Before I propose a solution I must define a problem to make it make what sense it will. Here is the capitalist problem:
We are, as an economic system, driven by productivity. The more Labor can produce per human hour, the lower the cost of goods, the higher the wage, and the more the profit. The whole of Classical Liberal economics concerns itself with the humane, logical increases in productivity that define the progress of capitalism in these last centuries and the consequent increases in capital formation and the consequent vast new fields of play for this capital, i.e. space exploitation.
Keynesian variants on Classical Liberal economics employ the genius of John Maynard Keynes in noticing that whole enterprise was keyed to aggregate demand in a life and death fashion. Capital expenditure, which causes overbuilt production and bubbles and recessionary adjustments, is only an attempt, however flawed, to capture increasing and increasingly differentiated aggregate demand which is tied directly to increasing productivity.
However, we are in a sea change in terms of the type and capabilities of the technology now coming off the shelf and into the factory. These AI driven systems, including capable general purpose robots, are putting us between the sword and the wall in regards to continuing the current model of capitalist industry. They are the problem that requires a new economic model.
AI driven robots have the theoretical capability to manufacture and repair themselves in a closed system I call the Autonomous Machine Economy. The genius John von Neumann even developed a mathematical model of the operations of such a phenomenon that he called Self-reproducing Automata. The only logical employment for human beings in such systems is as AI managers. And that is all the human participation possible. Robots, while needing spare parts and electricity, do not buy anything. There goes aggregate demand. The economy collapses.
We have to support aggregate demand and introduce the Autonomous Machine Economy in a measured fashion. Catastrophe is staring us in the face. The solution to this immediate problem is the creation of a Basic Income funded, not by raiding other people's bank accounts which is antithetical to capital formation, but by the establishment of licenses for AI systems, using a precedent of the licensing of working animals of which AI is a type, and generating fees of such significance as to afford some measure of support for aggregate demand and slow the introduction of catastrophically disruptive Autonomous Machine Economies.
This solution is well within the range of Classical Economics. It is only as radical as the problem requires.
Secondly, we need to move to bespoke manufacturing in order to maximize employment for AI managers in human scale manufactories that are capital intensive. In other words, we need to be less productive and more talented in that production, more human and more humane.
This is a vision of what I am calling Neocapitalism, preserving capital formation for such projects as assure a human future while recognizing that that future is a coin toss from not happening. There is a book that I recommend, Prometheus Unbound, which makes and supports the hypothesis that, by placing new technology in critical environments, we evolve ourselves. With Autonomous Machine Economies, the bar, not just to meaningful participation but any participation, goes up to somewhere in bright normal IQ range at this point. AI will get friendlier and the bar will drop more but both the economy and the people who define it need increasing support.
Do Well and Be Well.
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