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A conscious acknowledgement of our common purpose as fulfilment without harm so we may organise ourselves, our justice systems, our economies, our organisations, and our societies to enable our pursuit of it. The organising principle of fulfilment without harm must override the pursuit of money and/or power. Specifically: (more...)

Saturday, February 2, 2013

Technology, Capital & Labour

In economics, “Capital and labour are two inputs into a production process. When they are used to make a good or services, they function as both complements and substitutes to each other. Generally, for a given level of output they are substitutable - depending on wages and the cost of capital we could change the mix of labour and capital we use to create a good. However, they also complement each other in the sense that the more capital you have, the greater the additional output a new employee could create.

“As a result, although it is true that, for a given level of output, more productive capital means we need fewer workers - the fact that each additional worker can make more from this capital implies that wages are higher, and makes hiring workers more attractive. As a result, the real change in employment is not clear - all that is clear is that technology that makes capital more productive leads to greater output and income.

“In order to understand the impact of a change in technology on employment, we have to ask how it fits into this relationship between capital and labour, and we have to ask how people can change their skills in order to adjust to the change in technology. Contrary to both utopians and dystopians this process is far from clear and predictable!”

Should We Fear The Robot Uprising, Infometrics

Following on from above, increased capital can be used by the same total number of (possibly more skilled) workers to produce more product, and the wider question becomes, ‘how much more product can we consume?’ as, if consumption were limited there would be a limit on how much production we need and on how many workers we need to do this production. If there is not a limit, then no matter how much capital we supply we can always find work for more workers.

Probably we don’t need to consume much more raw food, oil, or other commodities per person than we do now (and we shouldn’t in many respects given factors such as climate change and finite resources). So we could just take growth in their extraction as equivalent to per capita growth (although climate change, commodity replacement and other factors should incentivise us to lower resource extraction per capita as well). However, in terms of their transformation into more diverse and refined products, there are next to no limits on production or consumption (only our imagination), so we can create and ‘consume’ better houses, better fuel, more efficient cars, more delicious varieties of chocolate, better machines, and so on, without any real limit on the creativity side.

Likewise, and in some ways less-resource depleting, are the products of software application and the web – to which there are also essentially no limits on our production or consumption of.

With next to no limits on production and consumption, due to the unlimited nature of technological advancement and human creativity, the only real limit on production is the quantity of non-renewable raw commodity (or how quickly renewable raw commodities renew). The less these finite resources are a factor of a product’s production (because instead refining technology makes up most of their finished states) the less they limit total production.

With no limit on the creativity (or technology) multiplier of production and consumption the issue then becomes, 'how can we enable people to work in ways that don't limit them to the jobs replaced by automation and fast advancing technology?', or to put it around the other way, ‘how can we enable people to work in ways that use their creativity to either a. produce the technology which replaces repetitive work, or b. produce the final (creative) products and services that improve our lives?’ And related to this question (because it relates to enablement) is, 'how do we fairly share the incomes from the ownership of raw resources, capital and technology, given that these incomes (which enable people to contribute) are always generated via the good fortunes of inheritance (genes, fortunes and class) and circumstance (geography, nation, education and government)?

The market is good at distributing resources (within its work and income limitations), but is less good at distributing work, and is poor at distributing incomes. Given this, the simplest way is to share the income from work and profits into a base income everyone over the age of entitlement receives (say half is shared into the base income, half retained), as this allows everyone to make their own choices about how they learn, develop and contribute - a freedom that would produce an enormous and on-going increase in productivity as people became ever more able to realise their own diverse contributions.

The Infometrics article above reaches at this later in the piece with: “The simple answer seems to be that we allow people in this situation the opportunity to increase their skills, and where they can't, redistribute some of the gains from mechanisation to these people in the form of an income payment”. But Infometrics confines that sharing ("redistribution") within the concept of unemployment benefits, student loans and subsidised education. So the additional question remains, 'how should income be shared - by some sort of government mediated benefits, student loans and subsidised education, or (and) directly via a base income all receive?'

Personally, I favour a mix of a direct shared base income with on-going, dynamic, and in many cases diminishing, government programmes. I don't think the government is good at picking winners (and nor should it) or that people should have to crawl to government to get a benefit. However, there are programmes that should be centrally organised and provided to ensure that everyone contributes and benefits from them when required (such as health and education). These programmes must be accountable to the people in a set of regular accounts accompanying the shared base income.

Ben Wallace
Author The Common Purpose Manifesto
LinkedIn - http://nz.linkedin.com/in/benwallace13
Twitter - http://twitter.com/BenDWallace

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