I had this thought the other day. What do you do when your society is so efficient that people can't get a job? I don't even know if this is a thing that economists have already thought through. I assume so. Anyone know what the big answers are?
We start out with people working hard to secure survival basics:
food, water, clothes, shelter, security. At some point people decide to specialize, so instead of one guy making everything he needs, he makes only pins and sells them to people who only make food, or clothes, etc.
This is a first organization step toward efficiency. It also is a step back in personal power, since he only knows how to make pins.
The next efficiency step is specialization of labor, so now he works in a factory that makes pins, but all he does is attach the pin-head to the shaft. Again, he gets more done but loses a whole lot of personal power because now he can't even make a whole pin by himself.
A parallel line of efficiency is in machine technology. A machine can be built that does a lot of work, or lets a person get more work done. There's a cost for the machine, but if that cost is less than what you save by using it then everyone will buy the machines.
There are also efficiencies to be gained by things like placing the work stations correctly, and managing incoming supplies and outgoing products so you don't have downtime. And giving workers health care and time off to improve their effectiveness while they are on the job.
And here's where my thesis comes in. Let's say you have a factory employing 100 people and no efficiency improvers (machines, methods, whatever). But when you add efficiency improvers, you fire a few workers because you can only sell so many pins. So eventually you can get your paid workforce down to 90, 70, 50 employees.
But since we're just looking at
this factory, assuming that the same things are going on everywhere, if you fire 60 employees then those 60 employees can no longer afford to buy pins. You see a slight drop in every factory's sales, which means you fire an employee or two to make up for it. This isn't a slippery slope, because the market doesn't shrink that much, so it's not like you'll have to shut the place down.
The problem comes in when you get so efficient that you employ only 10 people. You now have 90% unemployment. In your society, to produce the goods and services used by 100% of the people, you only need 10% of the workforce (in this example).
So what do you do with the other 90% of your society? It's not that the economy just isn't good enough, it's that nobody wants to buy any more than what is already produced. You could create make-work jobs, but they would overproduce by 9x what your society needs.
The ultimate efficiency goal of industry is to hire one mechanic to run a factory full of machines rather than hire a factory full of humans. So what happens when we discover or invent methods of production that cut all the humans out of the loop? Who will that industrialist sell his pins to if 99% of people can't buy anything?
I think one answer is that your society needs to prioritize differently. Maybe it's okay to provide everyone with the basic human needs even if they don't work. But they need to actually work to get things like a comfortable place to live, really good clothes, eating out, personal electronics, a car, diversions like dancing classes. I think you wouldn't have everyone be a free rider - I'd certainly work to get the better lifestyle rather than live like a well-fed hobo.
This is a moot point right now because we have ways of getting rid of our excess wealth: people steal it and hoard it and there is a lot of waste.
I'm talking about efficiency extremes. Imagine how efficient our modern robotic auto assembly line would look to someone in 1910. Now think about how efficient the workplace of 2110 will be. Far fewer employees, less craftsman and more machine operator. And remember that we're assuming the machine is cheaper than hiring the employee, so it's not constantly breaking down. The factory buys one set of machines and they last a heck of a long time. The factory that makes the machines uses a machine assembly line. Once you get a factory running that can automatically build more robotic machines, you don't need the craftsmen anymore.
When I talk about a society, I'm talking about an arbitrarily large one. Say, the whole world. All humans. If the same things that are going on in one factory are also happening in others, we must assume that if something is happening in one country it'll happen in others.
We're seeing rapid economic changes in China and India, the biggest countries full of poor people. At some point their standard of living will be somewhat like Europe. Already we accept far more imports from them than we should, so perhaps they'll encounter these efficiency-related social problems before we do.
In fact, we'd be the ones they offload their surplus to. We'd be the ones saving them from dealing with overefficiency. By the time we reached that problem there wouldn't be any big markets left for us to offload our surplus to.
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Topic: What happens when your economy is too efficient? (Read 4008 times)