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tomandlu

Money, Labour And Ci

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My son has recently started studying for GCSE Economics and, as a consequence, we've been having rather enjoyable discussions regarding the topic-title.

My contention is that all costs are, in essence, labour costs. These costs can be obvious and direct - the factory workers who build a car - or they can be indirect - the cost of steel to the same factory is based on the labour to extract, refine and transport it. So, the price we pay for something is the price of labour and nothing else. We do not pay for raw materials - we pay for the labour required to obtain those raw materials.

So... let us imagine a world where robots do 100% of the work. There would be no labour, so no way of earning a wage. Consequently, we can either give people some form of money to spend on whatever they want, or we could just do away with money altogether and accept that everything is free. In other words, money only has meaning when there is available work, and the less available work exists, the less utility money has (for this argument, we can define money as tokens of exchange received in return for productive work).

To some extent, we can see this mechanic in action. Structural unemployment has led to increasing numbers of households reliant on benefits, and as a result, the value of money has fallen. If the purchasing power of someone who works and the purchasing power of someone who doesn't work start to converge, then money has been reduced to a secondary role.

One thing I'm curious about regarding this argument (aside from whether it's correct or not) is what happens at various stages as we approach the 100% robots scenario? The number of available jobs starts to drop, but still some exist. Maybe robots are confined to factories and farms, so someone who had a job might be happy to pay someone else to mow their lawn. As robot saturation reaches 100%, even the lawn-mowing jobs are done by robots, at which point the only way of earning money is by creating something unique - a work of art, a unique bit of furniture, etc. - and the only thing you can really spend this money on is other unique items. Money, outside these specialist purchases, has become meaningless.

Have I missed or misunderstood anything here?

(as a side-note, the law of unintended consequences kicks in with 100% robots - population growth would explode imho)

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To pass economics exams, the last thing you want to do is do actually understand how it works.

Read the books, repeat it back. No need to engage brain.

After they have passed the exam, explain how it really works.

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My son has recently started studying for GCSE Economics and, as a consequence, we've been having rather enjoyable discussions regarding the topic-title.

My contention is that all costs are, in essence, labour costs. These costs can be obvious and direct - the factory workers who build a car - or they can be indirect - the cost of steel to the same factory is based on the labour to extract, refine and transport it. So, the price we pay for something is the price of labour and nothing else. We do not pay for raw materials - we pay for the labour required to obtain those raw materials.

So... let us imagine a world where robots do 100% of the work. There would be no labour, so no way of earning a wage. Consequently, we can either give people some form of money to spend on whatever they want, or we could just do away with money altogether and accept that everything is free. In other words, money only has meaning when there is available work, and the less available work exists, the less utility money has (for this argument, we can define money as tokens of exchange received in return for productive work).

To some extent, we can see this mechanic in action. Structural unemployment has led to increasing numbers of households reliant on benefits, and as a result, the value of money has fallen. If the purchasing power of someone who works and the purchasing power of someone who doesn't work start to converge, then money has been reduced to a secondary role.

One thing I'm curious about regarding this argument (aside from whether it's correct or not) is what happens at various stages as we approach the 100% robots scenario? The number of available jobs starts to drop, but still some exist. Maybe robots are confined to factories and farms, so someone who had a job might be happy to pay someone else to mow their lawn. As robot saturation reaches 100%, even the lawn-mowing jobs are done by robots, at which point the only way of earning money is by creating something unique - a work of art, a unique bit of furniture, etc. - and the only thing you can really spend this money on is other unique items. Money, outside these specialist purchases, has become meaningless.

Have I missed or misunderstood anything here?

(as a side-note, the law of unintended consequences kicks in with 100% robots - population growth would explode imho)

It's not just labour, you also have to pay for various kinds of permission, in the form of taxes and rents.

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Is the acquisition, accumulation and exploitation of wealth by the rentier classes to be regarded as labour?

Legalised extortion, taxes, the 'toll-booth' licenced economy, rent-a-currency money system, imposed costs of access to and/or use of land, etc...

Many and devious are the ways in which humans force costs upon each other. :(

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How do you induce the Saudis to give you their oil to power your robots?

I've made the assumption that we have alternative energy sources. However, for the sake of argument, you don't, but it's worth noting that they won't sell it to you either - your tokens are meaningless.

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It's not just labour, you also have to pay for various kinds of permission, in the form of taxes and rents.

Yes, I'm puzzling over this. If there is no labour, with what do you pay them? And if you can't pay them, how can they extract rent?

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Yes, I'm puzzling over this. If there is no labour, with what do you pay them? And if you can't pay them, how can they extract rent?

With your subservience, by obeying their orders.

How about land? Who decides which people get to live in home counties country estates and which people get to live in slums around northern mill towns? Surely charging for land access is the source of many of the other rents, fees and privileges?

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Yes, I'm puzzling over this. If there is no labour, with what do you pay them? And if you can't pay them, how can they extract rent?

The landlords just let people starve. The starving people revolt.

This isn't a theoretical argument, people are already unable to pay the rents, and so this is happening now.

We have a democratic government because the threat of revolution forced democracy on the landlords.

The government mitigates the problems caused by the landlords just enough to keep people from shooting them.

Edited by (Blizzard)

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With your subservience, by obeying their orders.

Orders to do what?

How about land? Who decides which people get to live in home counties country estates and which people get to live in slums around northern mill towns? Surely charging for land access is the source of many of the other rents, fees and privileges?

But what do they charge? What value can they extract from someone when everyone's labour is worthless? Rentierism surely only works when there's value to extract?

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Robot designer / maker / looker after would seem to be the job of tomorrow in that world

Or variants thereof. However, your wages for such work can only be used to pay for the fruits of others doing similar work. It wouldn't resemble money so much as glorified gift tokens.

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Robots would never be capable of maintaining the the steel works that made the materials they are made from or the production lines the robots work on, there will be a need for human labour for a very long time to come ,but the demand for that labour will continue to fall for a long time to

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My son has recently started studying for GCSE Economics and, as a consequence, we've been having rather enjoyable discussions regarding the topic-title.

My contention is that all costs are, in essence, labour costs. These costs can be obvious and direct - the factory workers who build a car - or they can be indirect - the cost of steel to the same factory is based on the labour to extract, refine and transport it. So, the price we pay for something is the price of labour and nothing else. We do not pay for raw materials - we pay for the labour required to obtain those raw materials.

So... let us imagine a world where robots do 100% of the work. There would be no labour, so no way of earning a wage. Consequently, we can either give people some form of money to spend on whatever they want, or we could just do away with money altogether and accept that everything is free. In other words, money only has meaning when there is available work, and the less available work exists, the less utility money has (for this argument, we can define money as tokens of exchange received in return for productive work).

To some extent, we can see this mechanic in action. Structural unemployment has led to increasing numbers of households reliant on benefits, and as a result, the value of money has fallen. If the purchasing power of someone who works and the purchasing power of someone who doesn't work start to converge, then money has been reduced to a secondary role.

One thing I'm curious about regarding this argument (aside from whether it's correct or not) is what happens at various stages as we approach the 100% robots scenario? The number of available jobs starts to drop, but still some exist. Maybe robots are confined to factories and farms, so someone who had a job might be happy to pay someone else to mow their lawn. As robot saturation reaches 100%, even the lawn-mowing jobs are done by robots, at which point the only way of earning money is by creating something unique - a work of art, a unique bit of furniture, etc. - and the only thing you can really spend this money on is other unique items. Money, outside these specialist purchases, has become meaningless.

Have I missed or misunderstood anything here?

(as a side-note, the law of unintended consequences kicks in with 100% robots - population growth would explode imho)

There`s another novel in there for you

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Have I missed or misunderstood anything here?

All resources are scarce: labour, land, natural resources, manufactured capital (e.g. buildings, machinery) etc. Almost all useful outputs require some combination of the above. I don't think it makes sense to say that labour is the only thing that is truly scarce, because it isn't.

We do pay more than labour for raw materials. For example, once a source of ore has been mined out, it cannot be mined again. If somebody wanted to take all of the ore under your land and would provide the labour themselves, you would still want to be paid, wouldn't you?

My feeling is that measures of economic output like GDP are worse than useless because they are completely money-obsessed, and the point of economic activity is to use real inputs to obtain real outputs that improve human life, not to shuffle a load of money around. Econometricians should go back to a more early 20th century style of trying to objectively measure real inputs like tonnes of steel or wheat, man-hours of labour, kWh of electricity etc and real outputs like numbers of square metres of housing and days spent on holiday or hours per week with family and let people decide for themselves whether the economic changes that are happening represent "growth" or not.

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Robots would never be capable of maintaining the the steel works that made the materials they are made from or the production lines the robots work on, there will be a need for human labour for a very long time to come ,but the demand for that labour will continue to fall for a long time to

'Never' is a bit dangerous in this context.

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It cannot be that only labour has value. Other tangible and intangible things have inherent value too. A tree may have been grown for wood. It is not just the labour involved in planting and cutting it that has value. The tree may be a rare type and have produced very good timber, which could be used for making fine furniture. On the other hand other trees may be poor and only be of use for fire wood.

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'Never' is a bit dangerous in this context.

I know where you are coming from but there will be tasks that need to much dexterity /agility and performed so infrequently that it would not be cost effective to use a robot even if it was capable of performing that task

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...

So... let us imagine a world where robots do 100% of the work.

...

Have you considered that this might already have happened?

A robot capable of doing all the labour of a human, would look an awful lot like a human.

Edited by (Blizzard)

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Or variants thereof. However, your wages for such work can only be used to pay for the fruits of others doing similar work. It wouldn't resemble money so much as glorified gift tokens.

Isn't that the same as money as of now ,a token that we recieved for our labour/services which we then exchanged for other goods or services

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Isn't that the same as money as of now ,a token that we recieved for our labour/services which we then exchanged for other goods or services

The difference would be that there would be remarkably little you could exchange it for. The majority of life's essentials and non-essentials would be free. Only those things that still required human labour could be purchased.

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That will be the end game

Bear in mind that humans are badly specified for a lot of the jobs out there.

Humans get bored, get RSI, complain if they get damaged or poisoned, need breaks, and if there is a lull in demand you still have to keep them powered up.

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It cannot be that only labour has value. Other tangible and intangible things have inherent value too. A tree may have been grown for wood. It is not just the labour involved in planting and cutting it that has value. The tree may be a rare type and have produced very good timber, which could be used for making fine furniture. On the other hand other trees may be poor and only be of use for fire wood.

Yes, this is one of the bits I'm puzzling over. The example I used in my head was ambergris. Very valuable, but, afaik, the only way you can get it is by the dumb luck of finding it washed up on a beach while walking the dog. I rationalised that as the value representing the labour that would be involved if you set out to find it deliberately. I wonder if a similar approach can be made in the case of your rare and desirable wood. Someone could grow and farm such trees, but it would be an intergenerational exercise, so the value of the wood reflects that. So... for certain materials and intangibles the relationship is more abstract, but the value is still inextricably linked to the cost of labour, even though the labour was never expended.

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Iain Banks tried to envisage a future of this kind in his Culture novels. In these, government is essentially delegated to a number of benevolent artificial super-intelligent "minds" and all production and services are automated. The main activity of the people is to provide entertainment for one another; they have no need for money.

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