What happens to economics in a futuristic world?

[Foucaulf]

This is a bizarre thread. I found Adam Griffin's post to be most interesting, but that's just because he's not the only one regurgitating info at an intro to microeconomics level. (FYI, economics as a "science of scarcity" is literally a slogan invented by British economist Lionel Robbins to boost his department's reputation in the 1930s.)

Anyways, always remember that two questions are asked here: "what would a world with cheap automated labour everywhere look like?" and "is that world coming soon?"

To the first, that world should be one of immense prosperity in the aggregate. A machine labourer is going to take less energy and time to cultivate than most human workers. Like how computers have created new professions and made certain tasks much faster, automated labour assisting certain humans would make them more productivity. So all the dystopian fears is really on the distribution of income, not its level.

To the second, the problem with substituting labour with robots is as much a problem of speed as it is of just cost. If adoption of robots is slow, even if you believe in a Marxist theory of the world, you could still argue that companies will seek rents on robots and the cost of robots will increase as a result (or wages along the manufacturing process increases).

An occupation today is not just marked by some marginal cost of labour, but also by regulations, flexibility/ability to contract work, management integration and so forth. I don't expect substitution by robots to be uniform across fields at all, due to all those factors I pointed out above creating variation in speed of adoption. I can even imagine a field like office secretaries being surprisingly resilient to automation due to some innate preference for human interaction there.

[Foucaulf]

Well, duh. I thought that point was obvious. You seem to think that should somehow reassure us.

Yes, it is sort of obvious, but it's like how people need reminding that we're headed more toward Huxley's dystopia than George Orwell's.

Besides, since economics doesn't really strike at what people worry about with income inequality, I'm really implying economics will matter less and politics will matter more. Doesn't that at least reassure you?

[Foucaulf]

Going to push this good article by Ryan Avent at The Economist on robots and automation. I had wanted to make the following point earlier in the thread, but he puts it in better terms:

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If you're versed in some economics, here's Paul Krugman reinterpreting the above passage with figures and the comparative statics of a rise in capital productivity.

If you're really versed in it, I can explain it in four sentences: this argument is a twist on the Stolper-Samuelson theorem. A rise in capital-intensiveness still increases the unit price of capital, but does not necessarily shift production toward the capital-intensive good (since prices are held constant). In fact, the share of the economy using the capital-intensive good decreases, and therefore more labor shifts to producing the labor-intensive good but at a lower wage.