Production and Savings

Suppose a workforce became more efficient, in the sense that 90% of the workers could produce all the goods its economy consumes. The result would be chronic unemployment, simply because there would be nothing for the remaining 10% of the workers to produce.

Broadly speaking, such an economy would not suffer due to scarcity of goods, but it would suffer since capital would not flow suitably through the 10% unemployed.

Thus the problem would be how to create viable jobs that produce goods no one traditionally consumes. For example, if the 10% unemployed manufactured collectibles from recycled garbage, that would resolve the unemployment crisis as long as consumers purchased enough of these items. Arguably, the society would not be wealthier in the sense of the goods they own (they would only be collecting garbage), but it would re-employ the 10% in question, and result in a sounder economy in the manner capital was being exchanged.

Taking matters another step, we could imagine the 10% unemployed "manufacturing" and "selling" Nothing. Here, the consumers would receive Nothing, or just a receipt, for their money. Although it seems unlikely that consumers would spend their income in this way, if it did in fact happen, the model would result in a healthier economy--exactly as if the consumers were purchasing and collecting garbage.

Suppose 10% of the workforce began to make a successful living producing Nothing, and that the workforce became even more efficient--so that 80% of the original workforce could produce all the goods its consumers traditionally purchase. There would follow a new unemployment crisis, which could in turn be resolved by an additional 10% of the workforce successfully expanding the industry of Nothing. Such an economy would be invulnerable regarding unemployment, as long as there was enough demand for Nothing to keep the potentially unemployed in business.

It may seem paradoxical that an economy could improve by manufacturing and selling Nothing, but the possibility is the logical result of a genuinely wealthy society--one that produces goods so efficiently that it can afford to pay a percentage of its workers to remain idle.

Or simply retire. Under the appropriate conditions, a society can consolidate its wealth by instituting a social security tax and retiring a portion of its citizens, or raising an existing social security tax and lowering the retirement age.