Saturday, January 14, 2012

How would an economy work if there were nothing useful to do?



Imagine you and a couple of hundred other people had washed up on a remote island, shut off from civilization through some contrivance of the kind one encounters only in thought experiments, or disappointing TV shows. After having accepted that the island will be everyone's home for the foreseeable future, all of you set to work doing the basic jobs that are necessary for survival. The daily business of subsistence living takes a lot of effort, and there is always something worthwhile for any given person to do. Several people go fishing every day. One hunts for crabs and other shellfish close to the shore. Some build shelter, splitting it into several tasks: a few people find the materials while others handle the actual assembly. At least twenty people engage in agriculture. Even those who have few skills can always gather firewood.

At first there's a quasi-military approach to survival, with everybody appointed a task by a small leadership group. Nobody complains; it's all for one and one for all. But after a few months have passed, a barter economy develops: rather than Dave bringing as many shellfish as he can find and sharing them out equally among the group, he offers them in exchange to others who will give him something in exchange that he deems to constitute a fair deal. Alice no longer fixes everybody's roof; she fixes the roofs of those people who pay her with firewood and fish.

It doesn't take long for a simple currency to be introduced. A few thousand shells are given unique number markings and used as coins. Counterfeiting shells is dealt with very harshly. After a while, some people - those whose goods and services are most in demand - have acquired more shells than others, and use them to acquire more goods than others. (Some of the in-demand people choose instead to work fewer hours to maintain a standard of living that they deem to be adequate, valuing free time more than possessions and services.) But everybody has something to do, and everybody can at least survive with the food, heat and shelter they earn through exchanging the fruits of their own labour with others.

A year passes. In an unexpected development, one of the islanders, Ted, spots a cargo canister with Japanese markings that has washed up on a beach. Excitedly, he spends several hours jemmying the container open. When the contents are revealed, Ted is amazed. There are twenty four humanoid robots inside - technology that is clearly cutting edge. However, after trying to get the robots working, it is clear that all but one of them is broken in some way. It might be possible to repair them - there are some basic tools and diagnostic devices accompanying each droid - but it will take some time. The single working unit, however, appears to be in perfect condition. Through examining the manual, Ted discovers that each robot is designed to learn any task taught to it by a human, and comes with a solar-powered recharging unit.

After teaching the robot several in-demand island jobs, Ted finds that he doesn't have to do any more manual labour at all.  While he sits in his deckchair sipping mango juice, his robot gathers firewood and fish, and builds new huts for other people, working quickly and indefatigably, getting much more done per day than Ted was ever able to manage. As the robot is officially Ted's, and working on his behalf, all of the things it builds, collects and provides are sold by Ted to the other islanders, in exchange for the things he wants. It's as though there were ten Teds where there used to be one, except that there is still only one Ted mouth to feed and one Ted who needs warmth and shelter. The total number of useful goods and services available in the island economy has increased, even though Ted himself is now sitting in a deckchair all day. The overall quality of life on the island has increased, although it's mainly Ted reaping the benefits, with a small trickle-down to others: the supply of firewood, fish and huts has increased, so these items cost slightly less than they used to.

Ted starts to think about the other damaged robots, which remain hidden in a dense copse near the cove where the goods container had washed up. Maybe he can repair one or two of them, with a little effort? Over the next few weeks he actually manages to get three of them working, and puts them to work just as he did with the first one, collecting firewood, fishing, and building huts. Again, the quantity of goods and services on the island increases. Again, the overall benefit is positive. Again, Ted enjoys most of the gains. Firewood, fish and huts are now in much greater supply than before, and therefore become considerably cheaper. For the islanders who were not collecting firewood, or fishing, or building huts, life has definitely become easier. However, the firewood collectors are starting to get nervous. A day's work can't be traded for nearly as much stuff as before: the supply of firewood coming from other sources has increased, and other islanders aren't willing to pay as much for any given bundle. On the other hand, the firewood gatherers find that a shell coin buys more fish than before, and huts are also cheaper. So there are gains and losses. Some of those whose trade has seen a drop-off in price start to move into other jobs. A couple of the fishers shift into agriculture. One of the hut builders starts building water features for people's gardens. One of the wood gatherers becomes an artist, another an actor. But some of them don't really have the skills to do anything else, so persist in their current low-paying jobs. For many islanders, their wages have decreased, but costs of many goods have also decreased (through increased supply), so although their relative share of the island's wealth has gone down, their level of absolute wealth remains more or less the same.

Now Ted repairs yet more robots, and starts to teach them how to do many of the other jobs on the island. Ted is confident that within a year he can have ALL the robots working, doing the jobs that used to be done by almost EVERYONE on the island: nearly all the jobs necessary for day-to-day survival.

Where is the island headed? And is its direction good or bad? Surely it has to be a good thing that the robots are adding cheap labour - FREE labour, in fact - to the island's economy? How can it be a bad thing to have servants who do most everyday jobs and ask nothing at all in return?

The island ought to be celebrating. But many of the islanders aren't happy at all. Lots of them no longer have anything to offer others in exchange for their goods and services. Whenever a wood gatherer returns at the end of the day to the kindling exchange, they now find that there are excess piles sitting there, having been gathered by Ted's robots. Firewood is so plentiful that there is no point in an individual gathering any more. This used to be the lowest-skilled job on the island, something that anybody could do even if they had nothing else to offer. Now this unskilled labour cannot be exchanged for anything.

What happens to the wood-gatherers? Are they left to starve to death, unable to trade anything for food? Is it really possible that Ted's robots, adding free labour, might manage to drive some of the islanders to death? Somebody might look after them, or they might scrape by gathering their own food. But their quality of life has actually gone DOWNHILL since Ted's robots arrived. The overall quantity of stuff on the island has gone up dramatically. With the menial jobs now covered easily, some people have become artists, or writers. Ted enjoys - and pays for - the luxuries that other people make, and some of the islanders aside from Ted earn enough to buy luxuries from each other. The mean quality of life has increased, but the median might not have. The distribution is so skewed that some people are now on the poverty line, some in danger of not getting by at all.

Of course, this makes Ted look like a villain, and also plain lucky, as he didn't make the robots himself. Ted isn't really a villain. He used a mixture of windfall inheritance and skill to provide something that the market demanded. People wanted firewood. People wanted fish. People wanted all the stuff they used to have before the robots arrived. Ted provided it to them. He didn't break the law. He didn't rip anyone off. His skill repaired and maintained the robots. He increased the volume of goods and services available in the economy.

But unemployment on the island is now running at 60%. Half the island has pretty much nothing to offer that anyone else is interested in: whatever this 60% can offer, the robots can do it quicker and cheaper. The 60% have to go so low in their payment demanded that it isn't worth their while.

The island council calls a crisis meeting. More than half the people in the community are fed up with Ted's robots, and are getting angry. Things might even get violent.

What should the council do? The free market has been left to run on the island, and has done its job, by providing a bounteous supply of goods and services. But the results weren't really what people had expected: the assumption had always been that every worker had something to offer. But in this era of automation, and cheap, plentiful labour that requires no payment at all, something seems to have gone wrong.

If every islander had a robot, or even if there was an allocation of one robot to every ten islanders, the place would be a potential paradise where everyone had large amounts of leisure time and the opportunity to pursue a path of what Maslow called self-actualization (the pursuit of one's dreams, in effect, once food, shelter and the other everyday needs had been dealt with). But wouldn't this be communism - the sharing out of Ted's wealth to others who had not earned it?

This starts a heated debate. In the age of automation, has Ted truly earned his wealth? Does the historical record of communism's failures still apply when individual motivation isn't really necessary anyway in order for work to get done? Does Adam Smith free-market capitalism still work when half the population can't offer anything that isn't already being created by machines for free?

Does the island end up with a better or a worse society if it lets Ted keep all the wealth generated by his robots?

1 comment:

  1. Frederik Pohl proposed a quirky solution in "The Midas Plague".

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