Fully Automated Luxury Communism

by Aaron Bastani

Capitalist realism is best summed up with a single sentence: ‘It is easier to imagine the end of the world than the end of capitalism.’*

Because capitalist realism has no offer of a better future – especially so over the course of the last decade – its default logic is one of anti-utopianism. Flat wages, falling home ownership and a warming planet might be bad, granted, but at least we have iPhones. And, yes, you may not be able to access the things your parents took for granted, like affordable homes or free higher education, but you should still be grateful – at least it’s not the sixteenth century.

This condition presents arguably the most pressing crisis of all: an absence of collective imagination. It is as if all humanity has been afflicted by a psychological complex, capitalist realism making us believe the present world is stronger than our capacity to remake it – as if it were not our ancestors who created what stands before us now. As if the very essence of humanity, if there is such a thing, is not to constantly build new worlds.

There are five such crises, which at times overlap. They are climate change and the consequences of global warming; resource scarcity – particularly for energy, minerals and fresh water; societal ageing, as life expectancy increases and birth rates concurrently fall; a growing surplus of global poor who form an ever-larger ‘unnecessariat’; and, perhaps most critically, a new machine age which will herald ever-greater technological unemployment as progressively more physical and cognitive labour is performed by machines, rather than humans.

history returned on 15 September 2008 when the global financial system crashed. Within weeks the world’s leading economic powers, previous zealots for minimal state interference, were left with no alternative but to bail out their domestic banks, with some even being nationalised. That exposed their previous free market fervour for the lie it was: this was socialism for the rich and market capitalism for the rest.

Powering this downward spiral is falling wages: since 2008, real pay in Britain, which takes inflation into account, has dropped by more than 10 per cent. It should come as little surprise, then, that nearly 17 million Brits of working age have less than £100 in personal savings. In the United States it’s a similar story, with 63 per cent of Americans saying they have $500 or less put aside.

It’s even worse in the US, though, where a combination of high prices, low wages and little credit means the average American is less likely to own their own home than at any time since 1965 – four years before the Moon landing.

So our world is one increasingly defined by low growth, low productivity and low wages.

‘Communism’ is used here for the benefit of precision; the intention being to denote a society in which work is eliminated, scarcity replaced by abundance and where labour and leisure blend into one another.

As Larry Summers and J. Bradford DeLong would write in August 2001, just a month after the file-sharing service Napster was taken down, ‘the most basic condition for economic efficiency … [is] that price equal marginal cost.’ They went on: ‘with information goods, the social and marginal cost of distribution is close to zero.’

Remarkably, two of the most esteemed economists in the world were conceding a quite remarkable truth: the price mechanism had broken down for what should be the most valuable part of the commodity – its instructions. Economics, for so long obsessed with the issue of dealing with scarcity, began to see glimpses of something beyond it – the only problem being this broke down the system of incentives by which people are meant to create things under capitalism, namely profit.

Summers and DeLong even conceded such a point when they wrote that temporary monopoly power and profits are the reward needed to spur private enterprise … the right way to think about this complex set of issues is not clear, but it is clear that the competitive paradigm cannot be fully appropriate … we do not yet know what the right replacement paradigm will be.

In 2011 the Economist, in circulation since 1843, posed its readers a question: ‘What happens when … machines are smart enough to become workers? In other words, when capital becomes labour?’

If capital can become labour – if tools produced by humans can subsequently perform any task they themselves complete – then, within a market system, the price a worker can demand for their time collapses.

This is a problem whose relationship to automation is best expressed in a meeting recounted in the Economist article, alleged to have taken place in the 1950s between Henry Ford II and Walter Reuther, leader of the United Auto Workers union. Ford had invited Reuther to examine one of the company’s newly built factories, and as the two began to walk across the shop floor he is said to have pointed at some newly acquired industrial robots, inquiring how such machines would pay their dues to the union. Reuther’s response is reputed to have been immediate: ‘Henry, how are you going to get them to buy your cars?’

While wanting to all but eliminate workers from production in order to save money, Ford also wanted to maintain demand for the company’s products, now made more efficiently than ever. Simply put, Ford wanted cheap employees but affluent consumers – something which simply wasn’t possible.

So while the motive power of animals, in this case horses, characterised the technology and energy model of another age, the most advanced economies wouldn’t reach ‘peak horse’ until the early twentieth century. The United States, which by that time had become the world’s largest and most advanced economy, wouldn’t reach its apogee until 1915 when over 26 million horses lived and worked alongside humans.

This was a theme returned to in 1983 by the Nobel Prize–winning economist Wassily Leontief. For Leontief, human labour in the twenty-first century would come to resemble horses at the turn of the twentieth. Now, as then, a key source of value-creation and wealth would become obsolete: Computers and robots [will] replace humans in the exercise of mental functions in the same way as mechanical power replaced them in the performance of physical tasks. As time goes on, more and more complex mental functions will be performed by machines … this means that the role of humans as the most important factor of production is bound to diminish—in the same way that the role of horses in agricultural production was first diminished and then eliminated by the introduction of tractors.

Contrary to popular misconceptions in the US of millions of manufacturing jobs being lost to cheaper workers abroad, for the most part they have simply been automated – subject to ever improving efficiency.

Surprisingly, less developed economies fare even worse over the same period, with Brazil enduring a 20 per cent decline in industrial employment and Japan 16 per cent. Perhaps most impressive of all is China which, in the process of becoming the world’s leading manufacturer, lost 16 million industrial jobs. As one journal observed, ‘though it is of course easy to demonstrate that plenty of industrial production still takes place, and that this is not only in important exporter nations such as China, the share of workers actually employed in manufacture has now been declining for almost two decades at the global level.’

While space transportation might feel like the cutting edge of technology, no rocket has yet surpassed NASA’s Saturn V – first launched in 1967. To this day it remains the tallest, heaviest, most powerful vehicle ever built. Its design and construction were overseen by Wernher von Braun, the engineer behind Nazi Germany’s V2 rocket – the first man-made object to reach space. In the fifty years since, we have yet to see a more impressive machine than one whose construction was led by a man born before a plane even crossed the Atlantic.

Perhaps unsurprisingly then, Naveen Jain, co-founder of Moon Express, is optimistic on the legal issue, noting in 2011 how there ‘is strong legal precedent and consensus of “finders keepers” for resources that are liberated through private investment, and the same will be true on the Moon’.

There is of course one problem with Mr Jain’s thinking: ‘private investment’ is not responsible for our present level of technology, be it rockets, robotics, 3-D printing or other technologies critical to space exploration. Even now the most innovative private actor in the industry, SpaceX, remains dependent on NASA contracts to fund its research and development. What Jain wants, as we see repeatedly with the powerful, is to socialise the losses of publicly funded research and privatise the gains.

It did so by taking inspiration from the US city of Cleveland and its own response to similar problems it faced a few years earlier. There the response to a budgetary crisis had been heterodox and unprecedented, with local government refusing the default medicine of privatisation and outsourcing – focusing instead on energising the city’s economy through the procurement of ‘anchor institutions’ like schools, hospitals and universities. In time it proved a success, so much so that the approach came to be titled the ‘Cleveland Model’.