RE-Inventing Srnicek and Williams’ ‘Future’

by Jehu

The remarkable thing about Srnicek and Williams’ book, Inventing the Future, is that it brings together technology, labor and income into a concise political program for the Left. The defect of the book is that it attempts to do this in a superficial (merely political) way that neglects the inner relation between the three elements.

Technology, for instance, is not an isolated factor in political economy but influences both labor time and income distribution in the capitalist mode of production. The authors seem to vaguely understand this, but their grasp of the subject is limited.

In a passage I cited in my last post, Srnicek and Williams explain that automation of production reduces the demand for labor. They then explain a reduction of hours of labor reduces the supply of labor available for capitalist production. However, and oddly, at this point, Srnicek and Williams pull their punch: they never go on to explain the demand for the complete automation of production is, at the same time, a demand for the complete abolition of wage labor; nor do they explain that with the complete automation of production and the complete abolition of wage labor, all income — both wages and profits — must fall to zero.

This means the demand for complete automation of production called for in the book is identical with a demand for the complete abolition of wage labor. It also means that, in the long run, technical progress, wage labor and wages are not simply loosely related elements of a purely political program, but three different expressions of one and the same thing.

The necessary ambiguity of Srnicek and Williams’ demands

However, in the short run, the relationship between the three demands is known to be complex and ambiguous.

Technical progress can accompany increased or decreased employment of labor and higher or lower wages. Employment of labor can lead to faster or slower technological change and higher or lower wages. And a given wage may be associated with a higher or lower rate of technical development and a higher or lower level of employment.

Because the relation between technological improvement, wage labor and wages can be ambiguous in the short run, the possibility exists that rapid technological improvement of the type proposed by the authors can produce anything ranging from a society of incredible wealth and unprecedented leisure to a society of poverty and unprecedented unemployment.

The goal set forth in “Inventing the Future” is to get to a society with rapid technological improvement, more leisure and high wages. A high level of technological development is an absolute requirement for a society characterized by material wealth and leisure, but the same technological development can just as easily lead to a society marked by unemployment, underemployment and poverty. In either case we get less labor. To avoid the latter outcome, Srnicek and Williams think they can simply tack on a demand for a universal basic income program.

What is the problem with this approach?

The demand for universal basic income is added by Srnicek and Williams program despite the authors’ own argument that a reduction of hours of labor amounts to a reduction in the supply of labor. If this assertion is correct, what happens when the supply of a commodity is legally restricted? The price of the commodity increases. If the reduction of hours of labor results in higher wages as would be expected for the reduction of the supply of any commodity, what then is the economic necessity for a basic income demand?

Further, higher wages are not the only result of a reduction of hours of labor. As wages increase, there sets in two additional results.

First, with a tightening of labor market supply and rising wages, we should expect the reserve army of labor (those workers who have, until now, been enjoying ‘the leisure of the starving’) to be drawn into production. The labor reserve are precisely those individuals who in normal times are not active in the labor force, but find employment during periods of robust expansion. As in the case of rapid expansion, in the short run reduction of hours of labor requires additional labor power that can only be satisfied by this surplus population of workers. The more severe the reduction of hours, the more necessary it becomes to tap the reserve army of labor.

Second, with higher wages we get the so-called ‘substitution effect’, which Wikipedia defines as “the economic understanding that as prices rise consumers will replace more expensive items with less costly alternatives.” This effect means that the capitalists (the consumers of labor power) will respond to higher wages by substituting machines for labor to the extent that machines can be employed more cheaply in the production of commodities than living labor.

If, as Srnicek and Williams argues, a reduction of hours of labor amounts to a reduction of the supply of labor available to the capitalists, their three separate demands actually can be accomplished by a single demand: reduction of hours of labor.

Can all three demands actually stand on their own?

Now, let’s compare labor hours reduction to the other two major demands proposed by Srnicek and Williams, complete automation of production and a universal basic income.

COMPLETE AUTOMATION: As we know, despite the authors fascination with it, accelerating technological development can have very negative results for the working class. The capitalists introduce improved technology to reduce the labor time required for production of commodities. With the diminution of the labor time required to produce the commodity below the average of the labor time socially necessary, the individual capitalist can realize additional profits over his competitors.

The capitalist thus has tremendous incentive to introduce new technologies, in many cases even before his existing technology is obsolete. At the same time, the relentless improvement in technology sets free a portion of the existing labor force. In some cases, these workers find employment in other firms, branches of production, or regions, but, as Srnicek and Williams note, increasingly the prospects of selling their labor power falls as new technologies replace the older ones and less labor is demanded per unit of output. In most cases the workers find their wages falling as they move from one firm, branch or region to another. Thus, even as technological improvement increases the profits of capital, the worker’s condition sinks.

The rapid advance of technology, taken by itself, has necessarily ambiguous employment results that can lead to the destitution of the working class as well as improve its conditions. Moreover, within the limits of the capitalist mode of production, technological improvement must have a negative tendency because no capitalist will introduce improved technology if it does not improve his bottom line.

BASIC INCOME: But can’t this depression of wages produced by automation be countered by an income policies like a higher minimum wage, means-tested poverty programs and even universal entitlements like Social Security and basic income?

To answer this it would help to recall why wages are falling in the first place. Wages are falling because the capitalists are introducing technical improvements into production in order to lower their labor costs. Under the most optimal circumstances, one of these income policies, or all of them together, can indeed temporarily offset the fall in wages. However, assuming this is successful, how do the capitalists respond? By accelerating the introduction of improved technology so as to reduce their labor costs still more aggressively, of course.

And here I assumed the most favorable conditions to offset the negative impact of technical improvement. In fact, the history of these sorts of programs since the 1970s suggest anything but the most favorable conditions. Income support programs like Aid for Dependent Children, Social Security and the minimum wage have been inflated away or altogether abolished. Even as we speak, politicians are plotting the severe reduction or even outright abolition of the most important program in the entire social safety net, Social Security. And this does not even begin to discuss the impact on wages and income of globalization and so-called free trade agreements.

My problem with the Srnicek and Williams program is that although they assert each of the demands they offer — complete automation, reduction of hours of labor and universal basic income — can stand on their own, two of these demands — complete automation of production and universal basic income — have huge employment effects that are unpredictable. Unless we can nail down the employment effect of these demands, we can’t say whether they advance the overall goal of Srnicek and Williams program.

Put in language most writers on the Left, who are steeped in conventional economics, can understand, the supply shock, income and substitution effects of a general reduction of hours of labor are far more predictable than either a demand for complete automation or universal basic income policies. Moreover, this is true not only with respect to the impact of a reduction of hours of labor on automation and income, it is also true with respect to the impact of a general reduction of hours of labor on unemployment and underemployment.

Reducing competition among workers

This brings us to the inherent bonus the demand for a reduction of hours of labor contains that neither a demand for complete automation or basic income possess: it reduces competition within the working class and directly improves their capacity for economic and political organization.

As I said above, many writers on the Left are steeped in bourgeois political economy. They are, by and large, unfamiliar with core arguments of Marx’s labor theory. So let me first state this argument in conventional economic terms with which they should be familiar. I will then restate the same argument in classical Marxian labor theory form.

My conventional argument is taken from Kalecki here, where he discusses the political implication of a full employment program:

“A solid majority of economists is now of the opinion that, even in a capitalist system, full employment may be secured by a government spending programme, provided there is in existence adequate plan to employ all existing labour power, and provided adequate supplies of necessary foreign raw-materials may be obtained in exchange for exports.”

However, Kalecki notes there is strong resistance by the capitalists and the state to embarking on such a program. Why is the resistance of the capitalists so vociferous? I probably don’t have to tell you why, since, more than likely, you have already read Kalecki — but let me focus on one particular concern: it gives the working class a competitive advantage over the capitalists:

“We have considered the political reasons for the opposition to the policy of creating employment by government spending.  But even if this opposition were overcome — as it may well be under the pressure of the masses — the maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders.  Indeed, under a regime of permanent full employment, the ‘sack’ would cease to play its role as a ‘disciplinary measure.  The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow.  Strikes for wage increases and improvements in conditions of work would create political tension.  ….  ‘discipline in the factories’ and ‘political stability’ are more appreciated than profits by business leaders.  Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the ‘normal’ capitalist system.”

Kalecki here argues there is, in theory at least, no reason why full employment of the population of workers cannot be realized — a conclusion borne out by the history of the Soviet Union, which experienced no significant unemployment. The objection to full employment at least in part resulted from the fact it would upset the competitive balance between the two classes in a capitalist society. If full employment could be ensured, the bosses could lose their power over the working class and the workers, realizing their increased economic power, might soon control society.

Marx essentially makes the same argument in a series of lectures almost 100 years before Kalecki, but his focus was on how automation intensified competition among the workers:

“The laborer seeks to maintain the total of his wages for a given time by performing more labor, either by working great number of hours, or by accomplishing more in the same number of hours. Thus, urged on by want, he himself multiplies the disastrous effects of division of labor. The result is: the more he works, the less wages he receives. And for this simple reason: the more he works, the more he competes against his fellow workmen, the more he compels them to compete against him, and to offer themselves on the same wretched conditions as he does; so that, in the last analysis, he competes against himself as a member of the working class.”

Full employment of the working class reduces the self-destructive competition within the working class over sale of its labor power. Workers no longer have to compete against each other for sale of their respective labor powers, because, under a regime enforcing a progressive reduction of hours of labor, technological improvement no longer leads to unemployment. And if the class is no longer competing over jobs, their capacity to organize and assert their common interests are improved.