"It is easier to imagine the end of the world ..."

This quote, "it is easier to imagine the end of the world than to imagine the end of capitalism," has been attributed to the cultural analyst, Fredric Jameson.

It bears deep reflection.

Capitalism is the first mode of production which separated the mass of people from the means of securing their own livelihood. Previous modes of production saw ordinary people as hunters, gatherers, pastoralists or farmers.

Given the economic precariousness of the proletariat, some social organising principle is needed to coordinate actions to secure the reproduction of collective life. This is called an economy.

Historically there have been only two forms of economic organisation consistent with the existence of a proletariat (a class of resourceless labourers): the privately-owned, decentralised means of production constitutive of capitalism; and bureaucratically-owned means of production in a centrally-planned 'socialism'.

We know the track record of both models. In particular we know that a statist centrally-planned economy does not work - it lacks incentives to grow and optimise, and is captured by bureaucratic elites.

There are two further models: the naive Leninist-Trotskyist model of a worker-controlled (soviet) state and economy .. and a fully-automated economy.

The Leninist-Trotskyist model was only ever theorised in the sketchiest form and founders under modern political, industrial and financial complexity .. and human nature.

The fully-automated economy is a limit point of the natural tendency of capitalism to automate (the law of increasing organic composition of capital). However in that limit the last workers are displaced and therefore surplus value can no longer be created. Profits tend to zero as competition equalises prices to costs.

So no more capitalist economy, but that does not mean no economy. A collection of fully-automated companies (perhaps with non-waged human involvement in setting objectives - and certainly in consumption) is rather like a collection of villages each of which has a monopoly of some kind of natural resources (water, fruits, meat, ...) which are essentially not scarce. Such an economy engages in exchange, because human needs straddle the portfolios of the various producers, and it's similar to petty-commodity production, albeit without the involvement of human labour.

The working class may have vanished as a social category (no wage labour) but humans certainly haven't. Provided the machines have not been so badly designed as to eliminate humanity, people experience this world as super-aristocrats: their every feasible, practical need met.

"The future is already here — it's just not very evenly distributed," said William Gibson. And if we look at the super-rich today we see a preview of behaviours which could be open to all in a society of totally-automated abundance.

As expected, the behaviour-set is just what would be expected given the innate nature of the human animal - all drives are exhibited from the most prosocial to the most antisocial.

On a sufficient timescale (a century or two) human nature can itself be engineered and hopefully there will be major speciation events. We will find it easier and more robust to adapt to Mars than to make Mars adapt to current-us, for example.

Capitalism will abolish itself not through socialism but through self-elimination. And the human race will diversify into every possible ecological niche in this awaiting universe.

Unless we're stupid about it.

Beyond capitalism: is this the best we can hope for?

It's to easy to reify capitalism. To see it as the capitalist class (hiss!) bearing down upon the downtrodden proletariat. 

Expropriate them!

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1. The inner-truth of capitalism

Let's do the analysis right.

Consider the vast mass of people who cannot live by their own efforts (they have no land, no resources, they are not self-sufficient). The proletariat.

Add a minority who own the land, the factories, the machines, the tools, the raw materials and all the other means of economic production. Ownership guaranteed by law and state. The capitalists.

If the owners hire workers (their capacity to work, actually) at a rate which can reproduce them for work next day, week, year .. while the amount produced by said workers exceeds their wages in value, well the surplus will be owned by the capitalists. They will get consistently richer. We have a technical name for this: it's called profit and it's a good thing. It means social needs are being addressed efficiently.

Note: if you work for the state rather than a private-sector employer, your wages are paid out of taxes: value contributed ultimately by the capitalist sector.

2. What do the capitalists do with their ever-increasing riches? 

An insignificant relative proportion goes into luxury apartments and super-yachts (although this conspicuous consumption is a powerful human motivator and source of envy and resentment). The statistics show that most capitalist profits are re-invested to secure another round of expanded reproduction. Or in these stagnating times, financing debt.

M - C - M' in Marx's formula. Money makes money through the intermediary of surplus value production.

Gratuitous consumption is always a missed opportunity under capitalism. An opportunity cost.

In the nutshell, it is the way production is organised which creates the classes .. they are both a precondition and a consequence of the relations of production.

3. Capitalism really pushes the social-surplus product

No moralism. We're none of us going back to living off the land. Noble hunter-gatherers, trapped in the deepest well of unproductive subsistence.

Nor are we going back to the agrarian life, another low-productivity hell-hole where almost everyone is tied to mediocre, hard, tedious life on the land.

We all agree that human affairs are improved when we have a better constructed-environment, one which suits our diverse needs. The way we do that is by a global division of labour where projects of the most ambitious scope can be realised. I like modern medicine.

That's going to take a lot of social-surplus product going forwards. It's going to continue to require people to personally consume only a small fraction of the value they themselves produce.

Any one individual is going to look at projects on all scales up to the fully global and subjectively feel like a small cog in a vast machine.

I wonder though whether they'll really care. Nobody asks me about NASA but I can still get excited.

Who decides what projects should be done, if not individual capitalists who have succeeded in attracting investment capital? I refer you to the pessimistic literature on traditional post-capitalist organisational forms well-documented here.

4. A post-capitalist economic organisation we might expect

Suppose we get the miracle of total automation. Cognitive robots replace workers. But in the end, without wage-labour, profits can't be obtained.

Under capitalism, the capitalist who automates gets a short-term advantage but then overall profits fall. Competition means that in the steady-state the capitalist cannot charge more than will cover his costs. Without wage-labour creating additional value, sale-prices are simply bid down to the costs of robots, overheads and materials. As a consequence, profits tend to zero.

The capitalists don't invest. It's like an economic crisis which never abates.

5. The Roman Empire redux

An economy of petty-commodity production is what still works. Like the Roman Empire of antiquity. The slaves have been switched out for robots. Units of production produce lots of goods  which are sold at their value, like in a village marketplace.

The Roman Empire was economically complex and vast in space and time. It was not very productive, not very dynamic - which may have been due to its agrarian character. And slaves are not the ideal robot - far from it. Not biddable at all.

Some people think the answer is for everyone to own personal robots. In antiquity most of the elite fraction of society had at least a few household slaves. But that isn't commensurate with distributing widely the benefits of a sophisticated global economy.

If I had to guess, I would say that the automation-heavy future is essentially robot-powered petty-commodity production combined with a very generous guaranteed income for everyone. Add in genetic enhancement to exploit the possibilities of an improved humanity and we'll not be in a bad place.

At least until the AIs decide we're a waste of their space!

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Note: the Marxist economist Michael Roberts has written extensively about the consequences of total automation under capitalism. Here's a good place to start.

Capitalism incompatible with total automation/slavery

In the previous post, "Five questions on the last days of capitalism", I discussed the evolution and final fate of capitalism - which will be very different from the violent revolutionary end imagined by the Leninist left.

In this post I want to zero in on the exact mechanics of the final days of capitalism. Little of what follows is original, but it's seldom brought to prominence.

1. Start point: a model capitalist economy with competition

Our economy consists of a number of identical competitive companies serving an anonymous market. Each company spends per working period:

• £10 on constant capital c (= depreciation, raw materials, premises etc), 
• £4 on wages v (= 4 labourers at £1 each)

with a rate of surplus value s/v of 100%. This means that £4 of surplus value s is produced in the working period. So c = 10, v = 4, s = 4.

Revenue = c + v + s = 10 + 4 + 4= £18     -  4 labourers remember. Assume 18 objects are produced at £1 each.

Profit p = revenues - costs = £18 - (£10 + £4) = £4.

Rate of profit = profit/cost = p/(c + v) = 4/(10 + 4) = 2/7 = 29%.

2. The power of innovation

One of the companies buys some better machinery which bumps c up from 10 to 11 but which allows two workers to be eliminated. Their numbers look better:

c = 11, v = 2, s = 2 (same s/v) so c + v + s = £15.

Suppose that 18 objects are still produced in the working period. Initially the innovator can sell at the going market rate of £1 each - a total revenue of £18.

Revenue = £18. But his costs (c + v) = 11+2 = £13 are lower.

Profit = £18 - £13 = £5 .. and rate of profit = p/(c + v) = 5/13 = 38%.

This is far better than his business rivals (stuck at 29%).

3. Other companies follow the innovation

But all too soon other companies follow suit. Prices fall due to competition until each company finds that for itself:

New revenue = c + v + s =  £11 + £2 + £2 = £15

New profit = (c + v + s) - (c + v) = £15 - £13 = £2.

New rate of profit = p/(c + v) = 2/13 = 15%.

But the previous market equilibrium profit was 29%! Now each employer is worse off.

But the 18 objects now cost only £15, or 83p each. Consumers benefit from the wonders of competition and innovation driving productivity.

4. Robots now eliminate all labour

The robots are coming! A progressive innovator buys more automation which bumps c from 11 to 12 and which eliminates workers altogether.

c = 12, v = s = 0.

As before, 18 objects are produced in the working period and the going rate is still 83p each. Our innovator takes advantage of existing market pricing.

Revenue = £15 as before, but costs = £12 only (no wages).

Profit = £15 - £12 = £3 and the rate of profit = 3/12 = 25%.

An improvement over his competitors (who only see 15%) but again, they soon follow suit.

5. Everybody adopts total automation: no more wage bills

Competition drives prices down to costs (there is no surplus value s).

Revenue = 12 and cost = 12.

Profit = 0 and each object costs 12/18 = 66p. Except no-one is making any.

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Discussion

Slaves or robots: it makes no difference

I assert the above model holds whether the total automation is clever machinery, some humanoid AGI or a human slave.

Nonsense, you reply. A slave is just a worker where the employer is paying for food and shelter directly, rather than via wages.

Not so fast! The slave has to be bought as well as maintained - just like any other piece of capital equipment. What then is the cost of a slave in a competitive market?

The cost of a slave = expected-output-value - maintenance-costs (all discounted).

In one cycle above, assuming the slave is bought at price c and is as productive and exploited as a wage-worker (s/v = 1) then:

output-value produced by slave = (v + s) and maintenance-cost = v, so using the definition:

slave-cost = c = (v + s) - v = s                   - (values/costs here for one work cycle).

People (not slave-owners though) forget to include the initial cost of the slave, which already factors in the 'value' the slave will create.

Suppose c_R represents the cost of the raw materials the slave works with and other non-slave constant capital costs. In a work cycle or period:

revenue = c_R + value-added-by-the-slave = c_R + (v + s)

costs = c_R + slave-cost + slave-subsistence = c_R + s + v.

Profit = revenue - cost = [c_R + (v + s)] - [c_R + s + v] = 0.

There have been capitalist economies with slave sectors of the economy

You say, there have been slave-owning sectors of capitalist economies, the antebellum south, and I remind you that this is well-trodden territory on the left.

Read more at this post: "Total automation under capitalism?" - the topic area is the theory of equalisation of the rate of profit between sectors with differing levels of automation and the concept of prices of production.

It's perfectly possible for sectors of a capitalist economy to transition to total automation (point 4 above). The automated sectors extract value produced by workers in other sectors through profit equalisation. But it's not possible for the whole economy to 'lose its workers'.

8. What kind of an economy can you have with total automation?

What does work, you ask. Absent complete overproduction capability ('abundance') of everything, there will be a need for exchange between different production units: commodity exchange at value via simple (or petty) commodity production. Like in the Roman empire, or during feudalism. In this mode of production, exchange is driven by the need for use-values. The dynamic is not profit maximisation.

One can only hope that innovation and dynamism in such an utterly-transformed society of the future is not stifled. Perhaps the AIs will have some objectives of their own? Not everything that is wonderful and creative in human affairs is driven by capital valorisation.

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You will have observed that the cost equation for a slave already incorporates elements of rent. Yet the treatment here is not definitive. As Poulantzas reminds us (Classes in Contemporary Capitalism, chapter 1), 'capital is not a thing'. In arithmetical examples social relationships are reified.

So I'm thinking that the 'expected value of future output' term in the value of a slave is similar to the way we value a share. Marx called this fictitious capital. Compare with the labour involved in delivering the slave as a market-commodity (reproduction, transport and transaction costs) which is how we normally value constant capital. Not sure how to bring these two paradigms together. On this rather opaque thought I must leave it.

Update: Reading Poulantzas (Classes in Contemporary Capitalism, Productive and Unproductive Labour: 2) I am reminded that slaves are not produced in factories.

Slave traders are engaged in non-productive labour and the commodity price form of the slave, like that of the bond or share, is not derived from some quantity of abstract social labour incorporated in it.

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My further posts on Marxist theory.