Tag: automation

the “hacker class”, automation, and smart capital

(Mood music for reading this post:)

I mentioned earlier that I no longer think hacker class consciousness is important.

As incongruous as this claim is now, I’ve explained that this is coming up as I go through old notes and discard them.

I found another page of notes that reminds me there was a little more nuance to my earlier position that I remembered, which has to do with the kind of labor done by “hackers”, a term I reserve the right to use in MIT/Eric S. Raymond sense, without the political baggage that has since attached to the term.

The point was in response to Eric. S. Raymond’s “How to be a hacker” essay which was that part of what it means to be a “hacker” is to hate drudgery. The whole point of programming a computer is so that you never have to do the same activity twice. Ideally, anything that’s repeatable about the activity gets delegated to the computer.

This is relevant in the contemporary political situation because we’re probably now dealing with the upshot of structural underemployment due to automation and the resulting inequalities. This remains a topic that scholarship, technologists, and politicians seem systematically unable to address directly even when they attempt to, because everybody who sees the writing on the wall is too busy trying to get the sweet end of that deal.

It’s a very old argument that those who own the means of production are able to negotiate for a better share of the surplus value created by their collaborations with labor. Those who own or invest in capital generally speaking would like to increase that share. So there’s market pressure to replace reliance of skilled labor, which is expensive, with reliance on less skilled labor, which is plentiful.

So what gets industrialists excited is smart capital, or a means of production that performs the “skilled” functions formerly performed by labor. Call it artificial intelligence. Call it machine learning. Call it data science. Call it “the technology industry”. That’s what’s happening and been happening for some time.

This leaves good work for a single economic class of people, those whose skills are precisely those that produce this smart capital.

I never figured out what the end result of this process would be. I imagined at one point that the creation of the right open source technology would bring about a profound economic transformation. A far fetched hunch.

Innovation, automation, and inequality

What is the economic relationship between innovation, automation, and inequality?

This is a recurring topic in the discussion of technology and the economy. It comes up when people are worried about a new innovation (such as data science) that threatens their livelihood. It also comes up in discussions of inequality, such as in Piketty’s Capital in the Twenty-First Century.

For technological pessimists, innovation implies automation, and automation suggests the transfer of surplus from many service providers to a technological monopolist providing a substitute service at greater scale (scale being one of the primary benefits of automation).

For Piketty, it’s the spread of innovation in the sense of the education of skilled labor that is primary force that counteracts capitalism’s tendency towards inequality and (he suggests) the implied instability. For the importance Piketty places on this process, he treats it hardly at all in his book.

Whether or not you buy Piketty’s analysis, the preceding discussion indicates how innovation can cut both for and against inequality. When there is innovation in capital goods, this increases inequality. When there is innovation in a kind of skilled technique that can be broadly taught, that decreases inequality by increasing the relative value of labor to capital (which is generally much more concentrated than labor).

I’m a software engineer in the Bay Area and realize that it’s easy to overestimate the importance of software in the economy at large. This is apparently an easy mistake for other people to make as well. Matthew Rognlie, the economist who has been declared Piketty’s latest and greatest challenger, thinks that software is an important new form of capital and draws certain conclusions based on this.

I agree that software is an important form of capital–exactly how important I cannot yet say. One reason why software is an especially interesting kind of capital is that it exists ambiguously as both a capital good and as a skilled technique. While naively one can consider software as an artifact in isolation from its social environment, in the dynamic information economy a piece of software is only as good as the sociotechnical system in which it is embedded. Hence, its value depends both on its affordances as a capital good and its role as an extension of labor technique. It is perhaps easiest to see the latter aspect of software by considering it a form of extended cognition on the part of the software developer. The human capital required to understand, reproduce, and maintain the software is attained by, for example, studying its source code and documentation.

All software is a form of innovation. All software automates something. There has been a lot written about the potential effects of software on inequality through its function in decision-making (for example: Solon Barocas, Andrew D. Selbst, “Big Data’s Disparate Impact” (link).) Much less has been said about the effects of software on inequality through its effects on industrial organization and the labor market. After having my antennas up for this for many reasons, I’ve come to a conclusion about why: it’s because the intersection between those who are concerned about inequality in society and those that can identify well enough with software engineers and other skilled laborers is quite small. As a result there is not a ready audience for this kind of analysis.

However unreceptive society may be to it, I think it’s still worth making the point that we already have a very common and robust compromise in the technology industry that recognizes software’s dual role as a capital good and labor technique. This compromise is open source software. Open source software can exist both as an unalienated extension of its developer’s cognition and as a capital good playing a role in a production process. Human capital tied to the software is liquid between the software’s users. Surplus due to open software innovations goes first to the software users, then second to the ecosystem of developers who sell services around it. Contrast this with the proprietary case, where surplus goes mainly to a singular entity that owns and sells the software rights as a monopolist. The former case is vastly better if one considers societal equality a positive outcome.

This has straightforward policy implications. As an alternative to Piketty’s proposed tax on capital, any policies that encourage open source software are ones that combat societal inequality. This includes procurement policies, which need not increase government spending. On the contrary, if governments procure primarily open software, that should lead to savings over time as their investment leads to a more competitive market for services. Equivalently, R&D funding to open science institutions results in more income equality than equivalent funding provided to private companies.