Ryan Avent usually writes for The Economist, here he is at MIT's Technology Review, June 27:
Private ownership of capital is the defining feature of most of the world's economies. The conflicts between the owners of capital and the laborers who operate it for them defined two centuries of history. Not for nothing did Karl Marx title his indictment of industrial economies, simply, Capital. Yet the nature of capital changes with time and technology. The world may soon face a new era of conflict between labor and capital, based on a relationship between the two far different from that which animated Marx.If interested see also:
For most of industrial history, capital meant tangible things like looms and furnaces and other machines that you could see and smell and fall into if you were insufficiently cautious. Capitalists spent heavily to outfit their factories, and they put the maximization of these factories’ output above all else. But they also depended on a growing workforce to operate the machines. Capital and labor each sought to prevent the other side from gaining the power to dictate the terms of the relationship—and the distribution of profits generated by it.
Today’s corporate giants rely on different sorts of capital entirely, with very different demands. In their recent book, Capitalism Without Capital, Jonathan Haskel and Stian Westlake describe a 2006 analysis of Microsoft. The company's market valuation at the time was about $250 billion. But its book value was only $70 billion, largely cash and financial instruments, while a mere $3 billion or so could be ascribed to what is usually thought of as capital: plants and equipment. Almost all of Microsoft’s worth was in intangible assets like its intellectual property and brands. Intangibility is most pronounced in tech firms, but it’s important across the economy. A recent analysis found that less than 20 percent of the market value of S&P 500 firms was due to the tangible assets on their balance sheets—a reversal of the ratio that prevailed in the 1970s.
Today most capital, in value terms at least, lives in neurons and silicon rather than on factory floors. The computerization of everything from toothbrushes to pickup trucks means that ever more of a good’s value derives from the software that operates it. The know-how needed to design and build such products (and to manage the complex supply chains that actually produce them) is yet another component of intangible capital. The growing power and appeal of AI stretches the definition of capital still further. Machine-learning programs are an odd form of quasi-labor, trained on data generated by people to do tasks previously done by people. Yet they are owned and controlled by firms in the same way a truck or computer would be.
This evolution fundamentally changes the relationship between labor and capital. While the world of industrial capitalism was shaped by the conflict between the two, there was nonetheless a certain balance of power, since they also needed each other to unlock the riches made possible by technological change. Digital capitalism is different.
On the one hand, as machines grow increasingly autonomous, capital will need fewer workers. In the industrial era, machinery was a substitute for some workers but a complement to many others, such as the tens of millions of relatively low-skilled workers needed to operate factory equipment. Ever more capable AI, in contrast, is very nearly a pure substitute for labor. As it spreads across the economy, labor will lose both leverage within the workplace and the moral claim to a share of the economy’s profits that working provides.
Capital is learning from labor in order to mimic labor and eventually replace it....MUCH MORE
