In the last couple of days, Centrica and Barclays Bank have both announced job losses — several thousand in each case. The supermarkets, after having destroyed hundreds of thousands of small shopkeeping jobs in the last 20 . . . years, will be shedding yet more labour themselves in the near future as they shut down some of their stores under strong competition from internet providers delivering goods from automated warehouses.
And so job losses will go on in all large firms due to automation, leaving the bulk of the population to be increasingly occupied in lower paid jobs — in fact, the continuation of what has been happening in all advanced countries in the past 20 years or so. If so, how can a sufficient consumer market be maintained? Where will the minority of the population which owns or services the large firms get their profits, and hence their prosperity, from?
The answer is that profits don’t come from the exploitation of some people by others. That’s the Marxist fallacy which unfortunately still pervades most thinking. That’s what has seemed to happen throughout history and, indeed, it seems to be going on now in the sense that the advanced countries are doing well at the expense of the less advanced countries. But, fundamentally, profits can come only from the successive use of methods which use less energy than its predecessors, whether the energy concerned is the cost of human energy, animal energy or electricity. Who or what introduces the energy into the production method is immaterial. It’s the cost that counts.
Thus, even if the total consumer market declines in numbers and spending, the minority which owns and supervises the large highly automated firms of the future will still continue to make profits (vis-a-vis other competitive firms) by constantly changing its methods in order to use less energy each time.
What will happen to the majority of the population as it become steadily impoverished? It can slow down the process by having fewer children, or by increasing its rate of euthanasia (as discussed in yesterday’s blog). or it can successfully appeal for more subsidies from the prosperous minority (as most of the UK does at present from London at times of General Elections). or it can break away from poor quality state education for its children and develop Free Schools which will help to educate its children in scientific expertise enabling them to join the prosperous minority.
It will be a mixture of all these strategies and the balance will depend on government’s decisions which in turn depends on what other competititve countries are doing. Much will depend on how all the various skills are distributed between one country and another, and also on those consumer demands which can only be satisfied by individual countries with unique goods or services not able to be supplied by any others, perhaps due to their special location, geology or climate.