Reader JohnA on the End Result of Capitalism

Reader JohnA sent me an e-mail with a provocative subject header: “The end result of capitalism is……”

Here’s his post:


In an article called “America’s response to outsourcing: Automation” Paul Horn, the head of IBM Research states:

If you go out 10 to 20 years, the more you can take labor out of the equation, the better it is for the more innovative and high-labor-cost parts of the world. It makes succeeding in services more about who has the best technology to get the work done fastest–not who has the lowest labor costs. In this way, a highly innovative society can trump a lower-labor-cost society.

The more automation, the more competitive businesses become.. Being competitive is the goal of every red blooded capitalist, so we can expect automation to continue. However, take things further, so that in 80 or 100 years almost everything is automated. On the way there, unemployment starts climbing because more and more jobs are automated. 10, 20, 30% and so on until we reach a flash point.

At that flash point something would have to be done or the country would descend into chaos.. So what would we do with all those people for whom there is no job?
What happens to all the economic models when no one can afford to buy anything?


Cactus here…. part of me wants to say that it will be OK. New jobs appear, and people will simply provide services to other people that nobody could imagine now. (Describe programming in C++ to someone 100 years ago.) On the other hand… if every aspect of production is truly automated, then… can people really survive simply providing services to other people when none of those people actually make anything, when all the productive capital is held in the hands of a relatively small group which doesn’t need anything from the majority?