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Will Automation Lead to Economic Collapse?

Most of the agriculture and industrial jobs are already phased out by machines. Over 70% of jobs and labor is currently to find in the service sector, but also this sector is being phased out and replaced by automation which means decreased purchasing power of the general public. Just take a look at this: http://www.thefiscaltimes.com/Articles/2012/08/20/Will-Robots-Cause-Mass-Unemployment-in-China.aspx#page1

Let's make an example as well. What exactly happens when people get automated by machines? They loose their jobs and need welfare to support themselves until they get a new job, if they ever do. But, where does welfare come from? It comes from tax payers. And do people on welfare pay taxes? They don't. So, what happens when everybody is on welfare due to automation and nobody pays taxes? This example is the reality in Michigan and the government there have been on the brink of shutting down due this exact issue. And we are beginning to see this never-ending spiral go out of control in the rest of the world. The trends are definitely there, but where's the solutions?

Is an economic collapse, in fact, an imminent event and a mathematical certainty, looking at the trends in Michigan and China? And is there a way out of this, looking at it in an economical perspective?

  • Sep 25 2012: I find automation a good thing and if leads to the end of the current system so be it.
  • Sep 10 2012: I worked with computers all my life. Automation definitely decreases jobs. The people who own the machines will NOT share the wealth. They will simply keep the profits for themselves and toss the displaced workers aside.That is what the 99% do.
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    Sep 17 2012: Perhaps unskilled workers will be paid to think. Perhaps automation will allow us to simply think, exercise and educate ourselves in sustainable behavior. It could be that economic innovation will provide the foundation for a truly humane global commerce policy, one that taxes each market transaction and distributes it according to real-time humanitarian needs.
    • Sep 17 2012: I would say that for automation to do this to our society we would first have do develop better energy sources. Right now all economy is based around energy and for us to transition into a money less society energy need to be free and abundant....

      I think we all dream of that day ;)
      • Sep 19 2012: Noa: You're quite right, but it is no dream. A perfectly safe, cheap, Green form of limitless energy production has already been invented and demonstrated, and right now, the Chinese are developing it further. I mean the forgotten nuclear powered airplane engine project from the Cold war: the Thorium LFTR power plant. Look it up on Youtube.
        • Sep 19 2012: Cool, that sounds really good! But also a little dangerous having China sitting on all that energy?
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          Sep 27 2012: I agree - the USA had a Thorium test reactor in the 1960's - why didn't it get developed further and provided cheap, sustainable, safe (no need to have a pressurised dome), with little radioactive waste? Answer - because the politicians wanted a Uranium/plutonium reactor to make BOMBS with! How's that for joined up thinking?
          Energy is the answer to nearly all the worlds problems - so we need to get on with developing both Thorium and solar massive energy installations (both are sustainable and 'green')


      • Sep 20 2012: You can't pay people in energy, especially if its cheap, then its not worth much. You have to pay people in money.
        Money is of course, nothing special, just a medium of exchange that allow for dissimilar commodities to be valued according to a agreed upon formula.

        It can be anything but the source must be controlled. If money were leaves, we would all be millionaires, but each individual leaf would be valuless because it grew on a tree.

        So, if you are going to pay someone, they must do something of value to gain that pay.
        If you are just going to put people on the dole, then you are creating a debt that must be paid back in the future by people who do work, or you can print more money and make each exisitng curency unit that much less valuable.

        Every extinct civilization in th past has gone this route and crashed hard.

        We are actually running the automation experiment in real time in our economy. We went from agrarian to industrial, to automation to globalization.
        Global trade is just ofshore automation using cheap people rather than cheap machines but it has the same effect.
        Automation taken to its ultimate conclusion leaves us with a population that has nothing to be paid for. You end up looking like Greece, where everyone is a cab driver or a barista.
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          Sep 20 2012: When you boss pays you a paycheck and you buy gas for your car, part of your paycheck was the energy that got you back and forth to work. So value of the paper money is equated in energy, food, cloths, comfort.... Indirectly, if paper is equal to those objects and conditions, you are being paid not only in energy, but solid forms of matter.

          Gas is energy.

          Really cheap energy and automated machines could create an environment where we just don't have to work anymore. Once your belly is full and the cloth is on your body, what do you care? Suddenly it's time for fun, games, education, parenting, hanging around with Socrates.

          If money becomes worthless, we will just have to exchange our company with one another.
          That could be much more fun than slaving away at the grind each and every day.

          The only reason Greece needed money was to pay the soldiers to protect them. The slaves did all the work. If automated machines became like slaves, we could live like them. If there was nothing to be protected from, why would we need money?
        • Sep 20 2012: "You can't pay people in energy, especially if its cheap, then its not worth much. You have to pay people in money."

          No, you need energy to make/provide useful goods and services, you might as well pay people in units of energy. Money without energy is useless, energy without money works fine.
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          Sep 27 2012: Ok, there is a really serious discussion point here - we see the economy / society from a very limited point of view. The real underlying issue (once the bots are doing everything in say 50 to 100 years or so), is RESOURCES ... call it the move from Capitalism to Resourcism.


          Resources with continue to become scarcer (until we leave for the stars) and it is the share-out of these finite resources (including nice bits of land on which to live and play) that will be the main issue for the human race - this means new politics - and no-one is thinking about how we move on this yet, even though our children or certainly grandchildren will be faced with this move directly during their lives. Payment is likely to be made (as no one is working) by a 'share' of the resources, these are likely to be swappable and finite as they will reflect precise physical resources (so no inflation et al)

          see - Capitalism vs Resourcism and new political structures
      • Sep 20 2012: Noa: Luckily for all of us, just about every country in the world is "sitting on all that energy", if they would only wake up. Unlike oil and coal, Thorium is so plentiful, that it would not be worth fighting about. See Thorium Energy Alliance for more details, or Youtube. Right now, in the US, Thorium is a waste product they would pay you to take away.
    • Sep 25 2012: That hasn't been my experience. I used to work in the IT center of a company that made automation products. At first, we were considered skilled for being mainframe operators. Then, as they expanded their IT system to include several server farms, the comm network, databases and apps, etc, we had the added responsibility of monitoring that as well as the mainframe, but we also got classed as unskilled labor, script followers. Unskilled labor aren't paid to think in the business world. They are paid to execute orders and follow rules.

      Eventually, the whole dept was outsourced and all but four of us lost our jobs at the height of the recession. I'm still trying to find a job that will allow me to keep my house, but I fear that is not going to happen. The bank is going to get the house and I'll have to file for chapter 7 to avoid paying the difference of what they end up selling it for and what I mortgaged for.
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    Sep 11 2012: It means that we grow with the times. Somebody has to make the machinery, make the and design the software, etc.We have to have a different set of skills.
  • Sep 4 2012: Suppose we automate the jobs no one wants to do, and let humans do the jobs that are interesting, creative, and fun. We could find ourselves enjoying sports, movies, hundreds of tv channels, more music than we could possibly listen to in one lifetime, building space ships, learning lots of things in universities, libraries and on the internet. Does this seem familiar?
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      Sep 8 2012: Only problem is... We already have that, and there's still 10% unemployment.
      • Sep 8 2012: That is a problem, and IMO it will get worse before it gets better.

        But eventually people will adapt to new jobs, largely in entertainment and service. The bad news is that many of these jobs will not be very challenging. The good news is that most of these jobs will not be onerous. A carpenter once explained that if you find yourself doing hard physical work, you are not using the right tool. And when we are not doing our jobs, our leisure time will be much more fun, like here at TED.
        • Sep 9 2012: Barry: the real problem is that there has never been and never will be any mechanism to guarantee that everyone who wants to work will find a job available. Except, that is, for the Nepotism factor: people who can afford it want to find jobs for their friends and relations, if only to keep them out of trouble. Now with automation and robots, we have to consider what to do with all the "unemployed", the number of which can only increase if Industrialism is doing its job, which is to put "Labor" out of work.. It is a common feeling that people who don't contribute anything to the economy don't deserve much sympathy, unless they are handicapped in some way. Well, we are going to have to get used to the idea that the non-existence of "jobs" is a handicap. Wealthy people have always gotten a pass on all this; no one accuses them of being lazy, etc. So I guess what it comes down to is that we as a society will have to get used to practicing Nepotism for everyone, without feeling remorseful.
          In former times, it would be possible to say that we "can't afford" this. But since the invention of unlimited cheap Thorium Power, it is clearly in the cards that such a limitation in only political. The real idea of Socialism is not that far from Nepotism: you want to take care of the people you care about, un-economic or not. And as Proudhon said "Property is Theft", an extreme statement, but which doesn't imply confiscation, only fairness.
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    Oct 1 2012: Automation will lead to economic efficiency...
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      Oct 1 2012: for some time that is a true statement... but i guess the question has to do with the extreme scenario... when all manufacturing jobs are replaced by machines... who is the consumer for the products? even if their manufacturing is done at 99% efficiency?
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        Oct 1 2012: still holds
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          Oct 1 2012: Indeed Krisztian, economic efficiency still holds, but doesn't the consumer base shrink with automation?
        • Oct 1 2012: "Indeed Krisztian, economic efficiency still holds, but doesn't the consumer base shrink with automation?"

          No, Murray Rothbart and Ayn Rand will rise from the dead and magically create new jobs for all those people.
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        Oct 1 2012: nope. consumers don't go anywhere. don't buy keynesian crap. not the cart pushes the horse.
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          Oct 1 2012: I was not thinking about Keynesian crap. I was in Mexico when computer manufacturing moved from the USA there, and I was also there when the same manufacturing moved from Mexico to China. In both cases, for a period of time, there was a shift from manufacturing to services, but the number of people employed was always less after the manufacturing sector was replaced with the service sector.

          If anything, automation would tend to shrink the service sector too... I trust that the human ingenuity is tremendous... but I don't buy on the idea that it can keep creating new economy sectors forever
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        Oct 1 2012: if you focus on short term changes, you might come up with the idea that the sun is lower and lower every day, since it goes down every day.

        the fact is still this: every job taken over by machines were replaced by other jobs. we have no reason to believe that it will ever stop.
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        Oct 1 2012: exactly. supply and demand always clears on an undisturbed free market.
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          Oct 1 2012: like in the case of (insert country name here)...

          I promise you, I am willing to be proven wrong, i just have never seen proof of the invisible hand in action
    • Oct 1 2012: As Andres said: the question at hand here is not productivity, it's what happens to the people who used to be workers.
    • Oct 1 2012: People who used to be workers find employment in providing new products and services. Human needs are infinite. All parties gain. Consumers gain by increased spending power, Businesses gain by staying in business, Price competition drives price to lowest possible that still makes the process of providing the good or service worth while. Profits above the minimum can only be achieved through Innovation (Joseph Schumpeter) Innovation leads to the creation of new products and services that leads to new employment opportunities.
  • Oct 1 2012: As long as we stay in our current economic system, automation leads to collapse. No jobs or income? Then we can't sustain the "vicious cycle of consumption". If we change our economic system, automation can free us, can end the starvation and wars. We can manage our resources intelligently (a resource based economy), and get rid of all the occupations and careers which are no longer relevant. We believe that our current system is "real", and has to continue. But it's just a fictional money game that has run its course. Watch "Money In The Future" -- http://www.youtube.com/watch?v=5NAxSYF1SAk
    • Oct 1 2012: interesting video. I thought I was the only guy thinking that the world could / should progress towards this kind of world.
      I do disagree with the later parts but it's a nice conceptual video. I don't want to believe that the monitairy system is evil (like the video somewhat shows).
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        Oct 1 2012: ... it NOToptional - the future won't exist for most people (ie the rest die) unless we follow this path - no other conceivable options, to understand why see the 'story' (always an interesting perspective looking back from the future).

        Capitalism – Level 2 history notes Nov 25th 2199


        cheers JP
  • Sep 27 2012: Everyone relates automation to labor, and yes, it is part of the picture. But it needs to be equated to efficiency. Labor reduction is a small part of the justification of a new machine, let's say, in a manufacturing environment. You have quality consistency, space reduction, and less downtime. You also still have the employment of programmers and operators. Point being, just because there is a reduction in labor does not mean it harms our economy. It puts our businesses in a better position to be competitve. Therefore, the business improves and grows creating economy.
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    Sep 25 2012: This is a tricky subject for me. I can understand the negative consequences of automation. I think you did a great job of highlighting the issue here Mats...so thank you for that.

    As you stated Mat...about a displacement to the service sector. These are generally low paying jobs with little possibility for advancement. This result is concerning as we would ultimately like an employment climate that gravitates towards more high paying careers.

    However, if the service sector is booming the jobs must be filled. The fact that people are finding employment is a positive. We obviously want a more progressive state for our society. However, I think we sometimes get confused with the real issues.

    The current problem is really about education, government policy, and peoples general attitude. None of this is the fault of anybody in particular. I don't think it is healthy to blame anybody for our current state.

    If progression is our target then moving forward is the only positive state.

    I don't like to post things like this without solutions. Doing so would probably just make me look like a preacher.

    1) Let's talk about education!

    I think there's much debate about degree over certification or trade. This disparity is an illusion and we need not pay attention to it.

    That being said...what you should pay attention to is what you are good at. What are you really good at?

    I think it's important to focus on such things because if you don't realize what your good at....come on...how do you realize your potential?

    Once you have a subject that makes you feel good inside...go to it. If you utilize passion your every move will be full of energy and desire. This is a necessity...don't look past it as a "hippie concept" :)

    As far as degree over certification...just do what's necessary. If you want to be a doctor...guess what?

    Just my opinions.

    Great post Mats.
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    Sep 24 2012: The economy has already collapsed! Automation has speeded up the process!!
  • Sep 14 2012: "Will Automation Lead to Economic Collapse?"

    It will most likely bring us to the brink of collapse, but doesn't necessarily have to push us over it. Automation is a blessing and we screw that through our current economic system which is the actual problem. A smart society would take advantage of automation by making people work less hours for the same wage to make everyone happier. A stupid society let's half the people work just as many hours as they used to, fires the other half to let them die in the gutter and translates the gain in efficiency into mulit million executive bonuses. It's clear which category our current society falls in, but it doesn't have to stay like that forever.
  • Sep 14 2012: It is a natural evolution of our species to develop technology and utilize it. People who do not recognize technological automation as a exponentially increasing real thing, need to wake up. As if we are going to stop at the scientific calculator or the iphone. Not only that, but productivity is inverse to employment, so it's irresponsible for us not to try and mechanize and automate wherever possible. Instead, we have an economic system that inhibits this progress by requiring people to perform obsolete tasks, essentially modern day slavery. As for technology creating new jobs, what is everyone going to be working at Facebook just to keep this stupid labor for income 'game' going. Where are the Da Vinci's and Einstein's of our time? I'll tell you, they are serving Subway sandwiches and poking people on Facebook! So to answer your question, will automation lead to an economic collapse? Yes, the collapse is coming, if it hasn't hit already. You look in the news and what do you see everyday, 500 jobs cut here, 3000 jobs cut here.. This is a downward spiral because less people working means less people buying things to keep the economy going. Eventually the majority of people on this planet will be unemployed because corporations are liable to one thing only - profit. Once that happens, a globally conscious effort will need to be made by every individual to change to a more sustainable and humane economic system. Hopefully one without money or credits.
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    Sep 13 2012: We should also consider the fact that automation has also led to the creation of new jobs as in the software development industry, and not forgetting the jobs that has been created by the internet and online platforms(design/content etc).

    Maybe automation leads to a metamorphosis of jobs and not necessarily loss of jobs.
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      Sep 13 2012: The ultimate purpose of automation is to save money -- and eliminating labor costs is the major area of savings. If automation didn't produce a net reduction in labor costs, no one would bother to do it.
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        Sep 13 2012: The much migger impact of automation is to make human life better, and in some cases to make it more secure. Would you rather harvest crops by hand, mine with hand tools, fly to space with analog systems, and clean up radioactive waste yourself? There many more such examples, but when automation comes into play most of them are handles by machines efficiently and securely.
        • Sep 14 2012: That's not how it works currently: the multi billion multinational corporation that has to decide whether or not to implement some form of automation doesn't give a rat's ass about making human life better, so in practice automation only happens when it reduces costs.
        • Sep 19 2012: John: But the whole history of the Industrial Revollution for 400 years shows that it DOES reduce costs.
      • Sep 14 2012: There will certainly be jobs created for mechanical engineers and programmers, which are highly skilled professions. A handful of college graduates will replace hundreds of uneducated laborers. This might not lead to collapse, but will certainly widen the gap between rich and poor.
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    Sep 12 2012: No. Because machines do not have magic in them, they are made by designers, engineers, computer scientists who work hard to make them happen. I believe it is nature of human civilization to make some type of jobs obsolete and to bring new ones into life. Even if machines we have are reducing the need for human factor in industrial jobs, there more types of new jobs that require human knowledge and thinking.
    • Sep 13 2012: While this sounds good on paper, it doesn't hold up in reality. One technician can easily fix several machines in a day. By this logic, the number of computer scientists that exist will always be greater than the number of computer scientists required to keep the machines running.
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        Sep 13 2012: Technician is not necessarily a computer scientist, and fixing machines is very small part of what people have to do with them. Engineers and scientist are needed for many more purpuses that just maintaining existing architecture. It's ok if you think in terms of individual products, but know that behind each product there is hard work of hundreds of people. More specifically in software industry, each great project requires continious collaboration of thousands of individuals to keep up the developnent to fulfill ever changing demands. That is what happens in reality.
        • Sep 14 2012: I hope, but do not think, that you're right. If it takes a hundred day laborers to work a field, a dozen technicians can do it. Once that system is refined, it scales to other fields easily, instead of needing to find more unskilled workers by the truckload.

          Regardless of the demand for programmers and roboticists, the uneducated poor will never have a chance to join these elite. Free, universal, quality education is still a pipe dream. As efficiency goes up, we might have enough food for everyone (I doubt it), and we certainly won't have enough work.
  • Sep 11 2012: Automation will succeed if and only if the government assumes the initial development of structures and education. In an fully automated society education will be the main resource humans would fill. If we build new cities that are autonomous, with energy and resources, Arts and Science would be our main focus. What do we learn at College? You get a BS or a BA, there is our answer, Education!
    • Sep 11 2012: How would this fit in the current socioeconomic system though?
      • Sep 11 2012: That is the problem, our current socioeconomic system is wrong. The Chinese would of been the conquerors of the world but the Emperor recalled the ships when they reached South Africa. Why? So the money would be used to feed the Nation. If we build a whole city with fish farms, indoor gardens and the like, we will benefit in the long run. If the government taxes us for the "poor" well wouldn't it be better to make a productive city for those that need. That would be a start. Once that is in motion our production levels rise. Eventually money as we know it should disappear and a Resource society should arise!
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          Sep 11 2012: The problem is that the government isn't going to take any initiative nor will the corporations who finance them (and the media) allow anyone to take the initiative. They'll continue to find a way to profit from the situation. It's really up to the people in general to take the initiative to rearrange their own lives to become more community minded and teach essentials like permaculture to their own children and neighbors. The corporate run media isn't going to advertise consciousness for us. We each have to pitch in and do a little ourselves. Finding movements that promote a permacultural lifestyle helps, not joining just one, but all movements that promote sustainability. Using social media to raise consciousness, using the web, and just practicing it in your daily life and 'being the change you want to see in the world' so your friends can see for themselves that the old system is obsolete. Eliminate your debts, don't go into debts, do without what you can't afford and adopt a hunter-gatherer lifestyle to repair, recycle and repurpose waste is a start. Trade with those who are out of work before you buy something new or go to a corporate run service. Use craigslist to find and offer work. Use food or things you own or services instead of currency, before you buy from Waltard. We use old Silk Yogurt containers to store food rather than buy new Tupperware. We haul recyclables to town when we go. We barely have a full trashcan for the trash guys even when we skip a week's pickup. Compost your food scraps. My girl helps at a food pantry in exchange for food that would normally get thrown out. Did you know that Kroger now composts their old produce rather than give it to the local food pantries? How wasteful is that? But that's the corporate mindset. We have to do this ourselves. The government is a joke and we're all the butts. They will continue to spoonfeed hope while accomplishing nothing.
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    Sep 9 2012: It will definitely change the economy. It will eliminate jobs that less educated people would be applying for, and in my opinion, the best way to fix that is to make college free.

    We have free education up until the end of high school - and we're given just enough education to be slaves... to shut up and flip the burgers and mop the floors. Why is it we have to pay thousands of dollars to get 4-6 more years? Imagine the benefit to society overall if everyone had a full college education. Right now, only the wealthy can afford it. So only the wealthy get jobs. If you take out a student loan, you don't get enough to finish. When you do you start your career in horrible debt. Most scholarships are only for a year or two.

    The coming technological unemployment mandates free higher education. That education can come in the form of recorded classes online. Colleges spend outrageous money on their lavish buildings. The cost of running free online courses is minimal in comparison - and the benefits are priceless.

    Imagine someone becoming a doctor because they care about healing the sick, instead of becoming a doctor so they can buy a yacht (not always the case - but tell me it doesn't happen). I learned my business on my own - no schooling - just the library and the internet. Imagine if the knowledge found here was organized into something the average person didn't have to stumble through for 10 years to find! How much would that really cost when you compare it to paying out unemployment benefits with money that isn't being earned because there are no jobs to tax?
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    Sep 9 2012: I see 2 main problems with increased automation.

    One is runaway productivity, as Tres English explained earlier in the thread.

    The other is centralization of wealth. Excessive wealth centralization is dangerous for the economy. People often argue that jobs will move to the service industry, but if all the wealth is moved to a tiny fraction of the population, how many jobs could there possible be to serve them? I don't see any solution to the dilemma. Technology was supposed to make our lives easier, but over the last 40 years people have had to work more and more to get by. There was a time when a single income family could own there own home and raise 4 kids. Now both parents have to work, people put in more overtime, go into student debt just to get a job and are no farther ahead.

    Something needs to change so that when robots do the work for us we can celebrate and relax, instead of having to work harder to get by.
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      Sep 9 2012: today we have bill gates. but walmarts and tescos all around the world does not sit tight waiting for bill gates to finally walk in. people cooperate with each other, work for each other.

      you have a total unrealistic view of the world or of the future. wealth does not concentrate in few hands. maybe it does in percentage. but the total sum of wealth in poor people's hands also increasing. that is the direct consequence of markets: in an exchange, both parties benefit. in a capitalist future, there might be some super rich that makes trillions of dollars. but the average fella also will have more than today.
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        Sep 9 2012: I'm glad you brought up Walmart, since it is a perfect example of my point. People who work at walmart don't make enough money to support their families. Poor people in north america are not better off than they were 40 years ago. They are poorer if you account for inflation and have to work more to survive.
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        Sep 9 2012: I know someone who works at walmart, he makes just over 10 dollars an hour in Kelowna, British Columbia, Canada.
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        Sep 9 2012: I don't know what the cost of living is in budapest.

        Let me ask you this, could you support a wife, 2 children, buy a home, pay for the kids education and have enough to retire? That's what my father did with a grade 12 education. This is what I mean when I say that the middle class is in fact not richer than a generation ago.
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          Sep 9 2012: now wait a second. nobody said you are richer than a generation ago. i said the free markets bring progress. you don't have that now. not since the "progressive" era gradually destroyed it. this fall in real wages is a very nice example why we don't need government interventions. you will see more of it.
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      Sep 9 2012: The state of affairs reminds me of a turn of the 20th century communist prescription to capitalism's future. "You can't fix a problem with thinking that allowed the problems to start."" New evils must be fought with new innovation" Who are you, Krisztian, to say someone has a total unrealistic view of the world? How does wealth justify the suffering and injustices classes of wealth creates? People's whole value system and goals in life have a dollar sign attached or some material object to be cyclically consumed and not the real intrinsic value of quality, thoughtful consideration to posterity, and self-fulfillment we all owe ourselves before we die. The average fella is gonna keep taking whatever the government will give him as he's getting workied more and more to maintain profits in the face of automation until we experience economic meltdown or continued wars from failure to adapt.
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        Sep 9 2012: it is kind of a pity that these false statements are around for 150 years refuted. so what do i do? give up, for if 150 years was not enough, we have no hope? depressing. or should i just open up any web page refuting marxism, and copy-and-paste stock answers to these stock questions? or should, as i used to, try to find some entertainment value for myself in trying new ways to shine light on things. but i find less and less satisfaction in it.
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          Sep 9 2012: "but i find less and less satisfaction in it."

          Tired of talking to yourself?

          Me thinks that some are awake and most ain't...
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          Sep 9 2012: Only a couple problems with your history lesson. The internet wasn't available until recently. Since change in technology is happening exponetially, the current economic model can't keep up. I'm all for free enterprise and capitalism but it's current condition is riddled with corruption and in the fact can't keep up with the imbalance of collapsing demand due to the death of competition.
    • l aresu

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      Sep 10 2012: i do agree so much with you scott, and your fears are mine and many many million people around the world. if you don't have read it already have a look at jeremy rifkin's "the end of work" that deals exactly with this topic and gives a gleam of hope. i'm worried as you're about an excess of automation as i don't believe that there is a solution with mass-employment in view of the loss of so many working places. my parents have greatly enhanced their living conditions compared to the condition of my grandparents. they'd got better salary, incredibly more rights (as payed vacation, they were payed if they got ill ecc..) while i belong to a generation that's swimming in a swamp, with little or no guaranties at all, nor for working conditions nor for retirement, it's the first generation since many decades where the sons get it worse than their parents.
  • Sep 3 2012: Yes automation will contribute to the next collapse. The question is who benefits and who suffers from the collapse.
    The benefits will always fall to those individuals whose fortunes remain through limited liability and/or taxpayer bailout money. These are the players in "national" and "global" economies. After the collapse they seize the opportunity to exploit the newly expanded and increasingly desperate work force. Isn't globalization beautiful!
    A more pressing question is where does all this leave local economies?
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    Sep 3 2012: We will find something new where human involvement will be needed.....
    This fear was always there through out the history as human civilization evolved....
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    Sep 1 2012: NO, look at how farming once the vast majority of employment is now way less than 5%, Manufacturing is similar. The jobs just go to other areas.

    This video speaks to this subject:

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      Sep 9 2012: Farming was automated and former farmers became factory workers. Factories automated (and outsourced). Former factory workers became medical billing clerks which automated and former medical billing clerks became landscape maintenance workers. Landscape maintenance was automated and former landscape workers became pool cleaning service owners. Pool cleaning was automated and former pool cleaners became general laborers. General labor was automated and former laborers became organic farmers. Organic farming was automated and. . . .
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        Sep 9 2012: Not really, you wax pejorative. The reality if you look at the specialization of jobs that have been created over the last 100 years is more opportunity and more productivity and a higher standard of living although maybe a sedentary life style becomes the bigger danger?
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          Sep 9 2012: The disparaging tenor of my words is fitting for the subject; which I understand to be the effect of continuing automation on the economy. My hypothesis is that automation carried to its ultimate application (no human contribution necessary) will cause the collapse of the economy. The past hundred years cannot be the continuing model for displaced workers. Sooner, or later if EVERYTHING is automated people will have no means of purchasing.
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        Sep 9 2012: The evidence indicates the opposite.

        Why I could even envision where a feller could make his living and retire by doing nothing more than making engineering drawings for other fellers? Of course Auto Cad or Solid Works with FEA could put him out of business? Wait a minute that did not occur.

        Of course there will be causalities buggy whip manufacturers and the like. The prognosticators say that most people will not have just one career. Should we do away with Google to keep the librarians gainfully employed should we start a local chapter of the Luddites?

        My grandfather will tell the story of how fellers would come out to his fathers ranch and dig a water well with a drill instead of shovels, he said that is what I'm going to do for a living. If Star Trek is any indication everyone on the show seemed to be busy.

        In fact I would go so far as to say to do otherwise violates mankind's prime directive.

        P.S. This video indicates the senior datum for a successful life in the future and the past.

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          Sep 10 2012: Displacement and retraining can only go on for so long. As automation replaces more people eventually when 100% automation is reached there wil be no non-automated jobs for people to be retrained for. I repeat, "The past hundred years cannot be the continuing model for displaced workers". The question is: will automation cause economic collapse. I say once all humans are outplaced the answer will be YES.
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        Sep 10 2012: Why was the gross product of the world in 1900 1 trillion and today is 70 trillion? The automation has never been as high as it is now while the employment has never been higher.

        The last 100 years is the indicator of the future. Perhaps what you are missing is the specialized jobs that will have to be performed.
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          Sep 10 2012: Compensation of Employees (COE) is a major component in the GDP. With 100% automation the COE will be zero. End of economy.
        • Sep 17 2012: "Why was the gross product of the world in 1900 1 trillion and today is 70 trillion? The automation has never been as high as it is now while the employment has never been higher."

          Employment was higher 100 years ago: people worked more hours, kids worked, less people spent many years at school, less people were pensioners. Also, are you sure that $1 trillion GDP in 1900 figure accounts for inflation? The world's population is four times as high as it was in 1900.

          The truth is that automation has destroyed job opportunities but that's ok: I don't particularly fancy leaving school at age 12 to work 60 hours a week until the day I die.
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        Sep 10 2012: Ain't gunna happen, I will agree to disagree.
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          Sep 10 2012: I agree 100% automation is not going to happen, but that is not what the question is asking. The question asks would the economy collapse IF automation continues to grow?
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        Sep 10 2012: As I'm sure you know I meant the COE is not going to go to zero. And the answer to the O.P. is NO.
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          Sep 11 2012: No Pat, I was not sure you meant the COE because you did not say you meant the COE. You said QUOTE: "Ain't gunna happen," I assumed 100% automation was your subject. What exactly do you think the O.P. is asking? Maybe I am on the wrong page.
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        Sep 11 2012: He is asking if there is a correlation between automation and jobs. And what it will do to the economy.

        Once again as indicated by the World GDP 100 years ago being 1 trillion today it is 70 trillion and easily 70 times the automation of 1900

        No the jobs will not go away.
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    Sep 1 2012: Hypothetically 100% automation means the only essential human labor will be controlling the automated processes aka robots-- unless, of course, that too is automated. If there is no labor, how will people earn wages to buy the stuff and the services the robots are providing? How will the autonomous robots establish and maintain the support infrastructure to keep themselves running? Why will the robots keep making stuff and providing services if nobody is buying any of it? Sounds like economic collapse to me.
    • Sep 9 2012: edward : you have pointed out a real problem. But it need not lead to collapse. Consider my former life in the US army.: money was not really an issue. We had chores, like KP, but no one had to be "paid" for it. In ancient armies , such as the Romans, the troops did farming in their spare time, and supported themselves. Large groups of people , like the Amish, function in similar ways. Kind of a monastic life, not big on Fun Things, like buying and showing off expensive stuff, but still quite humane. As long as there is no War.
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        Sep 9 2012: If the definition of "economy" is the management of income and expenditures then currency is subsumed. What you suggest is that where there is no economy ($) there is no possibility of economic collapse. I disagree. The Amish system must collapse in an extended drought or persistent crop failure. They might try to establish a non-agricultural commercial endeavor but that would be replaced by automation and we are back to economic collapse. The Army runs on currency even though the dogfaces don't see much of it. "Free lunch" (welfare) programs run on currency even though the beneficiaries don't see much other than coupons and vouchers. Cash is the written evidence that commerce has occured. If commerce is 100% automated there is no buying power for the displaced workers and there is no need for cash for the non-consuming robots. . . . economic collapse. People gotta work!
    • Sep 10 2012: A robotic utopia seems like a good solution. Each individual is given an annual amount of credits (which basically translate into something like total energy produced / number of people). You could exchange those credits for what you need to survive or pool them with other people to have new novel things created - but the robots would be handling the "back end" of society so to speak. Marshall Brain does a fantastic job outlining this in his book ROBOTIC NATION which you can get for free online.
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        Sep 10 2012: That simply replaces currency with credits and is still an economy. Are the robots going to sustain themselves and perpetually exist simply to altruistically meet all of our human needs for products and services? The question being debated here is not about "the back end of society", or some limited use of automation. TOTAL automation will cause economic collapse.
  • Sep 1 2012: I wouldn't say that automation by itself if meaningful. The problem is runaway productivity. Automation is only one way to achieve that. (Think the waiter in the restaurant that takes your order on a hand-held device that places the order with the cook, makes an entry in the sales receipt, and deducts the materials from inventory.)

    Every time you hear that productivity has increased by two percent, you need to think that either labor costs (employment and/or wages) must decrease by 2%, OR consumption must increase by 2%. In the first case, this leads to our current jobless recovery and eventual economic collapse. In the second case, it leads to eventual ecological collapse.

    Automation is only one way to cause runaway productivity.
  • Oct 1 2012: We should approach this topic from a pure economic perspective and the best way to do that is to measure the overall welfare of the economy before and after automation. We can all agree that, because of automation, there would be gains to certain groups and losses to other groups. We should notice that, if the gains are of greater absolute value than the losses, then the argument must support automation.

    First of all, we should look at why producers look towards automation. It is because of the fact that they are trying to reduce costs and produce their product at the lowest possible price. In other words, they are trying to achieve competitive advantage in order to gain market share and increase profitability. This act will eventually lower the prices of the products for consumers. From this, we can see that automation causes a gain for the producers (businesses) and a gain for the consumers (note that people that work at businesses are also consumers). The problem with automation arises from the fact that people lose their jobs as a result. This is the loss associated with automation (note that the people being laid off are also consumers of other products).

    So we can see that automation provides the economy with large gains to large groups (producers and consumers) but causes a loss to a small group (laid off workers). This is where the emotional argument against automation comes in. The individual that is laid off may suffer more in absolute value (loss) than a certain individual gains from the process of automation. We should notice that the companies are better off with automation, but would still be better off even if they were to pay these few existing employees their salaries until they died (sure, they would have to pay these people for not doing the work, but the long run benefits would still outweigh these short run costs).

    In other words, consumers gain, producers gain, and some workers lose, but the economy experiences a net gain.
    • Oct 1 2012: "We should notice that, if the gains are of greater absolute value than the losses, then the argument must support automation."

      No, you can't just "notice" that. A society where 1 million people make 20k is much better than one where 999.990 people make 2k and 10 people make 15bn. Now of course things would be different with redistribution...

      "So we can see that automation provides the economy with large gains to large groups (producers and consumers) but causes a loss to a small group (laid off workers). This is where the emotional argument against automation comes in."

      Most consumers are workers themselves, so if not enough replacement jobs are provided quickly enough the number of unemployed can reach very high levels and the impact on society would not be negligible.
      • Oct 1 2012: That is the premise of my argument; my argument is based on a purely economic perspective; no emotions involved.

        You give a certain scenario and state that the prior is "better" than the latter. How do you measure better? I use the one dollar, one vote metric; you do not.

        The cost to society would be less than the gain; as others have said, job creation would move towards different sectors and prices would be pushed downward (the income effect of price change should be noted here).

        It's really simple.
  • Sep 29 2012: Even if automation eventually lead us to nirvana, we might all burn on the way there in the riots that may ensue.

    Rapid automation is certain to create vast pools of unemployed whose skills are no longer required. No alternative jobs that produce tangible goods will be awaiting. Some form of goods and services redistribution will need to be devised before people go cold and hungry.

    Let say miraculously, the new economical equilibrium is achieved. All physical or routine mental jobs are automated so 99% population don't need to work. All goods and services are delivered by robots to each individual.

    What will happen to the people? You can start by watching "Wall-E" http://en.wikipedia.org/wiki/WALL-E

    Think of typical side effects when people are not busy or challenged:
    1) they procreate -- can automation solve issues resulting from geometric population growth?
    2) they seek thrills -- resulting in risky behavior, drug use
    3) they want more -- more stuff, more control over others, new social orders, revolutions, radicalism ...

    So to avert these, everyone would have to be occupied with mental and physical activities to keep them busy or else suffer the consequences.

    Good Luck.

    [ Pragmatic Understanding of Trade Imbalance http://ideabits.blogspot.com/ ]
  • Sep 29 2012: Only one basic problem; If, for the sake of argument, we say that robots can create any product or service a human being can provide, there is still one fundamental thing a robot will ~never~ do: ~BUY~ the product or service it creates!

    Within the framework of our present economic culture, there are only two ways this could work; either we create sentient androids that can buy the products & services they create (they'd have to be paid & then they would totally replace us) OR we fundamentally change our socio-economic structure into... what? Robotically enhanced Socialism, where we all equally benefit? Doesn't look bloody likely!

    Let's not ignore the parallel development of recombinant DNA. Within 40 years Biotech will provide the means to increase life spans by 100-200% and arrest the ageing process. Not to mention increased intellect, strength, durability, vision, etc, etc. Who will benefit from these mega-enhancements? It will NOT be egalitarian, it will only be available to the rich & powerful among us (the .001%). If it were applied to the masses it could be a disaster, there aren't enough resources available for the present (short lived) world population. These procedures could cost millions of dollars, whomever becomes the 'Bill Gates' of the Biotech Company providing these enhancements could become a multi-trillionaire.

    The gap between the 'haves & have nots' is about to increase by ~several orders of magnitude~! These lucky few may be considered to be Homo Sapiens 2.0, and who better to lead/rule society?! (I suspect that these 'super beings' will consider themselves as Homo Sapiens 1.0, the rest of us were just beta models.)

    Combine this with a robotically run society including robotic police & armies and a very unsettling & downright scary future can easily be imagined.
  • Sep 29 2012: Mats: If automation is as successful as it has been , and is likely to be, that can only mean more "production", of goods and services. So the "problem" of having everyone on welfare, with few or no taxpayers is only a problem if one insists that our economy remains in its present form: using "salaries" as sources of "money" which at present is actually a combination of Bookkeeping, credit , and Debt. But as long as the "stuff", food, etc. is produced, there is no reason we couldn't run it without "taxpayers" or money, or debt. Of course, there would have to be something like money, because we need to keep track of things. In the Army, years ago, there was very little salary, even that was not needed. No debt, etiher, except maybe for playing Poker. To sum up, the Free Enterprise , "Capitalist" system has pretty much run into its limits: a very few people got most of the "money", to the point where there is not enough "Consumption" to keep it all going. I hope that the next economic model is more like that of a wealthy clan: i.e. you take care of your members , whether they are efficient or not, because they are your relatives. Now we know that , like it or not, all people are actually ARE our relatives, annoying as it may be.
  • Sep 28 2012: NO... when it frees us up to be artistic in our disciplines.
    YES... when it's hacked after we forget how it all works.
  • Sep 28 2012: I presume (having not referenced this, as yet) automation would result in at least a few significant effects on society: (1) Development of new skilled jobs and production chains, for design, engineering, and production of the tools of automation; (2) Smaller labor forces, in automated tasks; (3) Technical jobs creation, for employees operating and maintaining the machines of any newly automated part of a production line.

    From the bluesky point of view, I'd like to think it could also result in more leisure time for workers - therefore more opportunities for community involvement, and probably more local economic involvement consequently. I'm afraid that's not been the case, though, in how it's been working out so far, in the US. (I think it seems bleak to me, personally, in how it's been working out so far - namely, as starting with work weeks far exceeding the typical 40 hour "norm" being not uncommon at all, to my understanding, and following from that, also less community involvement in society, and less local economic interaction, consequent with the diminished leisure time.)

    Considering automation, specifically, there are tasks that cannot be usefully automated - so simple as landscaping and gardening and so complex as expert medical work. Regardless of how far automation would proceed, in mass production industries, no doubt jobs will still exist for fulfilling those tasks, in society.

    As far as possible unemployment resulting from automation, in regards to the situation of being layed off if a plant becomes newly automated, that would not be an end to one's employability, of course. Retraining and horizontal job shift become possible, at least at the transition.

    Considering economic shift, the number of economic flows in a society is not limited to those passing through an automated production chain. Without analysis, I wouldn't want to blame machinery for economic difficulty, . (In fact, I'd probably look at management, first. ;)

    Intriguing questions
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    Sep 27 2012: Ok, there is a really serious discussion point here - we see the economy / society from a very limited point of view. The real underlying issue (once the bots are doing everything in say 50 to 100 years or so), is RESOURCES ... call it the move from Capitalism to Resourcism.


    Resources with continue to become scarcer (until we leave for the stars) and it is the share-out of these finite resources (including nice bits of land on which to live and play) that will be the main issue for the human race - this means new politics - and no-one is thinking about how we move on this yet, even though our children or certainly grandchildren will be faced with this move directly during their lives. Payment is likely to be made (as no one is working) by a 'share' of the resources, these are likely to be swappable and finite as they will reflect precise physical resources (so no inflation et al)

    see - Capitalism vs Resourcism and new political structures