How Can Capitalism Survive the Rise of Automation

Automation indeed involves an increase in the use of technology to perform tasks traditionally done by humans. However, this does not pose an existential threat to capitalism, a system that has consistently evolved and adapted to technological advancements.

Understanding Capitalism's Resilience

Many mistakenly believe that capitalism will be consumed by automation, often confusing it with a mixed economy, which is a precursor to fascism. Capitalism isn't about a mixed economy; it is about maximizing efficiency and capital. When you invite or sanction government intervention, you indeed risk losing your right to exist. The success of capitalism lies in its ability to embrace change and innovation.

Capitalism thrived during the industrial revolution, and automation is merely the next phase in this evolution. Automation brings about more discretion, more recreation, and more provisioning for risk and the future. These advances ultimately lead to higher productivity and better living standards. What impresses us most is not a half-assed approach to capitalism, but a more robust and capital-intensive system. If we embraced technology fully, we could achieve three to five times the current wealth and a more life-affirming economy.

How Automation Does Not Threaten Capitalism

The rise of automation does not signify the downfall of capitalism. Instead, it reinforces its principles. The 19th century saw the gold standard limiting the money supply, which coupled with productivity gains from the industrial revolution, led to lower prices. Years later, inflationary policies, where money supply grows faster than productivity, lead to a different set of challenges. Machines replace workers, but in an inflationary economy, their real income increases, and their work hours decrease, all thanks to the increasing value of their savings.

Capitalism is the driving force behind automation. It is the system that will ensure the transition happens. Governments may claim they can implement automation through a wave of a hand, much like they claim to be behind electric vehicle (EV) initiatives. However, such claims often fail to account for the massive capital investments required for automation. Robots don't build themselves; they require capital investment in materials and infrastructure. This investment underscores the necessity of capitalism to facilitate technological progress.

Reorienting Capitalism for the Future

Capitalism can adapt and thrive by focusing on controlling inflationary monetary policies. If the money supply grows too rapidly without corresponding productivity gains, it leads to inflation, eroding the value of labor and capital. On the other hand, a balanced approach that aligns the money supply growth with productivity improvements ensures that the benefits of automation are distributed fairly.

Automation does not pose a threat to capitalism. Rather, it is an opportunity for reinvention. By steering the labor process and ensuring that machines are used to augment human productivity, we can continue to grow economically. The relentless drive to produce more per head each year is the very dynamic that propels economic growth.

In conclusion, capitalism can survive and even thrive in the age of automation. By understanding its strengths and adapting to new technologies, capitalism will continue to be a driving force for progress and prosperity. The future is not about fighting automation, but about embracing it to create a more robust and equitable economic system.