Preventing Economic Collapse in the Age of Autonomous Production;

A Framework for Managing the Robot Economy

Author: John M. Frazier  

Date: November 3, 2025

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Introduction:

I have developed these ideas over many years in my blogs on my blogspot site, Contemporary Thought. 

Executive Summary

The rapid deployment of autonomous robotic systems in manufacturing threatens to trigger a systemic economic collapse through chronic demand insufficiency. Unlike previous technological disruptions, autonomous production severs the historical link between productivity gains and human purchasing power, creating a pathological condition where production capacity vastly exceeds demand.

This paper proposes a three-part solution that maintains capitalist market structures while preventing collapse:

1. Legal Framework: 

Classify autonomous robots as "mechanical working animals" requiring ownership, registration, and regulatory oversight

2. Revenue Mechanism: 

Implement licensing fees on registered robots and protective tariffs on products from unregistered automation

3. Distribution System: 

Establish a Government-Sponsored Enterprise (GSE) to collect fees and distribute them as citizen dividends

Key Finding: 

By 2027, an estimated one million industrial robots operating at $3/hour will displace $22-32/hour in human wages, extracting $13-19 billion monthly from aggregate demand. Without intervention, this creates an accelerating demand insufficiency spiral leading to economic collapse.

Proposed Solution:

Transfer $12-16/(operating hour) at current valuation per robot to citizens as compensation for economic displacement, maintaining sufficient demand while preserving productivity gains and market incentives.

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Part I: The Problem - Pathological Excess Productivity

The Historical Context

Throughout economic history, supply-demand imbalances have been temporary phenomena corrected through market mechanisms and Schumpeterian creative destruction. Workers displaced by innovation found employment in new sectors. Productivity gains translated into higher wages and increased consumption. The system maintained equilibrium through the fundamental link between production and purchasing power.

The Autonomous Production Anomaly

Autonomous robotic systems represent a qualitative break from this pattern. Unlike previous automation, they:

- Operate with minimal human intervention beyond initial programming,

- Replicate exponentially through robots building robots,

- Reduce marginal production costs to near-zero levels,

- Eliminate rather than redeploy human labor across entire sectors simultaneously.

This creates chronic pathologically excess productivity—a permanent structural condition where production capacity grows independently of human purchasing power.

The Demand Collapse Mechanism

The mechanics of collapse are straightforward:

1. Robots replace human workers at scale.

2. Displaced workers lose purchasing power.

3. Reduced aggregate demand decreases sales.

4. Decreased sales trigger further automation to cut costs.

5. Further automation accelerates demand destruction.

6. System enters a death spiral.

Critical insight: 

This is not a moral failing or policy choice. It is a systemic malfunction where rational individual decisions (automating to compete by reducing costs) produce collective catastrophe (no one left to buy products).

Timeline and Scale

Conservative estimates project one million industrial robots operational by 2027, with exponential growth thereafter. Each robot operating 600 hours monthly at $3/hour replaces $25-35/hour human labor.

Monthly demand extraction (2027) - 

$13-19 billion  

Annual demand extraction (2027) - $156-228 billion  

Growth rate: 

Exponential as robots build robots

Without intervention, demand insufficiency becomes severe within 2-5 years and catastrophic within a decade.

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Part II: 

The Framework - Mechanical Working Animals

Historical Precedent

Working animals have amplified human productivity throughout civilization. Legal systems developed comprehensive frameworks for their integration into society:

- Ownership requirements: 

No animal could be "at large" without a responsible legal person

- Regulatory oversight: 

Use, breeding, and management subject to community standards  

- Liability for damages: 

Owners bore responsibility for harm caused by their animals

- Utility justification: 

The concept of ownership by legitimate use (Greek legal tradition) governed their place in society

These frameworks emerged from practical necessity: 

autonomous beings with economic utility but without human agency required human stewardship.

Application to Autonomous Robots

Autonomous robots fulfill identical conditions:

Amplification of human labor: 

Robots multiply human productive capacity, though to an unprecedented degree

Autonomy in designed habitat: 

Modern robots operate independently on factory floors, their designed environment within society

Economic utility without human agency:

They produce value but cannot be legal actors or bear responsibility because they are not human

Requirement for human stewardship: 

Like working animals, they cannot simply "be" in society without ownership and regulation

Legal Classification

Autonomous robots should be classified as mechanical working animals, requiring:

1. Registration: 

Every autonomous system must be registered with a designated authority

2. Ownership: 

Clear legal person responsible for the system's operation and effects,

3. Liability: 

Owners bear responsibility for economic displacement and other damages,

4. Regulation:

Standards for deployment, operation, and retirement (depreciation).

This framework is not novel or radical—it extends centuries-old legal principles to new technology.

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Part III: The Solution - Compensation and Transfer

Philosophical Foundation

Aristotle observed that "flourishing manifestly requires external goods in addition...for it is impossible or not easy for someone without equipment to do what is virtuous."

Benjamin Franklin articulated the same principle in modern terms: "Do well by doing good."

An economy exists to facilitate human flourishing. Dispossession from economic participation without compensation renders virtuous life impossible. Those displaced by autonomous production have suffered damages requiring redress.

The Compensation Principle

Claim: 

Autonomous robot deployment damages human economic participation.  

Responsible party:

The owner/steward of the robot causing displacement. 

Remedy:

Compensation sufficient to restore economic agency.

This is not wealth redistribution or welfare. It is *compensation for damages*—a core function of legal systems and market economies.

Mechanism: The Robot Registry GSE

Structure

Establish a Government-Sponsored Enterprise (Robot Registry GSE) as a federally chartered corporation with -

Mission: 

Register autonomous systems, collect licensing fees and tariffs, distribute compensation as citizen dividends

Capitalization:

- One voting, dividend-bearing, non-transferable share issued to each adult citizen

- One non-voting, dividend-bearing, non-transferable share issued to each minor citizen

- Strategic blocks held by Treasury Department and Federal Reserve as institutional checks

Governance:

Board structure with representation from shareholders, Treasury, and Federal Reserve, ensuring separation of powers and preventing capture

Revenue Collection

Licensing Fees: 

$12-16/hour per registered robot, assessed on owners based on operational hours

Protective Tariffs:

Products manufactured by unregistered automation (domestic or foreign) subject to tariffs equivalent to displaced labor costs

Rationale:

Fees capture 50-67% of productivity gains ($22-32/hour displacement minus $12-16/hour fee), maintaining strong automation incentives while preventing demand collapse

Distribution

Quarterly dividend payments to all shareholders (citizens) from collected fees and tariffs.

Projected 2027 dividend (1M robots, 600 hrs/month, $14/hr average fee):

- Monthly revenue: $8.4 billion

- Annual revenue: ~$100 billion  

- Per capita annual dividend (330M citizens): ~$303

As robot deployment scales exponentially, dividends scale proportionally, maintaining purchasing power parity with productivity gains.

Enforcement

Registration Compliance: 

Department of Justice enforces registration requirements through:

- Audits and inspections

- Substantial penalties for non-compliance (back fees + multiples, criminal liability for willful evasion)

- Business license revocation for persistent violators

Tariff Collection: 

Customs and Border Protection (existing infrastructure) assesses and collects tariffs on imported goods from unregistered automation

Definition: 

Legislation must define "autonomous system" as: *Any mechanical system capable of performing productive work requiring minimal human intervention beyond initial programming and periodic maintenance, operating continuously for [threshold] hours with autonomous decision-making capabilities.*

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Part IV: Addressing Objections

"This is socialism/communism"

Response: 

The proposal maintains all core capitalist structures:

- Private ownership of robots and means of production

- Market price discovery and competition  

- Profit incentives for innovation and efficiency

- No central planning or state ownership

It addresses a market failure (demand insufficiency) through compensation for damages, a fundamental capitalist principle.

"Innovation will be stifled"

Response: 

Even with $12-16/hour licensing fees, automation remains economically compelling:

- Robot labor cost: $3/hour + $14/hour fee = $17/hour

- Human labor cost: $25-35/hour

- Net savings: $8-18/hour per robot

Strong incentives for automation remain while preventing systemic collapse.

"Enforcement is impossible"

Response:

- Registration enforcement uses established DOJ corporate compliance mechanisms

- Tariffs leverage existing customs infrastructure  

- Penalties structure makes compliance the rational economic choice

- Offshore production is tariffed at the border, requiring no extraterritorial enforcement

"This creates dependency/kills work ethic"

Response:

- Compensation is for damages, not welfare

- Citizens remain free to work, start businesses, pursue careers

- Dividends supplement rather than replace market income

- Alternative is mass unemployment without compensation—true dependency

"Why not let markets adjust naturally?”

Response:

Markets cannot adjust to permanent structural demand insufficiency. Previous disruptions allowed labor redeployment. Autonomous production eliminates entire employment sectors simultaneously without creating equivalent new sectors. Natural adjustment = collapse.

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Part V: Implementation Pathway

Legislative Requirements -

Primary Legislation: 

Robot Registry Act establishing GSE, registration requirements, fee structure, and dividend distribution

Supporting Legislation:

- Amendments to tariff code for automation-produced imports

- DOJ enforcement authority and penalty structure

- Definitions and standards for autonomous systems

- Phase-in timeline and transition provisions

Regulatory Framework

- Treasury Department oversight of GSE operations

- Federal Reserve monetary policy coordination  

- Department of Commerce autonomous system classification standards

- DOJ enforcement protocols and compliance procedures

Timeline

Year 1:

Legislation and regulatory framework development  

Year 2: 

GSE establishment, registration infrastructure deployment  

Year 3:

Mandatory registration begins, fee collection commences  

Year 4:

First dividend distributions, full enforcement

Critical:

This timeline is aggressive but necessary given 2027 robot deployment projections. Delay increases collapse risk.

Political Strategy

Bipartisan appeal:

- Conservatives: Maintains capitalism, private ownership, market incentives

- Progressives: Addresses inequality, ensures broad prosperity

- Populists: Protects workers and domestic economy

- Technologists: Enables rather than blocks automation

Messaging:

Frame as system maintenance, not redistribution. Emphasize lose-lose collapse scenario for all parties without intervention.

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Part VI: International Considerations

Trade Competition

Challenge:

Other nations (particularly centrally-managed economies like China) can deploy automation without demand-side constraints

Response: 

Protective tariffs allow domestic market management while permitting others to automate freely.To each his own, as long as they're not trading unfettered in ours.

Strategic advantage:

By maintaining domestic purchasing power through dividends, the U.S. preserves its massive consumer market—a competitive asset other nations cannot replicate without similar mechanisms.

Global Coordination

While international adoption would be beneficial, U.S. implementation does not require global consensus. Tariffs and domestic registration create a self-contained system. Other nations facing similar demand crises will likely develop parallel solutions.

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Conclusion

The autonomous robot economy presents an existential challenge to market capitalism. Without intervention, exponentially increasing productivity will destroy the demand base necessary for markets to function, triggering economic collapse within years.

The solution requires neither abandoning capitalism nor accepting collapse as inevitable. By applying established legal frameworks (mechanical working animals) and economic principles (compensation for damages), we can capture robot productivity gains and transfer them to human consumption agents through citizen dividends.

The core mechanism is simple:

- Register robots

- Collect licensing fees from owners

- Distribute fees as citizen dividends

- Maintain demand and prosperity

The choice is stark:

- Implement this framework and grow prosperous on robot productivity

- Maintain current trajectory and face systemic collapse

The autonomous factory revolution is already underway. Policy responses have begun but remain incoherent. This framework provides the conceptual architecture to make those responses effective before the window closes.

-We either grow fat on the sweat of robots, or we starve in poverty collectively. Those are the options.-

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References

Aristotle, “Nicomachean Ethics”

Keynes, John Maynard, “The General Theory of Employment, Interest, and Money”

Marshall, Alfred, “Principles of Economics”

Noyes, C. Reinhold, “The Institution of Property” 

Schumpeter, Joseph, “Capitalism, Socialism and Democracy” 

About the Author

John M. Frazier writes on economic philosophy and technological disruption at “Contemporary Thought” blog. His work focuses on adaptation strategies for capitalism in the age of autonomous production.

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Contact: coyotylyip@gmail.com 

  

Date: November 3, 2025