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Rents in a Post-labor Economy

November 21, 2011

Natural resources and politics, not capital will be the source of rents in a post-labor economy. Economic factors of production are rewarded based on how much people need to be paid in order to get them to contribute, not necessarily on how productive those factors are. Normally, the productivity theory of compensation is based on the idea that if one firm does not pay a factor the value of its marginal productivity, another firm will and the factor will be bought by the firm with the highest willingness to pay, which is, in turn, based on the factors productivity. So, if a worker can produce $50,000 worth of goods per year, in a competitive environment, firms will bid that worker’s wages up to $50,000 minus other costs. If a firm only offers $40,000, another firm can profitably outbid them.

Capital does not need to be paid. It is inanimate, and cannot withhold work effort. People pay for capital because they need to buy the natural resources that go into making it and they need to pay for the effort of those who make the capital. When there are super robots that can make anything, they will be able to make other super robots. The only constraining factor on the amount of capital and goods they will be able to make are the natural resources which are input. I really don’t think that owners of the super robots will be able to maintain a monopoly, either on the robots themselves or on the recipes of stuff the robots can make. Knowledge has MC close to 0.

So, without wages and without capital income, what is left? If our super robots are smart enough to make new recipes, we won’t even need humans to design practical things. There are still going to be status games, which some people will win and thus have more resources than others, but status games won’t provide for the masses. That pretty much leaves politics. Natural resources are allocated based on what property rights people can secure for themselves politically. Thus, if economic power is reduced to natural resources, political power will determine economic power. Some may welcome that development based on a judgement/prediction that political power is/will be more widely distributed than economic power is now, but I don’t think it will be. Both methods of resource distribution can be highly unequal and a more detailed analysis of specific institutions is necessary to determine what even currently-existing institutions will play out. It is flat out impossible for anyone to make an accurate preduction on the distribution of power within future institutions based on a yet-undiscovered technology.

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3 Comments leave one →
    • November 21, 2011 9:11 pm

      Ok ok, I’ll read the damn book. I don’t think the idea of intellectual property will survive the singularity, nor do I think birth rates will be high enough to trigger a Malthusian crisis.

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  1. The Coming Battle over Intellectual Property « azmytheconomics

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