The Withering Away of the Market

“The robots are coming! The robots are coming!” — Mark Stahlman

“Throughout history the amount of time spent at work has never consistently been much greater than that spent at other activities. Even a work week of fourteen hours a day for six days still leaves half the total time for sleeping, eating, and other activities. Economic development has led to a large secular decline in the work week, so that whatever may have been true of the past, today [this article being first published in 1965 -Erik] it is below fifty hours in most countries, less that a third of the total time available. Consequently the allocation of efficiency of non-working time may now be more important to economic welfare than that of working time; yet the attention paid by economists to the latter dwarfs any paid to the former.”
–Gary Becker, from the Introduction to “A Theory of the Allocation of Time”

”But where danger is, grows. The saving power also.”
–Friedrich Hölderlin

There’s a profound irony that it was the notorious neoliberal Gary Becker who, in the mid 1960’s, pointed out and addressed the increasing importance of *non-market* activity. His theory of the allocation of time provided some of the most profound insights into non-market, concrete labor, including leisure time and “household production”. In the meantime, contemporary free-market advocates and market “libertarians”–as opposed to the anarchist communists who first introduced the term–continue to fetishize and focus on market production. For the most part, they ignore the ever-increasing importance of non-market production.

In a system of highly automated market production, people will still receive income from the goods and services that are brought to market by machines–if those people own the machines in the form of capital. The supposed problem with the rise of the robots is that not all people will have access to capital. Without access to capital, they will not have an income, and without any income they will be left behind.  More fundamentally, with increasing automation people are anxious about the decreasing need for human production and therefore for marketable, abstract labor. They fear that supply will be fulfilled by autonomous machines owned and monitored by only a few people.  Without jobs they will have no income; without income they will be unable to purchase the goods and services produced by machines.  Again, they will be left behind.

Since demand for goods and services is dependent on income from employment, aggregate demand would fall due to widespread unemployment. Hence, there could be a considerable fall in aggregate demand due to unemployment caused by massive automation.  If that is true, it must be taken into account in any large increase in automation at the cost of employment–especially if it is brought about by government intervention.  The owners of capital–the owners of the machines–have an interest not only to avoid a large decline in aggregate demand, but they also have an interest to exploit the massively-expanding, ever-cheaper labor supply resulting from the displacement caused by widespread automation.  However, they will only be able to take advantage of cheaper labor if nominal wages can sufficiently decline.  This will be particularly difficult where their efforts are encumbered by minimum wage restrictions.  Where decreases in wages are possible, nominal wages and incomes will decrease.  On the other hand, real wages and incomes will either remain stable or increase due to the improved productivity of non-human capital.  In simple terms, as the owners of capital increasingly exploit displaced labor, wages and incomes might appear to decrease; however, real wages and incomes will actually either remain the same or increase since goods and services will be cheaper due to higher productivity brought about by automation.

In any case, if the ownership of the means of production–esp. of autonomous machines–becomes adequately distributed so as to provide widespread money income, then human-based, market production will increasingly wither away and, along with it, so will much of the market. Hence, though in the future the anti-statism in libertarian ideology will retain relevance, pro-marketism and market libertarianism may become increasingly irrelevant. People will spend less and less time monitoring increasingly autonomous production at increasingly higher levels while spending more and more time in non-market production. They will continue to move away from market production to non-market or household production in Gary Becker’s sense.