Will Wilkinson argues that robots will make manufacturers rich
When I employ labour, production is a matter of the coordinated integration of capital goods with valuable human skill and effort. Productive cooperation naturally raises questions about the fair division of the spoils. Now suppose I replace all my workers with machines. Questions of distributive fairness disappear! I own the machines; I don’t owe the steely suckers anything! Of course, the principal reason I choose to automate is not that machines don’t slack off, become indignant in the face of injustice, or go on strike. I choose to automate because it saves me, and thus makes me, money. Of course, “robots” are expensive. I buy them from robot manufacturers. At some point, a good robot “pays for itself”. Until then, I’m dividing profits with the robot-makers instead of workers. (Imagine I’m paying in installments out of my revenue; it’s a lot like paying wages.) After then, I internalise all the gains from production. All mine!
Will might think that he is going to rake in tons of profits from a purely robotic assembly line but he is going to be disappointed.
It turns out there are other capitalists with exactly this same idea. They too are going to buy robots. They will compete against him and drive the price of his product down, all the way down to the price of the robots.
Indeed, if managing a robot firm requires less skill, and is therefore more open to new competitors, than running a human factory then Will could actually see his profits decline in the robot future.
So who will profit in this world? The superstar engineers who own the patent on robots.
Rents always accrue to the limiting factors of production. Simply put, the people who walk away with all the cash are always the ones who own the thing that is in shortest supply.
When labor is in short supply its workers. In a world without efficient capital markets, its those with access to a pool of private savings. In our modern world it is the creators of new technology and the managers of other people’s money.