<div dir="ltr"><div><div><div><div><div>Thanks Eric.<br><br></div>It is also interesting to look at it from the point of perspective of control, property, of who controls what.<br><br></div>My feeling is that capital, and artificially scarce money as capital, is only a tool to transfer and concentrate property and control in the hands of a minority over time.<br><br></div>If , in the logic of concentrated power, humans are not any more needed , or only a small percentage of humans are needed to control other humans, or to maintain the priiledges of certain super wealthy in a competition with other super wealthy, and if less money is circulating, <br></div>it may not necessarily be a big problem for the super wealthy. The issue I would speculate, is not if they loose billions or make billions, but rather how much control the super wealthy have in relation to others.<br><br></div><div>If a great part of the population ends up without money, the billions they already have can buy them much more power.<br><br></div><div>If it leads to a great deal of the population being even more alienated, it only poses a threat as soon as such populations get organized to generate alternative "games" of organization, and can disenfranchise themselves, eventually by using technology, too. Yet there , once more, concentration of land, requirements for paying taxes in corporate currency, and so forth, reduce by so much the opportunities for disenfranchising.<br></div><div><br></div>We may indeed, as I noticed some articles speculating, be beyond capitalism already.<br></div><div class="gmail_extra"><br><div class="gmail_quote">On Mon, Nov 9, 2015 at 5:08 PM, Eric Hunting <span dir="ltr"><<a href="mailto:erichunting@gmail.com" target="_blank">erichunting@gmail.com</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
<div bgcolor="#FFFFFF" text="#000000">
This is an argument I've been making for many years myself. In the
debate about automation and job destruction it is commonly
overlooked that labor and capital are in the same boat when it comes
to long-term impact because production capability itself is becoming
a commodity. Machines aren't just getting smarter, they're getting
smaller, more adaptive, progressively lower in minimum necessary
production volumes, and cheaper. You can now initiate more kinds of
production 'out of pocket' than ever before. You can now
competitively manufacture more things in the space of a four car
garage than ever before. You can now approach a conventional
middle-class standard of living based on entirely local and personal
production and open source designs. Corporations are beginning to
abandon the ownership of their own means to production in favor of
job-shops because as that production capacity becomes more of a
commodity the cost of money and the adaptability lost to
amortization becomes the chief drag on market competitiveness. The
volume of consumer goods produced in job shops went past that from
traditional factories in the year 2000, and it never went back. The
factory--and the traditional capital creating it--is already an
anachronism. This brings us to the core premise of Post-Industrial
futurism; that the paradigms of the Industrial Age are being eroded
by the evolution of the very technologies on which they depend. This
is the ultimate crisis of Capitalism; the eventual obsolescence of
capital itself by the automation it cultivated as value shifts away
from material goods and the means to make them and becomes
virtualized, integral to design. The product has no value. The real
value is in the 'spime'. Already corporations are increasingly
obsessed with litigation, intellectual property, whittling-away at
the First Sale Doctrine, and limiting the rights and controlling the
behavior of the consumer as means to maintain market share.<br>
<br>
The long-term evolution of production and distribution is a
transition to localization, networking, production-on-demand,
increasing reliance on management automation through quantitative
analysis, increasing cost-transparency, and eventual integration
into the infrastructure of the built habitat as a kind of municipal
utility. The global economy will shift from trading in goods to
trading in commodity refined materials and modular parts. As labor
is factored out of production, cost of production becomes more
transparent, market prices capitulate and fall except where they can
leverage the value of exclusive design and designer prestige.
'Brand' manufacturers will increasingly take on the aspect of
ateliers--design studios. The next Apple will be composed of a
relative handful of people whose chief jobs are design, development,
and the management of spimes with all production owned by someone
else and local to the consumer. The next Ford or Toyota will
assemble cars on demand at the dealership--maybe generic
dealerships. (an overlooked impact of electric cars and the electric
power train is their ability to radically drive the number of
components in a car down. Tomorrow's car might have less than 100
parts and go together like a desktop PC!) <br>
<br>
So Capital is running out of things to do, the paradigm or money is
failing, and the model Westphalian state is running out of people to
tax, while, now evolved to accommodate Industrial Age paradigms,
having no other mechanism to define, capture, and collectivize
surplus social productivity to do anything with. (are you going to
conscript labor off the street to make fighter jets?) The state and
the monetary system have been very closely wedded through the
Industrial Age, premised on a concept of extracting and
collectivizing monetary capital as societal debt to gift to elites
to create the means of production, and now their common paradigms
are breaking-down. To continue to exist government will have to
devise a new basis of economics--a new paradigm by which to define
resource collectivization and a rationalization for it--or (more
likely) a new economy will emerge stigmergically by the logic
intrinsic to the underlying technology and the compulsion of people
to make things work day-to-day. This is why, when I talk about basic
income myself, I talk about two forms of it. An 'institutional'
basic income--that is disbursed as money and administered by some
kind of bureaucratic institution--and an 'integral' basic income
that's built into the 'firmware' of the infrastructure of the built
habitat and disbursed as on-demand access to goods based on a
systemic quantitative analysis of demand. Long-term, we are likely
to evolve toward that integral form as local communities are
compelled to take on increasing responsibility for keeping daily
life going as the state increasingly fails them and people discover
the at-hand means/technology to do that in their now local
production capacity. <br>
<br>
All these things add up to a picture of a very different lifestyle
in the future that I don't think we communicate too well right now.
This is why I've been very interested in the notion of using the
approach of Living Museums in a future context to illustrate future
lifestyle and am working on projects like the Open House documentary
to showcase open source living. <br>
<br>
<br>
<div>On 11/9/15 4:52 AM,
<a href="mailto:p2p-foundation-request@lists.ourproject.org" target="_blank">p2p-foundation-request@lists.ourproject.org</a> wrote:<br>
</div>
<blockquote type="cite"><br>
<div lang="x-unicode">
<div dir="ltr"><br>
<div class="gmail_quote">---------- Forwarded message
----------<br>
From: <b class="gmail_sendername">Chris Quigley</b> <span dir="ltr"><<a href="mailto:cmqesquire@gmail.com" target="_blank">cmqesquire@gmail.com</a>></span><br>
Date: Mon, Nov 9, 2015 at 6:33 PM<br>
Subject: Fwd: Excellent Art By Charles Smith<br>
To: Michel Bauwens <<a href="mailto:michel@p2pfoundation.net" target="_blank">michel@p2pfoundation.net</a>><br>
<br>
<br>
<div dir="ltr">
<div class="gmail_quote">
<div dir="ltr">
<div class="gmail_quote">
<div dir="ltr">
<div class="gmail_quote">
<div dir="ltr">
<div class="gmail_quote">
<div dir="ltr">
<div class="gmail_quote">
<div dir="ltr">
<div class="gmail_quote">
<div dir="ltr">
<div class="gmail_quote">
<div dir="ltr">
<div class="gmail_quote">Michel,<br>
<br>
<br>
<div dir="ltr">Thought this
might be of interest.
<div><br>
</div>
<div>Kind regards,</div>
<div><br>
</div>
<div>Christopher</div>
<div><br>
</div>
<div>---------------------------------------------------------------------------------------------</div>
<div><img src="http://www.oftwominds.com/CHSbanner2d.png" style="color:rgb(64,64,64);font-family:Verdana" border="0"><span style="color:rgb(64,64,64);font-family:Verdana"></span>
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<div>
<div align="center"><b><a href="http://www.oftwominds.com/musings-sample.html" target="_blank">Musings</a> <a href="http://www.oftwominds.com/CHS-books.html" target="_blank">My Books</a> <a href="http://www.oftwominds.com/archives.html" target="_blank">Archives</a> <a href="http://www.oftwominds.com/books.html" target="_blank">Books/Films</a></b></div>
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<div align="left"><font face="Verdana"><br>
<br>
<a href="http://www.oftwominds.com/blognov15/automation-profits11-15.html" target="_blank"><b>Automation
Doesn't Just
Destroy
Jobs--It
Destroys
Profits, Too</b></a>
<p><i>November 9,
2015</i></p>
<p><i>The idea
that taxing
the owners of
robots and
software will
fund
guaranteed
incomes for
all is not
anchored in
reality.</i></p>
<p><b>Automation
is upending
the global
order by
eliminating
human labor on
an
unprecedented
scale--and the
status quo has
no
reality-based
solution to
this wholesale
loss of jobs.</b></p>
<p>Two recent
articles
highlighted the
profound
consequences of
advances in
robotics and AI
(artificial
intelligence) on
employment: <a href="http://www.mckinsey.com//Insights/Business_Technology/Four_fundamentals_of_workplace_automation" target="_blank">four fundamentals of workplace automation</a> and <a href="http://www.telegraph.co.uk/finance/economics/11978542/Robots-may-shatter-the-global-economic-order-within-a-decade.html" target="_blank">Robots may shatter the global economic order within a
decade</a> as
the pace of
automation
innovation has
gone from linear
to parabolic
(via Mish).</p>
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<p><b>The status
quo
apologists/punditry
have offered
two
magical-thinking
solutions to
the sweeping
destruction of
jobs across
the entire
spectrum of
paid work</b>:</p>
<p>1. Tax the
robots (or
owners of
robots) and use
the revenues to
pay a guaranteed
income to
everyone who is
unemployed or
underemployed.</p>
<p>2. Let the
price of labor
fall to the
point that
everyone has a
job of some
sort, even if
the pay is
minimal.</p>
<p>Neither one is
remotely
practical, for
reasons I will
explain today
and tomorrow.</p>
<p><b>Today, let's
examine the
misguided
fantasy that
automation/robotics
will generate
enormous
profits for
the owners of
robots.</b> Here's
the problem in a
nutshell:</p>
<p><b>As
automation
eats jobs, it
also eats
profits, since
automation
turns labor,
goods and
services into
commodities.</b> When
something is
commoditized,
the price drops
because the
goods and
services are
interchangeable
and can be
produced almost
anywhere.</p>
<p>Owners must
move
commoditized
production to
low-tax regions
if they want to
retain any
profit at all.</p>
<p><b>Big profits
flow from
scarcity, i.e.
when demand
exceeds
supply.</b> If
supply exceeds
demand, prices
fall and profits
vanish.</p>
<p>(Monopoly is a
state-enforced
scarcity. In our
state-cartel
economy, there
are many
monopolies or
quasi-monopolies.
While
eliminating
these would
lower costs,
that wouldn't
reverse the
wholesale
destruction of
jobs and
profits--it
would only speed
the process up.)</p>
<p><b>The other
problem the
"tax the
robots and
everything
will be
funded" crowd
overlooks is
the falling
cost of
software and
robots lowers
the barriers
to competition</b>:
nothing destroys
profits like
wave after wave
of hungry
competitors
entering a
field.</p>
<p>The cost of
automation and
robotics is
falling
dramatically.
This lowers the
cost of entry
for smaller,
hungrier, more
nimble
competitors, and
lowers the cost
of increasing
production. When
virtually any
small
manufacturer can
buy robots for
less than the
wages of a human
laborer, where's
the scarcity
necessary to
generate
profits?</p>
<p>The parts
needed to
assemble a $45
tablet are
dropping in
price, and the
profit margins
on those parts
is razor-thin
because they’re
commodities.
Software such as
the Android
operating system
is free, and
many of the
software
libraries needed
to assemble new
software are
also free.</p>
<p><b>Automation
increases
supply and
lowers costs.
Both are
deadly to
profits.</b></p>
<p><b>Here’s the
core problem
with the idea
that taxing
the owners of
robots and
software will
fund
guaranteed
incomes for
all:</b> the
more labor,
goods and
services are
automated/commoditized,
the lower the
profits.</p>
<p>The current
narrative
assumes more
wealth will be
created by the
digital
destruction of
industries and
jobs, but
real-world
examples suggest
the exact
opposite: the
music industry
has seen
revenues fall in
half as digital
technology ate
its way through
the sector.</p>
<p>A $14 billion
industry is now
a $7 billion
industry.
Profits and
payroll taxes
collected from
the industry
have plummeted.
So much for the
fantasy that
technology
always creates
more jobs than
it destroys.</p>
<p>As subscription
music services
replace sales of
songs and
albums, revenues
will continue to
decline even as
consumers have
greater access
to more
products. In
other words, the
destruction of
sales,
employment and
profits is far
from over.</p>
<p><b>Examples of
such radical
reductions in
paid labor
abound in
daily life.</b> To
take one small
example, our
refrigerator
recently failed.
The motor was
running but the
compartment
wasn’t being
cooled. Rather
than replace the
appliance for
hundreds of
dollars or hire
a high-cost
repair service,
I looked online,
diagnosed the
problem as a
faulty sensor,
watched a
tutorial on
YouTube (what I
call <i>YouTube
University</i>),
ordered a new
sensor for less
than $20 online
and completed
the repair at no
cost beyond a
half-hour of
labor, which
cost me nothing
in terms of cash
spent.</p>
<p>The profit
earned by
YouTube was
minimal, as was
the profit of
the firms that
manufactured the
sensor and
shipped it. The
sales and
profits that
were bypassed by
using
nearly-free
digital tools
were an order of
magnitude
higher.</p>
<p>I was recently
interviewed via
Skype by an
online
journalist with
millions of
views of his
YouTube channel.
A decade ago
when he worked
in mainstream TV
journalism, an
interview
required costly,
time-consuming
travel (for the
crew or the
subject), a
sound engineer,
a camera
operator, the
talent
(interviewer),
editor and
managerial
review. These
six jobs have
been rolled into
one with digital
tools, and
travel has been
eliminated
entirely.</p>
<p>Some will argue
that the quality
of the video and
sound isn’t as
high, but the
quality of the
user experience
is ultimately
based on the
viewer’s
display, which
is increasingly
a phone or
tablet. So in
terms of
utility, value
and impact, the
product (i.e.
output) produced
by one person
replaces the
conventional
media product
that required
six people.</p>
<p>My own solo
digital content
business would
have required a
handful of
people (if not
more) only a
decade ago. With
digital tools
and services, it
now requires
just one person.
Those of us who
must work with
digital tools to
survive know
firsthand that
what once
required a
handful of
workers must now
be produced by
one person if we
hope to earn
even a
marginally
middle-class
income.</p>
<p>Multiply an
appliance that
doesn’t need to
be replaced and
a repair service
that doesn’t
need to be
hired, a
half-dozen
positions
replaced by one
part-time job, a
fully functional
commodity tablet
that costs 10%
of the
high-profit
brand and you
understand why
profits will
plummet as
software eats
the world.</p>
<p><b>These are
not
starry-eyed
examples based
on
projections;
these are
real-world
examples of
widely
available
digital
technologies
destroying
costs, sales
and profits on
a massive
scale.</b></p>
<p>Some observers
have suggested
taxing wealth
rather than
profits to fund
the super
welfare state
of <i>guaranteed
income for
all.</i> But
the value of
assets
ultimately rests
on their ability
to generate a
profit. As
profits fall,
wealth may be
more chimerical
than these
observers
believe.</p>
<p>Tomorrow we'll
look at the
rising costs of
human labor and
explore why this
trend will
persist even as
labor becomes
increasingly
surplus.</p>
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<br>
<pre cols="72">--
Eric Hunting
<a href="mailto:erichunting@gmail.com" target="_blank">erichunting@gmail.com</a></pre>
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