Automation, Accelerating Technology and the Economy of the Future

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* Book: Martin Ford. The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (Acculant Publishing, 2009).

URL = http://www.amazon.com/Lights-Tunnel-Automation-Accelerating-Technology/dp/1448659817/ref=sr_1_1?ie=UTF8&s=books&qid=1269474663&sr=1-1

Free ebook version at http://www.thelightsinthetunnel.com/


Review

Kevin Carson:

1.

"There are significant mitigating features to technological unemployment which Ford fails to address—features which I’ve also raised on-list in debates with Fernhout. Most important is the imploding price of means of production.

Most discussions of technological unemployment by people like Rifkin and Ford implicitly assume a capital-intensive mass production model, using expensive, product-specific machines: conventional factories, in other words, in just about every particular except the radically reduced need for people to work in them. They seem to be talking about something like a GM factory, with microcontrollers and servomotors in place of workers, like the Ithaca works in Vonnegut’s Player Piano. If such expensive, capital-intensive, mass-production methods constituted the entire world of manufacturing employment, as they were in 1960, then the Rifkin/Ford scenario would indeed be terrifying.

But the mass-production model of manufacturing in large factories has drastically shrunk in significance over the past thirty years, as described by Michel Piore and Charles Sabel in The Second Industrial Divide. Manufacturing corporations have always deferred investments in plant and equipment in economic downturns, because—as John Kenneth Galbraith pointed out in The New Industrial State—the kinds of expensive product-specific machinery used in Sloanist mass production require full utilization to amortize fixed costs, which in turn requires a high degree of confidence in the stability of demand before companies will invest in them. During recessions, therefore, manufacturing corporations tend to expand production when necessary by contracting out to the craft periphery. But the economic crisis of the 1970s was the beginning of a prolonged period of economic stagnation, with each decade’s economic growth slower than the previous and anemic levels of employment and demand. And it was also the beginning of a long-term structural trend toward shifting production capacity from the mass-production core to the craft periphery. Around the turn of the century, the total share of industrial production carried out in job-shops using general purpose machinery surpassed the amount still carried out in conventional mass-production industry.

On pp. 76 and 92, Ford argues that some jobs, like auto mechanic or plumber, are probably safe from automation for the time being because of the nature of the work: a combination of craft skills and general-purpose machinery. But manufacturing work, to the extent that it has shifted to small shops like those in Emilia-Romagna and Shenzhen, using general-purpose machinery for short production runs, has taken on the same character in many instances. If manufacturing continues to be organized primarily on a conventional assembly-line model using automated, highly specialized machines, but with the additional step of automating all handing off of goods from one step to the next, then the threat of 100% automation will be credible. But if most manufacturing shifts to the small shop, with a craftsman setting up general purpose machines and supplying feed stock by hand, then Ford’s auto mechanic/housekeeper model is much more relevant.

Indeed, the shift toward lean production methods like the Toyota Production System have been associated with the conscious choice of general-purpose machinery and skilled labor in deliberate preference to automated mass-production machinery. The kinds of product-specific machinery that are most conducive to automation are directly at odds with the entire lean philosophy, because they require subordinating the organization of production and marketing to the need to keep the expensive machines running at full capacity. Conventional Sloanist mass-production optimized the efficiency of each separate stage in the production process by maximizing throughput to cut down the unit costs on each expensive product-specific machine; but it did so at the cost of pessimizing the production process as a whole (huge piles of in-process inventory piled up between machines, waiting for somebody downstream to actually need it, and warehouses piled full of finished goods awaiting orders). Lean production achieves sharp reduction in overall costs by using “less efficient,” more generalized machinery at each stage in the production process, in order to site production as close as possible to the market, scale the overall flow of production to orders, and scale the machinery to the flow of production.

Ford himself concedes that the high capital outlays for automating conventional mass-production industry may delay the process in the medium term (p. 215). And indeed, the pathological behaviors (like optimizing the efficiency of each stage at the expense of pessimizing the overall production flow we saw immediately above) that result from the high cost of automated product-specific machinery, are precisely what Toyota pursued a different production model to avoid. Large-scale, automated, product-specific machinery creates fixed costs that inevitably require batch production, large inventories and push distribution.

What’s more, Ford’s scenario of the motivation of the business owner in adopting automation technology to cut costs implicitly assumes a model of production and ownership that may not be warranted. As the costs of machinery fall, the conventional distinctions between worker and owner and between machinery and tools are eroding, and the idea of the firm as a large agglomeration of absentee-owned capital hiring wage workers will become less and less representative of the real world. Accordingly, scenarios in which the “business owner” is the primary actor deciding whether to buy automated machinery or hire workers are apt to be less relevant. The more affordable and smaller in scale production tools become, the more frequently the relevant decisionmakers in the capital vs. labor tradeoff will be people working for themselves.

Besides the shift that’s already taken place under the Toyota Production System and flexible manufacturing networks like Emilia-Romagna, the shift toward small scale, low cost, general purpose machinery is continuing with the ongoing micromanufacturing revolution as it’s currently being worked out in such venues as Factor e Farm, hackerspaces, Fab Labs, tech shops, Ponoko, and 100kGarages. http://openfarmtech.org/weblog/ http://hackerspaces.org/wiki/ http://en.wikipedia.org/wiki/Fab_lab http://blog.guykawasaki.com/2007/09/techshop-geek-h.html http://www.ponoko.com/ http://www.100kgarages.com/

Technological unemployment, as described in the various scenarios of Rifkin, Brain and Ford, is meaningful mainly because of the divorce of capital from labor which resulted from the high price of producer goods during the mass production era. Indeed, the very concept of “employment” and “jobs,” as the predominant source of livelihood, was a historical anomaly brought about by the enormous cost of industrial machinery (machinery which only the rich, or enterprises with large aggregations of rich people’s capital, could afford). Before the industrial revolution, the predominant producer goods were general-purpose tools affordable to individual laborers or small shops. The industrial revolution, with the shift from affordable tools to expensive machinery, was associated with a shift from an economy based primarily on self-employed farmers and artisans, and subsistence production for direct use in the household sector, to an economy where most people were hired as wage laborers by the owners of the expensive machinery and purchased most consumption goods with their wages.

But the threat of technological unemployment becomes less meaningful if the means of production fall in price, and there is a retrograde shift from expensive machinery to affordable tools as the predominant form of producer good. And we’re in the middle of just such a shift, as a few thousand dollars can buy general-purpose CNC machine tools with the capabilities once possessed only by a factory costing hundreds of thousands of dollars. The same forces making more and more jobs superfluous are simultaneously reducing barriers to the direct ownership of production tools by labor.

So rather than Ford’s scenario of the conventional factory owner deciding whether to invest in automated machinery or hire workers, we’re likely to see an increasing shift to a scenario in which the typical actor is a group of workers deciding to spend a few thousand workers to set up a garage factory to supply their neighborhood with manufactured goods in exchange for credit in the barter network, and in turn purchasing the output of other micromanufacturing shops or the fruit, vegetables, bread, cheese, eggs, beer, clothing, haircare services, unlicensed cab service, etc., available within the same network. Unlike Ford, as we will see in the next section, I see our primary task as eliminating the barriers to this state of affairs.

I do agree with Ford that we’ve been experiencing a long-term trend toward longer jobless recoveries and lower levels of employment (p. 134). Total employment has declined 10% since it peaked in 2000, for example. And despite all the Republican crowing over Obama’s projection that unemployment would reach only 8.5% in 2009, that’s exactly the level of unemployment that Okun’s law would have predicted with the decline in GDP that we actually experienced. Our conventional econometric rules of thumb for predicting job losses with a given scale of economic downturn have become worthless because of the long-term structural reduction in demand for labor, and long-term unemployment is at the highest level since the Great Depression.

But while some of this is probably due to technological change that reduces the labor inputs required for a given unit of output, I think the lion’s share of it is explained by the overaccumulation thesis of neo-Marxists like Paul Sweezy, Harry Magdoff, and other members of the Monthly Review group. The main reason for rising unemployment is corporate capitalism’s same chronic tendenices to overinvestment and underconsumption that caused the Great Depression. Cartelized state capitalist industry accumulates excessive surpluses and invests them in so much plant and equipment that it can’t dispose of its entire output running at capacity. This crisis was postponed by WWII, which destroyed most plant and equipment in the world outside the U.S., and created a permanent warfare state to absorb a portion of surplus production. But even so, by 1970 Japan and Europe had rebuilt their industrial economies and global capital markets were saturated. Since 1970, one expedient after another has been adopted to absorb surplus capital in an era when consumer demand is insufficient for even existing plant and equipment to operate profitably.

Ford is also correct that rising oil (and hence shipping) costs will provide a strong economic incentive to distributed manufacturing with factories located as close as possible to consumers, which—intersecting with trends to automation—will lead to “much smaller and more flexible factories located in direct proximity to markets…” (p. 126) But I think he underestimates the extent to which the shift in economies of scale he describes has already taken place. The flexible manufacturing trend has been toward small job-shops like those in Shenzhen described by Tom Igoe, with ever cheaper general purpose machinery. And the model of automation for such small-scale CNC machinery is most conducive to craft production using general-purpose tools. Coupled with the cutting-edge trend to even cheaper CNC machinery affordable by individuals, a major part of the relocalization of industry in the U.S. is likely to be associated with self-employed artisan producers or small cooperative shops churning out manufactured goods for neighborhood market areas of a few thousand people.


Of those cheap tools, Tom Igoe writes:

- Cheap tools. Laser cutters, lathes, and milling machines that are affordable by an individual or a group. This is increasingly coming true. The number of colleagues I know who have laser cutters and mills in their living rooms is increasing…. There are some notable holes in the open hardware world that exist partially because the tools aren’t there. Cheap injection molding doesn’t exist yet, but injection molding services do, and they’re accessible via the net. But when they’re next door (as in Shenzen), you’ve got a competitive advantage: your neighbor.

Ford also equates automation to increasing capital-intensiveness (pp. 131-132). The traditional model presupposes that “capital-intensive” methods are more costly because capital equipment is expensive, and the most capital-intensive forms of production use the most expensive, product-specific forms of machinery. Production is “capital-intensive” in the sense that expenditures are shifted from labor compensation to machinery, and “high-tech” necessarily means “high-cost.” But in fact the current trajectory of technical project in manufacturing hardware is toward drastically reduced cost, bringing new forms of micromanufacturing machinery affordable to average workers. This means that the term “capital-intensive,” as conventionally understood, becomes meaningless.


He goes on to argue that manufacturing will become too capital-intensive to maintain existing levels of employment.

- Beyond this threshold or tipping point, the industries that make up our economy will no longer be forced to hire enough new workers to make up for the job losses resulting from automation; they will instead be able to meet any increase in demand primarily by investing in more technology. (p. 133)

But again, this presupposes that capital equipment is expensive, and that access to it is controlled by employers rich enough to afford it. And as the cost of machines fall to the point where they become affordable tools for workers, the “job” becomes meaningless for a growing share of our consumption needs.

Even before the rise of micromanufacturing, there was already a wide range of consumption goods whose production was within the competence of low-cost tools in the informal and household sector. As Ralph Borsodi showed as far back as the 1920s and 1930s, small electrically powered machinery scaled to household production could make a wide range of consumer goods at far lower unit cost than the factories. Although the unit cost of production was somewhat lower for factory goods, this was more than offset by drastic reductions in distribution cost when production was at or near the point of consumption, and by the elimination of supply-push marketing costs when production was directly driven by the consumer. Vegetables grown and canned at home, clothing produced on a home sewing machine from fabric woven on an efficiently designed power loom, bread baked in a kitchen oven from flour grown in a kitchen mill, all required significantly less labor to produce than the labor required to earn the wages to buy them at a store. What’s more, directly transforming one’s own labor into consumption goods with one’s own household tools was not subject to disruption by the loss of wage employment.

If anything, Borsodi underestimated the efficiency advantage. He assumed that the household subsistence economy would be autarkic, with each household having not only its own basic food production, but weaving and sewing, wood shop, etc. He opposed the production of a surplus for external sale, because the terms of commercial sale would be so disadvantageous that it would be more efficient to devote the same time to labor in the wage economy to earn “foreign exchange” to purchase things beyond the production capacity of the household. So for Borsodi, all consumption goods were either produced by the household for itself, or factory made and purchased with wages. He completely neglected the possibility of a division of labor within the informal economy. When such a division is taken into account, efficiencies increase enormously. Instead of each house having its own set of underutilized capital equipment for all forms of small-scale production, a single piece of capital equipment can serve the neighborhood barter network and be fully utilized. Instead of the high transaction costs and learning curve from each household learning how to do everything well, like Odysseus, a skilled seamstress can concentrate on producing clothing for the neighbors and a skilled baker can concentrate on bread—but achieve these efficiencies while still keeping their respective labors in the household economy, without the need either for a separate piece of commercial real estate or for expensive capital goods beyond those scaled to the ordinary household.

Most technological unemployment scenarios assume the automation of conventional, mass-production industry, in a world where manufacturing machinery remains extremely expensive. But when the cost barriers to owning manufacturing machinery are lowered, the threat becomes a lot less terrifying.

By way of analogy: If a Star Trek-style matter replicator can replace human labor for producing most goods, but it costs so much that only a large corporation can own it, then the threat of technological unemployment is real. But if anyone can own such a replicator for a few hundred dollars, then the way we supply a major part of our needs will simply shift from selling labor for wages to producing them for ourselves on a cheap replicator.

In a world where most production is with affordable tools, employers will no longer be able to restrict our access to the means of production. It will become feasible to produce a growing share of our total consumption needs either directly for ourselves, or for exchange with other household producers, without the intermediation of the corporate money economy.

Paul Fernhout’s emails (which you probably read regularly if you’re on the P2P Research or Open Manufacturing email list) include a quote in the sig line about today’s problems resulting from an attempt to deal with abundance in a scarcity framework. Dugger and Peach, as we saw above, failed to recognize the nature of abundance at all, and despite their use of the term worked from an ideological framework entirely adapted to scarcity. Ford, on the other hand, is halfway there. He recognizes the new situation created by abundance of consumer goods and the falling need for labor to produce them. But his solution is still adapted to a framework in which, while consumer goods are abundant, means of production remain scarce and expensive.

When means of production are cheap and readily available, the “need” for labor becomes irrelevant. The need for labor is only relevant when the amount needed is determined by someone other than the worker who controls access to the means of production. By way of analogy, when a subsistence farmer figured out a way to cut in half the labor required to perform some task on his own farm, he didn’t lament the loss of “work.” He didn’t try to do things in a way that required twice the effort in order to keep himself “employed” or achieve “job security.” He celebrated it because, being in a position to fully appropriate the benefits of his own productivity, everything came down to the ratio between his personal effort and his personal consumption. In your own home, you don’t deliberately store the dishes in a cupboard as far as possible from the sink in order to guarantee yourself “sufficient work.” Likewise, when the worker himself can obtain the means of production as cheap, scalable tools, and the cost of producing subsistence needs directly for oneself in the informal economy (or for exchange with other such producers), the question of the amount of labor “needed” for a unit of output is as meaningless as it would have been for the farmer.

Ford also raises the question of how the increasingly plausible prospect of stagnating employment will destabilize long-term consumer behavior. As people come to share a consensus that jobs will be fewer and harder to get in the future, and pay less, their propensity to spend will decrease. The same consumer pessimism that leads to the typical recessionary downward wage-demand spiral, thanks to technological unemployment, will become a permanent structural trend. (p. 109)

But this neglects the possibility that these trends will spur underemployed workers to meet more of their consumption needs through free alternatives in the informal economy. Even as technological change reduces the need for wage labor, it is simultaneously causing an increasing share of consumption goods to shift into the realm of things either available for free, or by direct production in the informal-household sector using low-cost tools. As a result, an increasing portion of what we consume is available independently of wage labor.

Ford argues that “free market forces” and automation, absent some government intervention to redistribute purchasing power, will lead to greater and greater concentration of incomes and consequently a constantly worsening crisis of underconsumption. The ultimate outcome of skyrocketing productivity, coupled with massive technological unemployment, is a society in which 95% of the population are impoverished and live on a subsistence level, while most income goes to the remaining 5% (p. 181). But this state of affairs could never come about in a genuine free market. The enormous wealth and incomes of the plutocracy result from rents on artificial scarcity; they are only able to become super-rich from technological innovation when artificial property rights like patents enable them to capitalize the increased productivity as a source of rents, rather than allowing the competitive market to “socialize” it in the form of lower prices to consumers.

Indeed Ford himself goes on, in the passage immediately following, to admit “the reality” that this level of income polarization would never come about, because the economic decline from insufficient purchasing power would cause asset values to collapse. Exactly! But my proposal (in the next section) is precisely to allow such collapse of asset values, and allow the collapse of the price of goods from the imploding marginal cost of production, so that it takes less wage income to buy them.

The collapse of exchange value is a good thing, from the perspective of the underemployed worker, who experiences the situation Bruce Sterling wrote of (I suspect about three-quarters facetiously, although it’s hard to tell with him):

  • Waiting for the day of realization that Internet knowledge-richness actively MAKES people economically poor. “Gosh, Craigslist has such access to ultra-cheap everything now… hey wait a second, where did my job go?”
  • Someday the Internet will offer free food and shelter. At that point, hordes simply walk away. They abandon capitalism the way a real-estate bustee abandons an underwater building.

Ford draws a parallel between the mechanization of agriculture in the 20th century, and the ongoing automation of manufacturing and service industries (pp. 124-125). But the parallel works against him, in a sense.

The mechanization of agriculture may, to a considerable extent, have resulted in “a massive and irreversible elimination of jobs.” That is, it has eliminated agriculture for many people as a way to earn money by working and then to spend that money buying food. But it has not, by any means, eliminated the possibility of using our own labor to feed ourselves by growing food. Likewise, developments in manufacturing technology, at the same time as they eliminate jobs in manufacturing as a source of income to buy stuff, are making tools for direct production more affordable.

In the particular case of agriculture, as Ralph Borsodi showed eighty years ago, the total labor required to feed ourselves growing and canning our own food at home is considerably less than that required to earn the money to buy it at the store. And nobody can “fire” you from the “job” of feeding yourself with your own labor.

What’s more, the allegedly superior efficiencies of mechanized large-scale agriculture are to a large extent a myth perpetuated in the propaganda of corporate agribusiness and the USDA. The efficiencies of mechanization are legitimate for cereal crops, although economies of scale still top out on a family farm large enough to fully utilize one complete set of farming machinery. But cereal crops occupy a disproportionate share of the total food production spectrum precisely because of government subsidies to cereal crop production at the expense of fruits and vegetables.

In the case of most fruits and vegetables, the economies of mechanization are largely spurious, and reflect (again) an agitrop campaign to legitimize government subsidies to corporate agribusiness. Even small-scale conventional farming is more efficient in terms of output per acre, if not in terms of output per man-hour—to say nothing of soil-intensive forms of raised-bed horticulture like that developed John Jeavons (biointensive horticulture can feed one person on a tenth of an acre). And while large scale production may be more efficient in terms of labor inputs at the point of production, it is probably less efficient in labor terms when the wages required to pay the embedded costs of supply-push marketing and distribution are included. Although it may take more labor for me to grow a tomato than it takes a factory farm to grow it, it probably takes less labor for me to grow it myself than to pay for the costs of shipping and marketing it in addition to factory farming it. So absent government subsidies and preferences to large-scale agribusiness, the most efficient method for producing a considerable portion of our food is probably something like Ford’s housekeeping or auto repair labor model.

Likewise, it’s quite plausible that it would cost a decent home seamstress more in total labor time to earn the money to buy clothing even from a totally automated textile mill, when the costs of high inventories and supply-push distribution are taken into account, than to make them herself.

Besides, if I’m unemployed or working a twenty hour week, labor is something I have plenty of, and (again) I can’t be “fired” from using my own labor to feed and clothe myself. The more forms of production that can be carried out in the informal sector, using our own labor with individually affordable tools, the less of what we consume depends on a boss’s whim. And the higher the levels of unemployment, the stronger the incentives will be to adopt such methods. Just as economic downturns are associated with a shift of production from the mass-production core to the craft periphery, they’re also (as James O’Connor described in Accumulation Crisis) associated with a shift of production from wage labor to the informal sector.

This is not meant, by any means, to gloss over or minimize the dislocations will occur in the meantime. Plummeting average housing prices don’t mean that many won’t be left homeless, or live precarious existences as squatters in their own foreclosed homes or in shantytowns. The falling price of subsistence relative to an hour’s wage doesn’t mean many won’t lack sufficient income to scrape by.Getting from here to there will involve many human tragedies, and how to minimize the pain transition is a very real and open question. My only purpose here is to describe the trends in play, and the end-state they’re pointing toward – not to deny the difficulty of the transition.

So while Ford argues that “consumption, rather than production, will eventually have to become the primary economic contribution made by the bulk of average people” (p. 105), I believe just the opposite: the shrinking scale and cost, and increasing productivity, of tools for production will turn the bulk of average people into genuine producers—as opposed to extensions of machines mindlessly obeying the orders of bosses—for the first time in over a century.

This whole discussion parallels a similar one I’ve had with Marxists like Christian Siefkes. Competitive markets, he argues, have winners and losers, so how do you keep the losers from being unemployed, bankrupt and homeless while the winners buy out their facilities and concentrate production in fewer and fewer hands? My answer, in that case as in the one raised by Ford, is that,with falling prices of producer goods and the rise of networked models of production, the distinction between “winners” and “losers” becomes less and less meaningful. There’s no reason to have any permanent losers at all. First of all, the overhead costs are so low that it’s possible to ride out a slow period indefinitely. Second, in low-overhead flexible production, in which the basic machinery for production is widely affordable and can be easily reallocated to new products, there’s really no such thing as a “business” to go out of. The lower the capitalization required for entering the market, and the lower the overhead to be borne in periods of slow business, the more the labor market takes on a networked, project-oriented character—like, e.g., peer production of software. In free software, and in any other industry where the average producer owns a full set of tools and production centers mainly on self-managed projects, the situation is likely to be characterized not so much by the entrance and exit of discrete “firms” as by a constantly shifting balance of projects, merging and forking, and with free agents constantly shifting from one to another.

Education has a special place in Ford’s vision of the abundant society (p. 173). As it is, he is dismayed by the prospect that technological unemployment may lead to large-scale abandonment of higher education, as knowledge work is downsized and the skilled trades offer the best hopes for stable employment.

On the other hand, education is one of the centerpieces of Ford’s post-scarcity agenda (about which more below) for dealing with the destabilizing effects of abundance. As part of his larger agenda of making an increasing portion of purchasing power independent of wage labor, he proposes paying people to learn (p. 174).

But for me one of the up-sides of post-scarcity is that the same technological trends are decoupling the love of learning from careerism, dismantling the entire educational-HR complex as a conveyor belt for human raw material, and ending “education” as a professionalized process shaping people for meritocratic “advancement” or transforming them into more useful tools.

The overhead costs of the network model of education are falling, and education is becoming a free good like music or open-source software. MIT’s Open Courseware project, which puts complete course syllabuses online for the university’s entire catalog of courses, is only the most notable offering of its kind. Projects like Google Books, Project Gutenberg, specialized ventures like the Anarchist Archives and Marxist.Org (which has digitized most of Marx’s and Engels’ Collected Works and the major works of many other Marxist thinkers from Lenin and Trotsky to CLR James), not to mention a whole host of “unauthorized” scanning projects, make entire libraries of scholarly literature available for free. Academically oriented email discussion lists offer unprecedented opportunities for the self-educated to exchange ideas with established academicians. It’s never been easier to contact a scholar with some special question or problem, by using Google to track down their departmental email.

In short, there have never been greater opportunities for independent and amateur scholars to pursue knowledge for its own sake, or to participate in freely accessible communities of scholars outside brick-and-mortar universities. The Internet is creating, in the real world, something like the autonomous and self-governing learning networks Ivan Illich described in Deschooling Society. But instead of the local mainframe computer at the community center pairing lists of would-be learners with expert volunteers, or renting out tape-recorded lectures, the technical possibilities of today’s open education initiatives taking advantage of communications technology beyond Illich’s imagining at the time he wrote.

Likewise, it’s becoming increasingly feasible to pursue a technical education by the same means, in order to develop one’s own capabilities as a producer in the informal economy. Someone might, say, use the engineering curriculum in something like MIT’s Open Courseware in combination with mentoring by peers in a hackerspace, and running questions past the membership of a list like Open Manufacturing. Open hardware projects are typically populated by people teaching themselves programming languages or tinkering with hardware on the Edison model, who are at best tangentially connected to the “official” educational establishment.

Phaedrus’ idea of the Church of Reason in Zen and the Art of Motorcycle Maintenance is relevant. He describes the typical unmotivated drifter who currently predominates in higher education, when deprived of the grades and meritocratic incentives for getting a career or “good job,” finally dropping out for lack of interest or motivation.


- The student’s biggest problem was a slave mentality which had been built into him by years of carrot-and- whip grading, a mule mentality which said, “If you don’t whip me, I won’t work.” He didn’t get whipped. He didn’t work. And the cart of civilization, which he supposedly was being trained to pull, was just going to have to creak along a little slower without him….


- The hypothetical student, still a mule, would drift around for a while. He would get another kind of education quite as valuable as the one he’d abandoned, in what used to be called the “school of hard knocks.” Instead of wasting money and time as a high-status mule, he would now have to get a job as a low-status mule, maybe as a mechanic. Actually his real status would go up. He would be making a contribution for a change. Maybe that’s what he would do for the rest of his life. Maybe he’d found his level. But don’t count on it.


- In time…six months; five years, perhaps…a change could easily begin to take place. He would become less and less satisfied with a kind of dumb, day-to-day shopwork. His creative intelligence, stifled by too much theory and too many grades in college, would now become reawakened by the boredom of the shop. Thousands of hours of frustrating mechanical problems would have made him more interested in machine design. He would like to design machinery himself. He’d think he could do a better job. He would try modifying a few engines, meet with success, look for more success, but feel blocked because he didn’t have the theoretical information. He would discover that when before he felt stupid because of his lack of interest in theoretical information, he’d now find a brand of theoretical information which he’d have a lot of respect for, namely, mechanical engineering.


- So he would come back to our degreeless and gradeless school, but with a difference. He’d no longer be a grade-motivated person. He’d be a knowledge-motivated person. He would need no external pushing to learn. His push would come from inside. He’d be a free man. He wouldn’t need a lot of discipline to shape him up. In fact, if the instructors assigned him were slacking on the job he would be likely to shape them up by asking rude questions. He’d be there to learn something, would be paying to learn something and they’d better come up with it." (http://blog.p2pfoundation.net/three-works-on-abundance-and-technological-unemployment-part-three-martin-ford/2010/03/29)


2.


"Ford uses the term “Luddite fallacy” for those who deny the possibility of technological unemployment in principle.


This line of reasoning says that, while technological progress will cause some workers to lose their jobs as a result of outdated skills, any concern that advancing technology will lead to widespread, increasing unemployment is, in fact, a fallacy. In other words, machine automation will never lead to economy-wide, systemic unemployment. The reasoning offered by economists is that, as automation increases the productivity of workers, it leads to lower prices for products and services, and in turn, those lower prices result in increased consumer demand. As businesses strive to meet that increased demand, they ramp up production—and that means new jobs. (pp. 95-96)

The problem with their line of reasoning, as I argued here and I think Ford would agree, is that it assumes demand is infinitely, upwardly elastic, and that some of the productivity increase won’t be taken in the form of leisure.

My critique of Ford’s scenario is from a perspective almost directly opposite what he calls the Luddite fallacy. I believe the whole concept of employment will become less meaningful as the falling cost of producer goods causes them to take on an increasingly tool-like character, and as the falling price of consumer goods reduces the need for wage income.

Ford refers to something like my perspective, among the hypothetical objections he lists at the end of the book: “In the future, wages/income may be very low because of job automation, but technology will also make everything plentiful and cheap—so low income won’t matter” (pp. 220-221). Or as \I would put it, the reduced need for labor will be offset by labor’s reduced need for employment.

Ford’s response is that, first, manufactured goods are only a small percentage of the average person’s total expenditures, and the costs of housing and healthcare would still require a significant income. Second, he points to “intellectual property” the source of prices that are above marginal cost, even at present, when technology has already lowered production costs, and argues that in the future “intellectual property” will cause the prices of goods to exceed their marginal costs of production.

Ford’s objections, ironically, point directly to my own agenda: to make housing and healthcare cheap as well by allowing asset prices to collapse, eliminate the artificial scarcities and cost floors that make healthcare expensive, and eliminate “intellectual property” as a source of artificially high prices.

Where Ford supports new government policies to maintain purchasing power, I propose eliminating existing government policies that put a floor under product prices, asset prices, and the cost of means of production.

Ford, like Fernhout and Arvidsson and many other post-scarcity thinkers, proposes various government measures to provide individuals with purchasing power independent of wage labor (p. 161). As a solution to the problem of externalities, he proposes a differential in government-provided income based on how socially responsible one’s actions are—essentially Pigovian taxation in reverse (p. 177). He also proposes shifting the tax base for the social safety net from current payroll taxes to taxes on gross margins that remain stable regardless of employment levels (p. 142).

Such proposals have been common for solving the problems of overproduction and underconsumption, going back at least to Major Douglas and Social Credit. (I’m surprised Ford didn’t hit on the same idea as Douglas, and dispense with the idea of taxation altogether—just create enough purchasing power out of thin air to fill the demand gap, and deposit it into people’s bank accounts.) Something like it is also popular with many Georgists and Geolibertarians: tax the site value of land and other economic rents, resource extraction, and negative externalities like pollution and carbon emissions, and then use the revenue to fund a citizen’s dividend or guaranteed minimum income.

Interestingly, some who propose such an agenda also favor leaving patent and copyright law in place and then taxing it as a rent to fund the basic income.

Ford raises the question, from a hypothetical critic, of whether this is not just “Robin Hood socialism”: stealing from the productive in order to pay people to do nothing (p. 180). I’d attack it from the other side and argue that it’s in fact the opposite of Robin Hood socialism: it leaves scarcity rents in place and then redistributes them, rather than allowing the competitive market to socialize the benefits of innovation through free goods.

I prefer just the opposite approach: where rents and inflated prices result, not from the market mechanism itself, but from government-enforced artificial scarcity, we should eliminate the artificial scarcity. And when negative externalities result from government subsidies to waste or insulation from the real market costs of pollution, we should simply eliminate the legal framework that promotes the negative externality in the first place. Rather than maintaining the purchasing power needed to consume present levels of output, we should reduce the amount of purchasing power required to consume those levels of output. We should eliminate all artificial scarcity barriers to meeting as many of our consumption needs as possible outside the wage economy.

And Ford seems to accept the conventional mass-consumption economy as a given. The problem, he says, “is really not that Americans have spent too much. The problem is that their spending has been sustained by borrowing rather than by growth in real income (p. 161).”

I disagree. The problem is that a majority of our spending goes to pay the embedded costs of subsidized waste and artificial scarcity rents. Overbuilt industry could run at full capacity, before the present downturn, only at the cost of landfills piled with mountains of discarded goods. Most of the money we spend is not on the necessary costs of producing the use-value we consume, but on the moral equivalent of superfluous steps in a Rube Goldberg machine: essentially digging holes and filling them back in. They include—among many other things—rents on copyright and patents, long-distance shipping costs, planned obsolescence, the costs of large inventories and high-pressure marketing associated with supply-push distribution, artificial scarcity rents on capital resulting from government restraints on competition in the supply of credit, and rents on artificial property in land (i.e. holding land out of use or charging tribute to the first user through government enforced titles to vacant and unimproved land).

The waste of resources involved in producing disposable goods for the landfill (after a brief detour through our living rooms), or shipping stuff across country that could be more efficiently produced in a small factory in the same town where it was consumed, was motivated by the same considerations of surplus disposal that, as Emmanuel Goldstein’s “Book” described it in 1984, caused the superpowers to sink millions of tons of industrial output to the bottom of the ocean or blast them into the stratosphere. It’s motivated by the same considerations that caused Huxley’s World-State to indoctrinate every consumer-citizen with tens of thousands of hypnopaedic injunctions that “ending is better than mending.” Human beings have become living disposal units to prevent the wheels of industry from being clogged with unwanted output.

If all these artificial scarcity rents and subsidized inefficiencies were eliminated, and workers weren’t deprived of part of the value of our labor by state-enforced unequal bargaining power, right now we could purchase all the consumption goods we currently consume with the wages of fifteen or twenty hours of labor a week.

What we need is not to guarantee sufficient purchasing power to absorb the output of overbuilt industry. It is to eliminate the excess capacity that goes to producing for planned obsolescence.

As with mass consumption, Ford seems to accept the job culture as a bulwark of social stability and purpose. What he has in mind, as I read it, is that the guaranteed income, as a source of purchasing power, be tied to some new “moral equivalent of jobs” that will maintain a sense of normalcy and fill the void left by the reduced need for wage labor (pp. 168-169). His agenda for decoupling purchasing power from wage income involves, rather than the basic income proposals of the Social Credit movement and some Geolibertarians, the use of government income subsidies as a targeted incentive or carrot to encourage favored kinds of behavior like continuing education, volunteering, and the like. “If we cannot pay people to work, then we must pay them to do something else that has value” (p. 194).

Again, I disagree. The loss of the job as an instrument of social control is a good thing.

I share Claire Wolfe’s view of the job culture as unnatural from the standpoint of libertarian values, and as a historical anomaly. From an American historical perspective, the whole idea of the job was a radical departure from the previous mainstream in which most people were self-employed artisans and family farmers. It arose mainly because of the high cost of production machinery in the Industrial Revolution. From that perspective, the idea of the “job” as the main source of livelihood over the past 150-200 years—a situation in which the individual spends eight hours a day as a “poor relation” on someone else’s property, and takes orders from an authority figure behind a desk in the same way that a schoolchild would from a teacher or a prisoner would from a guard, is just plain weird.

The generation after the American Revolution viewed standing armies as a threat to liberty, not primarily because of their potential for suppressing freedom by force, but because their internal culture inculcated authoritarian values that undermined the cultural atmosphere necessary for the preservation of political freedom in society at large. At the time, standing armies (along with perhaps the Post Office and ecclesiastical hierarchies like that of the Anglican Church) were just about the only large-scale hierarchical institutions around, in a society where most people were self-employed. As such, they were a breeding ground for a personality type fundamentally at odds with the needs of a republican society—people in the habit of taking orders from other people. And today, it seems self-evident that people who spend eight hours a day taking orders, and serving the values and goals of people who utterly unaccountable to them, are unlikely to resist the demands of any other form of authority in the portion of their lives where they’re still theoretically “free.”

The shift to the pre-job pattern of self-employment in the informal sector promises to eliminate this pathological culture in which one secures his livelihood by winning the approval of an authority figure. In my opinion, therefore, we should take advantage of the opportunity to eliminate this pattern of livelihood, instead of—as Ford proposes—replacing the boss with a bureaucrat as the authority figure on whose whims our livelihood depends. The sooner we destroy the idea of the “job” as a primary source of livelihood, and replace the idea of work as something we’re given with the idea of work as something we do, the better. And then we should sow the ground with salt.


So here’s my post-scarcity agenda:


1) Eliminating all artificial scarcity rents and mandated artificial levels of overhead for small-scale production, in order to reduce the overhead cost of everyday life, and to reduce the household revenue stream necessary to service it. That means, among other things:


1a) Eliminating “intellectual property” as a source of scarcity rents in informational and cultural goods, and embedded rents on patents as a component of the price of manufactured goods. See, for example, Tom Peters’ enthusiastic description in The Tom Peters Seminar that ninety percent of the cost of his new Minolta camera was “intellect” or “ephemera” rather than parts and labor.


1b) An end to local business licensing, zoning laws, and spurious “safety” and “health” codes insofar as they prohibit operating microenterprises out of family residences, or impose arbitrary capital outlays and overhead on such microenterprises by mandating more expensive equipment than the nature of the case requires. It means, for example, eliminating legal barriers to running a microbakery out of one’s own home using an ordinary kitchen oven and selling the bread out of one’s home or at the Farmer’s Market (such as, e.g., requirements to rent a stand-alone piece of commercial real estate, buy an industrial-size oven and dishwasther, etc.).


1c) Likewise, an end to local building codes whose main effect is to lock in conventional building techniques used by established contractors, and to criminalize innovative practices like the use of new low-cost building techniques and cheap vernacular materials.


1d) An end to occupational licensing, or at least an end to artificial restrictions on the number of licenses granted and licensing fees greater than necessary to fund the costs of administration. This would mean that, in place of a limited number of NYC cab medallions costing hundreds of thousands of dollars apiece, medallions would be issued to anyone who met the objective licensing requirements and the cost would be just enough to cover a driving record and criminal background check and a vehicle inspection.



2) An end to government policies aimed at propping up asset prices, allowing the real estate bubble to finish popping.



3) An increase in work-sharing and shorter work weeks to evenly distribute the amount of necessary work that remains. Ford also calls for job-sharing (pp. 185-186), and quotes Keynes 1930 essay on post-scarcity on the principle “spread the bread thinly on the butter—to make what work there is still to be done to be as widely shared as possible” (p. 190). Our disagreement seems to rely in this: I believe that, absent artificial scarcity rents to disrupt the link between effort and consumption, the average individual share of available work would provide sufficient income to purchase a comfortable standard of living. Ford explicitly denies that a part-time income would be sufficient to pay for the necessities of life (p. 191), but seems to operate on the assumption that most of the mechanisms of artificial scarcity would continue as before.



4) The decoupling of the social safety net from both wage employment and the welfare state, through 4a) an increase in extended family or multi-family income-pooling arrangements, cohousing projects, urban communes, etc., and 4b) a rapid expansion of mutuals (of the kind described by Kropotkin, E.P. Thompson, and Colin Ward) as mechanisms for pooling cost and risk. Ford also recognizes the imperative of decoupling the safety net from employment (p. 191), although he advocates government funding as a substitute. But libertarian considerations aside, government is increasingly subject to what James O’Connor called the “fiscal crisis of the state.” And this crisis is exacerbated by the tendencies Douglas Rushkoff described in California, as the imploding capital costs required for production rendered most investment capital superfluous and destroyed the tax base. The whole gross margin from capital that Ford presupposes as a partial replacement for payroll taxes is for that reason becoming obsolete.



5) A shift of consumption wherever feasible, from the purchase of store goods with wage income, to subsistence production or production for barter in the household economy using home workshops, sewing machines, ordinary kitchen food prep equipment, etc. If every unemployed or underemployed person with a sewing machine and good skills put them to full use producing clothing for barter, and if every unemployed or underemployed person turned to such a producer as their first resort in obtaining clothing (and ditto for all other forms of common home production, like baking, daycare services, hairstyling, rides and running errands, etc.) the scale of the shift from the capitalist economy to the informal economy would be revolutionary;



6) A rapid expansion in local alternative currency and barter networks taking advantage of the latest network technology, as a source of liquidity of direct exchange between informal/household producers.

Putting it all together, the agenda calls for people to transfer as much of their subsistence needs out of the money economy as it’s feasible to do right now, and to that extent to render themselves independent of the old laws of economic value; and where scarcity and exchange value and the need for purchases in the money economy persist, to restore the linkages of equity between effort and purchasing power.

Suppose that the amount of necessary labor, after technological unemployment, was only enough to give everyone a twenty-hour work week—but at the same time the average rent or mortgage payment fell to $150/month, anyone could join a neighborhood cooperative clinic (with several such cooperatives pooling their resources to fund a hospital out of membership fees) for a $50 monthly fee, the price of formerly patented drugs fell 95%, and a microfactory in the community was churning out quality manufactured goods for a fraction of their former price. For most people, myself included, I would call that a greatly improved standard of living." (http://blog.p2pfoundation.net/three-works-on-technological-unemployment-and-abundance-part-four-martin-fords-agenda-and-mine/2010/03/30)