A large car maker boss was showing a union leader the latest robots for assembling cars and asks the union man “How will you collect subs from this lot”? Without hesitation came the reply: “How will you sell your cars to that lot”?
An apocryphal story but it highlights an increasing problem, namely the technological advance in the use of robots in manufacturing and other industries. It reveals the classic contradiction of market capitalism between production and consumption.
Technological advances without safeguards mean robots will replace human workers resulting in high levels of unemployment and leading to a dramatic fall in consumption and total demand for goods and services. Underconsumption in a capitalist economy hasn’t been much in favour among economists since Bernard Mandeville wrote his controversial The Fall of the Bees(1714).
However in the 1920s it made sense to Jenny Lee, the Fife-born MP, who saw mass unemployment in the pit villages.
Put simply as the union boss implies, without wages to spend, total demand for goods and services will inevitably fall unless there is an economic strategy in place to counteract it.
The question is: “What is to be done?”.
No government - no matter its political complexion – can be complacent about a “robotic revolution” that could have a devastating impact on economic society. It would seem that when robotic redundancies begin to bite, the present welfare and benefits status quo will prove to be woefully inadequate to deal with the economic and political issue of underconsumption.
What should be discussed is what Stewart Lansley in his recent book The Sharing Economy, calls a Citizens’ Income, but as a topical subject better known as the Basic Income.
Briefly the Basic Income – which has a prominent place in the history of economic thought – pays a weekly income to every man, woman and child as of right and isn’t taxed or means-tested. It is paid no matter what kind of work is done or earnings made.
The system is intended to replace all welfare benefits, and of course there are disadvantages to overcome.
Clearly there would be budget savings as welfare administration costs were slashed, but there is still a problem of funding the scheme from taxation. One proposal is for a “flat tax” on all income and expenditure.
Ethical economics should be concerned with the strategic policy of the Basic Income to meet the urgent issue of “robot redundancies” and head off mass unemployment.
Paradoxically, both the right and left wings of Scottish politics should find such a measure appealing.
Ellis Thorpe BA. MSc is a retired lecturer in Social Science, University of Aberdeen.