-1
$\begingroup$

According to Thomas Piketty, if I do not misunderstand, the population growth and technology advancements are the keys for the growth of the economy and society in the capitalism society.

However, could the decreasing population be a result of capitalism? The advancement of technologies will replace human with automation. In 1940, more than 10 million people are in agriculture but approximately 100,000 in 2020 in Japan due to the technology advancement.

Technology and automation will reduce the necessity of human labor, then how do we do with the population redundancy? Do we develop an economy in which such redundant people live or do we reduce the population itself?

$\endgroup$
2

1 Answer 1

1
$\begingroup$

According to Thomas Piketty, if I do not misunderstand, the population growth and technology advancements are the keys for the growth of the economy and society in the capitalism society.

These are keys for the economic growth of any society. No matter what political or socio-economic system it has.

However, could the decreasing population be a result of capitalism?

Decreasing population growth is result of combination of (the Economist):

a) Increase in average income.

b) Decrease in child mortality.

c) Bans on child labor.

d) Creation of social support systems and retirement schemes.

e) Higher levels of education.

Increases in average incomes make opportunity costs of having a child higher. Moreover, children in past served as family safety net. In pre-welfare-state societies children were required to care about their parents in old age. Having large number of children was a way for families to ensure there is some social net for them once they are too old to work. This was especially important when child mortality was high so people had to overshoot (as there was high probability of child dying before maturity) and have extra children to ensure at least 3-4 of them would survive till adulthood. Moreover, in past children were also free labor for the household. In pre-industrial and early industrial societies mostly only rich children would have education and regular children would work and contribute to family as soon as they could. Finally society with higher levels of education have to spend more resources on educating children so people can afford to have less kids.

As to whether any of these are result of capitalism depends on your definition of what capitalism is.

Technology and automation will reduce the necessity of human labor, then how do we do with the population redundancy? Do we develop an economy in which such redundant people live or do we reduce the population itself?

It is not clear whether technology decreases necessity of human labor. That is part of ongoing debate. In fact until now technology - mostly increased the necessity for human labor as an input into economy-wide production function.

Automation does not necessary reduce need for human labor because demand for labor is endogenous. There is no fixed amount of work that has to be done. For example, if machine allows one worker to produce 10x the amount of goods that worker could produce in past then the company can sell 10x more goods to customers.

Macroeconomically output is equal to income and as income increases people consume more goods so the more productive people get the more consumption there will be in an economy (see for example Blanchard et al Macroeconomics). Of course, as economies get richer the consumption patterns might shift so people in some industries might experience disemployment due to automation but overall economy-wide employment would not change as long as there is at least some minor level of complementarity between labor and capital.

For example, in the US unemployment today is virtually the same as it was in 1948 despite of more than 70 years of automation and offshoring.

enter image description here

Of course, this could change in the future. It all depends whether there is some complementarity between labor and capital or whether they can be substituted for each other (e.g. is economy wide production function like this: $Y=AL^{\alpha} K^{1-\alpha}$ or like this: $Y=AL^{\alpha}+ BK^{\beta}$). However, so far labors and capital are on average complementary.

If at some point there is absolutely no need for human labor (i.e. we have human level intelligent robots that can do any task humans can better and cheaper including managing the work of robots), then it will be policy choice what to do with unemployed people. Either government can decide to subsidize people for doing nothing, or trying to do something else.

$\endgroup$

Not the answer you're looking for? Browse other questions tagged or ask your own question.