Charles Hugh Smith took on the premise for universal basic income (UBI) today in his post Marx, Robotics, and the Collapse of Profits. The premise for UBI is that, as more industries become automated, wealth will consolidate into the hands of fewer and fewer people. In the inevitable future a few capitalists will own the robots that create all the goods. However, the people will mostly be unemployed. The only way to provide for the welfare of the masses, and the only way to supply buyers for the robot-manufactured products and keep the economy running, will be to redistribute wealth from the barons to the people. Many support a scheme where the government provides a UBI for all citizens (and all resident non-citizens, no doubt) funded by taxing the producers.
There are many social arguments against UBI, which often can be boiled down to the old adage, "idle hands are the devil's playground." There is also great moral hazard in having a democracy, where leaders are elected by the people, in charge of issuing paychecks to the people. Men would not do well under a UBI. "Don't worry, the government will protect and feed your family. You go watch football." Men decay in such scenarios, and their nations will quickly follow behind them.
Smith approaches the issue from an economic perspective, and insists that the UBI premise is false because the economy-by-robots is ultimately unprofitable and, if anything, it is the remaining human-led economies that would be taxed to subsidize unprofitable robots. It is good to see economic arguments against the UBI-driving scenario because there is an equivalent to Murphy's Law for socioeconomic systems. If a venture tends to destroy society but it is profitable, eventually it will be tried. If Smith is correct then we don't really need to have the UBI debate, because the conditions for it will never arise.
Unfortunately his argument is based on some flimsy assumptions. Because profits tend to fall, he says, industrialists will only be able to maintain profits by massively investing in production capital to increase output. Eventually the robotic industries will become unprofitable and significant capital investments will be destroyed. Marx believed that, because profits tend to fall, eventually the driving force of capitalism would be eliminated through natural forces and the whole capitalist order would destroy itself through exhaustion. So the robotics scenario is just the Marxian debate put into a format that is easier to grasp intuitively.
Smith's big flaw here it to assume that the tendency of profits to fall means profits will fall perpetually; to zero and beyond. Not just unprofitable, but antiprofitable. The problem is there is no supporting evidence for such a claim. That's not to say that industries never become antiprofitable, but not for the reasons he provides. What industry has even been driven to antiprofitability by over-investment in itself? I suspect there's a very good reason he provided no examples.
Let's look at some ourselves. Take farming. That's an industry that has become so heavily automated, so commoditized, that it certainly fits the the kind of scenario that Smith describes. By his theory, farmers would have so over-invested in machinery that farming would run at a loss and invested capital would be destroyed. Historically, farming was done manually. Grain was sown by hand, harvested with reapers, and then ground by hand or with the aid of machinery such as water mills. Was hand farming done in because landowners over-produced reapers and grinding stones, driving profits below zero? Of course that doesn't make any sense at all, and has never happened. Farming has always been profitable, because investment follows demand. When demand is being met, the incentive for investment wanes.
As long as an industry is profitable it will continue. So why is it no longer profitable to cut wheat by hand anymore? For thousands of years it was, and there's no reason it couldn't happen now. Anyone could pick up a few acres of land and advertise for a couple of laborers if they were so inclined. A hundred years ago or so it would be profitable to do so if you had the investment capital. Today it's not, and the reason is pretty obvious. You wouldn't make enough off the grain to pay the workers. The cost of labor has gone up! No one is going to come toil in your soil for a sack of corn. The government even forbids it. Commoditization drives down profits, but not to zero. Antiprofitability is caused pirmarily by increasing labor costs. If labor is replaced by automation, and automation is always getting cheaper, then actually it ensures that the industry won't be driven to antiprofitability. The only other way it might happen then is if other costs increase, such as energy prices or tax bills. The author has it backwards and flipped. Commoditization won't lead to antiprofitability that demands tax subsidies, but increasing taxes on those industries could lead to antiprofitability.
So where does that leave us now, in the context of UBI? If Marx and Smith are wrong and automation isn't actually self-destructive, then what's to stop the trend of the commoditization of industries? Well, besides even larger maladies like an energy crisis or political instability, nothing. But that may be okay. The wrong assumption that UBI promoters make is the conflation of commoditization with the monopolization of the means of production. It's very troubling if true, because economic power yields political power. Even if their assumption is true, UBI is not a good solution in that context, as it advocates giving all the economic control to the government. If certainly satisfies the rule that all liberal policies must make the problem they are addressing even worse. Let's take away excessive economic control from the hands of global capitalists (okay, I'm listening) and give it to the government. Idiots!
Well here in the dissident right we are not idiots (definitely not!) and we have a different economic agenda. Instead of concentrating economic power in the hands of global capitalists (bad) or centralized governments (worst), let's put economic power in the hands of the people. Gee, it's so simple it might just work, although it sounds a bit platitudinous or cliche (power to the people!). But I do believe that the commoditization of industry is actually putting more economic control into the hands of the people already. Economic independence occurs when people are self-contained units that can generate profit. The opposite of economically independent would be a factory-employee who has no capacity to generate income without the company's machinery and other business capital. Even more the opposite of economically independent is the welfare dependent, which is what UBI enthusiasts want us all to become.
There's a luthier in my town who I have commissioned to build a guitar. He has a day job where he makes a modest income, but has nonetheless put together a shop where he can construct an entire guitar by hand. His ambition is to transition to full-time luthiery. He is on track to achieving maximal economic independence. He would never be able to do so if it wasn't for the commoditization of the tools of his trade. Without them he'd never be able to afford the capital costs and his only option to build guitars would be to work in a guitar factory. While he can't compete with those factories on efficiency, overall the benefits of industrial efficiency have given him increased economic independence.
Many occupations are seeing increasing economic independence thanks to the benefits of commoditization. It hasn't been that long since computer programming meant gaining employment at a place that could afford the massive computers. Today the tools of the trade can acquired from a week's pay. You need a computer and an internet connection. Maybe some software. Many programmers are self-employed and work from home. This would not be possible without the commoditization of the processor and other computer hardware.
People tend to be too narrowly focused when they think about industrial robots. Say a factory that makes wrenches fires its workers and buys wrench-making robots. Ah, social plague, we must redistribute wealth or the factory worker is destitute and no one will be able to buy wrenches! But think of the auto mechanic. If wrenches become cheaper, it's easier for him to acquire the tools to open his own shop, rather than working for a wage. From our perspective this is mostly positive. The jobs being created are much more economically independent than the ones being destroyed. Economic independence means less centralization of economic power, from which follows less centralization of political and social power. The result is a freer, more natural, and more holistic society. Compare this to the liberal plan where everyone is a wage slave for the biggest corporation of them all, FedGov. Our goals give people independence and a sense of meaning. Their goals destroy everything natural and good about life and are doomed to catastrophe.
Marx believed the tendency of profits to fall would be the ruin of capitalism. Charles Hugh Smith believes that profits will tend to fall below zero. The reality is that industries don't inherently drive themselves to antiprofitability, and the falling profits of commodities permits more economic independence for workers. It may be our foremost goal on the right to do everything possible to transfer economic power away from the government and corporations and into the hands of ordinary people.
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