Robots Raise a Row(e) in Economics Land

Always remember, economics is not reality and the fact that economists use the tools of scientists (maths) does not make it a science. Or, as George E.P. Box said so much better:

"...All models are wrong, but some are useful"

From Worthwhile Canadian Initiative (Nick Rowe):
Production of Robots by means of Robots

(Sorry about the title. The devil made me write it.)

What are we afraid of? Let's think about the worst-case, nightmare scenario for the distribution of income.

Assume that all capital is robots, and robots are perfect substitutes for human workers. One robot can produce everything and anything one human worker can produce. And that includes producing more robots.

And assume that every year the technology of robot production improves, so that it takes less and less time for one robot to produce another robot.

That sounds nightmarish, right? Because robots will get cheaper and cheaper, and drive down human wages?

Well, no. They won't. Or rather, it all depends. It depends on whether we add other forms of capital, or land, to the model.

Labour and Robots only.
Let's start out by ignoring land. And the only form of capital is robots. You can produce everything with just human or robot labour.

The production function is: C + I/a = L + K  and Kdot = I
where C is consumer goods produced per year, I is robots produced per year, a is a parameter which increases over time as technology improves and robots get easier to produce, K is the stock of robots, and L is the number of human workers.

There's another way to look at the parameter a. It's the rate at which robots can reproduce themselves if they aren't producing consumption goods instead. (I'm assuming that robots can't, er, reproduce and make chewing gum at the same time.)...MORE

That post elicited this rejoinder from Thoughts on Economics (Robert Vienneau):

Nick Rowe Knavery 

So much nonsense packed into so few words:

"But the lefty Sraffian model has only labour and time as inputs." -- Nick Rowe

I do not know what politics has to do with it. I'd like to see some evidence of the political beliefs of, say, Neri Salvadori. When Sraffa states, in the preface of Production of Commodities By Means of Commodities, that "Others have ... independently taken up [similar] points of view," I think he includes John Von Neumann. Von Neumann wanted to wage an atomic war against the Soviet Union. I guess Rowe must think Von Neumann was a Trotskyite.

The Sraffa model, of course, includes non-produced inputs other than labor. "Land" is the title of Chapter 11 of Sraffa's book. I have attempted to explain some of the points in this chapter here and here. Heinz Kurz, Neri Salvadori, and Bertram Schefold are just some of the economists who have contributed to the literature building on Sraffa's analysis of land.

To address another Rowe misconception, Sraffians have also analyzed heterogeneous labor. In fact, "Heterogeneous Labor" is the title of Chapter 7 of Ian Steedman's book, Marx After Sraffa. I have an example with heterogeneous labor here....MORE 

Mr. Vienneau is a bit of a bomb thrower and has obviously read Schopenhauer's little treasure "Die Kunst, Recht zu behalten" on debate and dialectics and especially the last chapter Become Personal, Insulting, Rude (the Ultimate Strategem).

Here's Sraffa's Production of Commodities by Means of Commodities.

The only other time we've mentioned Sraffa was to link to his monumental biography of David Ricardo so I could excerpt Ricardo's rules of investing and about which Nobel economics Laureate George J. Stigler said:

 "Ricardo was a fortunate man... And now, 130 years after his death, he is as fortunate as ever: he has been befriended by Sraffa."

By fortunate Stigler is surely including the fortune Ricardo made as a stock-jobber, bond trader and investment banker in the City of London, which made Ricardo, as well as I've been able to determine, the wealthiest economist of all time.

See also:
The Road to Serfdom: Where the Robots Are Taking Us