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Thursday, June 29, 2017

AI & Capitalism: On a Collision Course

First we had self-scan checkout lanes, now we're facing down self-driving vehicles. IBM's Watson AI can predict cancer better than the best oncologist. Ultimately, few jobs are safe from automation. Should this scare us? Maybe.

We face a social conundrum. Capitalism, by its very nature, seeks the most efficient use of capital to produce an optimal economic outcome for shareholders. Technology doesn't require benefits. It doesn't get sick. It doesn't spend 30% of its work day socializing. Technology is efficient. Thus, it is always a natural choice for executives to invest in technology which will eliminate people -- that is, if their objective is to optimize the use of capital.

While there are certainly social-minded organizations that consider it part of their mission to employ people, most for-profit companies seek more profits. Technology is the best way to do that. Heretofore, white collar jobs that required people to "think" for a living were safe. We could retrain people who had used their hands to use their minds. Now, artificial intelligence (AI) threatens those jobs too.

Nobody really knows where the tipping point is, but we do know that there are certain types of phenomena that have tipping points. A tipping point is a specific condition that causes an abrupt and often dramatic change. A good example would be the housing bubble that manifested in 2006. In 2007, in a very short time, we reached a point that caused housing prices to drop sharply and quickly.

It is reasonable to suspect that at some point, AI and other related automation will eliminate enough jobs that the economy will become dysfunctional. Companies want to reduce cost and improve output, but they need customers to take advantage of those efficiencies. Customers are people with disposable income. Income is money earned from work. Do you see the conundrum?

Prospects for Change

There are alternatives. Unfortunately, they will all require strong political leadership. If we've learned nothing, we now know that any self-promoting gasbag with enough social and economic resources can claim the mantle of leadership, even having never demonstrated any evidence of real leadership.

What is a leader? There are many books on this topic and I have read some of them. My takeaway is that leaders are those who can create a clear vision of the future and empower people to execute plans to achieve that vision. We don't have many of those in Washington these days.

National politicians are convinced that they need huge amounts of money to win elections. As we all know, huge amounts of money come from places that have huge amounts of money. Common sense would tell you that these are not the people who are worried about losing their jobs to technology. They're the ones BUYING IT! In other words, the people who are taking away jobs are those who have the most influence on our "leaders."

There are three ways in which the major changes necessary can come about:

  1. Total collapse of the system
  2. Revolution
  3. Courageous leadership that can sell tough love

I numbered these because I believe this is the order of likelihood that the necessary changes will come about. People are basically problem-solvers. It ought to be clear to anyone with a brain that the folks who have influence in Washington don't have any major problems with the current system right now. Thus, they will not be inclined to take steps to avert the onset of the tipping point discussed earlier.


So, let's assume that we eventually arrive at #1 - total collapse. The big problem here is we end up with the same crappy [lack of] leadership we have now. The first and most important thing will be to prop up the people who own Washington -- rich people (remember corporations are people too). In the past, this has meant printing money and giving it to them, so that their wealth wouldn't be diluted. This worked okay when they used the money to buy things that created demand for products and services that required more employees to deliver them. What happens when more people aren't needed to do this? We've already noticed a trend in the last few business cycles that the recovery is much slower. There has even been mention of a "jobless recovery." This sounds as strange as a "money-less economy." What is THAT!

Therefore, even if they try to prop up rich people first, that won't be the end of it because that won't do anything. Next, they will try traditional means of putting money back in the hands of consumers. This has typically been done with tax credits. Tax credits work great for people paying taxes. However, people with no income don't pay taxes...and there's going to be a lot of those.

Finally, we get to the only real solution: handing out free money. There's one big problem with free money. Since our capitalist system puts economic value on money by evaluating its productive power in the marketplace, free money is ultimately worth nothing. On a small scale, free money can be covered by other economic activity, but on a massive scale, the economic value would be gone.

This is right where our current government taps out. I can't imagine them overthrowing the very system that they control. It would take an incredibly strong and visionary leader who could reach the people, thereby bypassing the power elite to sell and idea on a massive scale. I can't imagine anyone like that coming to power now, but maybe in a crisis we could garner such a leader.

Assuming we could, what's the answer? I believe it is socialism. Socialism has gotten a bad name for two main reasons:

  1. People don't like to work to support other people who are just sitting around
  2. Socialism generally requires centralized control and this means central power, which becomes corrupt every time
In the past, #1 has been a problem, but in the future it is likely that people who don't want to work won't have to. Thus, nobody should be complaining about working to support the masses. If you don't like your work, turn it over to a computer or machine (or both); or the 100,000 people lined up to take it off you (some people actually like to work - even if they don't get paid).

The second problem is trickier, but not insurmountable. How can we decentralize socialism? The answer is to use open source algorithms that are democratically modified to alter decision parameters. If decisions are not "black box," the logic behind them can be examined and justified. I wrote a post about the distributed system problem that you can read here. The point being, the very technology that put us in this situation can be used to fix the traditional problems of socialism.

The Future

Nobody knows how the future will unfold. What we do know is that it will unfold. Sometimes it is relatively easy to extrapolate certain changes. They may not be inevitable, but it will take an intervening disruption for the course of major events to be altered. Assuming that doesn't happen, eventually we won't need near as many people to work as we have. We can't keep warehousing a growing population that is just not needed in the workforce. When the tipping point comes, it may likely come in the form of a seemingly normal business cycle. However, none of the old tools will fix it and as it deepens, it will drag more of us down with it. If we are ready with new options and strong leadership, maybe we can avoid much pain and suffering. I sure would like that. How about you?