by 
With the possible election in November of Mitt Romney as America's first “businessman-president” since Herbert Hoover in 1928, we're forced to ask a philosophical question that comes around regularly on the guitar: Beyond its imperative to make profits, does business have any moral responsibility to society?
Republicans, our traditional zealots for unregulated capitalism, usually inject into this discussion the 18th century economist, Adam Smith, who depicted every good merchant's fierce pursuit of profit as an “invisible hand” that naturally redounds to society's benefit. To quote Smith: “By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”
If this were all Smith had written in his masterwork, The Wealth of Nations (which most Republicans have never read — but I have!), he'd remain the ideological linchpin for the conservative movement's current breed of social Darwinism. The trouble is that Smith also favored the sort of “compassion” that tends to creep-out winner-take-all capitalists like Romney. Smith, for example, not only advocated the minimum wage; he was the first to suggest a “living wage” that might lift all laborers to genuine prosperity.
Smith thought wealth earned by labor was virtuous, but he frowned on guys (like Romney) who make millions by dabbling and gambling in financial markets. He believed that great wealth concentrated in private property or in big banks was a menace to society, and he was a pioneering fan of progressive taxation. “It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion,” Smith said.
Talk like this positions Smith way left of Romney — which is why his running-mate choice, Paul Ryan, was a brilliant stroke. It not only brought youth and the Tea Party into Romney's camp, it interjected an economic philosopher more appropriate to current conservatism.
Enter Ayn Rand, stage far right (holding Paul Ryan's hand).
For 25 years (until a politically driven recantation in April), Ryan was a slavish Rand disciple, quoting her, handing out her books, and declaring that America was locked in battle between “individualism [yay!] and collectivism [boo!].”
Rand — who died before Ryan could seek her out and actually genuflect in her presence — was a Russian atheist whose “heroic” vision owed debts to, among other megalomaniac wet dreams, the Norse gods and Valkyries, Ivan the Terrible, and Friedrich Nietzsche. This sort of testosterone intellectualism has long rendered Rand deeply seductive to sheltered, wealthy, snow-white reactionaries on backwater campuses like Miami of Ohio (Ryan's alma mater).
While Smith counseled empathy — even fairness — for the working poor, Ayn Rand's capitalism is pure, crystalline, merciless. She regarded ordinary people as a vast cesspool. She would spare the poor and jobless from an industrial-scale system of extermination only because they were, simply, unworthy of notice. Quote Rand: “One can't love man without hating most of the creatures who pretend to bear his name.”
Adam Smith, by contrast, was a sissy. He said: “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”
Perhaps the big difference between Smith and Rand is that Smith grounded his ideas in reality. Rand, a Hollywood screenwriter, fashioned fictional worlds, built on a Cecil B. DeMille scale, manned by solitary, misunderstood giants who waged lonesome battle against armies of jealous drones, vengeful dwarfs, and parasites. In Rand's five-pound pulp novels, she spun grand fables, erected ivory pulpits, and unspooled epic paeans to the divinity of Self (while, back in Janesville, one deeply gullible teenage boy, looking around at the unwashed shrubs in study hall, wept silent tears of inspiration).
Rand's world in The Fountainhead featured hero-architect Howard Roark, inventor of modernism. He is rejected by a hidebound Establishment that perpetuates — by violence, if necessary — the endless imitation of a neo-classical past. We know this is a cool fictional premise because, by time of The Fountainhead 's release in 1943, a real-life architect named Frank Lloyd Wright (after his early battles against tradition) had been designing modernist buildings for an eager Establishment for some 50 years. Rand's heroic iconoclast was an outdated outcast in a tendentious dystopia.
Like Howard Roark, both Romney and Ryan seem the brainchildren of a pop philosopher whose magically simple measure of human superiority is rooted in a sort of divine materialism. In Romney's and Ryan's Randworld, virtue and wealth are two sides of the same shiny Krugerrand.
There's just one hitch. Rand, who was actually alive during the Hoover regime, offers no guidance on the question of whether business guys, as Mitt asserts, make better presidents. Rand found democracy — the scum of the earth electing their leaders — disgusting. She didn't vote; nor did she care whether the president was a businessman or a porn star. Nor would she have deigned to admit into her salon the corporate lobbyists and casino billionaires who are bankrolling campaigns.
Adam Smith, on the other hand, had a position: “The government of an exclusive company of merchants is, perhaps, the worst of all governments for any country whatever.”
Huh yeah, as I recalled that Herbert Hoover is associated with that notorius Great Depression in 1930s. With the possible election of Romney, I'll bet we'll have another Great Depression incoming. And BTW, the Fed is ready to flood the market with QE3 soon.
The Jackson Hole Symposium will be worth some attention, as Mario Draghi follows Ben Bernecke and they may have strong interaction in effect of their choices for Eurozone and US.
http://www.minyanville.com/articles/print.php?a=43322 if the link works covers this event from one viewpoint.
From another economic viewpoint,
http://www.voxeu.org/article/protocylicalists-fiscal-austerity-vs-stimulus
Hope the links work.
I loved the final paragraph of he main aricle, re Adam Smith and Ayn Rand.
I refer to Ryan and Greenspan as “The Spawn of Ayn Rand” to my buddies.
We just had to go back and re-read Atlas Shrugged..but could not finish it this time…last time was mandatory.
I really enjoyed your article and found it very thought provoking. I am more of a Smith man myself.
It is misnomer to call all automation devices and machniary Robot?
In the next coming years will see robots to take seats at every factory unit. The question should be “what about the human workers ?”
@Nemos: I understand, but I would like to share an additional perspective; in a such way, robots could help humans in perfoming better their own job or doing that in critical conditions. We are assisting for example, right now, to the mission to Mars. Maybe right tradeoff in using robots, could bring several advantages to us.
The next generation factories and ware houses will consist of robots taking Care of all the goods movements. This will definitely improve the efiiciency and cut the costs.
We have all heard that one day in the not so distant future, the development of artificial intelligence (AI) will mark the end of the human race as the super intelligent robots will take over the world and make the human race redundant. This article clearly shows that without the need of AI, people are able to make humans redundant in the manufacturing sector at least.
The trouble is the replaced workers are often low skilled people and have very little alternative to find other jobs to be able to make a living. If you consider such replacements in millions, the scale of the problem becomes clearer.
I think the key in the expansion of robot capabilities has to do with that they're getting easier to program. Increasing ease of use of automation means humans are getting smarter too, and whoever can catch on to programming these devices can ride the gravy train for a while.
I found Ayn Rand to be entertaining in the manner of good fantasy fiction. Her message is not applicable in an area populated by humans, so her writing should not be considered as other than entertaining fantasy. Enough about her.
The challenge that exists with business can best be explained by quoting one of my co-workers, who declares that “the sole responsibility of a board of directors is to maximize the profit for the shareholders”. The intrinsic flaw in that theory is that it never mentions the customers of the business, much less the employees. Why would it be that there is no responsibility towards those whose consumption of the product is the sole means of gain for the business? And is it possible that at some point the business should avoid “consuming” it's employees? After all, some of them may also be customers, at least potentially.
Perhaps if it were to be assumed that the obligation of a business was to provide the customers with the value of product that they paid for, things might be different. Today I see some businesses that appear to be doing that, but they are not a majority.
It is simply not possible to legislate morality, as all of the attempts in the past have proven. On top of that, there are certainly a bunch of different understandings as to what is “moral”. Is being completely honest adequate? Or should business support the nanny state, supporting nearly everybody? The problem with that is that with support comes control, at least, if things are fair. So there would be a loss of freedom associated with it.
Probably the best way to have business behave in a more responsible and decent manner would be to take those individuals and companies that created this last financial disaster that has hurt our nation so badly, and lock them away in some third -world jail and forget about letting them out. Example can be a very effective teacher.
@mfbertozzi,
You are right on that but that is an advantage,it could be a disadvantage too.
Which means that companies will employ less human workers and therby leading to high rate of joblessness.
I could aslo lead to people going to school to get educated to be jobless because what they can do can be done faster and better by a Robot.
@elctrnx,
You are very right on that but it may also increase joblessness except if we all go to school to learn how to make Robots.
Do you happen to know what the price point is? It depends on the industry, i'm sure. But this robots must have some sort of entry-level price, don't they?
William K., Unfortunately, this example that you talked about is the one thing we are unlikely to get. Companies don't pay any huge price for the misadventures they cause. Instead, they either get a slap on the wrist or even worse, get bailed out, in the belief that they are too “big to fail.”
The same applies to the environment. The idea that a company will work in any way against its own interest to protect the environment is silly. It won't happen. But if it is in the company's interest to protect the environment then they'll do it most vigorously. If we can't legislate interest, we can at least make compliance sound beneficial through legislation.
The price point is less important than the return on the investment. If the robots' productivity is exponentially higher, the investment would have been worth it over the life span of the equipment. If robots take over companies may be less concerned about things they must constantly consider where humans are concerned.
Rich, There's another overpopulation you may have to be concerned about if “robots take the next step in automation.” If robots become as successful as people have imagined, robots will be used for many and most functions man currently performs. The overpopulation of robots will follow the underemployment of man.
It is indded correct about adjusting the costs.
IF the penalty for an oil company having a blowout preventer valve system fail were a whole lot more than the cost of testing and replacing a blowout preventer, then possibly another disaster like the last one could be prevented. Of course, my idea would be to simply never allow that company, or it's dirivative company, to ever drill in the golf again, with no recourse or consideration of economic damage. In fact, a penalty aimed at the shareholders profit would probably be the very best way to assure that adequate precautions were taken.
@Adeniji,
“it may also increase joblessness”
I have been hearing that complaint about robots taking our jobs for years now and nothing has happened. The threat may be real, but we should not blow things out of proportion.
Till the time when robots themselves will be able to reproduce robots, we humans do not have to worry. More robots actually means more jobs in robot manufactruing , so the human effort is not reduced but diverted to some different factory.
Robot design, manufactruing, related software development , robot maintenance all of this is going to become a big industry tomorrow like IT has become today .
It's true that these technical innovations transform the workplace rather than eliminating it. I'm of the opinion that nature is in an imperfect state, and as long as that's the case there will always be work to do. The trick is turning that work into paying jobs.
Robots making people lose jobs has surely been a myth for over the years and I think it will continue to be. With the introduction of robots, the mode of jobs will change but the overall number will not decline (in the economy that is). Mechanical workers may not be required anymore but they'll be replaced by people who can program robots and supervise them. Workers will need to get some additional trainings in order to cope up with this change.
“ Increasing ease of use of automation means humans are getting smarter too, and whoever can catch on to programming these devices can ride the gravy train for a while.”
@Stochastic: Considering this dire need for people who can program robots, I think universities need to pay more attention to this and start offering degree programs in the area of robotic engineering. There's already plenty of gap in the demand and supply of robot programmers and the gap will exist if the curriculum is not revised.
@Prabhakar, absolutely! At least it's evident robots cannot produce robots. The innovation and technology is still concentrated in humans. Its introduced to accelerate productions and maximise profits isn't?
It shows that there are changes taking place in the electronics manufacturing sectors. However, from human perspectives the fear of structural change to what it's been conditioned is often difficult to cope with. I agree with you to cope with these changes it will require re- training. I think that's the only way forward.
I guess in the industries where most of the work is monotonous and there is hardly any change its better to employ a robot. Atleast robot wont complain. But think about the amount of electonic waste we are gengerating by making so many robots.
Bots in warehouses are extremely cool, althugh a little creepy…I think for certain orders (standard lot-size, etc.) they can't be beat. For orders that have to be broken down and kits, though, I think there is still a fair amount of human intervention required. But the smarter automation gets, the more that will chnage as well
I saw a show last night on the Discovery channel about the massive Aalsmeer Flower Auction buildings. There is an automated rail system which will carry flowers to different areas of the buildings based on a barcode. The units know where they are in the rail system based on barcodes on the rails they are travelling on. It's pretty interesting stuff.
Well I feel robots have already taken several steps towards automation. Its just a matter of fact where they take full control over the whole system
@SP, for any repetitive work a robot is for sure a better choice given the price offset to deploy a robot is not excessively larger than human worker. Electronic waste is today's reality and i still do not know how will we handle so much of electronic waste. While thinking about whether robots will take jobs away from humans i realize that some is still required to make robots. So, the jobs will just shift from one domain to another.
@Clairvoyant, indeed while watching extreme machines or any such engineer related program i am always amazed at the ingenuity of the machines. Industrial design and automation is interesting any time.
KH Lloreda, Spain's largest household cleaning product manufacturer, is using robots (developed by Fanuc, one of the companies mentioned above) at its distribution warehouse. When a customer order comes in, robots locate and pick up the products for the order and RFID verifies that the correct boxes have been selected and that they are loaded onto the correct trucks for delivery. The combination of robots and RFID has virtually eliminated the need for labor at the warehouse. It is definitely a very interesting application for both RFID and robots. You can read more in the case study.
Himanshugupta:
Apart from the electronic waste another compelling issue with the extensive use of robots is the impact on human employment. Industries where robots have been deployed in manufacturing have led to the layoff of many workers.
I am not against the use of technology but I think human resource deployment should be considered before using robots.
jmcfarland:
Robots can work most effectively for defined set of instructions like the scenario that you have mentioned. Combined with RFID robots are indeed doing a good job with hopefully lesser errors than before.
Unfortunately, the problem comes in when intuition is required for a decision. In those cases, human intervention is required to sort out things. Nevertheless, technologically it seems to be a good solution.
@prabhakar,
Are you saying that, by then all our jobs will center around making and designing of robots?
@stochastic,
I agree it transform our workplace but it also reduce available jobs too.
How many gas attendants do you have to employ in an automated gas station?
@SP,
you are right on that, same goes to impact on power generation.
I understand, but even that can be translated into a price point. You measure the ROI and everything else and we can conclude: if it costs less than 100,000$, then it's worth it.
Adenji,
I do not mean to say that but my point is that there will be transformation of the nature of jobs that humans will be doing when new technologies start working for the routine tasks.
Take for example the working of banks and stock exchanges which was a purely manual activity a few years backwhci is now wholly working in real time on computerised systems. This has rediced the clerical work force but see how many software development ,support and maintenance jobs it has created worldwide.
Prabhakar,
“there will be transformation of the nature of jobs that humans will be doing when new technologies start working for the routine tasks.”
Exactly. This transformation you are talking about is something that will happen not only at workforce level but also at creating new careers while older ones disappear as the graduates will not be needed anymore.
Your example of the changes in the banking system is good. More and more we will see bank branches disappearing, and more online and cloud banking being created and used. New jobs in connection with banking are created but the old clerks will disappear completely. Even money will suffer a transformation, and cash will dsappear to give room to electronic transactions in cashless economies. And this is no future or science fiction, this is already happening in Sweden.
-Susan
@AK: well, I have appreciated your thoughts and I agree with the fact that, in a such way, robots' adoption could represent a possible risk for workers' job; I would proceed with your vision about education. Robots need to be conceived, than built, deployed and managed then all those steps could potentially act as now jobs and activities for humans and, in principle, for teaching at schools.
@elctrnx_lyf: I full share this point, warehouses' automation has allowed saving and a better way for providing end users with goods requested; the important step, speaking for myself, is the profit achieved by companies which have adopted automation by robots; I aim it will be invested, also partially, for example in education for workers in order to assure also for them, a step forward.