What if Capitalists Disappeared?

A few years ago my post "Krugman, Robots, and Exchange Value" gained some attention from the wise and good, and over time has kept on attracting hits.

In that post I explored a scenario: what if robots replaced all human labour? The conclusion was that market prices and GDP would drop to 0, because stuff would not be sold (after all, consumers no longer receive income from wages). There would be no exchange value, value would not be realised.

It's a situation so absurd that it constitutes a reductio ad absurdum of the proposition "not all value comes from labour".

However, isn't there any credible alternative?


Of course there is! Governments would pay a Basic Income, maybe partly funded through taxation, partly through emission of fiat money: subsidised consumption. They'll gladly pay you to do nothing. And capitalists would be very receptive to that proposal, no doubt, as Michał Kalecki convincingly argues in his often quoted but seldom read paper "Political Aspects of Full Employment" (and that without mentioning the dollar quantities involved!). [*]

Phew! No reason to fear, then: you have a fail-proof plan, coming straight from the mouth of a necromancer channeling the spirit of Lord Keynes!

Besides, there is a backup plan: Capitalists would generously give their goodies away for free, out of that goodness of their hearts for which they are legendary. Prices would be nil, but workers/consumers would live comfortably, without having to move a finger.

You can sleep soundly tonight!

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Today I want to propose another thought experiment. To make it interesting, let's assume that Marx has been conclusively shown to be crazy: there is no exploitation. Workers and capital are paid their exact contribution to the product, no more, no less (it also works if you assume depreciation does not cover the whole contribution of capital).

My scenario now is the other side of the coin of my previous scenario: what if capitalists disappeared?

Lo and behold, one day the best, thriftiest, smartest, saintliest people -- poof! -- disappear, vanish in thin air.

To make the scenario more concrete and appealing to capitalists' fans -- matching their beliefs in the supernatural -- let's imagine that,

"Then we [capitalists] which are alive and remain shall be caught up together with them in the clouds, to meet the Lord in the air: and so shall we ever be with the Lord" (1 Thessalonians 4:17 KJV).

Come the Rapture and every single capitalist meets Lord Keynes and Steve Jobs in Heaven, in the clouds. But machines and factories, hospitals and mines and recording studios, movie theatres and farms, software and patents, bank accounts and accounting books, stores and buildings, trains and ships are Left Behind, together with the sinful workers, truck drivers, nurses, welders, engineers, software programmers, pilots, farm hands, accountants, cooks, sailors, waitresses, doctors, cameramen, shop attendants, teachers, actors and musicians, miners who use them.

Capitalists are not capital (or means of production, if you are punctilious): capital is property. Capitalists go to Heaven, but their property remains firmly bound to Earth. As Matt Bruenig (not a Marxist, I might add) put it: "The marginal productivity of capital is not the marginal productivity of its owners, a fact made even more compelling (and dangerous) by the fact that 'ownership' is a purely legal construct". You own capital and if you are no longer there, those Left Below can grab it, to make it produce stuff.

So, what changes back on Earth?

Barring the birth of the Anti-Christ (and Keynes believed in it), nothing much. The marginal productivity of the machines and workers did not diminish (it may actually increase). Apple Inc. did not grind to a halt with Jobs' death. Factories have been occupied by their workers and put back into production, after their owners left. Firms that were profitable, remain so. Only capitalists are not there to withdraw their dividends.

Workers are no longer forced to share the product of their labour -- or the control of their own lives -- with capitalists: from the profits capitalists can't cash in, workers get something extra every fortnight in their paychecks and -- on top -- now control their own workplace. They may even call that socialism.

What was that about exploitation "debunked", again?

UPDATE 04-03-2016:
[*] By the by, if Kalecki's argument is not good enough for British internet post Keynesians, they may want to check in the following post ("Marx, Fiat Money and a Simple Business Card Economy") the quote from Mr. Mosler. It also explains why their idea is boneheaded stupidity (to borrow John Quiggin's colourful expression).