Automation needs to be tackled with the economics of the 19th century

Marx versus the robots.

Since covering the strangely unimaginative way the economics establishment treated the effect of automation on the economy, I've been looking for economists who do seem to get it.

Responding to a piece by Paul Krugman (a back-of-the-envelope demonstration of how neoclassical models could show technological improvements leading to a reduction of the real wage), Fred Moseley, Professor of Economics at Massacheusettes' Mount Holyoke College, gives an overview of the Marxist approach to the problem:

Marx’s theory predicted in the early days of capitalism that technological change would tend to be labor-saving… and this labor-saving technological change would cause increasing unemployment (the “reserve army of the unemployed”) which in turn would put downward pressure on wages and the wage share of income (Capital, Volume 1, Chapter 25). He called this important conclusion “The General Law of Capital Accumulation” (the title of Chapter 25). One does not have to use the very dubious marginal productivity theory to explain these important phenomena. Marx’s theory provides a perfectly adequate explanation without the extremely problematic concepts of marginal products of labor and capital.

Marx is obviously relevant to the end stage, of a world in which automation replaced the bulk of work. That world would struggle to continue to arrange things along a capitalist order, as Noah Smith's contortions demonstrated. Ownership of the means of production — the robots, algorithms, computers and everything else replacing human labour — becomes more and more important the closer to that stage we reach.

Moseley's point is that Marx is probably relevant to the whole thing far earlier. The labour theory of value (Marx's key economic idea, that value — which is distinct from "price" — is determined exclusively by the human labour a good takes to create) has always been a lens through which technological improvement in the means of production leads, eventually, to immiseration of the labourer.

(The flip side of such an argument is that immiseration is offset by the fact that technology also reduces the amount of labour required to live a good life. The balance between those two tendencies is, in essence, the answer to the question of whether or not capitalism is sustainable or not.)

No matter how accurate it may have been in this situation, it will take a long time for most people to begin taking the Marxist economic analysis seriously. (Part of that might be that it's got that frightful déclassé word "Marxist" in it.) But if economics doesn't adopt some of its lessons, it seems doomed to spend the next decade reinventing it from scratch.

A man poses in front of a bronze statue of Karl Marx and Friedrich Engels in Berlin. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Northern Ireland's election: Will Arlene Foster pay the price for a domestic scandal?

The wind is in Sinn Féin's sails. But both parties have to work together after the poll. 

Will voters use the forthcoming elections to the Northern Ireland assembly to punish ministerial incompetence?

After all, these elections are all about the Democratic Unionists’ Arlene Foster and her disastrous mishandling of the Renewable Heat Incentive scheme, the energy subsidy she previously introduced as enterprise minister without putting cost controls in place, thus racking-up a £500m liability for the Northern Ireland Executive.

Her refusal to stand aside as First Minister and allow an independent investigation triggered a sequence of events that collapsed the power-sharing executive that runs Northern Ireland, necessitating this poll.

The electorate offers its verdict on Thursday.

So far, there has been a predictable rhythm to the campaign. Cautious and insular, the parties have all been here before and know how to harvest their vote. Elections in Northern Ireland are effectively a race to see who can shore up their core the most, (made harder by the overall reduction in seats from 108 to 90 across 18 multi-member constituencies).

Foster knows she is fighting for her political life. Her woeful handling of the RHI scandal, exposed her severe limitations as a politician. Brittle and stubborn, she further damaged her reputation at the DUP’s manifesto launch by refusing to take any questions from journalists on the basis she had "man flu".

Her pitch was a sectarian "Project Fear" warning that Sinn Fein might overtake the DUP as the largest party and push for an early referendum on Irish unity. Sinn Féin president Gerry Adams joked after the launch on Twitter: "Just for the record, I didn't give Arlene the flu." 

Foster’s campaign might be ugly, but in Northern Ireland’s hyper-tribal polity, it could prove effective. If the DUP suffers a reversal, however, her colleagues may yet think twice about re-nominating her for First Minister/deputy First Minister.

Meanwhile, as Sinn Féin’s new "leader in the North" Michelle O’Neill finds herself in exactly the same situation as Foster was 12 months ago at the last assembly elections - taking over from a male predecessor who had been a mainstay of the political process for years.

O’Neill is so far proving formidable. She benefits from the fact the wind is blowing in Sinn Féin’s sails. After all, the reasons for this election - the DUP’s incompetence - will play well among republicans and nationalists. 

Sinn Féin’s pitch is therefore about ensuring "equality, respect and integrity", with O’Neill claiming this is "the most important election since the Good Friday Agreement". The Shinners are pushing for the strongest possible mandate in what O’Neill describes as the "short, sharp negotiation" that will take place after the elections. She says she doesn’t want a new agreement, "just the implementation of previous ones".

In terms of the other parties, Mike Nesbitt, a former television journalist turned leader of the Ulster Unionists, deserves credit for trying to appeal beyond the tribe. He has offered his second preference vote to the nationalist Social Democratic and Labour party. Tactically, he has to try something to dislodge the UUP from the political sediment.

Both the UUP and SDLP are essentially fighting for relevance in these elections. They constantly claim the electorate has had enough of the SF-DUP duopoly and wants change, it’s just that the voters never vote for it. 

Following Thursday’s results comes the hard bargaining, if the parties are to get power-sharing up and running again and avoid a period of direct rule from the Northern Ireland Office. Both Foster and O’Neill need to be seen to strike a hard bargain. Foster will be desperate to claim she is still in control of events. O’Neill, the newcomer, will want to show she is no pushover.

If she is smart, Foster will  push for an early restoration of the executive and try to put this mess behind her. If, on the other hand, there is a lengthy delay, the election could become a running sore. After all, as the DUP may yet have to be reminded, power-sharing lies at the heart of the Good Friday Agreement

Kevin Meagher is associate editor of Labour Uncut and a former special adviser at the Northern Ireland office.