Automation seems to be a never-ending source of fear-mongering. Judging from the commentary, robots will “replace us” and cause large-scale unemployment. With the entry of artificial intelligence (AI), and robots that make robots, the value of human beings as productive forces in the economy is simply zero. People then become value-less consumers, only “mouths to feed” while production is carried out by machines.
And, the story goes, whoever first comes up with a robot that creates robots, and robots that fix themselves, will outcompete everyone else and soon own all means of production. The destiny of our innovative species is to become fundamentally dependent on that one capital owner, who by controlling all production controls all of us.
Engineering, not Economics
The problem is that this dystopian outlook is fundamentally flawed. And, as usual, it is reasoning based on economic illiteracy. Rather than an economic organism, the market economy is seen through the eyes of an engineer. In other words, it is seemingly economic reasoning based on a fundamental misunderstanding of economy – the view that production is about technology and engineering, about maximizing “output,” and not about the economizing of means to attain valued ends.
Economics in One Lesso…
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If we see the economy as a circular flow, then its effectiveness comes down to the task of removing imperfections or “transaction costs” and thereby “get the wheels spinning ever faster.” An efficient economy is a matter of engineering, and therefore the role of government planning becomes obvious: meticulously planned institutions and regulations can solve many (if not all) of…