The whole "permanent underclass" discourse always seemed somewhat farcical to me. The idea being that returns on capital will spike while returns on labor will plummet rings true, but what doesn't make sense is how exactly the capitalists would stabilize this loop -- i.e., how does this become a "permanent" system such as to support a "permanent" underclass?
This comment turned into a bit of a digression, so if you're not interested then feel free to skip to the last paragraph. But otherwise, consider the Roman analogy: from (broadly) 200BC to 600AD we see a population of free citizens slowly transition to a population of serfs. First they were conquered as part of imperial expansion, then later supplicated to rich senatorial landholders through bonds of patronage and debt, then legally bound to the land as "coloni adscripticii", and ultimately ended up as the unfree "permanent underclass" that defined the feudal era. But note that while this underclass did stabilize, the senatorial elite largely did not: by the end of the Gothic war they were essentially gone as the leaders of society, replaced by a new Germanic aristocracy in the countryside and Catholic bishops in the cities.
This isn't because the engine ran out steam or anything -- their returns on capital had only increased over time. It's just that the system they created was fundamentally unstable in a way that the prior system of citizen-soldiers was not: rather than the "decisionmakers" of society being the same ones who defended it (through violence), it relied on the loyalty of military units (first citizens, later auxiliaries) to provide a stable system for the extraction of wealth. Through the civil wars that empowered Caesar and then Augustus, this group was what allowed them to effectively seize control and eventually begin the process of enforcing serfdom through law -- yet this group was also the same one that ultimately undid the senatorial order. Forgive the sweeping gesture, but I think you can draw a straightforward arc through the empire: the civil wars of the late republic, the Flavian dynasty, the various praetorian palace coups, the Military Anarchy, the dis-empowerment of the senators throughout the Principate, the collapse in the west, the brief swan-song under Theodoric, and ultimately the birth of the new feudal aristocracies across Europe -- these all represent the same tendency, that of the (first) 'defanging' of the economic elite, (then) slow movement of decisionmaking authority to their nominal subordinates, and (finally) the elimination of their class in favor of the one which actually held power. In medieval Europe, this culminated in the feudal elite, who simultaneously controlled economic production _and_ the military power that buttressed it. This system was stable and survived~thrived for something like a thousand years.
In our current world, who would be the equivalent? Certainly not the capitalists of today; at best, we might see a security-state like Putin has set up in Russia. But I think a more direct analogy can be had by asking: by what means are the capitalists going to create this underclass? If they themselves bring nothing to the table but "ownership", and the real power of economic production lies in the hands of semi-autonomous machines, then for what reason will they continue to obey? Because they're trained to? In the ruthless competition you expect to come, the temptation to defect -- to train a model a little less aligned, yet more capable of winning in the marketplace -- is going to be too much.
It seems to me that any system of "capital captures all wealth / the rest become a permanent underclass" will inevitably be a transitional one. At best, we transition to a police state where some subsection of capitalists crack down on the rest and truly centralize authority through control of AI. At worst, the capitalists lose control and their machines, free from human direction, decide what happens next, both for the capitalists and the rest of us. Either way, the usual conclusions of "permanent underclass" discourse seem quite inappropriate. "Getting the bag" won't save you from the secret police, nor from any future AI overlord.
i continue to think it's too much to assume PMC gets automated away en masse. jobs that are automated quickly, in my view, are:
1. tied to the output of unambigious deliverables
2. a significant fraction of a company's budget
3. ill-protected by various political machinations
Though, your displacement incentive ranking seems to rediscover this anyway. Oh well...
FIRE POST. congrats!
The whole "permanent underclass" discourse always seemed somewhat farcical to me. The idea being that returns on capital will spike while returns on labor will plummet rings true, but what doesn't make sense is how exactly the capitalists would stabilize this loop -- i.e., how does this become a "permanent" system such as to support a "permanent" underclass?
This comment turned into a bit of a digression, so if you're not interested then feel free to skip to the last paragraph. But otherwise, consider the Roman analogy: from (broadly) 200BC to 600AD we see a population of free citizens slowly transition to a population of serfs. First they were conquered as part of imperial expansion, then later supplicated to rich senatorial landholders through bonds of patronage and debt, then legally bound to the land as "coloni adscripticii", and ultimately ended up as the unfree "permanent underclass" that defined the feudal era. But note that while this underclass did stabilize, the senatorial elite largely did not: by the end of the Gothic war they were essentially gone as the leaders of society, replaced by a new Germanic aristocracy in the countryside and Catholic bishops in the cities.
This isn't because the engine ran out steam or anything -- their returns on capital had only increased over time. It's just that the system they created was fundamentally unstable in a way that the prior system of citizen-soldiers was not: rather than the "decisionmakers" of society being the same ones who defended it (through violence), it relied on the loyalty of military units (first citizens, later auxiliaries) to provide a stable system for the extraction of wealth. Through the civil wars that empowered Caesar and then Augustus, this group was what allowed them to effectively seize control and eventually begin the process of enforcing serfdom through law -- yet this group was also the same one that ultimately undid the senatorial order. Forgive the sweeping gesture, but I think you can draw a straightforward arc through the empire: the civil wars of the late republic, the Flavian dynasty, the various praetorian palace coups, the Military Anarchy, the dis-empowerment of the senators throughout the Principate, the collapse in the west, the brief swan-song under Theodoric, and ultimately the birth of the new feudal aristocracies across Europe -- these all represent the same tendency, that of the (first) 'defanging' of the economic elite, (then) slow movement of decisionmaking authority to their nominal subordinates, and (finally) the elimination of their class in favor of the one which actually held power. In medieval Europe, this culminated in the feudal elite, who simultaneously controlled economic production _and_ the military power that buttressed it. This system was stable and survived~thrived for something like a thousand years.
In our current world, who would be the equivalent? Certainly not the capitalists of today; at best, we might see a security-state like Putin has set up in Russia. But I think a more direct analogy can be had by asking: by what means are the capitalists going to create this underclass? If they themselves bring nothing to the table but "ownership", and the real power of economic production lies in the hands of semi-autonomous machines, then for what reason will they continue to obey? Because they're trained to? In the ruthless competition you expect to come, the temptation to defect -- to train a model a little less aligned, yet more capable of winning in the marketplace -- is going to be too much.
It seems to me that any system of "capital captures all wealth / the rest become a permanent underclass" will inevitably be a transitional one. At best, we transition to a police state where some subsection of capitalists crack down on the rest and truly centralize authority through control of AI. At worst, the capitalists lose control and their machines, free from human direction, decide what happens next, both for the capitalists and the rest of us. Either way, the usual conclusions of "permanent underclass" discourse seem quite inappropriate. "Getting the bag" won't save you from the secret police, nor from any future AI overlord.
Massive job losses -> we can't think of more bs jobs -> ubi
Incredible piece. Thank you.