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The Second Machine Age Is Upon Us: Time To Reconsider The Luddites?

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http://www.theguardian.com/business/economics-blog/2014/feb/24/second-machine-age-luddites-computers

At the start of the Industrial Revolution, textile workers in the Midlands and the north of England, mainly weavers, staged a spontaneous revolt, smashing machinery and burning factories. Their complaint was that the newfangled machines were robbing them of their wages and jobs.

The rebels took their name, and inspiration, from the apocryphal Ned Ludd, supposedly an apprentice weaver who smashed two knitting frames in 1779 in a "fit of passion". Robert Calvert wrote a ballad about him in 1985: "They said Ned Ludd was an idiot boy/ That all he could do was wreck and destroy," the song begins. And then: "He turned to his workmates and said: 'Death to Machines'/They tread on our future and stamp on our dreams."

The Luddites' rampage was at its height in 1811-12. An alarmed government sent in more troops to garrison the disturbed areas than were then available to Wellington in the Peninsular War against Napoleon. More than a hundred Luddites were hanged or transported to Australia. These measures restored peace. The machines won: the Luddites are a footnote in the history of the Industrial Revolution.

Historians tell us that the Luddites were victims of a temporary conjuncture of rising prices and falling wages that threatened them with starvation in a society with minimal welfare provision. The Luddites, however, blamed their misfortune on the machines themselves.

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Just consider: machinery "may render the population redundant"! A bleaker prospect is not to be found in economics. Ricardo's orthodox followers took no notice of it, assuming it to be a rare lapse by the Master. But was it?

The pessimistic argument is as follows: If machines costing $5 an hour can produce the same amount as workers costing $10 an hour, employers have an incentive to substitute machines for labour up to the point that the costs are equal – that is, when the wages of the workers have fallen to $5 an hour. As machines become ever more productive, so wages tend to fall even more, toward zero, and the population becomes redundant.

Although you then have the problem of who will buy the goods if no one is working, and then you come back to the citizen income.

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If theres no market for goods than there are no goods. Prices will fall until people can afford stuff.

Nothing to be fearful of. Its something to be embraced. We'd all have the same or better living standards but only work a three day week if the government stopped trying to 'save' jobs.

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Although you then have the problem of who will buy the goods if no one is working, and then you come back to the citizen income.

You would not produce anything that no-one would buy, that wouldn't be a sustainable business.

You would have to price the goods at a price at which people are willing and able to pay.

With automation the cost of manufacture would reduce meaning the end price can be cheaper with the business remaining sustainable.

People would have to earn less for the same product versus pre-automation.

Less work, same stuff.

So why does it matter if people earn less when the goods cost less?

By the by, that end point is theoretical of course, we will not get to the point where 'no one is working'.

Wonderpup in 3… 2…. 1….

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If theres no market for goods than there are no goods. Prices will fall until people can afford stuff.

Nothing to be fearful of. Its something to be embraced. We'd all have the same or better living standards but only work a three day week if the government stopped trying to 'save' jobs.

Or, people will starve until people are sufficiently scarce.

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If theres no market for goods than there are no goods. Prices will fall until people can afford stuff.

Nothing to be fearful of. Its something to be embraced. We'd all have the same or better living standards but only work a three day week if the government stopped trying to 'save' jobs.

Not if wages are falling faster than prices. At present the difference is being made up with debt.

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You would not produce anything that no-one would buy, that wouldn't be a sustainable business.

You would have to price the goods at a price at which people are willing and able to pay.

With automation the cost of manufacture would reduce meaning the end price can be cheaper with the business remaining sustainable.

People would have to earn less for the same product versus pre-automation.

Less work, same stuff.

So why does it matter if people earn less when the goods cost less?

By the by, that end point is theoretical of course, we will not get to the point where 'no one is working'.

Wonderpup in 3… 2…. 1….

Problem is that there are some non-manufactured constants - land, food, water, energy, which have a constant, or rising cost.

So we end up in a situation where people can accumulate a stack of iPods and plasma TVs and [insert latest consumer gadget here] whilst being unable to pay the rent.

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So we end up in a situation where people can accumulate a stack of iPods and plasma TVs and [insert latest consumer gadget here] whilst being unable to pay the rent.

Only due to meddling, the free market would have sorted that out, spectacularly (mass bankruptcy) in 2008 otherwise.

I think with rent there perhaps has to be meddling, ie land value tax, but it's not like our lords and masters are a) competent or B) not coining it in from the present arrangements, so little will be done.

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Society seems unable to cope with the idea of all of us needing to do less work to maintain the same standard of living. You'll get an ever-smaller number of people working the same (or longer) with more unemployed unless someone manages to invent new jobs (the general assumption is that they'll turn up, and historically that's often been the case, e.g. when we no longer needed almost everyone in the fields in order to produce enough food) but assuming that's always the case seems dangerous.

So we have a smaller working population and a bigger bunch unemployed, and the smallest elite managing to skim off an even bigger percentage for themselves. Overall average living quality drops but not for those at the top, and even without them self-interest does the rest. How many people would be happy taking a cut in hours and pay so that more people can be employed? That's how it would work out because the efficiency gains will inevitably translate into fewer jobs rather than fewer hours (and I don't for a second believe that the people who keep their jobs will be the ones who'll get any of the benefit from greater efficiency).

Edited by Riedquat

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Not if wages are falling faster than prices. At present the difference is being made up with debt.

Debt simply saturates the money supply. It doesnt add or reduce real tangible wealth. Unless actual building or demolition work occurs, the amount of housing stock would still be the same after a deflationary or inflationary episode, for example.

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Debt simply saturates the money supply. It doesnt add or reduce real tangible wealth. Unless actual building or demolition work occurs, the amount of housing stock would still be the same after a deflationary or inflationary episode, for example.

Although the wealth that that housing stock represents is very much a function of other things too (physical supply and demand as well as that influenced by questionable economic factors). There's no such thing as real, tangible wealth.

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Society seems unable to cope with the idea of all of us needing to do less work to maintain the same standard of living. You'll get an ever-smaller number of people working the same (or longer) with more unemployed unless someone manages to invent new jobs (the general assumption is that they'll turn up, and historically that's often been the case, e.g. when we no longer needed almost everyone in the fields in order to produce enough food) but assuming that's always the case seems dangerous.

So we have a smaller working population and a bigger bunch unemployed, and the smallest elite managing to skim off an even bigger percentage for themselves. Overall average living quality drops but not for those at the top, and even without them self-interest does the rest. How many people would be happy taking a cut in hours and pay so that more people can be employed? That's how it would work out because the efficiency gains will inevitably translate into fewer jobs rather than fewer hours (and I don't for a second believe that the people who keep their jobs will be the ones who'll get any of the benefit from greater efficiency).

Shorten the working week, keep people in education longer (without having to rack up vast debts to do so), lower the retirement age, etc..

It's not that hard to keep full (ish) employment going even when machines are doing more and more. The problem is that all of these run counter to the neoliberal ideals in general circulation.

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The Luddites were the '1%' of their era, who wanted to maintain their high income, and ****** everyone else. The productivity increase from the machines they were destroying caused massive price drops that allowed the 99% to have a much higher standard of living than before.

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Shorten the working week, keep people in education longer (without having to rack up vast debts to do so), lower the retirement age, etc..

It's not that hard to keep full (ish) employment going even when machines are doing more and more. The problem is that all of these run counter to the neoliberal ideals in general circulation.

If you keep people in education for longer what are you going to teach them?

Shortening the working week is the same thing as asking people to take a cut in their hours, which will inevitably be accompanied by a pay cut. You're asking people to share the benefits of efficiency improvements instead of keeping them for themselves. Nice ideal but won't work.

I also think that there's a problem with automating the wrong things sometime. Some tasks no-one wants to do, others people are quite happy to do, just as long as they have enough spare time. The sort of things that people might do for hobbies anyway. Automating those to any great extent doesn't really make much sense unless there's a labour shortage (economically it does, which is another case of economics veering away from reality).

Edited by Riedquat

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So the luddites are the existing 1%? They regard the rest of the population as "useless eaters" who've served their purpose of building a highly automated, well developed industrial base and all the associated infrastructure and are now expendable.

I think the elite have always viewed the majority as livestock that can be herded into urban conurbations to serve the purpose of "creating wealth". That was surely the intent behind the various enclosure acts over the centuries.

Now that China has been designated as manufacturing sector of the planet, we'll all either be exterminated or culled back enough to maintain "sustainable" communities, almost like small zoos that maintain diversity and a pool from which to develop further strains of human cattle.

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Shorten the working week, keep people in education longer (without having to rack up vast debts to do so), lower the retirement age, etc..

Agree on shortening the working week, but increasing the cohort of 100% non-working people by having more students and retirees seems at odds with this, I think the economy would be much more vibrant if almost everyone did at least some work some of the time.

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http://www.theguardian.com/business/economics-blog/2014/feb/24/second-machine-age-luddites-computers

Although you then have the problem of who will buy the goods if no one is working, and then you come back to the citizen income.

The owners of capital and rentiers will buy the goods.A citizens income is the only long term answer to stop heads being cut off like happens every hour in Syria.

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The owners of capital and rentiers will buy the goods.A citizens income is the only long term answer to stop heads being cut off like happens every hour in Syria.

How does that work? Who are the rentiers renting to that gives them enough income? Who are the owners of capital selling to?

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Agree on shortening the working week, but increasing the cohort of 100% non-working people by having more students and retirees seems at odds with this, I think the economy would be much more vibrant if almost everyone did at least some work some of the time.

How do you make it happen though? Which would people go for, same pay and half the hours or double pay and the same hours (even if it means a load of other people are out of a job)? Plus splitting the same work amongst more people means more overheads, and some jobs can't be divided up like that easily anyway. Putting up with those issues would benefit society better than half working and half jobless but a system designed to produce the efficiencies that would allow that to be possible won't allow it to happen.

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If theres no market for goods than there are no goods. Prices will fall until people can afford stuff.

In reality though there will not be this gentle erosion of prices/wages- there will simply be more and more people whose wages go to zero in a precipitate fashion almost overnight as their jobs are eliminated.

It's also kind of ironic to be told on HPC that wage levels don't matter given how much angst there is about the price of housing and rents relative to income on this forum.

Yes there will be deflation in the prices of goods that are produced by labor when machines take over production- because demand will fall as unemployment rises. But how does that increasing number of unemployed people afford to pay their rent, food and energy costs?

The problem is that that the benefits of automation will go mostly to those with capital who own the machines- not due to some nefarious right wing conspiracy but because that how the free market works.

It's baffling to me when the Governor of the Bank of England states that increasing productivity (reducing the need for labor) will create higher wages and more jobs- in what universe does making a resource less scarce and less in demand lead to it's becoming more valuable?

If the benefits of increased productivity and efficiency flowed automatically to the workforce as well as the owners of capital why were the trade unions ever needed?

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The Luddites were the '1%' of their era, who wanted to maintain their high income, and ****** everyone else. The productivity increase from the machines they were destroying caused massive price drops that allowed the 99% to have a much higher standard of living than before.

They were hardly the 1%, they had to work for a living.

It could perhaps be said that they were a rising middle class cut back down to the position of casual labour and forced to re-train by economic necessity.

If you have ever lost a job, you'd be aware that you also lose your wages, the financial reward for doing your job.

Working in a warehouse might pay the rent now, but what when a machine can do your job, how can you afford to continue consuming the resources you were accustomed to.

Losing your job to a tractor doesn't ensure you a supply of food. Although it might increase the supply of others food.

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Or, people will starve until people are sufficiently scarce.

This is the free market solution to an oversupply problem- the excess is eliminated until supply and demand return to a viable equilibrium. The black death led to a significant improvement in the living standards of those peasants who survived because their relative scarcity gave them much greater bargaining power.

The real complexity arises from the fact that human beings are not only a source of labor, they are also what gives value to production itself. This is why it's relatively easy to imagine a society in which all production has been automated- but very hard to imagine a society in which all consumption has been automated- what would be the point?

We could-in theory- build a totally automated factory in which raw material went in one end, products were manufactured and at the very end of the production line was a machine that 'consumed' the products, reducing them to their raw materials and then send them back to the start to be once again made into products. But why would we bother to do this? It would be utterly futile.

So the conclusion seems to be that the one thing that humans can do that machines can never do is be the end consumer of products and services. Not because we could not build a machine to eat food or to wear clothes- we could- but there would be no point in doing so- it would be absurd.

So in the long run it might be that it's as consumers rather than as producers that human beings will be most valued- and those with the most creative desires and esoteric needs will be the stuff of popular entertainment as they dazzle the satiated masses with their perverse and ingenious appetites.

Edited by wonderpup

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those with the most creative desires and esoteric needs will be the stuff of popular entertainment as they dazzle the satiated masses with their perverse and ingenious appetites.

Time for me to shine

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