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How do we respond to the Robot Revolution?

11 December 2012

Summary: The productivity of the next industrial revolution — based on semi-intelligent machines, with sensors and manipulators — will create fantastic abundance. Perhaps on a scale and nature we cannot imagine. The question is choice: how we divide the results. Here are two extreme outcomes, with a thousand points between them.

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(1)  Feudal dystopia

The rich might prefer a form of feudalism: a very hierarchical society, people in the upper layers linked by personal relationships (networked), with massive inequality and limited social mobility, divided into classes.  Marx described a version of this.

  • the inner party (the haute bourgeoisie) of  upper echelon leaders and the wealthy,
  • the outer party of middle managers, small business owners, and professionals (the petite bourgeoisie), and
  • the remainder of the working class (the proletariat, proles)
  • the underclass (the lumpenproletariat) — criminals, poor workers (many in the grey economy), those subsisting on meager fixed incomes (pension, disability, welfare, and social security  — plus social services).

Maintaining this will require sophisticated internal intelligence and security services to prevent and suppress insurgencies, and keep social order (low levels of crime at the top, minimal levels at the bottom).  The security services and military would recruit strong intelligent people from the lower class — their only path to advancement — which also deprives the lower classes of their natural leaders.

We’re on our way to this future:

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  • the crushing of the unions, one of our major social mechanism to  reduce inequality;
  • the degradation of the public education system, decreased quality of the grade schools and higher cost of the colleges;
  • the vast expansion of the US domestic “law enforcement” and intelligence apparatus since 9-11.  Especially the growth of SWAT teams.  Such as the SWAT in Johnston RI (29 thousand people). A 1997 survey of towns of 50 thousand or more people found that roughly 80% had SWATs; 20% of those without SWATs planned to start one in the next few years.

The pyramid of capitalist society, from an 1911 issue of Industrial Worker (a IWW newspaper). Click to enlarge.

A 21st century form of Fascism might adopt a feudal-like social structure, with nationalist ideology or religious fervour helping to keep people in their assigned slots.  Perhaps with internal structures, like guilds, to divide the people and maintain the social structure.

Like the post-Civil War South, such a society sacrifices growth to maintain its social structure. It wastes much of its human talent, and devotes much of its national income suppress its people. The increased productivity of the next industrial revolution will generate the income to sustain such a society (far greater surplus income than available to a medieval society) and the mass unemployment to fill the lower classes.

For more about this see:

Scandinavia

The nations of northern Europe have taken another path, experimenting about new forms of society.  We can only guess where this will go, and what social innovations new forms of technology will make possible. New family structures. New government measures to minimize inequality and more equally distribute the abundance from modern technology.

While not utopias, these nations are portals to the future.  America’s leadership devotes considerable energy to prevent Americans from learning about these experiments.  About their successful education systems, and their health care systems.  Their benign grand strategies which, as the late John Boyd (Colonel, USAF) recommended, multiplies their friends and diminishes their enemies.

Their low fertility suits a future world with automation destroying jobs.  Their concern with the environment might stand themselves well as the world moves through its period of peak population — and environmental stress — during the mid-21st century.

Which path will America take?

Post your estimate of the odds — and other visions of the future — in the comments.

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For More Information

About the Robot Revolution

  1. The coming big increase in structural unemployment,
    7 August 2010
  2. The coming Robotic Nation, 28 August 2010
  3. The coming of the robots, reshaping our society in ways difficult to foresee, 22 September 2010
  4. Economists grapple with the first stage of the robot revolution, 23 September 2012
  5. The Robot Revolution arrives & the world changes, 20 Apr ’12
  6. The coming big inequality. Was Marx just early?, 27 November 2012
  7. In Friday’s job report you’ll see early signs of the robot revolution!,  5 December 2012
  8. Krugman discovers the Robot Revolution!, 9 December 2012

About inequality and social mobility: once our strengths, now weaknesses:

  1. A sad picture of America, but important for us to understand, 3 November 2008 — Our low social mobility.
  2. Inequality in the USA, 7 January 2009
  3. A great, brief analysis of problem with America’s society – a model to follow when looking at other problems, 4 June 2009
  4. The latest figures on income inequality in the USA, 9 October 2009
  5. Graph of the decade, a hidden fracture in the American political regime, 7 March 2010
  6. America, the land of limited opportunity. We must open our eyes to the truth., 31 March 2010
  7. Modern America seen in pictures. Graphs, not photos. Facts, not impressions., 13 June 2010
  8. Why Americans should love Tolkien’s Lord of the Rings – we live there, 13 December 2011
  9. News You Can Use to understand the New America, 14 March 2012 — Articles about rising inequality
  10. The new American economy: concentrating business power to suit an unequal society, 27 April 2012
  11. How clearly do we see the rising inequality in America? How do we feel about it? Much depends on these answers., 27 September 2012
  12. Ugly truths about income inequality in America, which no politician dares to say, 2 October 2012

Our lords live in palaces

We’re docile, so no high walls needed. Here’s the palace of Bill Gates, a next-gen American prince.  Built on a hillside overlooking Lake Washington in Medina WA, it is  66,000 square feet on 5.15 acres. Assessed value $200 million.

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Bill Gates' palace

Bill Gates’ palace

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Bill Gate's palace

Bill Gate’s palace

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27 Comments leave one →
  1. Pluto permalink
    11 December 2012 1:06 pm

    I’m sure Thomas More will show up soon with a well-referenced and incredibly depressing post so I’m throwing my two cents in right now.

    FM is quite right that we’ve been heading down the road to Industrial Feudalism at a scary pace but I think we are slowly swerving from that path. Tea Party candidates have been getting crushed in the elections, the Mainstream (compromising) Republicans have started fighting back against the Tea Party, and Progressive thinking is no longer publicly disparaged by our politicians. This may be a pleasant rest stop on the road to Hell or it may be something more meaningful.

    I will assume it is more meaningful until the evidence becomes overwhelming because I will not accept a fascist police state, the human race has been down that road before and the cost is just too damned high in our modern world.

    The real question, of course, is whether our ruling class would prefer to have absolute control over Hell or be a major power in Heaven. They’ve made the choice to allow the middle class to thrive before (after the Great Depression) and I have hope they will do so again (probably after another big financial crisis).

    The single biggest reason I have hope is the greed of the wealthy in the US. Yes, letting the middle class have a bigger share of the pie means that the wealthy will have a smaller share but it also means vastly increasing the size of the pie. At this time, I cannot imagine the American 1% settling for a smaller pie than any other country in the world.

    Like

    • 11 December 2012 2:49 pm

      I appreciate Pluto’s optimism. Optimism about America’s future, and our ability to meet the many challenges we face, has been the primary theme of the FM website. I will, however, disagree on one point.

      “The real question, of course, is whether our ruling class would prefer to have absolute control over Hell or be a major power in Heaven.”

      I believe the real question concerns our willingness to rule ourselves. Perhaps we, as have other people in history, prefer the easier role of sheep. For our 1% might prefer to chart a different course from that of Europe and East Asia. They might look at an unfree and slow growth America, fortified by its massive domestic security services and military, and say…

      Here at least we shall be free; the Almighty hath not built
      Here for his envy, will not drive us hence:
      Here we may reign secure, and in my choice
      to reign is worth ambition though in Hell:
      Better to reign in Hell, than serve in Heaven.

      Like

    • Pluto permalink
      11 December 2012 4:04 pm

      FM: “I believe the real question concerns our willingness to rule ourselves.”

      A good point, I did not implicitly state the size of the ruling class. It could be 50 people or 200+ million. I personally would prefer the latter number, but I hope my statements are true regardless of the size of the ruling class.

      Like

  2. underscore33 permalink
    11 December 2012 2:45 pm

    well, this is my vision of our dystopian future. as to it’s likelihood… i am not sure. the potential is obviously there. none of our freedoms or the equality of our society is guaranteed. in the bizarro world we live in, due process is redefined to suit the convenience of the executive branch, indefinite detention is institutionalized, and our champions of transparency relentlessly prosecute whistleblowers. all the while, the militarization of our society steadily progresses…

    yet, on the other end of the spectrum, socially equality moves forward. we finally passed some form of national healthcare, and have confirmed the government’s ability to regulate and enter the industry. signs look hopeful for gay marriage and decriminalization, if not outright legalization, of certain narcotics (hopefully ending the war on drugs which has institutionalized egregious racism in our justice system). demographically, young people are more amenable to an open society with more rights for marginalized groups. some of the more terrible aspects of our police state tilt seem to be supported by aging boomer era politicians and constituencies and, frankly, they won’t live forever. maybe rather than taking a different path than Europe, we are merely a few decades behind in our social development?

    this maybe a banal observation, but it seems to me the seeds of our destruction and progress have been sown and it’s merely a competition between which path is more viable–a reactionary security state that devolves freedoms in order to safe guard the homeland or a more open society that guarantees more individual rights to its citizens? all told, i am hopeful for the latter, but it won’t be easy going.

    Like

  3. Duncan Kinder permalink
    11 December 2012 7:57 pm

    We can bemoan Bill Gate’s mansion – or we can critique it. It is well within our OODA loops. We have pictures, diagrams, etc. Better would be a mansion that we would fail to recognize as such or which would baffle us. Consider, eg., the Black mansion in the Harry Potter series. It was quite obscure. No one knew it was there.

    Here’s a neat outfit: Creative Home Engineering.

    Like

  4. Thomas More permalink
    12 December 2012 4:55 am

    The crucial problem in maintaining an oligarchic cyberfascist society after the robot revolution boils down to finding ways to burn up the fantastic amount of goods and services generated by a nearly fully robotic workforce. Fortunately, America has found a way: our military-police-prison-surveillance-torture complex. By constantly expanding America’s blue laws and by continually engaging in ever more disastrous endless unwinnable wars overseas, America manages to burn through so much of the excess production of our highly automated economy that we now have the second highest rate of child poverty in the developed world. This is an amazing achievement for one of the wealthiest nations in the world, both in absolute terms and in terms of per capita median income.

    George Orwell explains this process in his novel 1984:

    “From the moment when the machine first made its appearance it was clear to all thinking people that the need for human drudgery, and therefore to a great extent for human inequality, had disappeared. If the machine were used deliberately for that end, hunger, overwork, dirt, illiteracy, and disease could be eliminated within a few generations. And in fact, without being used for any such purpose, but by a sort of automatic process — by producing wealth which it was sometimes impossible not to distribute — the machine did raise the living standards of the average human being very greatly over a period of about fifty years at the end of the nineteenth and the beginning of the twentieth centuries.

    “But it was also clear that an all-round increase in wealth threatened the destruction — indeed, in some sense was the destruction — of a hierarchical society. In a world in which everyone worked short hours, had enough to eat, lived in a house with a bathroom and a refrigerator, and possessed a motor-car or even an aeroplane, the most obvious and perhaps the most important form of inequality would already have disappeared. If it once became general, wealth would confer no distinction. It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste. But in practice such a society could not long remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realize that the privileged minority had no function, and they would sweep it away.

    “… [Therefore] the primary aim of modern warfare [in America]…is to use up the products of the machine without raising the general standard of living.”

    This is why an alert observer can reliably predict that America’s endless unwinnable foreign wars will not stop, but rather will expand and multiply; why the endless unwinnable War on Drugs and the endless unwinnable War against Copyright Infringement will grow more savage and more widespread, rather than tailing off; and why America’s internal prison-police-surveillance network will become much denser and more ferociously intrusive as the years pass, rather than less.

    Like

    • Pluto permalink
      12 December 2012 12:55 pm

      I agree with Breton’s comment below, Thomas. The US population is getting less comfortable with authority misusing its power, particularly if authority is somewhat incompetent (admittedly this is just beginning to happen).

      We have hit the outer limits of what can be achieved in internal politics through the various current wars (even going so far as to have two states essentially repeal the war on drugs by allowing Marijuana consumption in the last election). There is no appetite for new wars in the face of economic problems.

      The right is now busy fighting itself as the unwieldy alliance between the mainstream Republicans and the Tea Party falls apart. This leave President Obama some room to throw the progressives a bone by demanding (and getting) marginally higher taxes on the wealthy.

      Even the sycophants are beginning to pull out their knives and start cutting into authoritarian hype and pork. Below is an article published on the Milpub about the results of a test on one of the Army’s highly touted Stryker brigades. You wouldn’t have seen this article two years ago because Mr. Ricks would see his duty to protect authority from bad publicity. Now he sees his duty to highlight where authority performed poorly. “Not Very Pret-y“, FD Chief, MilPub, 10 December 2012.

      Result of analysis: The pendulum has gone as far as it can to the right, momentum is exhausted and the situation favors it swinging back to the center and left. The book 1984 is scary but not a likely predictor of near-term future trends in America. Note that this analysis assumes that we won’t have another terrorist incident or some equally nasty black swan event to scare the US public silly.

      Like

  5. Breton permalink
    12 December 2012 11:57 am

    Don’t be so certain everything will work just fine…….

    -Anecdote- Went for Jury Duty yesterday Major Metro City Was called into the first Courtroom 45 Prospectives Charge: felony menacing with a gun and possession of controlled substance of 4 grams or less (cocaine) Afro American ….of course. Jury was two Blacks, three Spanish Americans, 25 % over 55,rest younger whites….professionals.

    Young Prosecutor falls flat on his face in VD. “can you be impartial” leads to many people openly stating they do not trust Cops. And… Drug Laws are arcane. Then he asks for a Grade of the Criminal Justice system! Consensus was “C-” !!!

    Judge is flummoxed and states the Jury is to not Judge just determine the veracity of facts. The VD goes on and on…..lunch is arriving and it is cut short by the Judge. Defense is not pleased. Maybe they found 12 to sit on this Panel. Don’t be too quick to count the Sheep!?

    Breton

    Like

  6. Thomas More permalink
    12 December 2012 7:46 pm

    Breton remarks: “udge is flummoxed and states the Jury is to not Judge just determine the veracity of facts.”

    The judge is lying. Case law specifically states that the jury is to be judge of both the facts and the law.

    “William Penn may have thought he had settled the matter. Arrested in 1670 for preaching Quakerism, Penn was brought to trial. Despite Penn’s admitting the charge, four of the 12 jurors voted to acquit. The judge sent the four to jail “without meat, drink, fire and tobacco” for failing to find Penn guilty. On appeal, however, the jurors’ action was upheld and the right of juries to judge both the law and the facts — to nullify the law if it chose — became part of British constitutional law.

    “It ultimately became part of American constitutional law as well, but you’d never know it listening to jury instructions today almost anywhere in the country. With only a few exceptions, juries are explicitly or implicitly told to worry only about the facts and let the judge decide the law.”

    Source: “What lawyers and judges won’t tell you about juries” from Jury Manual site.

    “If the jury feels the law is unjust, we recognize the undisputed power of the jury to acquit, even if its verdict is contrary to the law as given by a judge, and contrary to the evidence.” — 4th Circuit Court of Appeals, US v Moylan, 1969

    “Every jury in the land is tampered with and falsely instructed by the judge when it is told that it must accept as the law that which has been given to them, or that they can decide only the facts of the case.” — Lord Denham, O’Connell v Rex (1884)

    “The jury has the power to bring in a verdict in the teeth of both the law and the facts.” — Justice Holmes, Homing v District of Columbia, 138 (1920)

    “When a jury acquits a defendant even though he or she clearly appears to be guilty, the acquittal conveys significant information about community attitudes and provides a guideline for future prosecutorial discretion…Because of the high acquittal rate in prohibition cases in the 1920s and early 1930s, prohibition laws could not be enforced. The repeal of these laws is traceable to the refusal of juries to convict those accused of alcohol traffic.” — Sheflin and Van Dyke, Law and Contemporary Problems, 43, No. 4, 1980

    “It is not only the juror’s right, but his duty, to find the verdict according to his own best understanding, judgment and conscience, though in direct opposition to the directions of the court.”– John Adams

    Like

  7. Todd Guthrie permalink
    12 December 2012 11:47 pm

    Fabius, what do you think of the possibility that different parts of America take different courses?
    What if the Midwest becomes a Feudal dystopia and Florida becomes like Scandinavia?

    Like

  8. 13 December 2012 12:13 am

    Labor can sometimes be replaced by capital, that is the case if a $50,000/year employee can be replaced by a $1M machine. Therefore, near zero percent interest rates actually encourage replacing the man with the machine, because the cost of getting that $1M for the machine goes down.

    If you have $1M and put it into bonds nowadays that would earn maybe $35K a year. So figuring in inflation, depreciation and all that, if you buy the machine and eliminate an employee earning a little more than that you end up ahead..

    Like

  9. Thomas More permalink
    13 December 2012 5:41 am

    To follow up on Cathryn’s point, this implies that as automation progresses, businesses will increasingly use recessions (which typically cause interest rates to plummet) as an opportunity to automate and/or offshore their workforce out of existence. This sets up a ratchet effect in which each recession leads to successively lower levels of employment and overall lower rates of labor force participation, and, by means of offshoring, successively lower manufacturing capacity in the U.S. after each recession.

    And, looking back through history, this is in fact what we observe in the charts of job growth by decade in the aftermath of recessions since 1948 and in the charts of American manufacturing capacity since 1948.

    Here’s the chart of manufacturing capacity normalized to 100 at the business cycle peak and corrected for inflation.

    .And here’s the chart showing job growth per decade since 1948.

    And here’s one last chart showing the direction America is headed. It shows growth in durable goods shipments divided into military and non-military categories. Notice the diverging trendlines.

    Like

    • Pluto permalink
      14 December 2012 1:19 pm

      Looked at your charts, Thomas, and wasn’t impressed. The big thing is that two of the three start after WWII. At that point the rest of the modern world was in ruins or on the verge of financial collapse. Of course it’s hard to match the statistics generated just after that world-changing event. I’d be deeply concerned about our future if we could match them as that would imply more events on the scale of WWII in the last 60 years. And no sane person would want that.

      My other big problem with them was that they can have multiple explanations for the events they chronicle: such as changes in the work force, the change to a service economy, the rebuilding of the rest of the world to better compete with the US economy, changing patterns in resource allocation (oil is just a bit more expensive than it was in the 1950’s, for example), poor government allocation of incentives, etc.

      Your statement about the final chart is also inaccurate. It shows where manufacturing capacity in the US has been allocated, not where it is going. As the old commercials used to state, “past performance does not guarantee future returns.” I suspect growth in medical products is going to far outdistance growth in military expenses in the next 20 years.

      Like

    • Pluto permalink
      14 December 2012 1:21 pm

      My last sentence was supposed to read: “I suspect growth in medical products is going to far outdistance growth in military expenses in the next 20 years.” Sorry
      .
      .
      FM Note: Fixed!

      Like

  10. Curtis fromke permalink
    14 December 2012 6:34 am

    The devil in all of this is our acceptance of usery, ie interest.

    Like

  11. 17 December 2012 3:41 am

    A great article, well-worth reading: “The robot economy and the new rentier class“, Izabella Kaminska, Financial Times’s Alphaville, 10 December 2012 — Opening:

    It seems more top-tier economists are coming around to the idea that robots and technology could be having a greater influence on the economy (and this crisis in particular) than previously appreciated. Paul Krugman being the latest.

    But first a quick backgrounder on the debate so far (as tracked by us).

    Probably the first high-profile advocate of the idea — in recent times — that “technology and computers were changing the economy in weird ways” was Alan Greenspan in the 1990s, when he attributed a mysterious lack of inflation, high productivity and low unemployment rate to the arrival of a technologically rich “New Economy”.

    Like

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