I probably don’t need to regale you about the economic troubles of our generation. Manufacturing work has been declining for decades hurting the economic prospects of the working class. Professional occupations are now suffering as well, enough so that even the mainstream media gets it. Unemployment is near 50% for new graduates and young people are being hammered by the recession. You all know the drill.
Everybody has a solution to the problem. Obama, Krugman, and the Keynesians say throw fiat money at the economy until it moves. Conservatives and libertarians decry excessive regulations and taxes. Economic nationalists say close the border, criminalize outsourcing, end free trade, and put up tariffs, while neo-liberals call for more free trade.
They blame the rich, they blame welfare bums, they blame bureaucrats, they blame capitalists, they blame the young, they blame the old.
The thing is, they’re all wrong.
There is no real solution to Western economic malaise, as the “malaise” is not actually an economic problem.
Our economic “problem” is that we are too wealthy.
Of course, this doesn’t seem to make sense. Unemployment is high, labour force participation is declining, and people can’t get jobs. How can I possibly say we are too wealthy?
If you look at GDP, it has increased steadily for decades. The “great recession” we blame for our economic woes caused the economy to fall to 2007 levels in 2009 (and we weren’t poor in 2007, at the height of the housing boom, were we?), which was promptly righted in 2010. In terms of what we produce, the goods that actually make our life better, the effects were minor.
Our economic malaise is one not of a lack of production, but of a lack of employment.
Or stated another way: as a society, we are continually producing more of the goods we want, but we have to do less work to get it.
It is the second part of that sentence that is the problem: we have to do less work to get it.
That is the cause of our economic problems. That is why there are no jobs, there is no work for people to do.
The problem is that we are in the process of transferring from a capitalist economic system to a post-scarcity “economic system” and nobody is ready for it. It is something that is completely out of most people’s understanding.
Post-scarcity is a word that some of you may have heard of before, or you may not have. So I’ll explain: a post-scarcity economy is one where scarcity has been overcome, where all people have access to as many goods and services as they want, with minimal labour necessary to produce them. In a post-scarcity economy, people do not have what we would consider to be jobs; because most goods and services can be produced with negligible labour.
People will work, but it will be according to the old Marxist saw “[communism] makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.”
Work will be something you engage in because you want to, not because you have to. You may choose to hunt, but you will do so because you enjoy it, not because you need to eat. You may choose to design a website, but it will be in leisure, not because the boss says to. You will be able to work at whatever you want, or at nothing, because it doesn’t matter to your material wealth, or anyone else’s for that matter.
If you want to see post-scarcity today, the best place to look is at the music industry, or perhaps more accurately, it’s continuing collapse. Music can now be made cheaply: at most it costs a couple thousand dollars in instruments and a couple thousand in recording costs. With music creations software, all it costs is a computer you already own and some pirated software to create music. Once the original act of music creation is completed it costs absolutely nothing and requires almost no labour to create another digital copy.
And that’s the whole problem; that’s why the music industry is collapsing. Music executives are finding that it is very hard to justify charging people for what they can get for free. They are fighting free music tooth and nail under the guise of copyright to protect their profits, and they are losing, badly. The economic spin-offs of this are that everybody in the music industry is going to lose their jobs eventually. Why buy a CD when I can download it for free? Why sign with a label when I can distribute my own music on the internet? Why hire a producer when production software is so cheap? Why go to HMV when I can download music at home?
The producer loses his job, the CD manufacturer loses his, the marketing exec loses his, the sales clerk loses his. Thousands of jobs are lost.
Yet, are we poorer? No. Every person in the west now has functionally unlimited access to almost every piece of music ever created at negligible costs. My music library is functionally unlimited and it costs me nothing.
Bill Gates has no greater access to music than I do and I have more access to music than even the richest of men in existence prior to a couple decades ago.
That is post-scarcity.
Now the problem with post-scarcity is that every economic system we have had to date has been based on scarcity; there was only a limited amount of resources to go around, so we need some way to distribute those resources. Goods required work, so we needed some way to encourage people to work. That’s why capitalism works, it distributes resources to an individual according to how others in society value the individual’s contributions to society.
But in post-scarcity, capitalism breaks down. With resources being unlimited, nobody can profit off the production of those resources.
Nobody knows how to handle post-scarcity.
The RIAA fights music pirating as post-scarcity means they can’t profit off of the goods.
Politicians back copyright law and fight pirating, not realizing that everybody is getting richer in actual terms as everybody now has unlimited music access, but because they aren’t paying for it it doesn’t register in GDP. In addition, the ability to create nigh unlimited music with negligible labour becomes “unemployment” according to economic measures.
That’s all well and fine for music, but it’s not a material good, it’s easily digitized. Certainly the manufacturing of hard goods requires labour.
Does it really?
We can look at 3D printers.These printers can take raw materials (usually plastics or metals) and convert them into durable goods. Industrial printers are expensive and the technology’s still being developed. Simple home printers can now be purchased for less than a used car. Compare their development to that of computers; 30-40 years ago, home computers were a primitive luxury good for businessmen and geeks, large mainframes were commercial technologies, and the internet was a military project. Now, everybody owns a computer with internet access that easily dwarfs the power of those older commercial mainframes and that has hundreds of applications pre-installed.
Why wouldn’t 3D printers advance like this as well? They may be primitive toys for nerds right now, but a couple of decades from now?
Think about it. If your knife broke (or bowl, or computer, or phone, etc.), you just download plans (which was created for free by an online 3D printing design community) for a new knife to your desktop 3D printer, feed in some metal and plastic, press the start button, and a minute later a new knife.
If you need a bigger object, say a car, you just go to the free neighborhood printer (why wouldn’t it be free, when another printer can print a printer for almost no cost?), stick in your old car to be broken down for raw materials, then have it print out a new car from plans you downloaded to a flash drive earlier.
Think it sound implausible? Why?
We have the basis for the technology, it’s simply a matter of refinement and scale. Remember what happened to computers.
Also remember what happened to the music industry.
When this happens (and I believe it’s a when, not an if), why would you need to work, if you could print whatever you wanted? Why would someone pay you for your work if almost anything was free? Why would you pay anyone else for something?
The capitalist market would collapse. Scarcity would disappear.
According to official measures though, GDP would plummet and unemployment would skyrocket.
In addition to the printers, robotics will be used to cover some production.
(I will say this: even in post-scarcity, we will probably need a few people keeping an eye on things, but the prestige, trappings of power, and/or conspicuous altruism of such positions will likely be enough to get the requisite number of people to do this).
What about raw materials? The printers couldn’t create those.
At first, out-sourcing. We’d pay poor foreigners to mine or grow raw materials with easily duplicated goods. Robotics could also be used.
At some point, recycling would be enough. There is a limit to what you could possibly want.
If you already have three cars and want a new one, just break down the old one and have a new one reprinted. Same with anything else.
What if you want more than what you have? My question would be why?
Most goods are simply positional; they are used for showing off your wealth.
If anybody can print a Lamborghini for the same material cost as a Pontiac (free, except for the $100 of scrap metals and plastic), the Lamborghini would be worthless as a positional good.
Once you have what you need: food, transport, housing, recreation, positional goods made by someone else would mostly meaningless. Any positional good that would bring you status would have be something deliberately created apart from the printers/crowd-sourced plans.
What about the services?
These would mostly be made unnecessary.
Amazon has made bookstores completely irrelevant. Steam is making video game stores irrelevant. In the future, 3D printing will make stores irrelevant.
Robotics and AI would replace some of the rest.
Communities of interested individuals would take care of the rest. If you had unlimited free time because work became unnecessary, you would pursue and master your favourite activities would you not? So would others. They would form communities and groups just as they do now. They would provide community members services and teaching, just as they do now.
So what’s the problem?
The problem is that these are not all going to happen together. Different occupations will be effected at different rates.
Manufacturing has already been dying a slow death for decades as robotics and off-shoring has replaced domestic labour. Unskilled blue-collar labour is already pushing towards post-scarcity conditions.
On the other hand, the trades are still doing well. Skilled blue-collar work is harder to replace.
Unskilled white-collar labour has been going there as well; filing replaced by digitization, clerks were replaced by Excel, etc.
Skilled white-collar labour is harder to replace with technology, but even so, we are approaching the tipping point.
In addition, different industries are effected at different rate. The music industry is in it’s death throes, book publishing will follow soon after. On the other hand, health care still requires human workers and will for a while to come.
So, while the transition to post-scarcity is occurring, we need a way to incentivise those we need to work to continue working. At the same time, we need to keep those who society does not need to work from causing trouble.
As a society on the road to post-scarcity, we are already so productive that we already pay a large chunk of our surplus to those who aren’t contributing, and we have been doing this for decades. Social security and retirement, welfare, EI, disability, foreign aid, and the like are all us paying some of our surplus to the unproductive.
The problem is, as soon as we start paying people to be unproductive, then people have less incentive to be productive. If we start just distributing good income to the unproductive with no pretense, then we might not have the people we need producing, producing. So all the above usually have some conditions attached, so it is not a generally usable condition.
Yet, we have a lot more people who need employment, than we have work that actually needs doing, so we have to find ways beside just giving people money to keep them occupied.
We have created a number of strategies to keep unemployment low while post-scarcity works itself out.
First is the welfare state. Welfare and disability, properly stigmatized, can keep the unproductive lower classes from causing trouble, while the stigma keeps productive people from pursuing this option.
Second, jail. If we jail the unproductive that cause trouble, they stop causing trouble.
Third, government. I’m a government worker, but we have to face it, government is on the whole unproductive. Some parts of government are productive, such as infrastructure or health care (assuming a public health system), but the majority of it is not. Redistributive government programs do not produce anything, they just shuffle wealth around while destroying some of it in the process. The regulatory functions of government actively destroy wealth and hinder wealth creation. Not to mention that the taxes necessary to fund government discourage wealth creation. But the government keeps a lot of white-collar people employed.
Fourth, the military. The US has no real external threats and it’s military is vastly superior to anything else on the earth, but the military keeps a lot of people, particularly those people who may be inclined to organized violence, employed.
Fifth, the subsidized. the government subsidizes a lot of economic activity and organizations that would otherwise be unable to continue to exist.
I’m not saying that these were actively created because the people creating them knew we faced unemployment problems due to the transition to post-scarcity, but they do help keep the problem of unemployment in check.
So, what should I take from this?
It’s simple, the next few decades are going to be very painful economically. Our wealth will increase, so we’ll continually have more goods and services over time, but at the same time our unemployment will increase and GDP might not accurately reflect the increase in goods and services as post-scarcity resources (such as pirated music) will be outside official measures of wealth as they will not require economic transactions.
Economic inequality will likely continue to increase, as the productive capacity continues to rely on fewer people, while more people are replaced by technology and have less access to wealth.
As each industry faces it’s own movement into post-scarcity each will push it’s own form of blowback as they realize their profits and jobs are going to disappear as technology replaces them.
Together, these forces will create great societal tensions. Government redistribution will continue to grow to keep the lid on these tensions.
At some point though, we will reach the tipping point into post-scarcity. After this, work as we currently know it will no longer be a thing and society will rearrange itself to adapt to a totally new situation.