(2020-06-18) Artificial Intelligence Fully Automated Luxury Capitalism

Artificial Intelligence, & Fully Automated Luxury Capitalism. People who airily dismiss fears about medium-term technological unemployment are committing the Reverse Luddite Fallacy.

If technological unemployment is coming, we must transition to a very different type of economy. I call the transition the “economic singularity”. (Economic Transition)

How should policy makers respond to the challenges presented by the economic singularity? Let’s look at a few options.

Should we try to protect jobs?

Should we tax robots?

Universal Basic Income?

As the noted economist John Kay said, “either the basic income is impossibly low, or the expenditure on it is impossibly high.”

Abundance

The solution is not to persecute the wealthy, but to reduce the cost of a good life. This means developing the economy of abundance, in which the prices of all the goods and services that you need for a very good standard of living are very low. Then the transfers from the wealthy need not be onerous – and avoided.

Fully Automated Luxury Capitalism

Some have argued for a version of communism, called fully automated luxury communism. While this approach deserves credit for facing up to the exponential future, it overlooks two important facts. First, it is no coincidence that wherever communism has been tried, it has degenerated into some of the worst regimes the world has ever seen. Communism grants absolute power to a ruling elite, and we all know what absolute power does to people.

The other fact is the astonishing power of markets. Markets incentivise people and firms to provide goods and services that are genuinely valued, and to do it efficiently.

Even in the abundance economy, it will be a very long time before we have the technology to build the matter replicators found on Star Trek’s USS Enterprise, so goods and services will impose a residual cost. And as long as we are human, we will also face shortages of things like attention, artisanal goods, and works of art. Markets are the best system we know of for resource allocation, so to start with at least, the optimal system for the economy of abundance is likely to be a form of capitalism: let’s call it “fully automated luxury capitalism”.

There's still money to be made

Can we reduce the cost of non-digital goods and services too, like housing (real estate) and clothes? (ahem Education, Healthcare, And Leisure!)

Clothify and Constructify

We can, if we do three things

First, we must take the expensive humans out of the production process for all goods and services

Second, we must make energy very cheap.

Third, we must use AI to make all production processes as efficient as possible, requiring minimal material inputs

The Churn

For a decade or three before technological unemployment arrives, AI-driven automation will have an increasingly disruptive effect on the job market: the Churn

During the period of Churn, we will need to re-train ourselves more and more frequently, and do it faster each time. Education and training are notoriously hard industries to reform. Here again, AI will provide solutions as well as raising the challenge in the first place.

Once we arrive at the economy of abundance, some people will continue to re-train for economic activity, but for most of us, educational will become vacational, not vocational. Which is what many of us wanted it to be all along.

To survive the economic singularity, we need to identify the optimal outcome in a largely post-jobs economy. If it is indeed the economy of abundance, and fully automated luxury capitalism, then we need to build a consensus about that, and a plan for how to get there without panic. Panic at the thought of racing toward technological unemployment without a plan could be almost as bad as the fact itself.

This process will be disturbing and frightening for many of us. Governments will need to support their people through the Churn with enhanced welfare programmes and other methods of economic support

But not everyone will be able to or inclined to participate in this reduced commercial world. The three central insights underpinning the idea of fully automated luxury capitalism are (1) that most humans will not have jobs, (2) that everybody must be wealthy – or at least comfortable rather than poor, and (3) that the taxes levied on wealthy people people and organisations must be affordable. The only way to achieve this is to drive prices down – to evolve the economy of abundance.

In fully automated luxury capitalism, people would continue to trade and innovate. Fortunes (and also more modest wealth) would continue to be made by creating art, artisanal goods, and other forms of intellectual property.