Cooking the Books 2 – UBI no solution

We’ll need universal basic income — AI “godfather” . The godfather in question was Professor Geoffrey Hinton, so dubbed because he was a pioneer of neural networks on which AI is modelled. He told BBC Newsnight that a scheme ‘giving fixed amounts of cash to every citizen would be needed because he was “very worried about AI taking lots of mundane jobs”. ( …) He said while he felt AI would increase productivity and wealth, the money would go to the rich “and not the people whose jobs get lost and that’s going to be very bad for society”’.

It’s a common view: AI will lead to mass unemployment with a consequent reduction in paying demand; the remedy to this is ‘the government paying all individuals a set salary regardless of their means’. This would both sustain paying demand and reduce inequality.

But it is not a new idea. The same analysis and the same proposal were made sixty years ago, but in relation to ‘cybernation’, a word that has dropped out of common use but which means ‘the control of an industrial operation or task through processing of information with a computer’. In March 1964 a group of left-wing intellectuals formed an ‘Ad Hoc Committee on the Triple Revolution’ and drew up a report for presentation to President Johnson. One of these revolutions was the ‘cybernation revolution’.

They argued that ‘the rate of productivity increase has risen with the onset of cybernation’ and that ‘an industrial economic system postulated on scarcity has been unable to distribute the abundant goods and services produced by a cybernated system or potential in it’. To remedy this, they proposed:

‘. . . it is essential to recognize that the traditional link between jobs and incomes is being broken. The economy of abundance can sustain all citizens in comfort and economic security whether or not they engage in what is commonly reckoned as work. Wealth produced by machines rather than by men is still wealth. We urge, therefore, that society, through its appropriate legal and governmental institutions, undertake an unqualified commitment to provide every individual and every family with an adequate income as a matter of right’ (

They were in effect saying that capitalism had solved the problem of producing enough for everyone but had not solved that of distributing it. Theirs was a proposal as to how capitalism could do this. Johnson of course took no notice of their report. Cybernation continued but there was no consequential massive increase in technological unemployment. So where did they go wrong?

One reason was assuming that mechanisation (of which automation, cybernation and now AI are instances) takes place as soon as it just becomes technologically possible. Under capitalism it is only applied if it is cheaper than having the work done manually or by some already established machine. This slows down technological progress.

Nor does technological progress come in all at once but spreads only slowly. Overall productivity does increase but only at a fairly modest rate (averaging around 2 percent a year). This gives the economy time to adjust. There is some technological unemployment but new employment opportunities (though not necessarily for those displaced) open up as capital accumulation proceeds.

Paying a basic income to everyone while maintaining private ownership of machines and production for profit won’t work, because it would undermine both the profit motive and the wages system, two essential features of the capitalist system. The money to do this could only come from taxes and taxes ultimately fall on profits, reducing the incentive that drives capitalism. It would undermine the wages system by reducing the economic pressure on the excluded majority to work for an employer to get money to buy what they need to live.

Capitalism is inherently incapable of solving the problem of distributing enough for all.

Next article: Proper Gander – Temu’s temerity ➤

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