Three Works on Technological Unemployment and Abundance, Part Four: Martin Ford’s Agenda and Mine

In the previous installment of this series of review essays, I considered the technological unemployment scenario presented by Martin Ford in The Lights in the Tunnel:  Automation, Accelerating Technology and the Economy of the Future.

In this last installment, I will discuss his proposed agenda for dealing with abundance, and then present my own counter-agenda.

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line of reasoning says that, while technological progress will cause some workers to lose their jobs as a result of outdated skills, any concern that advancing technology will lead to widespread, increasing unemployment is, in fact, a fallacy.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:

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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.

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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.).

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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.

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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.

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

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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.

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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.

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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;

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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.

1 Comment Three Works on Technological Unemployment and Abundance, Part Four: Martin Ford’s Agenda and Mine

  1. adam ricketson

    Thanks for the great review and essay.

    Can you point us to a real-life implementation of the informal/barter economy? All I can think of are weekend flea markets and farmer’s markets. Perhaps people who travel with bands such as Phish could also be an example (doing business, not just drugs, in the parking lots). Could a sufficient economy be sustained around such occasional meet-ups, or would it require a permanent space, such as an abandoned grocery store or box store? Can it be sustained online, or through one-on-one interactions (with no public market space)?

    Can it exist alongside wage labor, whether in the form of full-time work for a portion of the community, or in the form of part-time work for many of the informal market participants. It seems that full-time wage workers would have a hard time participating in the informal economy, but perhaps even just a little participation would be enough to provide some hard cash to the people in the informal economy.

    I’m guessing that your answers would be “no-one can know” or “a bit of each”. I’m just trying to figure out what is the real sticking point to establishing a thriving peer to peer market.

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