The theory goes something like this. Originally, it was predicted that, as robots and computers took over more of the hard jobs, we would move to a more leisure-oriented society. Then economists forgot about that idea. And now they have remembered it again – but not in a good way.
Technological advance is causing abundance which depresses prices and threatens the return on capital. So the incumbent interests threatened by this trend have an increasing incentive to impose artificial scarcity. They are rationing new ideas by exploiting and extending the system of patents. As market power becomes more concentrated, incumbents are better able to stifle innovation and raise rents on the ideas they own. This ‘idea monopolisation’ has become a hugely counter-productive force in the economy. And this trend is manifest in the growth of companies that don’t produce anything but exist solely on the revenue of their patents.
So, robot and technology power is reducing the natural employment rate. But rather than our subsidising those who have lost jobs to technology, so as to spread that manna wealth that’s literally dropped onto the surface of the earth at no-one’s physical disadvantage, companies are using monopoly power to extort rents on the capital that is creating all that free wealth.
That’s why inequality is rising.
As technology proceeds in a patent-obsessed world, the fruits of innovation flow to the owners of the capital and invention, forming a whole new rentier class. The financial assets/debts that back the innovation technology, meanwhile, get disproportionally valuable as their purchasing power gets completely out of whack with the output they radically accelerate.In other words, a rentier class of patent owners is hoarding ideas and extorting extravagant rents. Consequently wealth is concentrating instead of spreading outwards. Which is why those people who have been moved involuntarily into a ‘leisure-oriented society’ are finding they do not have the income to go with it. Perhaps that is why, as George Osborne alleges, they keep the curtains closed.