This is Martin Ford, the author of The Lights in the Tunnel. I just wanted to respond to your comment here:
If the average consumer is unemployed and has no income, he is obviously not going to be purchasing stuff for his machines. In fact, ownership of the machines will concentrate into a shrinking elite as machines take the jobs of average people.
Remember that the focus here is on what we might call "end consumption." If you consider GDP, consumer spending is about 70% of that. It is important to note that that is only END consumption by PEOPLE.
When General Motors purchases steel for its cars that is not consumption and is NOT added to GDP. The value of the steel gets accounted for ONLY when someone buys a car. The same argument applies to this idea of machines using resources. If the machines are used in production--and if they replace human workers--then what the machines "consume" is not END consumption and does not drive the economy. It is intermediate consumption. A PERSON still has to purchase the end product. Machines cannot do this. If too few people have the ability to purchase END products, the mass market economy will collapse.
Everything produced by the human economy is ultimately consumed by individual human beings. This applies even to government spending since the services provided by government are consumed by people. The only other factor is business investment, and that occurs in response to anticipated future consumer spending--businesses will invest only if they anticipate future demand.
Anywone who is interested can read the book for free in PDF at http://www.thelightsinthetunnel.com. If you prefer to buy the book at Amazon, I would like that even bettter.. ;-)
Hi,
This is Martin Ford, the author of The Lights in the Tunnel. I just wanted to respond to your comment here:
If the average consumer is unemployed and has no income, he is obviously not going to be purchasing stuff for his machines. In fact, ownership of the machines will concentrate into a shrinking elite as machines take the jobs of average people.
Remember that the focus here is on what we might call "end consumption." If you consider GDP, consumer spending is about 70% of that. It is important to note that that is only END consumption by PEOPLE.
When General Motors purchases steel for its cars that is not consumption and is NOT added to GDP. The value of the steel gets accounted for ONLY when someone buys a car. The same argument applies to this idea of machines using resources. If the machines are used in production--and if they replace human workers--then what the machines "consume" is not END consumption and does not drive the economy. It is intermediate consumption. A PERSON still has to purchase the end product. Machines cannot do this. If too few people have the ability to purchase END products, the mass market economy will collapse.
Everything produced by the human economy is ultimately consumed by individual human beings. This applies even to government spending since the services provided by government are consumed by people. The only other factor is business investment, and that occurs in response to anticipated future consumer spending--businesses will invest only if they anticipate future demand.
Anywone who is interested can read the book for free in PDF at http://www.thelightsinthetunnel.com. If you prefer to buy the book at Amazon, I would like that even bettter.. ;-)