Hi everyone, so i'm relatively new to austrian economics... i've only read Henry Hazzlits Economics in One Lesson and Murray Rothbards For a New Liberty, plus i regularly listen to guys like Peter Schiff and Ron Paul and read articles from Cato/Mises... but I still haven't got my head around this argument that comes up when I try to tell people that new machines won't destroy jobs.
I can basically make the argument the way Hazlitt did so well, but then it ends up someone saying "okay, what if machines became so efficient that only a few thousand people in the world needed to operate them in order to meet the supply/demand of the rest of the billions of people in the world, who would employ the rest of these people and where would they get their income from if there were no jobs available? basically as one person argued "machines will become too efficient'
like suppose car companies continued to invest in capital improvements until the point where eventually some guy builds a factory that can be operated by only 1 person and can produce 10 000 cars in 1 day, great quality and very low cost, sure, we're all richer now because anyone can easily afford a car, but if this were to be the case for all manufacturing of all consumables etc then where does the employment come from? in short, if there were only a few thousand jobs really NEEDED in the world, where does everyone else get their income/wages to buy stuff? maybe people would all work 1 day a year? but that doesn't sound like an adequate answer...
ps. I know this wouldn't happen for a long, long time haha
There was an article I found by a serious author which I critiqued (Technology, Machinery and the Human Laborer), on the subject. Let's take your example: let's say that a machine can produce 1,000 car doors in the same amount of time that a human laborer can produce 100. As a result, there are a number of options, and two of them are: either the machine will replace ten laborers, or it will replace one laborer and the factory will accept the greater productivity (the most likely case, probably). But, is that single human laborer (or the ten, for that matter) really "replaced"? Surely, there might be structural unemployment, as laborers who were building car doors must now learn the skills necessary to find other jobs, but there are several jobs created by the new machine: 1. building the machine 2. maintaining the machine 3. shipping the machine to the factory 4. installing the machine... et cetera.
For the sake of argument, we can even assume that there is actually an aggregate loss in jobs as a result of the machine. Why would this be a bad thing? Surely, this is an advantage to other industries, that can now take on those who are unemployed and increase their own productivity.
There is no such thing as limited demand for labor. Demand for labor is unlimited, just like demand in general. What can actually be purchases is limited by productivity and profit. But, in a free-market there would be nothing impairing businesses from exercising their full capabilities in entrepreneurship. As a result, one of the main methods to increase productivity is to take on a greater amount of laborers, and so there is always demand for human labor.
Economic Thought (Latest Post): How Not To Make Globalization Work
private chairty already makes up 10% of GDP. If machines and technology somehow moved us into post-scarcity, the cost of charity would go go nil so the non-profit industry would explode.
Your friends are implicitly assuming that the state is necessary to redistribute wealth from rich to poor when the poor can no longer find jobs. Problem is, the incentive structure of government causes wealth redistribution to go the other way.
"It has always been the prerogative of children and half-wits to point out that the emperor has no clothes. But the half-wit remains a half-wit and the emperor remains an emperor." ~Dream
By making production more efficient, capital may be used in other ventures in order to fulfill human demand. These other ventures can, and often do, create jobs - sometimes jobs that are considered more desirable that the jobs they have "replaced".
If you have accepted the role of labor, you need to be proactive in developing and maintaining the skills necessary to adapt. You owe this to yourself because no one owes you a job.
Jobs, and wages, don't drive the business cycle.
It makes no sense to invest in labor-saving capital unless there already is a scarcity of labor.
Sometimes that scarcity is artificially induced, for example by labor union cartelization.
Microsecession as a strategy for revolution | Challenge to minarchist | How would a private road system work?
You are assuming a world of abundance. Economics becomes irrelevant here, because in a world of abundance there are no scarce economic goods to be allocated to the best use possible. I recommend that you read Carl Menger's Principles Of Economics now. It will get your basics strong.
If the case you are proposing actually comes true, it's time to implement Communism. If I am right, Communism happens in the post-scarcity world.
Law of Diminishing Returns. One robot that produces 10 cars doesn't equal 10 laborers that produce 10 cars (assuming 1 laborer can produce only 1 car in a given space). Adding more laborers isn't enough - you're not even guaranteed to be able to produce the 10 cars with 10 laborers. The efficiency of the robot to produce an equivalent number of cars in less factory space - assuming fewer expenses beyond that compared to what a human laborer requires - can be enough to displace the human laborers even if there is no scarcity of labor. Even in the most extreme example, a robot that produces 10 cars can be better than 10 slaves that produce 10 cars. Going further, a robot that produces 100 cars in the time it takes a human laborer to produce 1 car magnifies the problem for the human laborer. If the increased efficiency of the robot is enough to justify the cost to purchase, maintain and operate the robot, and is less than the cost to hire, maintain and operate with human labor, then there is justification to invest in labor-saving capital.
daveyc86:basically as one person argued "machines will become too efficient'
People who think stuff like this haven't read much Scifi. The possibilities for man are endless. More technology means anything conceivable is within reach.
daveyc86:like suppose car companies continued to invest in capital improvements until the point where eventually some guy builds a factory that can be operated by only 1 person and can produce 10 000 cars in 1 day, great quality and very low cost, sure, we're all richer now because anyone can easily afford a car, but if this were to be the case for all manufacturing of all consumables etc then where does the employment come from?
Folks miss the point on this. You don't want a job. You want wealth. If you can produce more wealth with less work, that means your standard of living is increasing. Due to increasing standards of living, the poor today live like the middle class lived 250 years ago. I would bet that in another 100 years, the poor will live lives of greater abundance than the middle class do today.
daveyc86:in short, if there were only a few thousand jobs really NEEDED in the world, where does everyone else get their income/wages to buy stuff?
Manufacturing machines and machinery has to start with a human. Because while machines can build machines, only man can give them purpose for being. So as far into the future as I can reasonably see (in order to care about this question at all), man will provide the creative process until there are sentient machines. At which point, we will have to go back to labouring, because we will have to trade with them, and trade something of value which we create.
If you find something evil that wobbles, push it. - Gary North
Ludwig von Mises Institute | 518 West Magnolia Avenue | Auburn, Alabama 36832-4528
Phone: 334.321.2100 · Fax: 334.321.2119
contact@Mises.org | webmaster | AOL-IM MainMises
Mises.org sitemap