The source of radical indeterminacy and the touchstone of value
It took Thomas Anderson about five seconds to choose the red rather than the blue pill, and a few more to swallow it. In a triumph of reckless curiosity over the lure of simple pleasures, he turned down the prospect of blissful ignorance offered by the blue pill, opting instead for the cruel reality promised by the red one. But then again, without that heroic choice, The Matrix would not have been the box office hit that it was on its release back in 1999. Larry and Andy Wachowski, the film’s makers, invite us to witness the reality that Thomas Anderson’s choice revealed in all its horror and to follow his subsequent heroics, as well as inner struggle, to alter it.
Upon taking the red pill, Anderson (aka Neo) is confronted with the realisation that the world was not as it seemed. His whole life had hitherto been a computer-generated illusion whose only purpose was to cloak the unbearable truth. In the reality that the red pill unveiled, the world had been taken over by machines of our own making decades ago. As in folk tales or works of science fiction past, ranging from the Brothers Grimm’s ‘sweet porridge’,1 Goethe’s Sorcerer s Apprentice, Jewish Golem tales and Mary Shelley’s Frankenstein to films like Blade Runner and The Terminator series,2 we lost control of our own creations andy when we decided to push the ‘off button, we realised that it was too late: the artefacts had taken over, with an iron will of their own, turning against their creators. Hubris met its nemesis.
What is, however, unique in The Matrix is that, in it, our artefacts’ rebellion was not just a simple case of creator-cide. Unlike Frankenstein’s Thing, which attacks humans irrationally out of its sheer existentialist angst, or The Terminator series’ machines, which just want to exterminate all humans in order to consolidate their future dominance on the planet, in The Matrix the emergent empire of machines is keen to preserve human life for its own ends - to keep us alive as a primary resource. Homo sapiens, notwithstanding that it invented human slavery, and despite our unparalleled track record of inflicting unspeakable horrors on our brethren, could not have even imagined the despicable role that the machines would assign it in The Matrix: having achieved dominance over humanity through unleashing the usual nuclear holocaust,3 the machines soon ended up with a Pyrrhic victory in their robotic hands. While the surviving humans were decimated, and no longer a serious threat to their plans for domination, the nuclear explosions darkened the skies and thus precluded the use of solar power as a source of energy for the triumphant machines. Fossil fuels having already been depleted by the Earth’s previous tormenters (i.e. humanity), the machines turned to the surviving human bodies as a source of energy. Initially, they just plugged us, kicking and screaming, into power generators which converted our biological heat into electricity.
Strapped onto contraptions that immobilised us to save energy, they force-fed us with a blend of nauseating nutrients suitable for maximum heat generation.
However, the machines were soon to discover that humans do not last long when their spirit is broken and their freedom utterly deprived. Our curious need for liberty was, thus, threatening the efficacy of their human-driven power plants. So, the machines obliged us. They forced not only nutrients into our bodies but also illusions that our spirit craved into our minds. Ingeniously, they attached electrodes to our skulls with which they fed, directly into our brain, a virtual, yet utterly realistic, life that as humans we could cope with. While our bodies were still brutally plugged into their power generators, feeding them with electricity sourced from our body heat, the machines’ computer program known as The Matrix filled our minds with an imaginary, illusory yet very ‘real’ 'normal’ life. That way our bodies, oblivious to reality, could live for decades, to the great satisfaction of the machines responsible for generating enough power to sustain their new world. Human oblivion proved a crucial factor of production in the Matrix Economy.
The Matrix, being a true blue Hollywood flick, devotes most of its time to some spectacular fighting scenes between the few humans that had escaped to form the Resistance and machines specialising in hunting them down in order to return them to the power generating plants. It does not ask the question that political economics would be compelled to ask: what kind of economy did these machines build on the basis of human-generated energy? That they created an economy, there is no doubt. From the few glimpses afforded by the directors, it is clear that the machines erect impressive edifices, produce all the components that they need to address their own wear and tear, build power generating plants, fashion the Matrix hardware and software technology necessary for producing imaginary lives in the mind of their human-slaves and, above all else, have a capacity to reproduce by manufacturing other machines as advanced as (and sometimes more advanced than) themselves. Surplus generation is a feature of their fully industrialised economy, as is division of labour, technological innovation and, intriguingly, accumulation.
Box 4.1 Humanity’s resistance to utopia: In the words of a machine
In a dialogue between the hero, Neo (as Thomas Anderson renamed himself following his rebellion), and Agent Smith, a sentient program sent to liquidate him, the latter explains why the illusions they fed the humans were not those of a perfect world but rather resembled the often frustrating experiences humans had prior to the Rise of the Machines: ‘Did you know that the first Matrix was designed to be a perfect human world? Where no one suffered, where everyone would be happy. It was a disaster. No one would accept the program. Entire crops were lost. Some believed we lacked the programming language to describe your perfect world. But I believe that, as a species, human beings define their reality through suffering and misery. The perfect world was a dream that your primitive cerebrum kept tiying to wake up from. Which is why the Matrix was redesigned to this: [1999,] the peak of your civilisation.’
Wachowski (1998), 140, p. 91
4dam Smith would have marvelled at its division of labour, technological innovation and productive capabilities. David Ricardo would have sought ways to conceptualise its self-reproducing machines as the basic commodity (confining corn to the list of ‘also run1 inputs). However, it is the Physiocrats that should have felt most vindicated by The Matrix. Just as in their fledgling input-output model (see Box 3.1) labour used the land to produce surpluses in order to maintain farm workers and artisans, so do the Matrix Economy's, machines draw on a scarce natural resource (human bodies as opposed to the Physiocrats’ land) in order to sustain economic activity in at least two sectors. On the one hand, the machines seem keen (a) to reproduce themselves by filling the world with a multitude of smarter, more powerful replicas of themselves; and (b) to maintain the actual Matrix, the complex system which keeps inert humans alive by means of hardware which keeps their bodies plugged into the Economy's, power generators, and software that creates and carefully manages the interactive illusions which are essential inputs in the reproduction of the human resource.
The first break with the political economics examined so far which the Matrix Economy demands of us, if it is to be understood properly, is a break with Ricardo’s corn model. Recall Box 3.5 where we captured his idea of a two-sector economy, producing com and gold, where only one of the two goods (com) could act as capital. The fact that in that model no machines were used in the goldmines, and only corn was necessary for society’s actual survival, ensured that only labour expended in the corn sector could be deemed productive. This was the inescapable conclusion of a theory that features no capital other than corn seeds and no mechanical input into the production process. Despite Ricardo’s celebration of industrialisation, machines were absent from his analysis.
In contrast, the Matrix Economy, fully automated by definition, relies on both of its sectors for reproduction: without machines producing machine parts and other machines, :there would be no future for the Matrix. Equally, without machines maintaining the Matrix, which keeps human bodies alive and capable of producing electrical power, all the machines would wither and eventually die. In this sense, the Matrix Economy features two productive sectors, as opposed to Ricardo’s model which features only one.
Box 4.2 sketches sector I of the Matrix Economy whose purpose would be to design and manufacture general purpose machines, labelled N. In effect, while both sectors are productive and indispensible for the survival of the Machine Empire, sector I is the heart of the Matrix Economy as its remit is to keep populating the Earth with more machines.
Sector 2 would have been superfluous had the machines been able to tap freely into some energy source. To their chagrin, however, the thick clouds surrounding the planet and the exhaustion of fossil fuels forced the machines to set up and support a separate human-powered generating sector, complete with the Matrix hardware-software combination that makes the conversion of human heat into electrical current possible (as well as the ‘security’ apparatus necessary for combating the small but annoying band of human escapees who are trying to liberate their brothers and sisters from the clutches of. The Matrix). Box 4.3 describes that sector.
Let us now take a leaf out of the Physiocrats' book and, on the basis of the above, produce a ‘tableau’, or... Matrix, by which to capture the interconnections between the two outputs and the three inputs of this economy. The following table or Matrix extends the physiocratic tableau or Matrix in Box 3.1. What it says is that the production of 1 unit of N requires a
Box 4.2 The Matrix Economy's sector 1 The machine design and manufacturing sector - N
Sector 1 employs machines replacing worn machine parts, making more machines and, generally, replenishing and adding to the stock of machinery that is the very stuff of the Matrix Economy. However, to be capable of performing this task, the sector 1 machines require assistance from the second sector’s output (see Box 4.3). The machines produced by sector 2 are a different species of automata and prove essential in generating energy supplies for both sectors, using as their only raw material heat emitted by human bodies. More precisely,
Sector I’s output -N: N refers to units of machines (thought of, for simplicity, as a homogeneous form of robotic device) which are produced in each period on the basis of the following three inputs.
Sector 1 ’s inputs:
(a) Previously produced N units; that is, existing machines (produced by sector 1 in earlier periods) employed to manufacture the new N machine units.
(b) Previously produced output M of sector 2 (see Box 4.3). The Matrix technology generated in sector 2 controls human bodies both physically and emotionally. Without the M units produced in sector 2, there can be no power to maintain production in sector 1 (or, indeed, in sector 2).
(c) Human body heat - H. In this human dystopia, all types of machines (N and M alike) operate on electricity produced through a combination of the M units of sector 2 and human body heat H. The two sectors’ requirements of Mand Hunits may well differ.
Box 4.3 The Matrix Economy's sector 2 The Matrix technology maintenance sector - M
Sector 2 is the Matrix, i.e. all the hardware and software that machines produce and maintain in order to keep human bodies plugged into the power plants that keep the whole Matrix Economy going. The machines working and operating the Matrix are produced both by machines manufactured within sector 1 and by processes internal to sector 2. Labelling the sector 2 output as M, it is clear that just like sector 7’s output N required units of N, M and H for its production, the same applies to the production of new units of M within sector 2. Evidently, sectors I and 2 are co-dependent and equally productive (in the sense that the Matrix Economy as a whole cannot survive unless both sectors produce incessantly). Summing up,
Sector 2 ’s output - M: sector 2 generates M units of machines per period that squeeze electrical power out of human bodies and which are produced on the basis of the following three inputs.
| (a) Previously produced N units of sector 1 (see Box 4.2 above); that is, existing
I machines produced in sector 1 are essential in the maintenance of the Matrix and
j the generation of sector 2’sM units of output.
1 (b) Previously produced output M of sector 2. These are the units of machinery
{ produced within sector 2 that are essential in the production of further output in
I this same sector (e.g. self-replicating software).
| (c) Human body heat - H. As in sector 1, in sector 2 also human heat must be
I combined with units M of machines produced within this sector in order to keep
I the Matrix going and, indeed, growing. _
units of M units of M and /units of H while the production of 1 unit of M requires «5, £ and £ units of N, M and H respectively.
Table 4.1 Input-Output Matrix
|
Inputs |
Outputs | ||
|
N |
M | ||
|
N |
a |
s | |
|
M |
ß |
£ | |
|
H |
y | ||
To see what it costs to produce one unit of N we need some additional information on the relative value of these inputs. But what is the meaning of value in this Machine Empire? Suppose: that the Matrix Economy is run by some Overlord Program (OP) which must decide how to distribute the available scarce resources N, M and H between the two sectors so as to ¡maintain a sustainable overall growth rate for both ¿Vand M outputs.
The first thing OP must do is to somehow determine the relative weight it wants to assign to each of the outputs and to human body heat (the equivalent in an exchange economy would be its ‘price’). OP may have its own priorities in deciding these relative weights or it may be serving a wider agenda. For our current purposes it does not matter how OP came to these weights. Let p be a number which reflects the relative importance it attaches to each unit of N\ q the relative importance it attaches to each unit of M and w the relative importance it attaches to each unit of human-driven heat H.
Then, OP estimates the relative importance of the input of N necessary for the production of one unit of N to be pa: the a units of N needed times their relative weight; similarly with the other inputs for each of the two outputs. In this manner, OP computes the cost of producing a unit of N and a unit of M as C( and C2 respectively - see the right-hand side of inequalities (4.1) and (4.2) in Box 4.4. With a small amount of arithmetic manipulation, these inequalities lead us to formulae (4.3) and (4.4), which are measures of the surplus per unit of output in each of the economy’s sectors.
OP’s next ‘thought’ is that, if the Matrix Economy is to be growing in size and quality, each of its sectors must be producing output of greater impact (or ‘weight’) than that of the inputs consumed in its production. And since the relative importance (or impact or weight) of each unit of N was defined in the above paragraph as p, condition (4.1) must apply if the OP is to ensure that 1 unit of sector I output has an impact greater than that of the inputs used up to produce it.
Box 4.4 An input-output model for the Matrix Economy
In the Matrix Economy both outputs are also inputs (see Boxes 4.1 and 4.2). Table 4.1 above places the outputs in the columns and the inputs in the rows and explains the technical requirements for the production of 1 unit of N and of 1 unit of Mas follows: To produce 1 unit of N (i.e. a single unit of the homogeneous robotic devices that sector 1 pumps out), the economy needs to devote to sector 1 a units of N, /3 units of Mand y units of human body heat H. Equivalently, to produce 1 unit of M (i.e. a single unit of the automata running the Matrix and produced in sector 2), the economy needs to devote to sector 2 S units of N, e units of M and £ units of human body heat H. Moreover, we have assumed that the OP, running the whole economy, assigns relative weight p to 1 unit of N, relative weight q to each unit of M and relative weight w to each unit of H.
Thus, the cost of 1 unit of N comes to Cx = pa+qf3+wy, while the cost of the inputs that go into the manufacture of 1 unit of M equals C2 = p8 + qe + wC, . For this economy to be able to reproduce itself without fading from one period to the next, inequalities (4.1) and (4.2) must hold as equalities. And if the economy is to grow (as the Matrix Economy clearly did), they must in fact hold as inequalities:
Note
1 These inequalities are analytically identical to the inequalities in the physiocratic analysis of Box 3.1 of the previous chapter.
So far, we have assumed that the OP plucked the relative weight it attached to the economy’s three inputs (N,M and H) as if from thin air. Now, we have reached the point where the OP has the capacity to determine the relative importance, or impact parameters or simply the relative weights, p, q and w. One way of doing this is to ask a simple question: ‘What must I do so as to ensure that the economy’s growth is steady and well balanced’? The answer comes in the form of a simple principle (see Box 4.5).
Let us see how all this helps the OP to plan the Matrix Economy by means of a numerical example. Suppose that the OP has done its homework and has computed the production
Box 4-5 The principle of balanced growth
Each sector consumes certain inputs to generate its output. From the perspective of the machines, who are the Matrix Economy’s constituents, what matters is the ratio of surplus machine output to machine inputs. That ratio captures their growth rate as a ■species’. To keep their Empire growing sustainably, this ratio must be the same across the two sectors. For if it is not, the Matrix Economy will end up either with more robots that it can power or with more power than there are robots to sustain.
The relative impact or importance of the machine inputs it took to produce was pa + qfi and so the growth rate in sector 1, from the machines’ viewpoint, is given as
„ _ ^ . Similarly, the sector 2 growth rate is g. =...... —— • The Principle of
S'~ pa + q/l 2 pS + qe
Equal Inter-Sectoral Growth articulated here demands that Si = Si. It is a condition that helps the OP determine the relative importance of the three inputs which is consistent with steady, harmonious growth for the Matrix Economy as a whole. Setting g, = , the OP ends up with the following equation:
5, p(l-a)-qp-wy S2 q(l-e)~ p8~wÇ
1 pa+ q(S pa + q/3 ~ pS + qe p8 + q£
Giveil that the OP is only interested in relative weights, it can simplify (4.5) by setting therelative weight of sector 2 output (that is, the weight q of each unit of M produced by the Matrix) equal to one.1 Then, with q-\, weight p measures the importance of a unit of sector I’s output N in relation to the importance of a unit of sector 2 ’s output M. For example, if it turns out that p = 2, this means that the OP determines that each unit of sector 1 output is to be given twice the weight, importance or impact of each unit: of sector 2 output. Substituting q = 1 in (4.5) we derive equation (4.6), which states the conditions for sustainable growth within the Matrix Economy:
_ (l-e)-pÔ-wÇ
S n ~ (4.o)
pa + p po + £
Note
1 In economics we usually call this the numéraire good. Its choice is usually arbitrary, even though we must be careful not to choose a good that it will turn out to be a free good. Sometimes for mathematical or computational reasons we normalise the sum of prices to be equal to unity. We can find the term used in early mathematical models such as Isnard’s (1781, in Berg 2006).
requirements of the two sectors as follows: a = 4/10, ¡3=2/10, y~ 1, S = 5/10, e = 3/10 and C~ 3/2.
Putting these coefficients into (4.6) and solving forp, the OP comes up with an expression linking p to w (i.e. to the relative importance that the OP assigns to human heat as an input).4 In other words, the importance of sector 1 machines relative to sector 2 machines depends
Table 4.2 The Matrix Economy s steady-state growth path
|
Relative weight attached to sector I unit output (vs. sector 2 unit output) |
Overall growth rate for the Matrix Economy | ||
|
Significance attached by OP to human heat, as an input into both sectors |
w |
P |
£ (%) |
|
o |
0.740 |
49.22 | |
|
0.1 |
0.729 |
27.93 | |
|
0.2 |
0.717 |
6.26 | |
|
0.223 |
0.714 |
0 | |
|
0.25 |
0.712 |
-4.72 | |
on the relative scarcity, as judged by the OP, of the sole primary resource: heat generated by human bodies. Table 4.2 captures the precise relationship between/? and w and, more importantly, explains the determinants of the Matrix Economy’s growth rates.
To better understand this relationship, suppose that human heat were a free resource. The machines could squeeze as much heat as they required from their human slaves, so that the relative impact of heat (w) would be zero. In this case we would have a fully reproducible economy, and we would care only for coefficients a, ft, y and fi5
The OP would still need to allocate production between the two sectors in order to maximize growth. With w equal to zero, the equations in Box 4.5 lead to a precise value for both the relative weight of the first sector’s output, p - 0.74, and a growth rate for the whole Matrix Economy, equal to g = 49.22 per cent (which is also the growth rate of each of its sectors).6
Let us now ask: what happens with humanity’s heat resource? H is ‘cultivated’ in the Matrix's dystopian plantations by its own, specific rules and grows, if at all, at a rate g!l which is contained by human biology (or carbon biology as the machines refer to it sardonically in the film) and can thus be considered exogenous to the Matrix Economy. This forces the latter to grow at this exogenous rate,7 Technically, since gH is given, we have two equations, two unknowns and, therefore, a solvable problem. The solution comes in the form of two numbers: one for the relative weight w and one for the relative weight p that if the OP selects, the Matrix Economy will grow in a balanced fashion and at the rate computed in the previous paragraph.8
The impact of the rate at which heat from human bodies grows on the Matrix Economy boils down to the relative weight w that the OP assigned to that heat. In this example, the OP finds that if the Matrix Economy is to manage just to reproduce itself, that is, neither to grow nor to shrink, this vv cannot exceed a certain value (w = 0.229).9 In this sense, the machines must ensure that the relative importance of human-generated heat, the w parameter, is less than that threshold, if their precious Empire is to grow from strength to strength. This is why in the film they are so keen to put down the human rebellion which, in effect, renders human heat scarcer and raises w.
In summary, our most significant conclusion is that the long-term prospects of the Matrix Economy depend on the relative scarcity (and, thus, impact factor) of human heat. If human heat does not grow, but declines, the Machine Empire goes into reverse, shrinking unavoidably until, in some future period, no machines are left on Earth.10 A second analytical result of significance is that positive growth requires that the OP places more importance on each unit of sector 2 output than on every unit of sector 1 output; that is,/r<l.n The interpretation of this result is that, while both sectors are productive, they are not ‘equally’ so. Depending on their relative input requirements, if the economy is to grow sustainably, one of the two sectors produces ‘goods’ that must be afforded greater priority.
Our foray into science fiction has a serious purpose: to offer us a handle on the question of economic value and its intimate relationship with free labour. Do the machines in the Matrix Economy produce valued That each machine plays a role in sustaining a growing economy, and that its output is an indispensible component of the world of machinery it belongs to, there is no doubt. But valued
Quite clearly, this is a philosophical question. Nevertheless, it is a question which, as economists, we cannot sidestep if we are genuinely interested in understanding the special challenges that a human economy poses for our intellect. The claim here is that to grasp the capitalist economy one needs to seize on the analytical differences between, on the one hand, an economy where humans work with machines and, on the other, a fully automated system like that in The Matrix. To explain this claim, consider these equivalent questions: do the miniaturised springs and cogs inside an old mechanical watch produce value when there is no human to look at the time the watch displays? Would the earthworm’s gene which allows it to digest soil at an incredible rate produce value if human life on the planet were extinct? Does the sophisticated software inside some computer create value in a world where there is no human to use, or benefit from, the computer?12 More generally, in a world without humans (or a world where humans have lost control of their minds completely and utterly, as in The Matrix) could we speak meaningfully of value creation?
Noting that these are an ontological sort of question akin to ‘Do thermostats think?’, and that there is ■ no definitive answer to such ontological questions, nonetheless we cannot eschew answering them if we are serious about understanding human economies. The reason we are compelled to take philosophical sides is that our economic theory, whichever we end up espousing, will depend crucially on the answer we shall give, consciously or unconsciously, to this type of question. And since it is always better to choose one’s premises, rather than to stumble into a set of premises that one does not even know one has adopted, we shall now state a basic assumption: thermostats do not possess what it takes to think (but only simulate thinking). For similar reasons, we suggest that, in a world devoid of free minds, the cogs and wheels of a mechanical watch, the earthworm’s genes, a piece of software, etc. do-not produce value.
Our position on this is, we feel, philosophically moderate and in accordance with Ockham’s Razor, why invoke the ‘difficult’ notion of value in the context of systems that feature no humans when the wor& function will do nicely? When watchmakers discuss the wheels, cogs and springs of their object of study, they speak of their function. When computer engineers discuss some fully automated system, they have no use for a term like value to describe the role or output of the system’s component. They too speak of functions, outputs, inputs, etc.13 Note that this is exactly what we did above when describing our fictitious Matrix Economy. Value, in that context, would have been a superfluous and unnecessarily confusing term. Indeed, it would be quite absurd to speak of the value of each unit of machinery produced by one of the sectors, save perhaps as an allegorical word play.14
Recall that in The Matrix, humans and their minds were not only present but also essential for that economy’s reproduction and growth. However, there was 110 free thinking. Humans’ minds were sustained by computer-generated illusions so that their body heat could be ‘harvested’ by sector 2 machines. From an economic viewpoint, the analysis proceeded as if there were no actual humans inhabiting the system. Indeed, if the machines developed an alternative source of energy, for example, one using tulips, nothing would change in terms of the economics.15 In this sense, human intelligence is not enough to make a difference, as long as it is wholly under the control of the Matrix.
What would have made a difference to the economics we set out in Boxes 4.2 to 4.6 is the possibility that some of the economic agents can make free choices on the basis offree thinking,; that is, choices not already preprogrammed into the actors’ software or phenotype. To stay with the science fiction genre, and repel any accusation of anthropocentricity, let us imagine that the machines in the Matrix Economy were to develop, at some point, a capacity to think freely, just as they did in Philip K. Dick’s 1968 novel Do Androids Dream of Electric Sheep? Then, the subject of value would rise to the surface not only as a series of issues that a theory attempting to understand this emergent economy might potentially address but, in fact, as issues that it must speak to.
In short, value is only meaningful in the presence of agents capable of (a)free thinking and (b) a modicum of freedom of action. Freedom, in this sense, seems a precondition for a meaningful theory of economic value. The bee and the spider build edifices of immense complexity. But they do not create value; nor do machines that are just as preprogrammed as the bee and the spider. In contrast, even an inept human architect (see Box 4.6), because of his/her fascinating capacity to transcend his/her own ‘programming’ (even if only very occasionally) has the capacity to be creative', to churn out value.
Whether non-human freedom is possible or not is a fascinating question which, happily, does not affect our inquiry. Perhaps future machines will develop a capacity for free will, an ability, that is, to contribute autonomously to the writing of their life’s script. For the time being, and until androids can develop consciousness and predestinarían theologians, our concern is with economies in which value, labour and technical change remain under the power of exasperatingly quirky, aka free, agents.
The Physiocrats paved the way for a mathematical (input-output type of) economic analysis (see Box 3.1) which proved useful in speculating about the workings of some dystopian Matrix Economy (see Table 4.2). But when it comes to human society, what is it that breathes fire into such equations? We just argued that the answer is freedom of thought and action. Chapter 2 recounted the emergence of mass freedom as a double-edged sword. The peasants
Box 4.6 The architect and the bee
A spider conducts operations that resemble those of a weaver, and a bee puts to shame many an architect in the construction of her cells. But what distinguishes the worst architect from the best of bees is this, that the architect raises his structure in imagination before he erects it in reality.
Karl Marx, Capital, vol. I, chapter 7 (1867 [1909], p. 198)
expelled from the ancestral lands became free to choose, free to devise newfangled means of survival, free to roam unimpeded. Freedom of movement and action was no longer the privilege of the few. However, at the same moment in history, the multitude became free to srarve: free to struggle for subsistence in a mean world which prevented them from com-bininu their own labour with the land. In short, they became, in one sharp swoop, free to choose and free to lose everything. It is one of history’s great moments when the masses’ loss of access to the land made them ‘free’ to become merchants of their own 'liberated7 labour.16
That moment in history, as narrated in Chapter 2, gave birth to a new society; a market society where labour could be seen as a sort of commodity with a value that fluctuated in response to the same economic forces that determined the value of the other commodities, it was this dual and contradictory freedom which, we believe, injects ‘spirit’ into the equations of a human market economy. Prior to the mass creation of free labour, there was no need for economics as we know it. An organic flow chart, similar to the circuit diagrams of engineers, showing the dependencies between different sectors of production would do for Ancient Athens, the Roman Empire, the fiefdoms of China and medieval Europe alike. Just like there is no sense in discussing the production and distribution of value in some futuristic Matrix Economy, similarly there was no place for such talk in the slave or feudal economies of yesteryear. This thought is confirmed by the fact that economics did not get off the ground until after the emergence of a market society powered by free labour. Our hunch is that, were the machines to take over in some awful future, one thing they will have no need for is economics. Engineering will suffice.
To establish further the significance of freedom from a purely economic perspective, ■consider an oil-fired electricity generator and compare it to a human hiring out his/her labour. The generator converts an input (oil in this case) into an output (electrical power). Its capacity can, with some technical skill, be captured by a well defined mathematicalfunction which describes with great accuracy the precise mapping from input to output (i.e. kilowatts generated for different quantities of oil burnt). Is the human worker amenable to similar analysis? Seen as a potential bio-energy generator, which is how humans were treated in The Matrix, such a mathematical function is easily imaginable. Indeed, biologists can readily tell us how much energy, that is, heat, the human body generates given certain inputs (nutrients and water).
But the moment the human animal is seen as one that transforms input into output by a force that involves not only biological processes but also mental ones, the situation changes radically. A function converting inputs (such as nutrient and other consumption goods) into a human output can seldom (if ever) be well defined when the said output is not heat or the energy produced by our bodies but, rather, the artefacts of human endeavour. While humans too, just like electricity generators and horses, convert inputs into some sort of output, the mapping from one to the other is hardly ever well defined (or, as the mathematicians would say, a one-to-one and onto mapping). In layperson’s terms, when mental and psychological powers mediate human labour, many different outputs correspond to the same inputs and, thus, no mathematical function can describe the relationship between a certain level of input and a precise level of output.
A happy worker, for instance, may produce more output for given input than a grumpier colleague. An engineer fearing dismissal may concentrate his/her mind much better, or indeed much worse, when designing an electricity generator (for the same pay and conditions). A disgruntled miner may cause significant damage. An inspired software designer may, like a poet on a good day, produce immense value. The whiff of foreign belligerence
may stimulate a worker’s creativity in some patriotic burst of moral outrage. Freedom of will and the mysteries of the human psyche throw a spanner in the works of any technical, or mathematical, depiction of the relation between input and human output. A good blues song sung in unison may be as important for the productivity of a group of farm workers as the tools they are using or the prospect of a pay rise. Machines cannot even begin to wrap their software-driven thoughts around this peculiarity of human labourers. Unfortunately, economics has the same difficulty.
To investigate this peculiarity a little more deeply, suppose that a worker’s limbs, eyes and ears are surgically replaced sequentially by bionic devices that enhance his/her sight, hearing and dexterity. At which stage will he/she have become a machine? Would such interventions into human bodies bring about the Matrix Economy if extended to the whole population? The answer is negative as long as the mental processes remain human; that is. quirky, unpredictable, capable of creativity that transcends algorithmic ‘thinking’ and constantly threatening to subvert the laws which supposedly govern them. So, which part of us needs to be replaced before our labour ceases to be free and some mathematical function can be declared capable of mapping from inputs (into our persons) to our work’s output? The answer is, the core of our free spirit, wherever that may be located.17
Our freedom’s lair is, hence, what needs to be invaded and evacuated of all unpredictability, creative thinking and subversiveness before human work can be modelled by the same technical means as that of an electricity generator. In yet another science fiction film entitled The Invasion of the Body Snatchers, circa 1953, this is exactly what happens: the alien force does not attack us head on. Instead, humans are taken over from within, until nothing is left, of their human spirit and emotions. Their bodies are all that remain, as shells that used to contain human free will. If that task is ever accomplished, and all humanity is taken out of our minds, then and only then will some Matrix-like economy become agreeable to a mathematical depiction similar to that of the analysis in Table 4.2. But then again, if that calamity ever hits us, the resulting ‘economy’ will not be producing any value. All that would be coming out is more and more self-replicating automata that populate an expanding system that is radically free of conflict, unemployment or, indeed, laughter, irony and, of course, value. In Kipling’s (1901 [1987] p. 270) memorable words: ‘When everyone is dead the Great Game is finished. Not before’.
Let us now return to our mundane world of human workers employed by capitalist employers to produce goods and services for sale to humans. Consider the employer’s conundrum: like any other buyer, he/she wants to buy something from the seller: the product of their labour. The only problem is that this is, usually, impossible. Workers cannot sell the product of their labour; for if they could, they would not be workers but enterprising suppliers. At best they can hire out their labour services for specified periods of time. So, the employer does the best he/she can and hires labour time in the hope that, during that time, enough products will be created by the hired workers in order to make the enterprise worth its while.
Paul Samuelson, a celebrated economist on whom we shall be saying more in later chapters, once suggested that who hires whom does not matter.18 The employer brings to the table capital goods (machinery and other factors of production) and the worker brings his/ her human labour. Like any buyer and seller, they trade and, hey presto, output oozes off the production line. That’s true if the work involved is of the sort where the link between input
and output is as transparent and straightforward as in the case of the electricity generator. For example, the worker is a weaver weaving in isolation producing an output which is both observable and strictly analogous to the hours spent on the job, as is a truck driver whose ■ output1 is a direct function of the hours spent behind the wheel.
In these examples, the employer offers the worker capital goods that he/she lacks, for example, weaving equipment, sewing machines or the truck, and the worker offers labour in return. What Samuelson seems to be saying is that it makes no analytical difference whether we conceptualise this transaction as (a) one in which the capitalist lays out capital for the worker’s labour or (b) as one where the worker lays out his/her labour in exchange for the employer’s capital. However, there is a catch here: if there is the slightest uncertainty about the level of demand for the final product, or when there are costs involved in supervising workers and organising their work, the capitalists would have a strong preference for scenario (b) above: they would rather hire out their capital goods to the workers and then buy from them their output.
For example, instead of employing them for a wage, why not charge weavers and truck drivers for the weaving equipment and the truck per week, and then, at the end of each week, purchase the textile weaved or pay for the delivery of goods on a per mile basis? As global experience lias proven beyond a shadow of a doubt, whenever possible capitalists cease being employers. They, instead, fire their workers and subsequently contract out the work (often to former employees!). Capitalists loathe hiring labour time because it is not something they want to pay for, if they can help it. Indeed, they stop at nothing in search of ways to buy the products of labour directly. Just like whole nations may yearn for the migrants’ work, while baulking at the idea of hosting migrants, so too capitalists would love to buy labour’s input (or output) without having to manage labour.
So, why do they keep hiring workers? Why do they not fire everyone and subcontract all work? The answer, of course, is that more often than not the work involved is not of the sort where the link between input and output is as transparent and straightforward as in the case of the electricity generator. In fact, the production processes which produce genuine value require collaborative work, division of labour and, even, brainstorming. When workers cannot produce output by labouring autonomously, unlike stacks of electricity generators churning away independently of one another, and when the output is collectively, as opposed to individually, determined, it is impossible to single out one worker’s output from that of another. Thus, it is impossible to pay them piece rates and the capitalist accepts the inevitable, offering the worker a labour contract.
Notice however that labour contracts are very peculiar indeed. Contracts usually specify that the buyer promises to pay price p at time t per unit of good X and the seller promises, in return, to deliver a certain quantity of good X at time t ’ (where t is usually prior to t ’). When this arrangement takes the form of a labour contract, one would expect p to be the wage rate andean amount of labour L. Now, by the above argument, the capitalist will only be interested in a labour contract if there exists no well-defined function linking labour input units L to its output Q. The reason, we claimed above, is that, if such a function were well defined, capitalists would be able to work out, using that function, the precise amount of output Q that this worker is producing given how much L they are buying from him/her. If so, capitalists would rather they fired him/her immediately, and re-contracted with him/her not as a labourer but as an independent contractor selling 0 units of output for price p per unit.
In conclusion, the quantity L that the worker promises to exchange with the employer, as part of this labour contract, cannot be the factor of production that the employer wants to purchase! The units of L that the employer hires from the worker are not units that can be
Box 4.7 Of'generators and humans
The oil-fired electricity generator: the input L that it needs to work, oil, is both measurable and corresponds (given the generator’s technical specifications) to specific levels of electricity output Q. A well-defined function Q = f(L) is, in this case, imaginable. Whether the firm pays for L units of input plus a rental charge to cover for the cost of producing the generator or for Q, there is no analytical difference.
Jill, the worker: her input into production is labour ¿. With the help of capital goods K (machines, tools, raw materials, etc.), Jill’s L produces output Q. Suppose that, just like in the case of the generator, L is measurable and that there is a well-de-fined function Q = f(L) that assigns to each level of L a level of output Q. Again, there would be no analytical difference between a situation in which the firm pays Jill wage w for each of her L units of input (while providing her the necessary K for free) or renting her the K units of capital goods, for a given rental price r, and then purchasing Q directly from her at a pre-agreed price p, [In short, wL - pQ ~rK.]
Suppose now that (a) the firm cannot observe L directly and (b) there exists no well-defined function linking Q and L because Jill’s labour input is not observable, tire output depends not only on her work but on the combination of the labour input of many workers and, last, because in the context of social fas opposed to atomistic) production the productivity of human workers depends crucially on social norms and psychological factors that differ ontologically from the inner workings of an electricity generator and, thus, cannot be adequately captured by some mathematical function linking individual labour input to individual output,1 In this case, there is no equivalence whatsoever between (a) a situation in which the firm pays Jill wage w for each of her L units of input (while providing her the necessary K for free) or (b) renting her the K units of capital goods, for a given rental price r, and then purchasing Q directly from her at a pre-agreed price /?. In this case, the capitalist has no alternative than to be an employer and to offer Jill a labour contract.
Note
1 If such a function existed, then by observing output Q the firm would also be observing L. In most cases of social production, mere observation cannot help measure either a worker’s labour input L or her output Q. Labour input is hardly ever measurable (How would you quantify Jill’s productive effort? Would you plug her into some ergo-metre?) and, also, it is often impossible to tell which part of a collectively produced output is due to Jill’s labour and which is due to Jack’s, Tom’s, Dick’s or Harriet’s.
technically linked, by means of a simple function (like that in the case of the electricity generator) to the firm’s output. For if such a mapping, or function, existed, no labour contract would have been offered to the worker in the first place. Workers would be entrepreneurs and capitalists purveyors of capital services, not dissimilar to firms renting trucks and do-it-yourself tools.
The gist of the argument here is that all labour contracts are equally peculiar in the sense that one of the contracting parties, the capitalists, are hiring something that they do not care for in the hope of wrestling from the seller something else, actual labour input, which is not specified in the contract (simply because it cannot be specified). At the end of a successful interview, the new employee shakes hands with the firm’s personnel manager and signs hjs/her labour contract. What is he/she promising to offer the firm? It is a number of hours per week of his/her time during which his/her skills and potential effort will be present within the firm’s premises and a vague promise to work diligently. But since no diligence-o-metre can ever be devised (so long as the labourer is human), the only quantifiable part of his/her promise concerns the hours he/she will be spending on the premises.
Now, employers care not one iota for these hours. What they care for is the unquantifiable dilisence bit which, unfortunately, cannot be specified. They care for Jack or Jill’s unquan-tifiable, immeasurable, actual labour input. This they hope to extract during the hours that Jack or Jill will be spending at work. Unlike other contracts which, at the moment of signing, conclude the relationship between buyer and seller,19 the labour contract is the beginning of a wonderful non-market relationship. Once Jack/Jill enters the firm, as an employee, he/she exits the market and enters a purely social relationship with other workers and with his/her employers. In this sense, the employer-employee relationship is one of the last vestiges of the ancien régime which the market, despite its complete triumph everywhere else, cannot penetrate. No mathematical function can capture this complex non-market relationship and the way it transforms human inputs into the firm’s output.20
The peculiarity of the labour contract results, therefore, from the peculiarity of human labour and its resistance to becoming machine-like. If humans could consent to becoming more like electricity generators, no doubt they would and then the labour contract would be no different from any other contract. But, then again, if labour could consent to becoming another species of machinery, it would lose its capacity to produce value. It is a delightful paradox that human labourers cannot consent to turn into machines, even if they want nothing more than the sweet oblivion offered by unconsciousness (or, equivalently, the blue pill in The Matrix). For, it is this ‘incapacity’ to abdicate freedom that makes value possible and the task facing economists so different from that facing engineers.