Will Human Labor Become Superfluous?

            According to free-market economists (and I agree), most of the blame for any long-term unemployment that might exist is assigned to government. Minimum wage laws and the tolerance of the coercive activities of labour unions intended to push their wages above the market wage creates institutional wage rate rigidities which prevents the labour market from clearing based on supply and demand, thus causing unemployment. In addition, through their inflationary credit expansion schemes, governments sent in motion the boom-bust cycle, which entails a sudden, large-scale adjustment of productive activities in the bust period, which leads to unemployment until the adjustments have been made.

            

           Many people do not agree with this analysis, and instead look for deeper, more fundamental causes of unemployment in the modern world. One such alleged cause is technology, which supposedly makes many jobs obsolete and supposedly makes a number of people’s labor superfluous in the economic system, leading to permanent unemployment for these people. The goal of this post is to argue that human labor is not, and probably never will be, superfluous, and that permanent unemployment is not an effect of the increased productivity of labor that technology allows.

            

           To make this point, we must consider two questions: 1. Will the potential for mankind to produce more material goods likely ever run out? 2. Even if it does not, is it possible that only highly skilled labour would be necessary in a high technology production structure, thus rendering low skilled labour superfluous?

            

           In order to answer the first question, we must examine what it takes to produce economic goods. Essentially, land/natural resources, human labor, capital, and scientific/technological knowledge are all necessary to produce the vast majority of economic goods. Capital can be further reduced to land, labor, and time. For example, in order to produce refined steel (a capital good), you need, among other things, iron mines (land), coal mines (land), all the relevant human labor (miners, ironworkers, truckers, etc…), and production time to bring all the components together into the final product. The production time available is actually a scarce factor of production along with land and labor, if it takes too long for a production process to produce a consumer’s good, it may not be worth it based on market participants' subjective value judgements. Available production time can be augmented by market participants adopting a more future-oriented view, through abstaining from consuming all the resources available and instead saving and investing them in longer, usually more productive, production processes. Available production time, and thus capital, is and always will be scarce, but it can be made less scarce through less consumption and more saving. Abolishing anti-saving/capital accumulation government policies such as inflation, budget deficits, the progressive income tax, the capital gains tax, the inheritance tax, the corporate tax, and social security as it is currently constituted in the US, would encourage more saving and capital accumulation and make this factor of production less scarce.

            

           Abstract capital, a combination of land, labor, and time, must be embodied in concrete capital goods that will then increase the productivity of land, labor, and time, making it easier to produce more consumer’s goods and more capital goods. The more advanced mankind’s scientific/technological knowledge, the more efficient use can be made of capital by embodying it in more efficient, technologically-advanced capital goods, which in turn will tend to make land and labor more productive. Usually though, it is the scarcity of capital/available production time that sets a narrower limit on production than the state of technological knowledge. The fact that the most advanced capital goods and techniques are not used anywhere close to everywhere in the world confirms that it is the relative scarcity of capital/available production time that is preventing the worldwide use of the most advanced capital goods and processes. That being said, significant advances in scientific/technological knowledge could make the existing capital stock, land, and labor more productive, apart from any increases in capital itself. With a reformed patent system, along with private subsidies and perhaps a limited amount of government subsidies to research, advances in technological/scientific knowledge should continue at a sufficient pace.

            

            How about land/natural resources, could we be up against a scarcity of them? In terms of pure real estate, the answer is a clear no; a vast area of the earth’s surface still consists of nearly untouched land. How about natural resources and energy though, could be run out of them? Contrary to what the conservationists say, it is extremely unlikely, for reasons George Reisman points out in the chapter on environmentalism in his economic treatise, Capitalism. New ways to harness the vast amounts of energy on earth are constantly being developed (geothermal energy, advances in nuclear technology, etc…) and existing ways are being made more accessible (fossil fuels extracted from shale and tar sands, more natural gas deposits being brought into production). In terms of minerals, there are still lots of mines similar to the ones already being exploited that have been left untouched as of yet, and with advances in mining and digging techniques, we could gain access to the vast amounts of minerals that stand between us and the centre of the earth, a surface we have barely even scratched yet. In terms of agriculture, advanced chemical fertilization and irrigation techniques can be used to make previously infertile areas such as deserts highly fertile, while advances in indoor growing technology and bioengineering could even allow agriculture to be performed in less traditional locations such as in urban high-rises.

           

           In all these cases, the problem is not a lack of availability of land/natural resources, but a lack of accessibility. Capital goods and technology, used to make the land and the labor working on it more productive, would make these vast reserves of land/natural resources accessible to mankind.

            

            If total available land/natural resources are not scarce, capital goods are scarce but more of them can be obtained by combining land, labor, and time and making them more productive, and the state of scientific/technological knowledge is not a very important limiting factor of production, then where does that leave labor? Clearly, it means that human labor in general will likely always be scarce, and will likely never be superfluous. If mankind wants to produce more, there is essentially nothing besides their lack of ambition stopping them. To produce more, given the state of technological knowledge, requires more labor, and this increased production will serve to maintain the laborer and enhance the living standards of everyone in society. Human labor will thus always have something to do if more production is wanted.

            

           Having answered the first question, we must now move on to the second. We have established that mankind’s productive potential is nowhere near, and probably never will be, exhausted, and hence labor in general will be scarce and not superfluous. We must remember though that in order to be integrated into a given structure of production and sufficiently remunerated, the labor performed must be valuable to someone, given the competition of other laborers. Is it thus possible that a more highly technologically advanced production structure, while being vastly more productive, will render the labor of certain groups of laborers permanently superfluous? Specifically, would it be possible for technology to render unskilled labor superfluous?

            

           Let us consider an extreme hypothetical example. Imagine that, sometime in the future, due to significant advances in technological/scientific knowledge and a massive accumulation of capital goods, all of the manufacturing, resource extraction, and agricultural industries are fully mechanized (though I am not assuming Artificial Intelligence Robots in this hypothetical). What human labor would be necessary in these industries? Well, engineers and skilled mechanics would always be necessary to supervise/operate the machines and make sure they are working properly, and repairing them when they break. Lots of computer programmers to create and maintain the relevant software of these machines and of consumer devices would be necessary. Probably people to operate transportation vehicles would be necessary too. Besides this, the entire business apparatus would still be necessary, including accountants, managers, entrepreneurs, investors, marketing professionals, sales people, etc… In terms of highly skilled personal service providers, doctors and lawyers would remain in high demand, so would good hairdressers, interior designers, electricians, plumbers, etc… as would teachers/coaches of all sorts, academic as well as for recreational activities such as martial arts, sports, yoga, etc…

            

            Another thing to note is that with the increase in real income that this highly advanced and productive production structure would bring about, more of these well-paid, highly skilled laborers would probably choose to work less and use their high hourly incomes to enjoy more leisure time. This would mean that even for a given amount of production, more people’s skilled labor would be necessary.

           

            Thus, these skilled laborers who could fit into this highly productive production structure would be living well and would certainly not be superfluous, but how about those who simply do not have the brainpower/capability to learn such specialized skills, how about perpetually unskilled laborers? A hint as to what they would do is provided by the developed western world’s recent economic history: with manufacturing and agriculture either moving overseas or requiring less unskilled labor, more and more unskilled laborers have taken jobs in the service industries. As manufactured and agricultural goods become more abundant, people tend to want and have the means to pay for more personal services to be performed for them. If they had the material means, I am sure that lots of people would employ the services of babysitters, house cleaners, launderers, dog-walkers, personal chefs (could be highly skilled or unskilled laborers), gardeners, secretaries, etc… And indeed, in the highly productive hypothetical production structure we are considering, almost everyone integrated into the business, resource extraction, agricultural, or manufacturing sectors, or working as highly skilled personal service providers, would have the means to employ unskilled laborers to perform such personal services for them. They would have enough disposable resources at their command to make it worth their while, probably more than worth their while, for unskilled laborers to work for them. In addition, unskilled jobs such as greeters, waiters, bellboys/kitchen hands, fast-food workers, perhaps cashiers, would probably still exist. 

            

           Thus, even in a hypothetical, far-off from current reality production structure, and even making the slightly unrealistic assumption that unskilled laborers simply do not have the capabilities to become skilled laborers of any kind, there is still no reason for there to be permanent unemployment of unskilled laborers, let alone of skilled laborers.