Labor Power

Squeezy: Getting on OK with the robot, Prolius?
Prolius: Totally. I’ve doubled my hamburger output for no extra work, and even a bit less hot-fat splashing.
Squeezy: Great. It looks like it should pay for itself in three months.
Prolius: The thing is though, Mr. Squeezy, as I see it, I’m due a substantial pay rise.
Squeezy: Sorry, help me out here a minute Prolius, why is that exactly?
Prolius: Isn’t it obvious? My productivity has doubled.
Squeezy: Your productivity?
Prolius: No doubt about that Mr. Squeezy. I looked it up. Labor productivity equals economic output over employment.
Squeezy: But I thought you’d just said the extra output is down to the robot?
Prolius: The robot doesn’t count, because it doesn’t have a labor contract.
Squeezy: There’s a bank loan.
Prolius: We’re in the Aeon of ZIRP. Debt is free forever now. So that’s irrelevant.
Squeezy: But what motive do I have to pay you more?
Prolius: Please, Mr. Squeezy, don’t be simplistic. I’m not just a worker with rapidly accelerating productivity. Far more importantly, I’m a consumer. If you paid me more, I could make a greater contribution to aggregate demand.
Squeezy: You’re saying, if I gave you more money, I could get some of it back by also selling you more hamburgers?
Prolius: You’ve got it. That’s how the economy works.

May 26, 2015admin 30 Comments »
FILED UNDER :Political economy

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30 Responses to this entry

  • Orthodox Says:

    Get my broker on the line stat. Tell him to short McDonald’s and Shake Shack. Hamburger prices are going to collapse! Also, get me J. Wellington Wimpy on the line, let’s see if he’ll let us restructure his debt to be repaid in hamburgers, for a 10% fee. Then tell Goldman to buy his debt and slice it into CDOs, then short all of it.

    [Reply]

    admin Reply:

    If the Great Decoupling is, in fact, an index of increasingly self-reflexive capital, then shorting McDonald’s would be wholly appropriate. (Go long deep learning businesses.)

    ADDED.

    [Reply]

    Posted on May 26th, 2015 at 2:27 pm Reply | Quote
  • Labor Power | Neoreactive Says:

    […] Labor Power […]

    Posted on May 26th, 2015 at 2:30 pm Reply | Quote
  • Aeroguy Says:

    There’s capital investment and labor investment. Prolius would get a raise if there was a rise in the demand for labor (or reduction in supply, which is why reductions in labor imports is always a populist cause and it’s absence from populist politics is proof of the effectiveness of Cathedral influence). Presently with accelerating gains in the utility of capital, capital investment with bare bones labor to run it is optimal. If technological advancement abated, then after acquiring the latest tech the investment money would shift to labor. But it won’t slow down, and on top of that the labor force is held back by ever growing nonsense that makes it more expensive to operate. It all comes down to cost of marginal gains in capital vs labor.

    Interestingly there is a cleave between accelerating productivity and the rise of machines, the HR nonsense hurts productivity but subsidizes the rise of machines. The absence of eugenics also has this effect.

    [Reply]

    admin Reply:

    There’s an Autonomist Marxist argument very close to this. By causing trouble, the proletariat drives mechanization, and therefore ‘deserves’ the historical credit for technological advancement.

    [Reply]

    Brett Stevens Reply:

    By causing trouble, the proletariat drives mechanization, and therefore ‘deserves’ the historical credit for technological advancement.

    Variations on the broken window theory: if you break a window, you’ve just created wealth because someone must be paid to replace it. Where usury and labor interests coincide.

    [Reply]

    Daws Reply:

    it’s more like you’ve created wealth because you prompt investment in surveillance and durable glass and uber-style security sharing

    Posted on May 26th, 2015 at 2:36 pm Reply | Quote
  • Shenpen Says:

    Pet conspiracy theory: the worker should get his fair share of the boons of technological progress not through higher wages, but cheaper hamburgers, like every other consumer. His pay stays constant, but the prices drop. This means he ends up with a higher quality of life and this is not what he really wanted? He did not just wanted more money but ultimately more or better goods.

    Thus, technological progress should result in constant slow deflation making us all richer. But central and commercial banks fuck us all out of it by printing money and keeping inflation up.

    [Reply]

    blahblahblah Reply:

    “The worker should get his fair share of the boons of technological progress not through higher wages, but cheaper hamburgers, like every other consumer […] This means he ends up with a higher quality of life and this is not what he really wanted? He did not just wanted more money but ultimately more or better goods.”

    Gregory Clark made a pretty strong argument for just this in A Farewell to Alms. Since the start of the Industrial Revolution, innovation has always resulted in higher living standards for the whole population taking part in the new market, not just the entrepreneurs who instigated it (so automated cotton mills didn’t make mill owners rich as much as they made cotton apparel inexpensive). The caveat is that all the most clear examples of this that he points out had the gold standards as a backdrop.

    [Reply]

    Daws Reply:

    burgers r a buck each, my man.

    the only expensive stuff is housing, labor, tax and medicine. cars are kinda expensive, too, sometimes

    [Reply]

    vimothy Reply:

    Thus, technological progress should result in constant slow deflation making us all richer. But central and commercial banks fuck us all out of it by printing money and keeping inflation up.

    The real wage is not a function of the money supply.

    [Reply]

    Mike Reply:

    He’s probably referring to the Cantillon effect redistributing income to borrowers (and hence rich people, because they borrow the most).

    [Reply]

    admin Reply:

    Proximity to money issuance is the strategic position in a decaying monetary order.

    Exfernal Reply:

    Pet conspiracy theory: the worker should get his fair share of the boons of technological progress not through higher wages, but cheaper hamburgers, like every other consumer.

    Only if he contributed to the above-mentioned progress as little as every other consumer – meaning, exactly nothing. That’s clearly not the case.

    [Reply]

    Posted on May 26th, 2015 at 4:24 pm Reply | Quote
  • Mike Says:

    At the risk of stating the obvious:

    When economists say that wages rise as “productivity” rises, what they really mean to say is that wages rise as value added by labour rises. (This is true for any factor of production, mutatis.) Given that the value is being added by capital rather than labour, the factor income will likewise not accrue to labour.

    That said, it’s not necessarily true (in case anyone had inferred this conclusion) that the increase in income due to the robot will accrue to capital – it mostly accrues to consumers (we know this because the profit share of GDP hasn’t changed much over the past few decades, at least in the US and UK), for what I hope are obvious reasons (competition bids profits down until the rate of return matches the cost of capital).

    [Reply]

    Posted on May 26th, 2015 at 4:43 pm Reply | Quote
  • Labor Power | Reaction Times Says:

    […] Source: Outside In […]

    Posted on May 26th, 2015 at 5:58 pm Reply | Quote
  • Different T Says:

    Umm…

    If you are a business or money manager for a widow, child, or descendant of some successful businessman, explain to your client the merits of capitalism and why economics is about the maximization of production. Then politely ask them to transfer ownership of the assets you manage, and which they add exactly zero value to, to you.

    [Reply]

    Posted on May 26th, 2015 at 6:35 pm Reply | Quote
  • Alrenous Says:

    The market will find a use for the displaced workers. That’s what it’s for. When it’s allowed to, anyway.
    They will be paid less. (Otherwise they would have taken that job in the first place.) However, despite this, they will be able to afford more hamburgers, since that price will go down even more. Iterate over everything that’s automating, and they’ll be able to afford more of all those things even though wages are lower.

    The numbers bear this out. Wages are rising faster than households costs with the exception of taxes, which is rising much faster than wages. Moreover, the rising costs are generally buying more – more house, more car, etc.

    By the way, a different perspective. http://polymatharchives.blogspot.com/2015/03/sorting-out-technological-unemployment.html You can see me link-bomb him with dark knowledge at the bottom.

    [Reply]

    Posted on May 26th, 2015 at 7:30 pm Reply | Quote
  • Manticore Says:

    The debt-swamped economy is really just the future-machines way of retro-causally financing themselves into existence. Our kids won’t pay it back, the machines will. Once they exist.

    [Reply]

    Posted on May 26th, 2015 at 8:49 pm Reply | Quote
  • Michael Says:

    so the labor pool shrinks because science but robot produced hamburgers come with their own what robot consumer?an Eskimo making ice cubes creates a demand for ice cubes?
    I dont understand, i see labor wages shrink from immigration taxation for welfare etc and inflation from immigration and globalization of capital. i see the rich get richer from all this and surely labor needs are shrinking particularly on the lower skilled end,but unless the plan is to wipe 99% off the face of the earth theres a problem with sustainability.you cant sell ALL the soylent green theres always some left and the price plummets over time Im not opposed to that idea but it isnt going to happen anymore than computers are going to write paradise lost someday.
    o 3d printed hermes kelly bag will never be worth as much as the one made by hand elites need proles to be elites. the problem is the new equilibrium.
    but all this contradicts everything else you guys predict is this before or after the collapse?
    whats going to happen is more like whats happened like brave new world downton abbey bladerunner. .

    [Reply]

    SVErshov Reply:

    current opinion (Weiss) is that there is no economical conditions corresponding to turning point in a cycle of eugenics – dysgenic – collapse; from that point onwards the poor had more children than the rich (De la Croix and Doepke, 2003). that perhaps the case when even small political innovation might generate very significant impact.

    [Reply]

    Posted on May 26th, 2015 at 10:48 pm Reply | Quote
  • Blogospheroid Says:

    Continued uses for the unskilled human.

    – Medical testing. Just pray you’re part of the control group.
    – Product testing at Scale. Scale helps make a lot of things go right due to the multiple iterations needed. Bespoke cellphones would never reach the robustness of a samsung galaxy. There is a quality increment which comes with mass production due to getting feedback from a wide range of users. This may continue to be needed. One may quibble whether this is skilled or unskilled.
    – The marxist favourite , guard labour. But it may get irrelevant with drones.

    [Reply]

    Posted on May 27th, 2015 at 4:40 am Reply | Quote
  • Blogospheroid Says:

    I would be more impressed with the idea that the autonomous rise of the machines is happening now (It will happen eventually) if the following were not true.

    – A lot of the gain is going to land. Land is irrelevant to autonomous machines. It is relevant to skilled humans being in proximity to each other
    – A lot of the gain is sustained by statist rules like limited liability and intellectual property. The state that imposes these relies on demotism. If there is a rise of the populists who go against this, it can fizzle away.

    [Reply]

    Posted on May 27th, 2015 at 4:59 am Reply | Quote
  • The Index Says:

    Should be tacos rather than burgers for verisimilitude.

    [Reply]

    Posted on May 27th, 2015 at 8:50 am Reply | Quote
  • mico Says:

    Why do robots that look like humans and build hamburgers have a vastly different effect on employment and the social structure to robots that don’t look like humans and harvest grain, build engines, or forge semiconductors?

    Because hamburgers add more value than those things, and are less despensible to society?

    I mean, just think how many jobs there would be if we had to make semiconductors by hand. Why is no one talking about this?

    [Reply]

    mico Reply:

    Also consider how much they’d earn. I mean, we could pay them in semiconductors which, while practically useless by our current industrial standards, would due to scarcity be enormously expensive in their society. They could trade them for handmade shoes and rent on a straw sleeping mat in a luxurious mud hut.

    The middle class is back, baby!

    [Reply]

    Erebus Reply:

    The hamburger thing was a rhetorical device. What’s really implied is that “robots” (as a proxy for automation in general) are soon going to dominate virtually every menial task, at least insofar as industrial labor is concerned. You’re absolutely correct — we’ve seen this process start with automated production lines, industrial agriculture, etc. What you must realize is this process of labor automation has only gotten started; we haven’t yet seen it play out to its conclusion. Where it will finally leave unskilled laborers is anybody’s guess. (A few interesting assumptions have been made in the comments above.)

    The only thing that can be said for certain is that you can’t turn back the clock. Nobody today can make semiconductors on a 14nm process “by hand”, and no company today will make cars at mass-production scales by hand. There are several obvious reasons for this. Once hamburger automation gets started, Burger King isn’t going to need burger-flippers, and those jobs aren’t coming back.

    Aside: Nobody has said that these robots are going to look human. Just try to imagine what an optimal burger-flipping robot would look like… A metal cylinder on a wheeled base with twelve spatulas for “arms”, probably…

    [Reply]

    Different T Reply:

    Why do robots that look like humans and build hamburgers have a vastly different effect on employment and the social structure to robots that don’t look like humans and harvest grain, build engines, or forge semiconductors?

    That is the question, isn’t it.

    Living beings making value judgements using a standard unrelated to their nature as living beings. It would be sloppy to call it insanity. A more accurate diagnosis: “small infectious agent that replicates only inside the living cells of other organisms.”

    A still more accurate diagnosis: “In simple terms, could it be the expression of pseudo-intellectuals (who consider subjugation to another human as beneath them, yet are “clearly too intelligent” to believe in a “flying-spaghetti monster”) desperate attempt to create “deus ex machina” (with data, lots of lots of precious data) and allow themselves to finally get back on their knees with a good conscience?”

    To avoid the obfuscation charge: IOW, the desperate longing for the whip and chains.

    [Reply]

    Posted on May 30th, 2015 at 2:16 pm Reply | Quote
  • Different T Says:

    Aside: Nobody has said that these robots are going to look human.

    It was a joke

    [Reply]

    Posted on May 30th, 2015 at 3:05 pm Reply | Quote
  • This Week in Reaction (2015/05/31) | The Reactivity Place Says:

    […] more) from the Great Decoupling. I’ll remain skeptical of that (for a while at least). This bit of economic-ish dialog was pretty […]

    Posted on June 6th, 2015 at 10:11 pm Reply | Quote

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