Tuesday, July 14, 2020

Robots and AI

Andy Barns, over at Socialist Resurgence, does us a good turn with an article entitled Robots can help humanity, but rarely under capitalism. He's among the few of my Trotskyist friends to comment on technology at all.

Unfortunately, his Marxist premises lead him astray. The opening lede:
Humans are making rapid strides in robotics and artificial intelligence (AI). Both have the potential to reduce working hours, make jobs safer, increase energy efficiency, etc. But there are many potential problems—chief among them being unemployment and the use of AI to control human destiny in ways we may not want.
He's forgotten one huge beneficiary: the consumer. Automation lowers prices which raises the standard of living for all consumers. An economic analysis that doesn't account for the cost of consumption is woefully incomplete.

The relevant word is productivity. As Mr. Barns notes, new technology raises productivity--i.e., the amount that can be produced by person-hour of work. The higher the productivity, the higher our standard of living. It is only by increases in productivity that our standard of living improves at all.

Mr. Barns assumes that all productivity improvements go straight to capitalist's back pocket in the form of profits. His example illustrates the point.
For example, a single industrial forklift can perform the same amount of work with one laborer that once took 20 or more laborers in the same time. Time is how labor is measured under capitalism and how the majority of workers are paid. If one worker can be as efficient as 20 used to be, then that will be more profitable, and thus, capitalists will gravitate towards technological development....
In our forklift example, the displacement of 19 workers means the one now has to do the same work as 20, whereas the 19 others now have no work. The total workload could be reduced for all persons while still offering meaningful employment to all. Again hypothetically, the forklift should reduce a 10-hour day of labor for 20 persons, into a three-hour day for 20 persons.
In this hypothetical, rather than the capitalists capturing all the benefits of new technology, instead the workers would. The price for consumers would remain constant, and thus our standard of living is not improved. Even the workers don't really benefit--their pay is capped because they are forced to work fewer hours.

The real world doesn't look like that. In a competitive marketplace all manufacturers will have to lower their prices to compete. While the remaining forklift drivers will get paid more than the original laborers (because of higher skill level), the total wages paid by capitalists will go down. The proceeds will not go to the capitalist, but instead to consumers as a result of lower prices.

Even a monopolist will lower prices in response to improved technology--just not as much. To maximize total revenue the monopolist will lower prices until the increase in the number of customers (more money) compensates for the reduced price (less money).

Consider this diagram taken from Wikipedia.
Graph illustrating consumer (red) and producer (blue) surpluses on a supply and demand chart
(Source)
The producer surplus represents the price over the cost of production--and that amount is what is fought over by worker and capitalist. The consumer surplus represents savings by consumers, giving them more money to spend elsewhere.

The effect of new technology is to lower the cost of production. The supply curve will move down, and the point labeled equilibrium will move down and right along the demand curve. The producer surplus will likely (not necessarily) shrink, reducing benefits to capitalists and workers alike. But the consumer surplus will necessarily increase, effectively raising consumers' standard of living.

Since we're all consumers, we're all better off if technology makes things cheaper. Marxists (including Mr. Barns) somehow don't understand this.

Mr. Barns realizes that not all the former laborers will be unemployed. He writes,
While there is a certain truth to the notion that technological development creates more jobs, since new industries (or branches of industry) offer new labor needs, the interim between employment and re-employment in a capitalist system is dehumanizing. All human needs are marketized under capitalism, and if you don’t have the money then you are going to starve (or otherwise be deprived of needs like housing, health care, entertainment, a car to get to work, etc). Meanwhile, the unemployed part of the population serves as a pressure on employed workers to accept lower standards of work and compensation. Unless there is a revolution, the same cycle of needless unemployment will repeat itself.
I don't think he realizes that new technology always creates new jobs, and for two reasons. First is supporting the new technology: forklift repair and maintenance, fuel, forklift manufacturing. But this isn't most important. More crucial is that consumers have a whole lot of money left over that they'll want to spend elsewhere: movies, video games, restaurant meals, personal grooming, travel, etc. Eyebrow plucking is now a job description! Who would've thunk?

Which brings us to Mr. Barns' important point--that the job market is dehumanizing. Of course he's right--and it is inevitably so. People will only pay for goods and services they want, for which they won't pay a penny more than they have to. Some people (not me) want to have their eyebrows plucked (God knows why), and that leads to (what I think is) a dehumanizing profession. Though better than being unemployed.

Consider Mr. Barns' alternative: all job categories are frozen in stone. Any improvement in productivity has to be taken as a reduction in working hours. Nobody is ever allowed to earn any more money. Capital allocations are made politically (i.e., by the mob), rather than by maximizing benefit to consumers (i.e., the same as maximizing profits). This is a recipe for poverty, as experienced in the former Soviet Union and Maoist China, and in Cuba today. I'd rather live in our "dehumanizing" world.

Indeed, contra Mr. Barns, our problem is not too much productivity, but rather too little. Productivity growth has slowed considerably since the mid 1970s, and nobody really knows why. The result is our standard of living is not growing, and the world is becoming a much more zero-sum game. See books/podcasts by Robert Gordon, Tyler Cowen, and Peter Thiel, among others.

Mr. Barns (uniquely among Trotskyists) discusses artificial intelligence (AI). Today AI is simply a tool--one that makes the robot cheaper and more efficient. I think Mr. Barns' concern over advertising is misplaced. For example, how much money would Trump have to spend in advertising before Mr. Barns would vote for him? Billions? Trillions? A whole lot, for sure. That shows how much good advertising does--humans are ornery and they make their own decisions. (See George Gilder's book Life After Google, my review here).

There is much discussion about AI as an existential threat to humanity--i.e., killer robots who will do us in. Nick Bostrom and Gwern write about this. I have not followed this literature at all, and somehow can't take it seriously--sort of like climate change.

Mr. Barns writes about commuting and mass transit. It's interesting stuff, but it will have to wait for another post.

Further Reading:

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