The Autonomous Machine Economy

 The Autonomous Machine Economy 

“The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.”

Adam Smith

The future is now. Even as I write this AI managed factories are being built around the world on the basic model of an Amazon warehouse, in Arizona, in Spain. Using mobile carrier robots built by a Spanish company, Robotnik, and robotic arms the factory in Spain could, with proper design, assemble their mobile carriers and robotic arms. That is the threshold of tomorrow when robots make robots, taking the ground out from under what we consider modern market economics, including neoMarxism. This I call the Economic Singularity.This will effect the removal of human productivity from economic calculations including the value of money. 

Formally, to add some precision, at the economic singularity, autonomous trainable machines (robots) and/or autonomous systems of trainable machines (extended robots) manufacturing autonomous trainable machines and/or autonomous systems of trainable machines, human productivity increases (∆production/∆(human work hours)) as a general case will approach infinity 

 [asymptotic (lim sup x=♾️) to infinity] 

and, according to research on such situations [PostWalrasian Macroeconomics, Colander, Cambridge University Press, 2006], become more meaningless as a metric as they get close to that limit which will reduce modern productivity based economics to so much noise.

"Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… [He] intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”

Adam Smith 

That is his justly famous description of how markets shape behavior. They do that by price discovery which, according to Smith, always references a “natural price” which itself references wages, rents or resources, and profits. Taking wages out of the market picture destroys his labor theory of value. What is the labor of robots worth? Nothing, some metal, some electricity and that may be the only way out of this theoretical chaos. We must grow fat on the sweat of robots, a nonsense construction. So how do we discover prices and the productivity which define the value of money in the Age of AI?

“A cynic knows the price of everything and the value of nothing.”

Oscar Wilde

Money can be constructed as needing to be of sufficient supply to relatively value all products and services in market purview and be of sufficient scarcity and reliability to hold its value reasonably over time. Modern fiat money must be carefully managed but cannot float or be replaced. There are not enough precious metals in existence to fund a general prosperity. The scarcity, the value, of modern fiat money is at present represented in the relation; 

[∆money supply/∆productivity] 

(simplified). 

This means that any calculation of the value of fiat money will be meaningless in the post economic singularity era or, more accurately, the era of Post-Productivity Economics, as productivity itself becomes a meaningless calculation, based on the traditional but by the then vacated relationships that define modern economics.

“The Great Depression in the United States was caused - I won't say caused, was enormously intensified and made far worse than it would have been by bad monetary policy.”

Milton Friedman

In fact, a market economy demands a sufficient value calculus (money) in order to relatively value disparate goods and services in a common market setting. What then constitutes the value of modern fiat money, which constructs the value of goods and services, in post-productivity markets? That's a large question and a long answer but it resolves in the mechanics of a legitimate transfer of wealth in redress of existential damages (effective permanent loss of employment) done to Labor, blue collar and white collar, by the deployment of very capable autonomous trainable machines (robots) and/or autonomous trainable systems of machines (extended robots) from the labor of those robots and/or extended robots to the purview of human beings as direct support of aggregate demand along with tariffs imposed on robots and/or extended robots outside the reach of redress to prevent capital flight and cutthroat competition, or effectively madness, as it reduces to productivity competition and productivity will become a meaningless metric.

To add a little precision, essentially, to the argument then the amount of damages assessed per robot hour and the amount of the protective tariffs, both significantly arbitrary and in lockstep organically constituting a significant demand and addition to the ∆$moneysupply, will define the value of money roughly in the manner;

[∆$moneysupply= ∆$damages+∆$tariffs

Inflation or deflation index = ∆$moneysupply/$moneysupply

(Old$value)(inflation or deflation index)= New$value]

(Simplified)

Markets do demand money or a common value calculus in order to function and money does organically construct markets or real and abstract locations of transactions involving the exchange of goods and services for money and the discovery of prices, in money, that define real and abstract locations, in time, of the relative quantities, plenty and scarcity, with their associated price differentials that make arbitrage possible which is what makes markets function (The Invisible Hand).

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." 

Friedrich Hayek

The question at hand is, if productivity approaches infinity and resources are addressed by asteroid mining and energy is addressed by fusion what is left to be subject to arbitrage? Where are the relative quantities, plenty and scarcity, that make markets go? They would be incidental and extremely transient and not a field of play for serious arbitrage but possibly still a mechanism for price discovery on a bid/ask basis although price determination on an arbitrary basis would be far more likely and the price/demand curve more determining of production than anything else.

We may have to agree, as a polity, to a reasonable level of prices which would imply a concept of usurious profits, an ancient notion. Robots making robots will probably see the end of ‘natural prices’.

We are strangers in a strange land.

Do Well and Be Well