Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

My Thoughts

Why you should be Scared of Robotization

There’s a new word out there that we should be scared of: “robotization.” The term conveys a simple but incredibly disruptive process the replacement of human workers with robots.

The process should scare us because it might create a society in which wealth and power is concentrated in the hands of those who own the robots. The fear is that the rich who own the robots will not share the wealth they produce with those displaced by them.

Who Owns the Robots Rules the World

The problem is best laid out in “Who Owns the Robots Rules the World: The deeper threat of robotization” a Harvard Magazine article by Ascherman Professor of Economics Richard B. Freeman. Freeman’s concern is that robotization will lead to increased unemployment, underemployment and income inequality.


“There is also nothing in economics that guarantees that the humans displaced from jobs by robots will end up with new jobs that pay as much as their former jobs, or pay enough to attain a middle-class lifestyle,” Freeman noted. “The main thing to fear today is not joblessness, but a future in which the earnings of workers are stagnant or falling (as robots take a greater share of high-productivity jobs), and the share of income going to the owners of the machines increases.”

How Robotization can Make Income Inequality Worse

Freeman also gives a good impression of how robotization will affect the economy with his three laws of robo-nomics; a play on Isaac Asimov’s three laws of robotics. The laws do a great job of laying out how robotization might affect us. Here they are:

Law 1: Advances in artificial intelligence and robotics will produce machines that are better substitutes for humans—in the lingo of economics, an increasing elasticity of substitution between robot and human work.

Law 2: The cost of robot machine substitutes for humans will decrease as technology reduces production costs, placing downward pressure on wages.


Law 3: Income will increasingly come from ownership of robots or other forms of capital and the stream of income they produce, rather than from human labor.

Industrial Revolution in Reverse

If Freeman is correct our society is about to undergo a technological and economic paradigm shift on par with the Industrial Revolution. The difference will be that instead of widely dispersing wealth and the benefits of technology; as the industrial revolution did. This upheaval will concentrate it in the hands of a few wealthy people and leave everybody else in the cold.


A good way to think of this would be as an industrial revolution in reverse. Freedman provides one potential to this problem in the form of shared ownership and profit sharing. A more obvious and probably realistic solution would be confiscatory taxation and government wealth distribution perhaps in the form of a basic income scheme similar to Alaska’s Permanent Fund, which disperses oil royalties to that state’s residents.

Even Darker Visions of the Future

Freeman’s vision is frightening but it only scratches the surface. Author Peter Frase offers an even darker depiction of the future in his Four Futures: Life After Capitalism which was examined in a recent Guardian review.

Frase presents four potential futures shaped by robotization they are:

  • Communism. A sort of Marxist utopia in which the bounty produced by robots is distributed to everybody free of charge. It would be a post-work, post-scarcity and post-carbon world like “The New World Economy” depicted in Star Trek. Note Freeman returns to the original meaning of Communism not the Marxist thuggery of Lenin, Stalin, Mao, Castro, Pol Pot and company.

back plate welding by robot

  • Rentism. A plutocracy in which the elite own all the robots, and charge a high price for their use. People would need jobs to take advantage of the robots; but there would be very few jobs because robots would be doing all the work. Such a world would be one of vast income inequality, class warfare and social instability.


  • Socialism. A society in which central planning evenly distributes the products produced by the robots. It would be similar to European social democracy. As in rentism a small elite would be in control, but it would be an elite of bureaucrats and politicians rather than capitalists.
Real-life terminators, Russia’s Uran-9 robot tanks are already in service.
  • Exterminism. A neo-feudal society Mad Max society in which the rich live in fortified enclaves possibly protected by armies of killer robots. Everybody else would be poor and living outside or exterminated by the wealthy’s terminators. The author points out that the poor would no longer be needed for labor so the logical solution would be to exterminate them. Frase imagines that resources would be scarce; and the world scarred by global warming, which might lead to constant wars among the robotic armies of the elitists with the poor caught in the middle.


We must start paying attention to voices like those of Freeman and Frase. They’re warning us of a nightmare future that might be just around the corner. We need to pay attention if we do not want to lose our freedoms to the robots and their owners.