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First, I would like to apologies because my question is more about economics than philosophy but I can’t find any good Objectivist information on this subject.

So there is goes. If I am correct, I think most Objectivist reject the assumption that new technologies create unemployment and history seems to prove Objectivists right, but what about the future?

I’ve been reading a lot about nanotechnology and artificial intelligence lately and many authors like Eric Drexler are predicting that once atomically precise manufacturing becomes available, it would enable us to produce almost anything at practically no cost. Now, I find this extremely exciting but I have trouble imagining how capitalism would work in a post-scarcity world.

My problem is this: If products can be manufactured at almost zero cost for the company and without the need of any human labor, this would necessarily lead to massive unemployment. Now, since most people are dependent on their salaries to consume they won’t be able buy the new products and if the companies can’t sell their products, then we have a major problem; the way I currently see it, the system would collapse.

The only solution I can think of for this problem is this: If we live in a truly capitalist society most people would invest in mutual funds and buy stocks of the companies who design and sell these new products, therefore dividends from their investments would replace salaries as the main source of income for most people which would allow them to consume. So does my solution make any sense?

asked Dec 16 '14 at 17:32

Carl's gravatar image

Carl
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edited Dec 17 '14 at 12:12

Greg%20Perkins's gravatar image

Greg Perkins ♦♦
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I think the premises of this hypothetical are inherently self-contradictory. Specifically, we're told to assume:

1) We can "produce almost anything at practically no cost" and 2) "[M]ost people are dependent on their salaries to consume."

But doesn't 1 negate 2?

(Dec 19 '14 at 13:19) anthony anthony's gravatar image

To the extent that 1 does not negate 2 (for instance because while we can "produce" things for free but require human intuition to design the things) then there is room for humans to be employed (for instance in design rather than production). Look, for instance, at Second Life for how economies still exist even when marginal production costs are zero.

On the other hand, if we had benevolent robots which would give us everything we ever wanted without requiring us to do any work, I guess we wouldn't need money or employment any more. But really I don't think that's possible.

(Dec 19 '14 at 13:31) anthony anthony's gravatar image
1

As far as your solution, I think you're hinting at the design/production dichotomy I mention above. But I don't see why the solution would necessarily have to involve mutual funds and stocks and companies. Individuals can also own patents and copyrights and other intellectual property. A world where marginal production costs are near-zero would rely heavily on the recognition and enforcement of intellectual property rights.

(If the hypothetical was that robots would do all the IP work, and that they'd be perfectly benevolent, then I'm back to not believing that to be realistic.)

(Dec 19 '14 at 13:40) anthony anthony's gravatar image
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There will probably be more to say about this question as the discussion proceeds, but I can point out some preliminary observations at the outset.

If products can be manufactured at almost zero cost for the company and without the need of any human labor, this would necessarily lead to massive unemployment. Now, since most people are dependent on their salaries to consume they won’t be able buy the new products and if the companies can’t sell their products....

This scenario fails to consider some basic economic realities, such as:

  • Where would the new manufacturing facilities come from, provided by whom and at what cost? Is the investment needed to create the new manufacturing capacity considered irrelevant?

  • Does the new manufacturing capacity last forever, or does it sometimes break down or wear out and need to be repaired or replaced? Is any human labor needed for such repair and replacement?

  • Is the new manufacturing capacity able to produce absolutely 100% of all goods and services throughout the whole economy, or are there still some things (perhaps many of them) that must continue to be produced in the normal, conventional manner? If so, what about the labor and material resources needed for the other products? Where does it come from, and how is it paid for? At the very least, what about the material resources and human labor needed to repair or replace the new manufacturing capacity when it wears out? What is the effective cost-value of the new manufacturing capacity in terms of the goods and services it can produce over its operational lifespan?

  • No manufacturing capacity can perform "ex nihilo" creation. Manufacturing simply means changing material elements from one form (such as raw minerals) into another form that is more useful to man. So where do the raw materials for the new manufacturing capacity come from? Wouldn't they still need to be produced conventionally?

  • How would the new manufacturing capacity be able to produce goods and/or services such as food, shelter, transportation, recreational sports, great works of art of value to humans, and so on? How about basic raw material mining, refining, etc., and energy production? Would the new manufacturing capacity need electricity? Where would it come from?

  • If nobody has any income with which to buy the products of the new manufacturing capacity, how would it stay in business? Where would there be any economic incentive for it grow and spread? Wouldn't its ability to expand depend on continued conventional production and a conventional labor force having the means to buy the new manufacturing capacity's products? Wouldn't this lead to a mix of new and old manufacturing capacity coexisting side-by-side?

  • Even if an incredibly minuscule minority of humans could produce 100% of everything they would want for their own consumption, what would be their economic incentive to sell their products to anyone else? In return for what? The others would have nothing to offer that the minority wouldn't be able to produce for themselves at vastly lower cost. Wouldn't all the others, then, remain free to continue producing and consuming in the conventional manner, and trading amongst themselves, without any conflict with the new manufacturing capacity and its owners and workers?

I think most Objectivist[sic] reject the assumption that new technologies create unemployment and history seems to prove Objectivists right, but what about the future?

It's more than just history; it's basic principles of economics, too -- integrating the realities of how free markets operate when their participants are free to pursue and maximize their own self-interests. "What about the future" here is nothing more than "maybe reality will change" in the future. But A is A; things are what they are; everything has a specific nature and acts in accord with its nature; causality exists and governs all action; magic does not. (Even an all-powerful magician has no incentive to sell his output to anyone else, since they have nothing to offer in return that he would rather trade for than magically bring into existence himself.)

answered Dec 17 '14 at 00:47

Ideas%20for%20Life's gravatar image

Ideas for Life ♦
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Asked: Dec 16 '14 at 17:32

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Last updated: Dec 19 '14 at 13:43