Home > Uncategorized > Capitalism and technology and Stephen Hawking

Capitalism and technology and Stephen Hawking

from David Ruccio

While we’re referring to the thinking of eminent scientists on capitalism and socialism, consider Stephen Hawking’s answer to a question about automation and “the possibility of technological unemployment”:

I’m rather late to the question-asking party, but I’ll ask anyway and hope. Have you thought about the possibility of technological unemployment, where we develop automated processes that ultimately cause large unemployment by performing jobs faster and/or cheaper than people can perform them? Some compare this thought to the thoughts of the Luddites, whose revolt was caused in part by perceived technological unemployment over 100 years ago. In particular, do you foresee a world where people work less because so much work is automated? Do you think people will always either find work or manufacture more work to be done? Thank you for your time and your contributions. I’ve found research to be a largely social endeavor, and you’ve been an inspiration to so many.

Answer:

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.

In other words, the problem is not with machinery per se—which has the potential to create a “life of luxurious leisure”—but the capitalist use of machinery—which means “most people can end up miserably power.”

The second option is more likely, according to Hawking, “if the machine-owners successfully lobby against wealth redistribution”—and, I would add, only if the rest of us are convinced by that lobbying.

  1. October 19, 2015 at 6:32 pm

    One more non-economist tells us that there is a non-elected political power that commands the economy and conducts a wealth and income concentration process that makes its members richer and richer. Of course these powered people are very rich; so, to find them follow the money until those who can print money from the air.
    Economists cannot change this reality but can elaborate an economic theory that assumes this reality and explains how the real world economy actually delivers the results we observe.

  2. October 19, 2015 at 9:45 pm

    Good for Hawking (and Einstein, following Ruccio’s link to “eminent scientists” and Bernie Sanders, who looks very interesting indeed: https://en.wikipedia.org/wiki/Bernie_Sanders).

    Interesting that Einstein is saying much what Chesterton and Belloc were saying pre-WW1, except for not picking up the difference between Fabian (state) socialism and Distributism (widely distributed ownership, whence Schumacher’s “Small is Beautiful”). Capitalist Hayek, of course, misrepresented Belloc’s seminal “The Servile State” in his influential “The Road to Serfdom”.

  3. October 20, 2015 at 3:52 am

    Capitalism did not invent this problem and it certainly will not solve it. The technological innovations of the Greek city states were used to fight wars and obtain land for the monarchs. The advanced science of ancient China was used to make war and make the ruling dynasty richer and richer. Not to make the poor and very poor better off. The technology changes that marked the end of the Medieval period in Europe were mostly used to invade the holy land. As a result the poorest members of European society actually got poorer and more oppressed. The vast technology changes that marked the first and second world wars were used mostly just for that – to wage war. Only after the second world war ended was technology spread widely. Mostly as a result of the invention of the middle class and the change in social norms that lead to that invention and the invention of the welfare state. Too bad economists will miss or misunderstand Dr. Hawking’s comment. The end result will be more and more unequal sharing. Until either the planet explodes in revolution or the richest on the planet die from over indulgence.

    • October 20, 2015 at 2:11 pm

      “Only after the second world war ended was technology spread widely. Mostly as a result of the invention of the middle class and the change in social norms that lead to that invention and the invention of the welfare state”.

      It has been said that origins tend to be forgetten when ideas are so successful they become taken for granted, as is arguably the case with Shannon’s information science and, here, Chesterton’s contribution to the change in social norms and the spread of the middle class: “The problem with capitalism is not too many capitalists, but not enough capitalists”. [http://rationalwiki.org/wiki/Distributism].

      “Sheer futility, Qoheleth says. Sheer futility: everything is futile! What profit can we show for all our toil, toiling under the sun? A generation comes, a generation goes.” But “What was, will be again. What has been done, will be done again, and there is nothing new under the sun”. [Prologue to Ecclesiastes].

      As a long-time student of why Distributism did not succeed and fraudulent banking is doing, my conclusion has been that both are addressing the symptoms but the one is fighting the current and the other going with the flow. Start fighting each other and one is soon going downstream, with international bankers very happy to finance rearmament. The root of the problem is not “not enough capitalists” but “the love of money” (believing it to be valuable), when the reality is that it represents the negative values of debt and Hayek’s “Road to Serfdom”.

      If then, Ken, the solution is neither more nor less capitalism, is it to be found in the honest money of the credit card system, which makes one aware of one’s debts and the value of repaying them in due time by earning one’s keep?

      • October 20, 2015 at 11:09 pm

        You seem to forget the golden rule of economics. Activity occurs when spare production capacity meets spare consumption capability. Anybody who was able to pass inorganic chemistry knows that whichever of these two ingredients is the scarce one drives the speed of reaction. Distribution works when it reduces the degree to which consumption capability is the scarce reagent.

      • October 21, 2015 at 10:58 am

        Excellent response, Jeff, but you seem to forget that how salty the meal is depends on who puts the salt in. We are busy wrecking our world by mass-producing things we don’t need or even want and mass-undernourishing people who have had to sell off their necessities to survive. That is being done by those allowed to create money, at the stroke of a pen, keeping it scarce for those who most need it.

        In a credit card system I have a credit limit and pension I can comfortably live with, but turn this creditworthiness into debt money I am able to repay, only by buying what I need, when I need it – not when less needy wholesalers and bankers want to sell. I have learned (but surely? the whole world economy needs to learn) to live this way: to harvest and reproduce and enjoy making the most of what is necessary, not seeking to grow wholesale markets by selling off our seed-corn.

        It is this on-going dynamic you are missing, Jeff, in your reply below to Pavlos. For today’s jet-set there may be less need NOW for physical assets, but the so-called financial “assets” amount overall to debts: i.e. to consuming the seed-corn, which will indeed henceforth produce zero return.

    • November 1, 2015 at 7:54 pm

      Only after the second world war ended was technology spread widely.

      The century around 1900 or so, say 1850-1950 was the fastest period of technological change and its wide distribution in human history – not so much the postwar era. And definitely not the subsequent, current, neoliberal era, which definitely slowed the pace of change. If there really were such great changes in the past few decades, all the BS about how fast things are changing would not be needed.

  4. October 20, 2015 at 8:06 am

    Our jobs will become “robotized” when it becomes cheaper than when we perform them ourselves. This means that the product will also cost less to produce and the customer presumably will be able to pay less for the resulting item of goods of service. It sound awful for an individual but we should remember that we need to consider the aggregate for the whole of society. Here the numbers employed will now be re-distributed to jobs that robots cannot do and also the consumer goods will be less costly, so we will have a higher standard of living and a greater degree of human care in what we will do. Is this so bad?

    • October 20, 2015 at 11:05 pm

      If the jobs exist, no; if they don’t, then yes. Stephen Hawking’s response cut through to what is required for those jobs to exist.

  5. Paul Schächterle
    October 20, 2015 at 12:49 pm

    Hawking’s remarks are actually the most compact formulation of the main problem of capitalism – “unemployment” due to bad distribution of property or income.

    Hawking refers to machines that produce without any labour. This, however, is just a special case for any kind or productive capital that makes labour more productive. Hawking (as a good theoretician) takes the extreme case (infinite labour productivity) to make the case that distribution matters.

    If labour is more productive than more or better goods can be produced with less labour. If the income (the claims to the good produced) are well distributed everybody benefits. People can enjoy more spare time or more or better products.

    If, however, the goods are ill-distributed then workers will see decreasing wages due to an increased competition for productive jobs, i.e. jobs with access to the capital that increases the productivity. And people without access to capital will end up in poverty and be dependent on welfare by the still wealthy or the proprietors.

    Kudos to Stephen Hawking for that perfect summary of the problem of distribution.

  6. October 20, 2015 at 1:58 pm

    The problem is with positional goods, real or perceived. In an age of abundance the rich claim assets and convert them to rank in some imagined hierarchy, destroying utility as fast as the machines can make it. The solution is to make everyone feel safe so the rich are not so destructively competitive, and to democratise the returns from capital if not the allocation.

    • October 20, 2015 at 11:12 pm

      Actually the problem is not with private jets and the like, which contribute to consumption, but with dollars being moved out of consumption entirely and moved to assets, which drives rates of return to zero even as there is less need for physical assets.

  7. October 20, 2015 at 4:35 pm

    Comments on comments subsequent to mine on Distributism and overcoming the love of money.

    Macrocompassion, in your second sentence you are guilty of the fallacy of composition, for while in monetary terms it may cost a capitalist less to produce jobs by robot, you have not accounted for the real costs to his former employers and the wide community of their not producing them.

    Paul, kudos to you too for making clear not just what Hawking was saying but how well he said it. I see your prognosis of competition for [by implication scarce] jobs decreasing wages as a realistic answer to Macrocompassion’s wishful thinking about the employed [what about the unemployed?] being redistributed to less robotic jobs, especially in the light of my finding Jevon’s theory of utility accounting for only what is surplus to an employee.

    Pavlos, I agree with you, but would the rich “claim” assets if in a credit card economy those “assets” were debts and “property” responsibilities? Would not everyone feel safe with a Citizen’s Income sufficient to maintain oneself and reward an honourable lifestyle?

  8. October 20, 2015 at 8:39 pm

    “Answer:

    If machines produce everything we need, the outcome will depend on how things are distributed.
    *****Read:
    If no matter what produces everything we need, the outcome will depend on how things are distributed.

    The question is really, “How we distribute the wealth drives the degrees of inequality and poverty.”
    The answer lies in how you redistribute the wealth, not in how you make it.
    As for the worlds wealth, there is the possibility of total accumulation through compound interest (the most powerful force in the universe) which then begs the question, “How would that wealth be redistributed ? Who will be the master?
    We change the direction from profit to the top 10% to that of using that wealth to fund
    “…a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”
    A simple understanding of -TAXATION.************************
    “So, an economic recovery program that has privileged the recovery of financial markets and corporate profits has fueled the increase in wealth inequality, in the United States and across the world.”
    Quote from….https://rwer.wordpress.com/…/we-estimate-that-the-top-per…/…
    “Capitalism is the “best” system to date devised by mankind. As it is administrated, perhaps, is where the “flaw” is manifested. If capitalism used its Central Bank properly,that is for the betterment of the common good, with equality and justice for all, capitalism would be the best ways and means to help “form a more perfect union….”
    SOLUTION.
    “LEGISLATE FOR “We the People” WHAT WE HAD LEGISLATED THE CENTRAL BANK TO DO FOR THE Private For Profit Banks (PFPB) ! ISSUE OUR OWN MONEY AS LOANS AND CHARGE A TAX CALLED INTEREST !”

    Create a honest Central Bank that shall fund-
    ““We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…””
    There is a solution. Reverse what the Central Banks are doing; rather than making the rich richer have them…fuel the increase in wealth Equality and …” promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…””

    As Einstein said,”Make it simple.”, read more Comments by Justaluckyfool ( http://bit.ly/MlQWNs )
    ( “You are always welcome to share, copy, plagiarize, improve, etc..any comments.)

    WHY WOULD YOU NOT WANT PROSPERITY FOR YOURSELF AND YOUR CHILDREN ?
    A ONE STEP SOLUTION: FIX THE FLAW OF THE PRESENT CAPITALISTIC MONETARY SYSTEM—CREATE A HONEST CENTRAL BANK !

    • October 20, 2015 at 11:17 pm

      Re: “compound interest (the most powerful force in the universe) ”

      To quote Robert Jordan, “trees do not grow up into the sky”.

      Compound interest is self limiting. You can see that as more and more money gets piled into assets, rates of return across all asset classes have trended to zero.

      The problem, of course, is not that people are receiving interest, but rather that interest is not taxed highly enough to plow enough money back into consumption, which seems to be the direction you took eventually.

    • October 21, 2015 at 11:28 am

      Well worth the effort of reading, Lucky, so I am glad to see Jeff too has read and understood you.

      I’d like to know more about your background, Lucky, so I could understand where your ideosyncratic writing style comes from. May I suggest a lesson I had to learn, about the presentational value of “white space”? (In my work environment, a report longer than two sides of A4 was too long)! Try double new lines between paragraphs, as Jeff has done here.

      • October 21, 2015 at 6:23 pm

        First and foremost I must express my gratitude, for you have taken out of the tremendous volume of “static noise” my words and gave them value. Thank you again.
        I am older than you but certainly not wiser, I appreciate your advice. Perhaps, maybe the 25,000 plus can sense from the way that I express my thoughts-“I have no formal education after having completed my freshman year of college. ” The Housing market crash got me interested in “Where We Went Wrong” and purely by chance I discovered “The Role Of Money”. My AH HA Moment whih led to justaluckyfool@aol.com
        JEFF, “Compound interest is self limiting.” Would disagree: The rate may be self limiting;
        but o quote “Steve Keen, “I was once sent a link to the work of a very good mathematician who claimed that humanity’s greatest weakness was its inability to comprehend the exponential function.
        Here is the link: Albert Bartlett on Sustainability
        Bartlett has made two notable statements relating to sustainability:
        “The greatest shortcoming of the human race is our inability to understand the exponential function.”
        That is it is infinite and only limited being in a finite world.

  9. November 1, 2015 at 10:11 pm

    ” Ken Zimmerman
    October 20, 2015 at 3:52 am
    Reply …….

    “Capitalism did not invent this problem and it certainly will not solve it.”

    Perhaps, maybe capitalism can solve the issue of inequality and poverty.
    The solution is not only simple but also proven. As a matter of fact it has allowed the top 10%
    to gain over $100 trillion dollars to distribute among themselves.

    ““Capitalism is the “best” system to date devised by mankind. As it is administrated, perhaps, is where the “flaw” is manifested. If capitalism used its Central Bank properly,that is for the betterment of the common good, with equality and justice for all, capitalism would be the best ways and means to help “form a more perfect union….”, Pontifical Council.SOLUTION.
    “LEGISLATE FOR “We the People” WHAT WE HAD LEGISLATED THE CENTRAL BANK TO DO FOR THE Private For Profit Banks (PFPB) ! ISSUE OUR OWN MONEY AS LOANS AND CHARGE A TAX CALLED INTEREST ! ! ! ”

    Create an honest Central Bank that shall fund-
    ““We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”
    Read more….. http://bit.ly/MlQWNs

    ONE STEP TO PROSPERITY- Have a HONEST CENTRAL BANK !

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