Capitalism in the age of robots
In April this year Adair Turner (Chair of the Institute for New Economic Thinking) gave a speech entitled “Capitalism in the age of robots: work, income and wealth in the 21st century.” In it Turner argued that the rapid and unstoppable development of automation—based on robotics, artificial intelligence and machine learning—will have profound implications for how we live and work over the next fifty to a hundred years.
This automation will result in very little human input in the production of most of the goods and services we need to live well. Today’s challenge of how to produce what we need most efficiently will become much less of an issue. However, how we use our time, how we earn and distribute income and how we measure progress will become ever more pressing
Turner acknowledges that in many respects John Maynard Keynes got here first, almost ninety years ago, with his essay “Economic Possibilities for our Grandchildren” in which he said “for the first time since his creation man will be faced with his real, his permanent problem, how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well”.
Conventional wisdom argues that as productivity increases in one part of the economy it frees resources up that can produce more value in other areas, increasing activities in other areas and increasing overall welfare. Yet Turner suggests that this is not necessarily the case if the resources freed up are devoted to zero-sum activities that cancel each other out in terms of overall welfare, as people struggle to secure their share. Some of these activities are more obvious, such as cyber criminals and the police that try to stop them. But there are many others, some of which might not seem so obvious at first glance including ‘elite’ education aimed mainly at securing a position in society.
How income is distributed rather than created will undoubtedly become an increasing focus. There are many different dimensions to the distribution question; for example, distribution within countries, between different regions and social groups and between countries. It also throws into even sharper relief the value of using GDP, as currently calculated, as a measure of societal wellbeing.
If wellbeing is poorly understood and measured and income is unequally distributed (and grows ever more unequal as income earning assets become more concentrated), it is likely that the ‘have-nots’ will spend their time serving the ‘haves’, and growing ever more resentful at their worsening welfare, the inequity all around them and lack of hope.
In this environment rent seeking is likely to become more prevalent and the assets that will be most highly valued will be those whose value is physically constrained and/or subjective, such as land in desirable locations, brands and beauty.
The early signs of these trends are already evident, even if the potential magnitude of the change has yet to become fully apparent. There are a growing number of low-paid, precarious jobs, alongside an increasing proportion of ‘zero-sum’ jobs, while the value of non-produced assets such as land now exceeds produced assets and populist politicians respond to growing feelings of discontent.
Turner suggests seven policy areas which demand further attention, some of which are or have been tackled by SUII projects:
- Income support, such as Universal Basic Income – alongside opportunities for rewarding work and the provision of high quality public services, goods and spaces
- Offsetting the concentration of income, wealth and rents – a greater focus of taxation on property wealth, capital gains and inheritance alongside a careful look at income from intellectual property rents
- High quality urban development – paying more attention to the geography of economic development to help address the high costs of urban living and commuting
- Adequate wages and status for caring services – recognising the limits to automation in these areas and the potential for adding to overall human welfare
- Celebrating craft skills – an opportunity for rewarding work which can enhance overall life satisfaction
- Increased leisure – spending more of the time freed up in leisure than in zero-sum activities might have a more positive overall impact
- Education for life and citizenship – empowering and equipping people to lead fulfilled lives and be equal and active citizens
For more detail on the ways in which SUII programmes have contributed to these discussions, see our website for information on programmes including: Citizens’ Basic Income, Integrated Public Services, City Deals, Stroke Technologies, Crafting Growth, and Conversations about Language and Literacy.