Producers, Consumers, and Scavengers

Our understanding of the human economy is based on the fact that we are producers and consumers. We are also scavengers. We gather materials from the earth and the forests, energy from the sun and winds and rivers and rocks. We “produce” food from farming and ranching but we also harvest it through hunting, fishing and gathering. Scavenging is part of the “production” side of the economy.

Our economy is based on maintaining a flow between acquisition and consumption. Whether we produce goods or simply gather them there needs to be a positive balance on the acquisition side in order for the economy to work to our advantage. If we expended more energy in acquiring our food than we gained from eating it we would rather quickly come to the end of our rope.

So what happens when we introduce machines, particularly robots, into this equation? Machines have to be more efficient than people at some aspect of scavenging or producing. Otherwise there would be no point in introducing them to the economy. And machines are also consumers; they require resources, especially energy.

People look at machines as aids but also as competitors. As machines become more sophisticated they replace human skills in the production side of the economy. Machines also consume some of the same energy resources. And as machines become more intelligent and versatile they compete even with highly skilled workers.

When a worker with a machine can produce as much as ten workers without machines a lot of workers are likely to lose their jobs. That is, they drop out of the producer side of the economy. Without income from jobs the losers fall out of the economy on the consumer side as well. And with a shrinking market for the goods they produce even the machines may be idled.

The forces on the economy that I have just described have been operating there for more than a century but the effects have become increasingly severe in America in the last 40 years. With an excess supply of human labor employers have not had to compete for workers. Wages have stagnated and even the employed have lost purchasing power. With less money in circulation on the consumer side markets have shrunk. For employers the only productive use for the savings in wages is to invest in more and better machinery. In the short run that improves the economy for producers of the machinery but the long range effect is to eliminate jobs and wages.

The vicious circle of decline I have described does have some escape routes. People with special skills are still needed in the development of better machines and robots. Money is being poured into education in the belief that it can propel young people into productive occupations. Many goods have become cheaper and thus more accessible even to the unemployed. The extension of human lives and the freeing up of time have opened up needs for more workers in areas such as medicine, personal care and entertainment. But the overall trend toward a less robust American economy is clear.

If our leaders are willing to do what is necessary to reverse this trend the first step is to put more spendable money in the hands of the working class, whether or not they are working. The key is that they will spend the money because they have immediate needs. Spending will create markets for goods and services, markets will attract investment, and investment will provide jobs for more workers and better machinery. The cycle of scavenging, producing and consuming will boom again.