The reasons why such a technological advance as major automotive improvement would cause economic problems are that (1) it eliminates the needs for the services of the people who made their living by meeting the demands of the old technology or conditions. (2) But it does so without creating a new or different need that these people in particular could become adept at fulfilling or would be peculiarly qualified to be readily trained for (such as in the case of, say, the development of a modified engine that is more efficient but that still needs service or repair and which (only) already trained mechanics could most readily learn with only a little extra training or a proper manual).⁽¹⁾ (3) There might not be any other sufficiently paying work they would be particularly suited for because of their previous training; so they would essentially have to learn a new or different trade from scratch⁽²⁾. (4) A free market economy has no way to absorb into the work force a huge number of people whose skills become obsolete or unnecessary in a very short period of time. (5) Yet working is the (main or only) way most people earn money to be able to do business (i.e., trade) with others for things they need, and (6) there will be things these now unemployed people will need. (7) They will be unable to buy these things, and people who sell them will be unable to sell as much, so they too will be affected and in turn affect those they purchase from. Essentially what an advance of this sort does is to eliminate the need for trading with --i.e., buying from-- these people any more, until and unless they can learn a new trade that is still in demand.⁽³⁾ Until they do so, they no longer help produce Goods and Services that would otherwise be unavailable without their work. (The same problem arises for these people, though with some differences for the rest of us, if something besides technological advances makes their service unnecessary -- for example, competition, foreign or otherwise, at a price and or quality they cannot match.) Unfortunately, they may not be able to learn a new trade or find a new economic niche of supplying a desired and affordable otherwise unsupplied Good or Service in a time frame that keeps them in sufficient money for food and shelter. To an uncaring society or in a system that could make no value judgments about human concerns, that would not be a technical or economic problem; it is simply the luck of the draw about who survives and who does not --the law of the economic jungle. It is also not necessarily a problem in a society or environment where individual self-sufficiency is possible and reasonable --where a person who loses his job is able to sustain himself somehow (as a farmer might, for example) without having to be part of an economic network⁽⁴⁾. It is a problem to a civilized, compassionate society that wants to be fair. And it is a problem to a society that believes people working together generally can, do, and should help each other more than they cost each other, so that throwing people out of the system, in the long run hurts those left in it more than it helps them. (And this refers, not to the negative aspects of chronic or "institutional" undesirable unemployment and poverty -- crime, social unrest, etc. -- but in terms of the lost total "positive" benefits society will do without, even if they never realize they are doing without something, whether it is leisure or whether it is additional Goods and Services.) 

The economic problem with the new car, or any invention, discovery, social development (such as the end of military threat), etc. that eliminates the need for much work, arises because generally (and supposedly) one earns from society in return for producing what society affordably needs or wants that is not otherwise available to them (that is, one's distribution from society is supposedly equivalent to or commensurate with one's contribution to society) and insofar as one does not contribute to society's affordable but unmet needs, one cannot get anything from society -- even if one is not lazy and it is not one's fault his particular skills and service are no longer considered necessary or worth trading for. The rest of society -- those who are still working and meeting other needs -- essentially now are freed from having to purchase or trade for the labor of the people whose labor is made unnecessary; but if at the same time there is no new work for the newly unemployed to begin, and if those still working will not share with them either their work (thus having more leisure) or the excess resources they are able to save by not having to purchase (i.e., trade for) these people's labor, then there is no way for the newly unemployed to enter into the contribution-distribution market. It is important for the unemployed if they cannot enter into the distribution part of the market when their original contribution is no longer necessary. And it is important for the rest of society if the newly unemployed cannot enter into the contribution part of the market because they are then idle instead of contributing.

Looking at this in different words, suppose that everyone is working and everyone's needs are met by the collective fruits of that work, and that labor serves not only as a contributing factor to the total well-being, but as a criterion or measure for how much one deserves to get back from the total output -- a standard for dividing up that total output. A technological advance of the sort in question 1 reduces the amount of need and eliminates the labor that went toward the previous need, but does not, by itself, change the distribution system. And so there is no way to spread the benefit of the reduced need to the people whose labor is no longer necessary. Without either (a) a new means of distributing the total production of society or (b) some new labor (or sharing of the remaining labor), if the need for people's previous labor is eliminated, so is their means of sharing in that production. If distribution is tied directly with contribution, then the elimination of the need for a particular contribution also eliminates the means of distributing (among those whose labor is no longer of use) the benefits of the elimination of that need. If technological advance like this happened to all labor at once, in all fields of human labor and need, the result might be Eden or paradise and everyone would be self-sufficient and content. The problem arises when it happens to some members of society and not to others. Those whose labor is not needed still have need for the labor of others but, without some redistribution of work or some form of "charity", they have no access to it because they have nothing to trade for it.

Some form of retraining for new work or for redistribution of remaining work in this particular kind of case seems, prima facie, to be the best way to solve the problem since it does not seem fair to say either (a) your work is no longer necessary, so you must starve out in the cold or (b) your work is no longer necessary, so the rest of us will work to sustain you while you do nothing. Solution (a) makes you very unlucky through no fault of your own; solution (b) makes you very lucky through no effort of your own. Both seem somehow unfair or wrong. There is an ethical relationship between working and benefitting from the work of others, the nature of which I will discuss more fully later in discussing fairness and desert. Essentially one wants everyone who can to pull at least his own weight (and, preferably, more) and do their fair share, while receiving a fair return for that work. 

It seems to me there are only two ethical solutions (for a compassionate and fair society) to solving the problem of those unemployed through the problem of their work's becoming obsolete. Society needs a way of reabsorbing them into the workforce as quickly and as painlessly and as fairly as possible either by (1) there being reasonable (suitable) new work for them to do -- which they find on their own or which society helps them find, or by (2) society's having a mechanism to redistribute all the current work that is still necessarily being done so that everyone participates in it, but now with more leisure time than all had before. In other words, the new invention should benefit all, either by allowing previously unmet needs to be met or by providing more leisure for all by letting the amount of work still needed to be done, to be done by more people -- those who were previously working to meet needs that the new invention meets better.

In the case of severe recession or depression, the contribution-distribution system is also disturbed, but this time because there is a severe and widespread breakdown on matching needs with available labor to meet those needs. It is not that needs can be met without the labor of some who then may be left out of the system, but that something has gone wrong in matching up trading, i.e., the contribution/distribution (labor/compensation) system while there is still work to be done and people to do it, but no systematic or methodological way to combine the two. There may be different reasons for this breakdown in different kinds of economic systems, e.g., wrong information or terrible mismanagement in a centralized command economy; but in a market economy, it is caused or exacerbated fully or in part by the unavailability of money (and/or credit) --the normal, and often controlling, means of exchange of labor and products-- where it needs to be in order to allow and facilitate trade. Keynes was able to show that under certain conditions (and there are other conditions as well), a capitalist, market or mixed economy might "stabilize" (reach equilibrium) with money in the wrong places to do any good for automatically employing people in needed tasks, and also in the wrong places to be able to flow to the right places automatically within the system to begin to do so.
 

What Keynes argued was that, as long as full employment in a given society was not reached, the level of unemployment was dependent on the level of consumer demand among those with wealth, and on the monetary interest rate. I believe there is a more general statement of this cause of unemployment: as long as any segment of society is (economically) contentedly self-sufficient, they have little or no economic incentive to include those left out of the economy in terms of either production or distribution. Just as a wealthy country can co-exist next to a poor country because the wealthy country is at least self-sufficient and does not need to have anything to do with its neighbor, so can this same situation occur within a country between different groups of citizens. There do not have to be geographic boundaries to be economic boundaries. This happens most easily perhaps, and is perhaps most obvious, when the advantaged, (relatively) self-sufficient group is readily distinguishable from the disadvantaged group (as with regard to gender or racial traits) but it is equally true with regard to physically indistinguishable poor who are, for example, undereducated, unwise in the ways of economic affairs, or without entry level access to positions where their talents or ideas might show and be appreciated and rewarded (e.g., authors who cannot get publishers to read their good works or who do not see the merit in them, and inventors, like Chester Carlson, for example, who cannot interest corporations in their inventions -- his invention ultimately becoming the Xerox machine, which could very easily be something none of us ever heard of). 
 

For reasons I will discuss more fully later (primarily keeping some form of individual choice and freedom as opposed to government control), the Keynesian or economic remedy (assuming population growth is reasonable and not Malthusian) for such problems is to use formal (rather than specific content) methods which manipulate consumer demand among the wealthy, and to manipulate the rate of interest so that investment (in more labor, more people) becomes attractive. I believe that in an advanced technological and industrial society this can lead to even further imbalances of wealth and employment (as investment is made in machines made by fewer and fewer people, and as communications can make companies more efficient with fewer workers); or it can lead to greater pollution or rape of resources as more unnecessary things get made and sold merely in order to provide people with a place in the economy, instead of redistributing the work that is done now so that everyone has more leisure to enjoy what is already produced. This is not meant to be an argument against invention or technological progress; but it is meant to point out that labor or employment, merely in itself is not progress. To induce the rich to spend their money getting others to do harmful or useless tasks is not likely the highest form of economic progress for the society as a whole. Further, I think it is not a particularly useful remedy, since the additional benefits can still be appropriated primarily among the already wealthy, rather than among the poor, just as a wealthy country can, by innovation and technology, produce more and more for itself and other technologically advanced (paying or trading) countries without including its poor geographic neighbor in the profits or increased benefits. Investment can always be in greater luxury for the few rather than in greater necessities for the many -- as long as all the needs of the few can be met, which, in a technologically advanced society, does not require full employment. I will argue later that there could be more direct ways of bringing the poor into the economy without the government's taking away individual freedom or infringing on personal choice.

There are six different arguments for doing so. (1) Compassion is right for people who can afford to act compassionately. (2) Hard-working, deserving people should not be abandoned just because they, through no fault of their own, had their skills become obsolete. They should not be discarded like old tv sets or obsolete computers. People should not be treated like inanimate things. They should not be treated only as means of benefit. (3) Obsolescence or unemployment could happen to almost anyone, and society's collectively trying to ameliorate its effects by (re-)training and (re-)employing people in useful, suitable work they have some talent for and interest in is basically an insurance policy for all. (4) In a population that does not outstrip the resources available to support it, the average person in a technological/industrial society can contribute far more than he or she consumes, so that each person employed in society can contribute more than he or she takes, thus benefitting everyone-- if his or her labor is employed wisely, producing Goods and Services. (5) In chapter 10, "The Invisible Hand Explained", I will argue that the there are peculiar limitations to the mechanism that Adam Smith, and economists since, have referred to as "the invisible hand". The limitations are essentially that in certain cases finding a beneficial economic niche to fit into may take more knowledge or insight than one or one's trading partners can reasonably have by themselves. If so, society's helping "the invisible hand" overcome those limitations will simply make even more useful the mechanism that economists from Smith on have extolled as being of tremendous economic and human benefit. (6) It is wrong to require people to support a social/political/economic system while excluding them from full participation, particularly benefits of that system. Insofar as an economic system requires certain social behavior and sacrifices from everyone, everyone should have fair opportunity (Chapter 8) to benefit from it. A system cannot rightfully unnecessarily burden some merely in order to benefit others.

The case presented by this car problem is not totally unlike the current United States problem of unemployment arising because of competition from Japan. However there are sufficient other factors involved in that problem that it will be more appropriate to discuss it in chapters that focus on issues of trade and on an explanation of money.

1. The work needed for these obsolete workers does not necessarily have to be a totally new job. If there were a mechanism for absorbing people into already existing jobs, whereby people shared work and gained leisure without losing other benefits, that would suffice. Theoretically, the advanced new cars introduced in the problem, because they are much less expensive to build, buy, and maintain, and because they do not have to be replaced, free people from having to work as hard to earn money for automobile needs. If people collectively then chose to redistribute the remaining necessary work among everyone available to do it, and if there were a mechanism that allowed this, the increased benefit and "profit" would be less work and greater leisure time for everyone, as opposed to forced idleness (which is not the same as leisure) for some while everyone else works as hard as they did previously, either for less money or for money which may simply buy less, and decrease in value due to inflation -- inflation caused by the reduction in products (i.e., less efficient cars) available because they are unnecessary. If new products and services do not become available to purchase with money that was previously spent on cars, that money will have less or no value to the person who earned it. And it will either be siphoned off by inflation or it might be siphoned off as a welfare tax of some sort to support the people who lost their jobs because of the invention that was such a benefit to everyone else.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2. The more a society has its labor divided and specialized, the more efficient it is in trade, as long as trade occurs, but the less efficient it is in reabsorbing into trade those workers whose particular skills and training have been rendered obsolete or unnecessary. That is because these people need to re-train to be useful. In a society that is not as specialized, those whose previous work was rendered unnecessary could step into other jobs more easily - if there were a mechanism that either made such jobs available, or that allowed workers to share jobs so that each had more leisure without losing benefits because of it.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3. This assumes the unemployed individuals cannot be self-sufficient. If they are self-sufficient, they may experience a temporary diminution in lifestyle, but are not put into a life-threatening situation nor one necessarily of poverty and all that entails. There is a difference between the ethics of a socio-economic system where participation is necessary for survival or for reasonable quality of life and a socio-economic system in which participation is reasonably optional. If one can leave the farm to work in the automobile industry or any other business, and return at will to the farm, the economic system that produces goods and services will expand and contract as people enter an leave it, but being a part of the system will not be a necessity, and there will be no great disasters as it shrinks or as jobs within the system become unnecessary and are eliminated.  (Return to text.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4. A totally interdependent society (where everyone's well-being is dependent on everyone's cooperation or companion efforts) has greater obligations to allow opportunity for the inclusion of deserving people who want to join than does a society in which interdependence is not necessary for survival or for financial flourishing. If being part of an economic network or system is not necessary in a society or is not important, society has less obligation to incorporate people into existing economic networks or niches. But as the importance of being part of the economic system increases, so does the obligation of the society that uses that system to allow opportunities for deserving or innocent people to participate. It is one thing for a group to allow individuals to be on their own if they wish; but it is another for a group to tell others they cannot participate when that would unnecessarily consign people to death or unfair sacrifice.  (Return to text.)