Technical change as collective action problem

Stephen Hawking has reminded us of why Marx is so relevant today. He's written:

If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality

There is, though, a problem with this second option: if most people are miserably poor, who will buy the products of super-machines?

This raises what Marx called one of the fundamental contradictions of capitalism. On the one hand, capitalism is great at developing productive potential. But on the other, demand might not keep up with this potential:

The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically. The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society. But this last-named is not determined either by the absolute productive power, or by the absolute consumer power, but by the consumer power based on antagonistic conditions of distribution, which reduce the consumption of the bulk of society to a minimum varying within more or less narrow limits.(Capital vol III ch 15)

This can lead to two possible outcomes. One is possible "realization crises" (see eg ch X of this pdf) if capitalists over-estimate demand and invest and produce too much:

The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit. (Capital vol III ch 30)

Another possibility, though, is that capitalists might fear a lack of demand and so not invest. (In fact, this is not the only reason why they might not invest. Investment is undertaken not by a representative agent but by individual capitalists. And each individual might be loath to invest or innovate for fear that future technical progress will undercut his own innovations.)  

In either of these cases, capitalism will not develop technology by as much as is technically feasible. If so::

At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production...From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution. (Preface to A Contribution to the Critique of Political Economy)

In these ways, capitalism is a form of collective action problem. We can imagine a society in which super-machines do indeed allow us all to live in luxurious leisure. But the decentralized decisions of capitalists might not get us there.

Granted, sensible aggregate demand policies might suffice to overcome realization crises - though the believe that such policies will be enacted is a form of what I've called centrist utopianism. But the other obstacle to investment and growth - the fear of future technical change - might not be so easily soluble within the confines of capitalism.

These issues are, of course, unresolved. What is clear, though, is that Marxism presents a useful perspective upon them.

Comments

[D]

"And each individual might be loath to invest or innovate for fear that future technical progress will undercut his own innovations."

Looking at it from a slightly different angle I had aways thought that the cults of personality at certain corporations were just pure ego-driven. I had not considered that they may actually play a role in deterring market entry. If you can get others to believe that your CEO/Management/Staff are all geniuses then that may deter others from trying to compete against you.

The relatively recent (say the past 30 years) glorification of previously boring business men and women ("innovative" "revolutionaries" "genius") can be seen as not just corporate narcissism but rather the development of a sophisticated barrier to entry.

[Carol]

The failure to invest in new technology actually is more like active attacks on new technology; you can see this in the fossil fuel industry's lack of investment in solar and wind energy, and active attacks on investment in alternative energy sources.

[Blissex]

«a problem with this second option: if most people are miserably poor, who will buy the products of super-machines?»

Why is that a problem? As long as the machines provide a life of easy luxury for their owners, why should they care about where are the markets for even more machine products?

There have been billions of people in the direst poverty for a long time and rich countries have never worried about sharing their wealth with them so they could sell more.

A reminder here: the super-machines are supposed to ease the supply of *labour*, the supply of commodities and other resources will still be the same. Indeed even super-machines need fuel, because without fuel they are just useless scrap.

The premise of the automation miracle after all is that turning fuel into labour is cheaper than turning food into labourers...

[Bob]

"If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality"
There is a third option, we do public sector jobs and buy the output of the machines.

[Bob]

Chris, you need to read some comments on Daily Mail articles on benefits claimants. It is difficult to defend existing welfare, let alone implement basic income.

[Bob]

The system dosen't even work at the top:
http://www.theguardian.com/us-news/2015/oct/17/wealth-therapy-tackles-woes-of-the-rich-its-really-isolating-to-have-lots-of-money
Create great jobs for the people!

[rogerh]

A parasite/host model comes to mind. Then the world's economic landscape is never likely to be flat so someone somewhere will be providing the buyers and sellers. Which begs the question - what is the outlook for those regions where the market has been sucked dry, where costs have grown too high and regulators and middlemen have grown too numerous. Perhaps the term 'corporate governance' will take on a broader meaning and what we call democracy will adapt to suit.

[Dave Timoney]

@D, ideology is symptomatic not programmatic. In other words, the "hero CEO" trope does not arise from a deliberate strategy to preserve the position of market incumbents but simply reflects the changing nature of the means of production. It is the tendency of the Internet to spawn global monopolies that has given rise to the Zuckerbergs, Musks and Page/Brins.

Similarly, the evolution of the business leader as brand (Branson, Trump, Berlusconi, and more bathetically Sugar) cannot be divorced from post-80s financialisation and privatisation. Likewise, the performative obliviousness of the Jobs/Apple cult reflects offshoring and modern supply-chain management.

[Blissex]

«though, a problem with this second option: if most people are miserably poor, who will buy the products of super-machines?»

To show again how this is not an economic problem, consider the argument that having super-machines is like having a huge oilfield. Because after all a bulldozer can do the work of 50 workers with a shovel, but only thanks to the fuel it carries. An oilfield is largely a substitute for labour, like the super-machines.

Thus owning an oilfield is like owning a lot of super-machines. In the present, countries that extract most of their income from oilfields give very little thought to the problem of «if most people are miserably poor, who will buy the» oil: either they do find sufficient buyers, or they consume the oil themselves to boost their own lifestyles directly.

In other times there have been countries endowed with fertile land and good weather, and they did not quite worry that much about whether «if most people are miserably poor, who will buy the» products of their land, they worried quite a bit instead about the «miserably poor» invading and taking their land for themselves.

There is an important point here as to the political economy of the situation, a point that is perhaps lost on those steeped in neoclassical economics: that the «if most people are miserably poor, who will buy the products» problem matters only to people whose lifestyle is funded by the profits of industry: that is when you earn your living by buying inputs, using your labour to produce outputs to be sold to some final customer, that had better be there and be able to pay.

But if you have super-machines you don't need to pay them, just fuel them, and you can get the putative super-machines themselves at work to extract or make that fuel.

BTW most "super-machines" scenarios completely ignore that in an economy in which they replace people as labour, they will still need fuel and inputs to produce the outputs for their owners, even if presumably the assumption is that the fuel costs will be much lower than wages for employees.

The "super-machines" should perhaps be seen as cattle, cattle that however make whatever you want and not just milk, and have to be fed fuel instead of grass, and the owners of the "super-machines" as herders/ranchers.

A herder/rancher economy, like a "super-machine" economy, can be quite self-sufficient and not need customers either.

[An Alien Visitor]

"they will still need fuel and inputs to produce the outputs for their owners"

But in the super machine world this will be done by, well, machines!

The problem with the machines do all the work theory is that it is a complete fantasy.

Hawkins point is that as technology improves why are living in an age of austerity, an austerity which isn't really austerity but a viscous attack on the poorest (see the "All Tories are lying scum" post)?

[S.Artesian]

"If machines produce everything we need..." If machines produce everything we need, then by definition, there is no necessary labor-time, and hence, there can be no surplus labor-time, and no surplus value.

Capital ceases to exist.

[Peter K.]

"the believe(sic?) that such policies will be enacted is a form of what I've called* centrist utopianism."

Whether or not they are enacted depends on the outcome of electoral contests and class conflict at the ballot box. The corporate media hasn't been helpful and doesn't keep the voters informed.

[Bob]

Yes, about "collective action" bloggers need to co-operate. How about having a week where bloggers all make guest posts on blogs etc.
We need to do something (other than blog.)

[Calito]

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