because, as Marx predicted, we will all be so much better off.

A high-tech capitalist Imperium in 31 AD

Amazon link

I should say 784 ab urbe condita: it seems unlikely that Christianity is going to end up on top when the Roman army is driving around Jerusalem in armoured cars, toting assault rifles. And where a certain Yeshua Ben Yusuf will be on trial for terrorism.

Helen Dale explains her thinking:

"What struck me at once was the attack on the moneychangers in the Jerusalem Temple. All four Gospels record it, and their combined accounts do not reflect well on the perpetrator’s character.

Jesus went in armed (with a whip) and trashed the place, stampeding animals, destroying property and assaulting people. He also did it during or just before Passover, when the Temple precinct would have been packed to capacity with tourists, pilgrims, and religious officials.

I live in Edinburgh, a city that has many large festivals - religious and secular. The thought of what would happen if someone behaved similarly in Princes Street during Hogmanay filled my mind’s eye. This was not a small incident.

It seemed obvious to me that Jesus was executed because he started a riot. Everything else - the Messianic claims, giving Pilate attitude at trial, verbal jousting with Jewish religious leaders - was by the by.

Our system would send someone down for a decent stretch if they did something similar; the Romans were not alone in developing concepts of ‘breach of the peace’, ‘assault’ or ‘malicious mischief’. Those things exist at common law, too. ..."

Jesus was far from 'meek and mild'.

"Finally, instead of bringing Jesus forward in time and placing him in modernity, I thought to leave him where he was and instead put modernity into the past. What, I wondered, would have happened had Jesus emerged in a Roman Empire that had gone through an industrial revolution?

"Other things being equal, what would modern science and technology do to a society with very different values from our own? Would they react with the same incomprehension that we do when confronted by religious terrorism? ..."

"My industrial revolution has its origins when Archimedes survives the Siege of Syracuse in 212 BC and is treated to a Roman version of ‘Operation Paperclip’ (the American retrieval of scientists from defeated Nazi Germany). As a consequence he (or his students) develop calculus and a variety of practical military technologies. In keeping with Roman militarism, the first place the new technologies manifest themselves is in warfare. They then propagate...."

Of course, new technologies can be introduced under slavery, although without the dynamism which capitalist competition alone provides.

"Chattel slavery undermines incentives to develop labour-saving devices because human labour power never loses its comparative advantage. People can just go out and buy another slave to do that labour-intensive job. Among other things, the industrial revolution in Britain depended on the presence (relative to other countries) of high wages, thus making the development of labour-saving devices worthwhile.  ...

"Slavery—and its near relative, serfdom—have been pervasive in even sophisticated human societies, and campaigns for abolition few and far between. We forget that our view that slavery and slavers are obnoxious is of recent vintage. In days gone by, people who made fortunes in the slave trade were held in the highest esteem and sat on our great councils of state.

This truism is reflected in history: The Society for Effecting the Abolition of the Slave Trade met for the first time in 1787. It had just twelve members—nine Quakers and three Anglicans. And yet, in 1807, Parliament passed An Act for the Abolition of the Slave Trade.

The Quaker role in abolition was so vast it is difficult to overestimate. And in the context of both Christianity specifically and human religion more generally, the Religious Society of Friends is theologically distinct. Who in antiquity could perform the Quakers’ role?

In the end, I lit upon the Stoics, and came to admire many aspects of their philosophy when researching Kingdom of the Wicked. ... "

In the novel, slavery has recently been abolished. And now we turn to Jesus's trial itself.

"I have, however, gestured towards three characteristics of Roman law that set it apart from common law. First is the capacity of judges to investigate matters on their own motion. This explains why Pilate is able to source evidence independent of counsel, something considered most improper at common law.

Next is the importance Cornelius [the prosecutor] attaches to obtaining a confession, and the lack of procedural safeguards for the accused. To a Roman lawyer, a confession is the ‘Queen of Proofs’, while his common-law counterpart always suspects that confessions come about thanks to the judicious application of lengths of rubber hose.

Finally, there is the absence of a rule against hearsay, something that is peculiar to the common law."

I've just started the book: it's well-written and taut. We're centred around the Roman administration (central characters Pilate, his family and hangers-on) and the Sanhedrin (major figure the high priest, Joseph Caiaphas).

The Romans are pious yet decadent, hedonistic and sexually uninhibited. The Jews (indistinguishable at the time from their fellow Arab tribes) are socially conservative and sexually repressed, disgusted at the loose ways of their autocratic rulers, the eponymous Kingdom of the Wicked.

Judaea is a hotbed of unrest. Terrorist groups vye with each other in atrocities. There are roadside bombs. And riots.

---

Could capitalism have taken root in Imperial Rome? Marx reminds us that capitalism was never pre-planned as a new mode of production. It took root and expanded where and when it could, and only afterwards was it understood for what it was.

The preconditions for capitalism to emerge seem to be a money economy (which the Romans had) and a strong guild-artisan sector capable of commodity production. At a certain point guild-restrictions on employment of labour are lifted, and the owners of capital begin to accumulate and expand their wealth and power.

They do however need to acquire free labourers, those who have no choice but to work in the nascent factories. In this they compete with landowners who own slaves or control a tied peasantry. The expulsion of landless labourers from agriculture everywhere propelled industrial revolutions.

It is not clear that the proto-bourgeoisie (which barely existed in Roman times) had, at any point, the political or economic clout to seriously contend with the land-owning classes. But it's a complex analysis.

---

My brother notes: "Am surprised that you didn’t include some backstory on [author] Helen Demidenko/Darville/Dale. Her biography is as interesting and extraordinarily as her fiction by all accounts!"

---

Here is the review of "Kingdom of the Wicked Book Two: Order".

"They dismiss the last workers from their fully automated factories"

A post at Marginal Revolution from 2010: "What is the biggest flaw in the labor theory of value?".

MR is an Internet temple to neoliberalism so a dismissive, patrician putdown of the Labour Theory of Value (LTV) was never in doubt.

In a comment, Chris Hallquist writes (March 30, 2010 at 12:34 pm):

"My favorite comment on the LTV comes from Peter Singer, of all people, in his largely sympathetic book on Marx. I don’t have the exact quote, but it was something like “The capitalists of the future will not see their profits dry up as they dismiss the last workers from their fully automated factories.”

I'm a capitalist. Suppose I have a Magic Box* which, say, costs £100 a day to run and which produces goods on demand to a value of £x. I have in mind something like a science-fictional 'next-generation 3D printer', which could make a case of baked-beans tins or the engine of a car depending on your menu selection and your whim.

Question: what can I charge for the goods produced? What is £x here?

So initially it's just me with the Magic Box -  I can charge what the market will bear. But soon all my competitors will have one too. The last workers are dismissed from their fully automated factories.

But due to competition, eventually I can charge no more than £100 for whatever I produce in a day. If I try to charge more, someone will undercut me and steal my customers. I make no profit.

Plainly before I get to this point I'm going to stop bothering with this investment in Magic Boxes - what's in it for me?

---

What stops this argument applying to capitalism today?

The primitive state of productivity and the consequent scope for further innovation.

As there is no Magic Box today, as a capitalist I have to use workers and machines to produce commodities for sale. Over a cycle of production the workers are paid for their labour-power at the cost of their own social-reproduction (v) and the machines (and raw materials) are paid for at their cost of operation and depreciation (c).  Given both factors (at a cost of c + v), the workforce then produces goods of value (c + v + s) which, by assumption sell at the direct price (Anwar Shaikh). My profit is then s.

Note that (c + v + s) is the actual (LTV) value which, in this model, equals the direct price of the product. There is no cheating here, no selling things above their actual value.

In the simplest historical models, the first capitalists competed with small-scale artisans engaged in simple commodity production - who make no profit as such on their work. But the capitalists innovate, add machines, significantly lower the cost of production per commodity but sell at (or slightly below) prevailing market prices. They increase their own market share and revenues, and thereby accumulate.

Incidentally they also wreck the economy of the simple commodity producers, forcing them out of business and into the ranks of labourers, who produce nothing but their own ability to work (labour-power) for a capitalist. The advent of capitalism was .. messy.

An 'arms race' then develops in which the contribution of more productive machinery increases and labour is shed. A capitalist could in principle always undercut the competition by lowering s, reducing price towards the cost of production and thereby removing profits, but why is that a good use of investment capital? Far better to use the money to invest in some other business which is still making adequate returns. And if there are no such, then we have a crisis, or stagnation.

[A truly perfect competition would drive s to zero and is impossible under capitalism.]

The limit of this process is the Magic Box where the capitalist needs no workers at all. But, as noted above, once everyone has one the price I can charge is forced down to the cost of production - there are no more profits to be had.

And if the Magic Box takes over the whole economy ("They dismiss the last workers from their fully automated factories") there are no other investment opportunities. It is the stagnation from hell; with nowhere to put your money, capitalism simply can't function.

So the story is this: as total automation comes closer, competition forces prices closer to the costs of production as there are declining opportunities to out-innovate competitors. When the last worker leaves, the capitalist simply stands back to observe the robot factories churning out goods which cannot be sold at a profit. He wonders why he bothered to invest (actually he didn't).

But it's worse even than that.

Meanwhile, the displaced workers have no income so they're kind of mad .. and the capitalists, with their profits vanishing, have nothing to skim for their own personal needs (no doubt their hoards will keep them going for a while). Eventually the automated factories all stop working due to no effective demand. The economy finally collapses and everybody starves.

In the real world, the model doesn't get pushed that far.

---

If some people (or a bunch of AIs) take over the reins of managing these automated factories, and if humans, displaced from production, are given money-tokens to purchase commodities, then we've re-invented simple commodity production - as practiced in antiquity using slaves.

Or perhaps people are also given (or purchase or take!) ownership of the Magic Boxes themselves. People use their machines to produce goods for personal consumption and also to trade unwanted goods with other people for commodities they do want (assuming some diversification due to variations in Magic Box design, capabilities or access to raw materials).

It's not capitalism, it's simple commodity production. And what about the centrally-planned economy, the classic model of post-capitalist socialism?

Another day.

---

This is a note: I'm still reading around these issues and revisions are almost certain. For a more detailed, quantitative and 'orthodox' treatment, leveraging the work of Michael Roberts and Peter Cooper, see "Total Automation under Capitalism?". And here is some background reading.

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* The economic effects of a 'Magic Box' (a cornucopia machine) were humorously imagined by Charles Stross in his SF novel, 'Singularity Sky' (2008).

Readings relating to total automation under capitalism

From the film, "Elysium"

Introduction

Suppose progress in AI and robotics manages to eliminate all human jobs: no more human workers. Would capitalism collapse or just sail serenely on, making the elite ever richer while the masses of the dispossessed watch in apathetic horror from outside the gated communities (Elysium)?

The usual Marxist account is that total automation is incompatible with capitalism, yet the standard response is curiously unconvincing. Marxists say that all automation systems are constant capital, and constant capital eponymously can't create new value. Only variable capital, living human labour, can do that. And it's from variable capital that surplus value - profits - are derived.

No workers, no profits.

This argument uses the abstract model of capitalist production developed in Volume 1 of Capital. But it leaves many things obscure.

• What is the special status of human labour, was Marx a vitalist?
• As automation increased, what actually would we see in the economy?
• If total automation brings about some other mode of production, how did we  switch?

Let's see if we can clarify any of this.

---

1. Why can't robots produce surplus value?

The question was asked particularly clearly in this Reddit post.

"I've often read that Marx firmly asserted that a machine cannot create surplus value. However, since technological capabilities have changed quite a bit since Marx's day, today I decided to do some research into modern interpretations of this theory.

"I couldn't find a good answer as to why a robot can't produce surplus value (sure, it's constant capital, but that doesn't really explain it), but I did find mention that neither slaves or animals (which are both living) can produce surplus value, which indicates that there is something very particular about the type of work done by machines, not the inanimate-ness of the machines themselves, that prohibits them from creating surplus value.

"This leads to a few questions:

• Why can't robots, slaves, and animals produce surplus value?
• Does the possibility of robots manufacturing other robots affect this?
• What about human-like robots created in the future?

"How can a society be both slave-based and capitalist (like the old American South)?

"Thanks!"

And here is the favoured answer - somewhat accurate but ultimately confused and unconvincing.

"Slaves are like tools since they are owned. If they exist alongside capitalism, they, like all other tools, pass their value on to the commodity but do not create new value. This does not mean that slaves are not exploited and don't produce a surplus for their masters. They do, but this surplus does not take the form of surplus value. In this case all the master's profit is surplus value transferred from free laborers. ...

"Surplus-value production requires a certain social organization. The question then is: What social organization differentiates the slave from the wage-laborer such that one doesn't produce surplus value but the other does?

"The answer is a social organization of generalized commodity production requiring an extensive division of labor. This social organization requires what Marx calls the laborer's "freedom in the double sense":

as a free man he can dispose of his labour-power as his own commodity, and that on the other hand he has no other commodity for sale, is short of everything necessary for the realisation of his labour-power.

"So, the slave/animal/robot must be given bourgeois rights; it must no longer be possible to buy and sell them, they must be considered equal as commodity owners and sellers. The slave/animal/robot must also be driven off the land and deprived of any means of production. This forces them to sell their labor-power to survive.

"If the animal/robot had the mental and physical capacity to function this way under these conditions, they would be surplus value producers."

Marx was not a vitalist, the term 'living labour' is an economic category (a producer of new value, an entity which brings labour-power to market as a commodity), not a term of biology.

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2. Forms of Production

The first step to understanding why the Marxist account is, nevertheless, correct is to carefully distinguish different ways stuff can get produced in a complex economy with a division of labour, requiring trading and exchange. It will become clear that the two critical ideas are the distinction between use-value and exchange-value, and the subtleties of the labour theory of value.

We start by describing three forms of economic organisation: pre-capitalist, capitalist and post-capitalist. Only the second creates surplus value, value appropriated by an economic actor other than the producer.

2a. Simple Commodity Production

Wikipedia has a good account of this pervasive economic mode:

"Simple commodity production (also known as "petty commodity production"; the German original phrase is einfache Warenproduktion) is a term coined by Frederick Engels to describe productive activities under the conditions of what Marx had called the "simple exchange" of commodities, where independent producers trade their own products. The use of the word "simple" does not refer to the nature of the producers or of their production, but to the relatively simple and straightforward exchange processes involved. ...

"Simple exchange of commodities is as old as the history of trade, insofar as it has progressed beyond barter, and occurred for thousands of years before most production became organised in the capitalist way. It begins when producers in a simple division of labour (e.g. farmers and artisans) trade surpluses to their own requirements, with the aim of obtaining other products with an equal value, for their own use. Through the experience of trade, regular exchange values become established for products, which reflect an economy of labour-time. ...

"Simple commodity production is compatible with many different relations of production, ranging from self-employment where the producer owns his means of production, and family labour, to forms of slavery, peonage, indentured labour, and serfdom. The simple commodity producer could aim just to trade his products for others with an equivalent value, or he could aim to realise a profit.

"That is to say, simple commodity production is not specific to any particular mode of production, and might be found in many different modes of production, with various degrees of sophistication. It does not necessarily imply that all inputs or outputs of productive activity are commodities traded in markets. Thus, for example, simple commodity producers could produce some products for their own use on their own land, while trading another part of their products. They might buy or trade some tools and equipment, but also make some themselves. ...

"In Marxian political economy, simple commodity production also refers to a hypothetical economy used to interpret some of Karl Marx's insights about the economic laws governing the development of commodity trade: it refers to a market economy in which all producers own the resources (including the ability to work) that they use in production. No-one is a proletarian, selling his or her labor power to another. Instead, each is self-employed.

"In this imaginary model, there is a direct correspondence between prices and the values of commodities. The model is imaginary, because no such society has ever existed in history; simple commodity production has always combined with some other modes of production, and as soon as a market economy reaches any size, it begins to utilise wage labor in production, and falls under the sway of the laws of capital accumulation."

The take-home point is that in simple commodity production the proprietor is neither a wage labourer nor a capitalist.

Amazon link

In general proprietors trade commodities at their value and do not produce surplus value, as Duncan Foley explains (Understanding Capital, p. 31):

"Consider a system of commodity production in which independent producers buy inputs to production, add their own labor to commodities, and sell the commodities for prices that in the aggregate reflect the labor time expended in the value added to the commodities. We could represent the movement of money and commodities in such a system by the diagram:

C-M-C'

where the producer starts with the commodities he has produced (C) and sells them for money (M) as a way of buying another bundle of commodities (C') that better suit his needs. The commodities purchased (C') have the same value as the commodities sold (C). The motive behind this transformation is not any change in the value owned by the producer but the qualitative change in the use-values he consumes.

When we think of the commodity circulation in this way, we realize that the process comes to an end after one round of exchange. Once the producer has exchanged the commodities he initially owns for the bundle he chooses, there is no reason for any further exchange to take place. If the economic process is to continue, the reason for its continuation must be sought outside the process itself, for example, in the external assumption that the next day the producer will once again find himself with commodities C that are not the ones he wants to consume and will be forced to exchange again.

Furthermore, there could be no social surplus value in this system. An individual trader might cleverly manage to buy some commodities below their real values and sell them at or above their real values and in this way appropriate a surplus value through unequal exchange. But whatever these agents gain in surplus value, some other agents must lose, because of the conservation of value in exchange.

Producers add value to commodities by expending labor on them, but in general they receive in exchange no more than the equivalent of this labor time. Thus there appears to be no way to explain the pervasive appropriation of surplus value as the basis of economic life within this conception.

Notice also that the only conception of accumulation of value in such a system is for an agent to realize more value by selling commodities than he spends in buying them over a period. The difference must take the form of an accumulation of money by the agent. But this accumulated value is simply withdrawn from commodity circulation through the agent's abstinence from consumption.

When the agent finally spends the hoard he has accumulated, he simply returns the money value to circulation and withdraws commodities from circulation of the same value (assuming that the value of money has not changed in the  meantime). There is in this conception no systematic process of accumulation."

2b. Capitalism

Capitalism is a weird mode of production, its strangeness hidden by its historical and geographical ubiquity, as Michael Heinrich explains in his “An Introduction to the Three Volumes of Karl Marx’s Capital” (p. 17):

Amazon link

"In precapitalist societies, the exploitation of the dominated class served primarily the consumption of the ruling class: its members led a luxurious life, used appropriated wealth for their own edification or for that of the public (theater performances in ancient Greece, games in ancient Rome) or to wage war.

Production directly served the fulfillment of wants: the fulfillment of the (forcibly) restricted needs of the dominated class and the extensive luxury and war needs of the ruling class. Only in exceptional cases was the wealth expropriated by the ruling class used to enlarge the basis of exploitation, such as when consumption was set aside to purchase more slaves, to produce a greater amount of wealth.

But under capitalist relations, production for the sake of increasing the capacity to produce is typically the case. The gains of a capitalist enterprise do not serve in the first instance to make a comfortable life for the capitalist possible, but are rather invested anew, in order to generate more gains in the future. Not the satisfaction of wants, but the valorization of capital is the immediate goal of production; the fulfillment of wants and therefore a comfortable life for the capitalist is merely a by product of this process, but not its goal. If the gains are large enough, then a small portion is sufficient to finance the luxurious existence of the capitalist, and the greater portion can be used for the accumulation (enlargement) of capital.

The fact that earnings do not primarily serve the consumption of the capitalist, but rather the continuous valorization of capital, that is, the restless movement of more-and-more accumulation, might sound absurd.

But the issue at hand is not an individual act of insanity. Individual capitalists are forced into this movement of restless profiteering (constant accumulation, expansion of production, the introduction of new technology, etc.) by competition with other capitalists: if accumulation is not carried on, if the apparatus of production is not constantly modernized, then one’s own enterprise is faced with the threat of being steamrolled by competitors who produce more cheaply or who manufacture better products.

A capitalist who attempts to withdraw from this process of constant accumulation and innovation is threatened with bankruptcy. He is therefore forced to participate, whether or not he wants to."

2c. Bureaucratic Socialism

Sam Williams describes the following scenario:

"A single corporation emerges that controls all of production. Let’s call our imaginary corporation the Universal Company Inc.  Its stock is traded on Wall Street and other global stock exchanges. Indeed, it is the only stock traded on the world’s stock exchanges, because it is the only corporation. It is the only business in the world.

Every factory, mill, mine, farm is controlled by Universal’s board of directors. Managers and technical personnel hired by its board of directors determine exactly what kind of goods are produced and the proportions in which each type of good is produced. Under the rule of Universal Company Inc., all workers are employees of the company since there are simply no other corporations to work for. Under the rule of Universal, what is the highest authority that the individual workers face? Why it’s the board of directors of Universal, which is elected by the stockholders of Universal on the principle of one share one vote.

But do the products of the labor of the workers of Universal take the form of commodities? The answer is no. Why not? Remember, Marx defined commodity production as a situation where the producers work for their own private accounts. Producers of commodities exchange the products of their labor and face no higher authority than the mutual pressure they exert on one another. Or what comes to exactly the same thing, the highest authority the producers face is competition among themselves. But this is not the case with the workers of Universal.

Instead of being indirectly social, the labor of the workers of Universal is directly social, as would also be the case under the rule of the associated producers. The board of directors and its subordinate employees such as managers, computer experts, foremen and so on see to it that the workers produce the right products in the right proportions. Since there is no commodity production, there is also no money, since money is simply a form of the commodity. And for the same reason, there is no capital, since capital consists of commodities and money. Where there is no commodities and money, there is no capital. And where there is no capital, there is no accumulation of capital.

The board of directors of the Universal Company Inc. might choose to continue expanded reproduction, but if it does, it will be accumulating use values not capital.

Since I am assuming a class of stockholders, the workers of Universal are indeed exploited. They are forced—just like is the case at the present day—to work some of the time for the boss—the stockholders of Universal—and some of the time for themselves. This allows the stockholders of Universal to live without working.

But the surplus product produced by the surplus, or unpaid, labor of the workers cannot take the form of surplus value, because there is no commodity production and labor does not take the form of value. And where there is no value, there can be no surplus value. And where there is no surplus value, there is no commodity production and no money. The surplus labor of the workers cannot take the form of profit—surplus value realized in the form of money. And where there is no surplus value and no capital, there is no capitalist mode of production.

While some might want to call our imaginary system of exploitation run by the Universal Company “state capitalism” in order to underline its exploitative nature as opposed to the system of cooperative production carried out by the associated producers, they would be forgetting that there have been other systems of exploitation in the history of human production over the last ten thousand years besides capitalism. But our imaginary system would not be a form of capitalism whatever else it might be, because it would lack the essential characteristics that separate capitalist production from other forms of exploitation.

For example, there would be no crises of the general overproduction of commodities, if only because there is no commodity production. In principle, our imaginary system might experience a generalized overproduction of use values, but that is something very different than the crises we experience under capitalism, which combine a generalized overproduction of commodities with a generalized underproduction of use values."

What Sam Williams describes here is an economic description of the "Communist States" emerging from the Russian Revolution and its WW2 aftermath. If you replace bureaucratic domination by workers control, you have a Trotskyist model for the aftermath of a socialist revolution: democratic socialism as the precursor (as the productive forces are developed) of communism. I have critiqued that model elsewhere.

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3. Discussion

To read further on why total automation is incompatible with capitalism, please continue to:

"They dismiss the last workers from their fully automated factories".