Fully Automated Luxury Communism A Manifesto

Once again similarities between Drucker’s thinking on the matter and that of his predecessors, particularly Marx, are clear. As Marx would write in the Grundrisse,

But to the degree that large industry develops, the creation of real wealth comes to depend less on labour time and on the amount of labour employed than on the power of the agencies set in motion during labour time, whose ‘powerful efectiveness’ … depends rather on the general state of science and on the progress of technology, or the application of this science to production.

Remarkably, Marx even adds how this undermines labour as the central factor of production:

No longer does the worker insert a modified natural thing as middle link between the object and himself; rather, he inserts the process of nature, transformed into an industrial process, as a means between himself and inorganic nature, mastering it. He steps to the side of the production process instead of being its chief actor.

Just like Drucker, Marx believed that this tension, between knowledge becoming a central factor of production and an economic system built on labour, inevitably meant a transition. Only for him the result was inexorable conflict, with the new only able to substitute for the old as the result of class struggle. According to Marx, even with the most developed machinery the worker could well be forced to ‘work longer than the savage does, or than he himself did with the simplest, crudest tools’. Technology transformed work, and could improve people ’s lives, but only if it was coupled with an appropriate politics.

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For Drucker, however, the transformation didn’t stop with Taylor. He observed an increasingly central role for knowledge as capitalism changed over the twentieth century. Thus, while the period after the 1880s saw a productivity revolution, and the decades following 1945 a ‘management revolution’, it was in the ‘information revolution’ that he saw production increasingly based on the ‘application of knowledge to knowledge ’. While knowledge had always been important – after all, the essence of the First Disruption resided in mastering the information content of crops and animals through selective breeding – with the rise of digitisation and information technology, Drucker viewed this process as reaching some kind of end point, with labour, land and capital critically sidelined as factors of production.

In Marx, Keynes and Drucker, we are ofered three futures, each articulating a society beyond capitalism only made possible by its fullest development. While it seemed otherwise for much of the last century, it now appears that in regard to declining living standards, regardless of productivity improvements, Marx was right, and Keynes wrong. Technological change can potentially lead us to abundance, as Keynes so bravely predicted in 1930, but only if it is accompanied by a politics that demands as much. And Drucker? What he correctly grasped was where value was increasingly located – in information.

But what none of the three clearly outlined is precisely how this new mode of production would stitch itself into the fabric of the present. Remarkably the person who did – almost without knowing it – would later become the chief economist for the World Bank. His name is Paul Romer.

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Information Goods Want to Be Free – Really

In 1990, at just 35, Romer authored a now celebrated academic paper titled Endogenous Technological Change. There he efectively crystallised what Drucker would write just a few years later, highlighting the new and critical importance of knowledge to economic growth.

Understanding what correlates with growth had long been an obsession for economists, principally because by assessing growth’s co-factors you could infer what caused it – savings rates, population growth, rising wages – and reverse-engineer a recipe for prosperity. Prior to Romer’s paper, technological change was presumed to be ‘exogenous’, an external, constant variable akin to background noise and, therefore, unimportant. But Romer disagreed, claiming that given market forces themselves drive innovation, technological change should be understood as a major driver of capitalist development. The question was how this functioned and with what consequences.

Romer defined technological change as ‘an improvement in the instructions for mixing together raw materials’. Technological change was therefore, perhaps counter-intuitively, immaterial – amounting to nothing more than an upgraded re-arrangement of previous information. ‘Instructions for working with raw materials are inherently diferent from other economic goods,’ Romer concluded. So over time, as technology develops, the value increasingly arises from the instructions for materials as opposed to the materials themselves.

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There was only one problem. What was now identified as the most valuable aspect of a commodity was also – technically, at least – capable of infinite replication at near zero cost: ‘once the cost of creating a new set of instructions has been incurred the instructions can be used over and over again at no additional cost. Developing new and better instructions is equivalent to incurring a fixed cost.’ Romer made no mention of the hacker movement, but this was starting to sound remarkably similar to Stewart Brand’s conclusion that ‘information wants to be free ’ some six years earlier.

This contradiction was particularly portentous for market capitalism. As Larry Summers and J. Bradford DeLong would write in August 2001, just a month after the file-sharing service Napster was taken down, ‘the most basic condition for economic eficiency … [is] that price equal marginal cost.’ They went on: ‘with information goods, the social and marginal cost of distribution is close to zero.’ This held true not only for films, music, books and academic papers but also for the design of an industrial robot or pharmaceutical drug. Indeed, as subsequent chapters will make clear, it holds true for ever broader swathes of the economy. Therein lies the paradox for capitalism, a system under which things are produced for exchange and profit.

If information goods are to be distributed at their marginal cost of production – zero – they cannot be created and produced by entrepreneurial firms that use revenues obtained from sales to consumers to cover their costs. If information goods are to be created and produced … (companies) must be able to anticipate selling their products at a profit to someone.

Remarkably, two of the most esteemed economists in the world were conceding a quite remarkable truth: the price mechanism had broken down for what should be the most valuable part of the commodity – its instructions. Economics, for so long obsessed with the issue of dealing with scarcity, began to see glimpses of something beyond it – the only problem being this broke down the system of incentives by which people are meant to create things under capitalism, namely profit.

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Their proposed solution – of exclusion and creating artificial scarcity – was sketchy but revealing. This would be achieved through creating closed voluntary architectures (as Apple would later pursue with their products for example), changes to copyright law and the active promotion of monopolies – something previously viewed as being at odds with functioning, healthy markets. Summers and DeLong even conceded such a point when they wrote that

temporary monopoly power and profits are the reward needed to spur private enterprise … the right way to think about this complex set of issues is not clear, but it is clear that the competitive paradigm cannot be fully appropriate … we do not yet know what the right replacement paradigm will be.

Nearly two decades later and still nobody can answer that question.

Until now.

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II. New Travellers

There is only one condition in which we can imagine managers not needing subordinates, and masters not needing slaves. This condition would be that each instrument could do its own work, at the word of command or by intelligent anticipation, like the statues of Daedalus or the tripods made by Hephaestus, of which Homer relates that ‘Of their own motion they entered the conclave of Gods on Olympus’, as if a shuttle should weave of itself, and a plectrum should do its own harp playing.

Aristotle

4 Full Automation: Post-Scarcity in Labour

Productivity is for robots.

Kevin Kelly

When Capital Becomes Labour

In 2011 the Economist, in circulation since 1843, posed its readers a question: ‘What happens when … machines are smart enough to become workers? In other words, when capital becomes labour?’

While early giants of classical political economy, such as Adam Smith and David Ricardo, did not view capitalist society as defined by conflict between classes, they did presume that labour would always remain distinct from ‘capital stock’, and that workers could never equate to human-made goods used in production such as machinery, tools and buildings.

Yet nearly 250 years after Smith wrote The Wealth of Nations, the publication most committed to defending his legacy was now uncertain whether one of the central premises of his thinking would endure for much longer. Such doubt resides at the very heart of what the Third Disruption means. If capital can become labour – if tools produced by humans can subsequently perform any task they themselves complete – then, within a market system, the price a worker can demand for their time collapses.

Such an outcome would bring a number of problems, the most immediate being underconsumption. This is a problem whose relationship to automation is best expressed in a meeting recounted in the Economist article, alleged to have taken place in the 1950s between Henry Ford II and Walter Reuther, leader of the United Auto Workers union. Ford had invited Reuther to examine one of the company’s newly built factories, and as the two began to walk across the shop floor he is said to have pointed at some newly acquired industrial robots, inquiring how such machines would pay their dues to the union. Reuther’s response is reputed to have been immediate: ‘Henry, how are you going to get them to buy your cars?’

This conversation between Ford and Reuther, whether it actually took place or not, demonstrates a paradox central to the future of capitalism. While wanting to all but eliminate workers from production in order to save money, Ford also wanted to maintain demand for the company’s products, now made more eficiently than ever. Simply put, Ford wanted cheap employees but afluent consumers – something which simply wasn’t possible.

His grandfather, the first Henry Ford, knew better. In 1914 he had shocked the industry by announcing that company employees would see their pay doubled to as much as \$5 a day. Behind that decision was the pressing issue of high employee turnover, with Ford viewing decisive action as necessary given the large costs of constantly training new workers.

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