In the past two hundred years, technology has transformed the human environment more than in the thousand years before. Until 1840, more than 70 percent of the American work force were employed in agriculture, now it is less than 2 percent. The freed labor found employment first in the manufacturing sector and then in services. Now, with robotization, the speed of substituting labor through machines will accelerate and artificial intelligence will increasingly substitute labor in the service sector.
Even sophisticated jobs will not offer employment security. A college degree is no longer the entrance ticket to high earnings. Yet the new technologies contain also the solution to the problem. While technological progress destroys occupations, innovations make the economy more productive. Wealth, rightly understood, is productivity. A rising productivity means that less labor is needed to produce the same amount of goods. The higher the productivity rises, the richer we get.
The current trend in the stock of robotics indicates the future growth of wealth (Figure 1).
Figure 1. World-wide stock of robotics in thousands of units.
Source: International Federation of Robotics (IFR) 2018
The Real Threat
The problem that we face is not the threat of unemployment. The real problem is that social resistance against the loss of certain jobs may emerge and an anti-capitalist mindset may prevail and hamper economic progress.
But in a free society, robotization is not a threat but a boon. A better future does not only require the continuation of robotization, there must also be a parallel move to free capitalism.
In the societies that are confronted with a growing share of older people, widespread robotization is the way out of the public pension dilemma. For emerging economies, robotization is the way to overcome poverty more rapidly. For humankind as a whole, the robotization of the economy paves the way to lead less burdensome lives and to gain a high standard of living (Figure 2).
Figure 2. Number of installed industrial robots per 10,000 employees in the manufacturing industry in 2017.
Jobs are just more toil and labor, and are not the key to a better future. Higher productivity is the key. Robotization provides the same deliverance from tedious work as the mechanization has done for the drudgery of working on the farms and in the factories. At the same time, robotization (as with all previous forms of mechanization) will further reduce the cost of basic necessities like food, clothing, and shelter. Our present prosperity is the result of the use of machines that came with capitalism (see Figure 3).
Figure 3. Gross domestic product per capita (international dollars in 2011 prices)
Reducing the Perceived Need for a State
The great benefit that the new technological tools potentially offer is not only to deliver us from toil and unpleasant labor, but also from politics. By greatly reducing the cost of basic goods and services, the new technologies can make the political apparatus obsolete and allow the privatization of the functions of government, of the public administration, and of the judicial system. In a world with highly automated production, and without a state in the conventional sense, the cost of living would be only a fraction of that of today and obligatory contributions would take only a negligible part of income.
With the dissolution of the state apparatus, a colossal financial burden would fall from the shoulders of the common man. Free capitalism together with the drastic reduction of the state and the abolition of politics would do away with the financial burdens that afflict the modern citizen.
An anarcho-capitalist order would open the way for the new technologies to do away with the avalanche of public policies and regulations and thus eliminate the present system, which is so inefficient, corrupt, unjust, and which is in its essence also undemocratic. No state intervention in economic life will lead to prosperity. The path to affluence is the withdrawal of the state and the end of politics.
Robotization vs. Social Democracy
In a free economy, productivity would rise so high that the purchasing power of the salaries would do away with the anxieties about job security and paying the bills for basic needs. This vision of an anarcho-capitalist order with a highly productive economy and a stateless society stands in stark contrast to the contemporary social-democratic, “liberal” system of governance which marches on to more government spending, more public debt, and more regulation, lower productivity, and less purchasing power.
The inner workings of the present social-democratic system lead to higher taxes and more contributions. Public debt continues to rise. The endpoint of the existing system of party democracy, social welfare, and state capitalism is not stability, wealth, and liberty but state bankruptcy, misery, and suppression.
The dominant policy agenda in most modern democracies asserts that government could prevent and cure unemployment, economic crises, recessions, depressions, inflation, deflation, and inequality and that the state could provide education, healthcare, and social security for all. The promises of rising incomes and employment dominate the political campaigns.
The traditional policies have not worked, and they will even less so function in the new millennium. The answer to the challenge is not more of the old.
In order to avoid a new totalitarianism, the answer is more free capitalism and fewer politics. Such a libertarian order would do away with party politics through a system called “ demarchy” or “ sortition,” which has the legislative body selected by lottery. A political system free of party politics together with a market-based monetary order and the private provision of law and security would minimize and finally abolish the state as a monopolistic organization of dominance.
Free capitalism guarantees not only rising incomes, it is also the means to hold tyranny in check which, after all, may be even more important than material progress.
Originally published at https://mises.org on August 30, 2019.