The Impact of the Uses of Humanoids Robots (HR) on Firms Performance

Abstract

This short academic note provides an overview of the role of humanoid robots (HR) in the economy from a microeconomic perspective. In the first section, we present a general introduction to robots. The second section offers a brief history of robots. The third section focuses on the basic requirements for building a humanoid robot (HR). In the fourth section, we delve into a microeconomic analysis of the impact of humanoid robots (HR) on firms, specifically regarding cost, revenue, and profit maximization. Additionally, this research emphasizes that humanoid robots (HR) are likely to create two possible outcomes, both of which require adaptation: job disruption versus job relocation and adaptation. We highlight key aspects of the emerging role of humanoid robots (HR) as a potential and effective substitute for human labour across various production sectors, as well as the profound changes occurring in the labour market.

 Keywords: Robots, humanoids, artificial intelligence, microeconomics, firm, research, jobs.

JEL: A1, B00.

 1.      Introduction

The idea of robots (West, 2018) is quite confusing and not well understood by most knowledgeable people. We need to start with automation as the basic premise of robotics. The primary concept of automation is reducing human intervention in the production process to increase productivity and decrease dependency on workers for the generation of goods or services for the market. The origin of automation lies in the use of basic tools as extensions of our arms or bodies in the production process (Cilekoglu, Moreno, and Ramos, 2021).

 The second stage of automation involves the creation and use of machines to facilitate production, improving efficiency with the aim of reducing production costs (total, average, and marginal). This enables the production of higher-quality goods and larger quantities, lowering prices in the market, which in turn generates faster and significant revenue in the short term. The ultimate goal is to generate substantial profits (by maximizing sales and minimizing production costs) and achieve rapid wealth accumulation in a sustainable manner.

The third stage of automation is the transition from mechanical machines (operated by workers) to fully autonomous machines (controlled by computers and advanced software) that require minimal human labour in the production process. These machines offer high productivity (through standardization and large-scale production) and efficiency (by ensuring quality and volume).

 The fourth stage involves the use of fully automatic, highly precise robots controlled by computers and advanced software, again with minimal human involvement. These robots achieve large-scale productivity (through standardized production of large volumes) and efficiency (through record production times).

 The fifth and final stage of full automation involves the use of humanoids—robots with human-like features—equipped with artificial intelligence (AI), sensors, microchips, micro-sensors, advanced materials, fast-charging batteries, and sophisticated structures. These humanoids can assess situations and take actions in real time without any human input, ultimately eliminating the need for workers in the production process entirely (Dautenhahn, 2007).

 2.     Short Brief of Robots History

Robots originated in the ancient world across various civilizations, including the Greeks, Chinese, Indians, and Romans. In the beginning, the concept of robots was purely mechanical, relying on a system of levers, cylinders, gears, and cables integrated to simulate human actions manually. According to this research robots were for military reasons more than for commercial reasons. A key contributor to the development of the formal idea of robots was Leonardo da Vinci, who created a robotic design in 1495. Historically, the origins and massive uses of robots in the process of production as we know them today can be traced back to the Industrial Revolution in England in the 1760s (18th century), with the use of steam and coal in various machines. Nevertheless, we have the contribution of Nikola Tesla with amazing advances in robots in the modern era. In this section, it is important to clarify that there are three phases of robot classification: 

 1. Full-mechanical and fully-manual – Robots are powered and controlled entirely by human force, requiring full human intervention. 

2. Semi-mechanical and semi-manual – Partial human intervention is required, with the use of parts and components powered by less human force to assist in the control and operation of the robot, the main source to supply energy was based on steam and coal. 

3. Electric and fully-autonomous – Minimal human intervention is needed, as robots are controlled and operated primarily by computers, the main source to supply energy to the robots is from electricity.

 3.      The Basic Requirements to Build a Humanoids Robots (HR):

In this section, we focus on the technical aspects of humanoids robot (HR) development and engineering. Encouraging science education at the secondary and university levels is crucial for fostering interest in the pure sciences (mathematics, physics, chemistry, and biology), which provide the foundation for supporting technical disciplines such as computer science (programming, networking, and security), materials science (nanotechnology), electronics, design and graphic design, architecture, engineering, and technology.

 To shift economies toward advanced technology, education systems must ensure that 60% of graduates focus on science and engineering fields. This emphasis is vital for building a strong foundation in robotics and automation. Constructing any robot humanoid (HR) requires meeting basic conditions and conducting specialized research and development in the following areas:

 1. Energy resources: Developing large-scale energy sources, such as electricity, to provide sufficient power for humanoids robots (HR).

2. Electronics: Ongoing research and development of electronic components like microchips, circuits, and coding.

3. Computing: Advancing mega-computers and servers with high memory capacity, speed, and data storage.

4. Network systems: Rapid development of networking and interconnectivity systems.

5. Internet speed: Ensuring faster internet access, with at least 5G speeds.

6. Materials: Creating new materials that are strong, durable, and cost-effective.

7. Design and manoeuvrability: Continuously creating, designing, and producing new robot models with improved manoeuvrability and responsiveness.

8. Software: Constantly developing sustainable programming and coding for better software.

9. Mechanical and electronic parts: Innovating the creation and development of mechanical and electronic components.

10. Aesthetic and graphic design: Incorporating artistic and graphic design to make humanoids robots (HR) more realistic and unique.

11. Security: Developing robust antivirus software and protection systems to ensure robot humanoids (HR) safety.

12. Maintenance systems: Establishing maintenance and improvement systems for humanoids robots (HR).

 This research strongly recommends that the development of artificial intelligence (AI) for humanoids robots (HR) be renamed as the Central Neural Artificial Intelligence Box (CNAI-Box). This system would interconnect the hardware and software of humanoids robots (HR), enabling them to analyse information, process data, and take actions based on pre-established parameters. It is essential to have a mechanism in place to disconnect any robot humanoid (HR)in case of an uncontrolled situation.

 4.     The impact of Humanoids Robots (HR) from Microeconomics Perspective (the firm side):

In the beginning, we can say that humanoid robots (HR) are entering the circular flow of the economy, where they interact with firms and households in the market. The primary goal of firms is to produce and supply goods and services for household consumption. In turn, household spending on these goods and services becomes revenue for the firms, creating an automated cycle. These transactions take place in the goods and services market.

 On the other hand, the market for factors of production consists of labour, land, capital, and entrepreneurship. These factors are provided by households to firms, and in return, firms compensate households through various forms of income: wages (for labour), rent (for land), interest (for capital), and profit (for entrepreneurship). For firms, these payments represent production costs, but for households, they are sources of income that enable them to spend on goods and services in the market.

 If we introduce humanoid robots (HR) to replace labour in the production process (Graetz and Michaels, 2018)., we see a dramatic shift in this equation. Labor (Barth, Røed, Schøne, Umblijs, 2020) becomes less relevant to firms, reducing their dependence on human workers (Montobbio, Staccioli, Virgillito, and Vivarelli, 2020), which could lead to a significant decrease in the demand for labour from households. This, in turn, may cause mass unemployment (Barbieri, Mussida, Piva, and Vivarelli, 2019) in the labour market. To address this issue, we propose two new concepts: the job disruption effect and the job relocation and adaptation effect.

 The job disruption effect refers to the immediate, negative impact of humanoid robots on the labour market, potentially displacing workers across various industries. On the other hand, the job relocation and adaptation effect involve the challenges and opportunities created as workers are forced to adapt to new roles in the evolving market.

 Addressing the job relocation and adaptation effect requires a fundamental shift in education systems (from elementary to high education) to foster creativity and human interaction, which are essential to competing with humanoid robots (hardware) and artificial intelligence (software) (Ruiz Estrada, Park, and Staniewski, 2023). Rapid adaptability and constant creativity are the most powerful tools labour can use to survive in the modern market, ensuring that this factor of production remains active and relevant in the long run.  To observe how humanoids robots (HR) are going to transform the entire economy from a microeconomic perspective, we begin by noting that the intensive use of humanoids robots (HR) will push the production possibilities frontier (PPF) higher than the average PPF achieved through labour-intensive production with less capital. Efficiency levels can increase significantly, allowing for the production of two or more goods simultaneously, thus lowering opportunity costs.

 In terms of demand and supply, there may be an initial overreaction, but in the long run, this could result in an optimal equilibrium for firms and households. Adjusting price and quantity equilibrium may face some challenges at the outset. It’s important to note that one of the main variables that can shift supply is technology—in this case, humanoids robots (HR). Additionally, the producer's surplus is likely to expand dramatically compared to a system relying on more labour and less capital.

 From a production cost perspective, humanoids robots (HR) can significantly reduce total costs (variable costs plus fixed costs), particularly by lowering variable costs more than fixed costs. This is largely due to the reduction in labour required for the production process of any firm. Average total costs (ATC) and marginal total costs (MTC) will undergo rapid changes in the short run, as marginal total costs may initially exceed average total costs. However, this will eventually lead to economies of scale, where constant returns to scale will increase substantially in the long run due to the intensive use of humanoids robots (HR). It can be argued that with humanoids robots, diseconomies of scale—where ATC rises as output increases—are unlikely, as humanoids robots (HR) help maintain lower costs even with increased output.

In the case of profit maximization, humanoids robots (HR) can reduce total costs, allowing firms to offer lower prices, which in turn can boost sales and increase total revenue. As a result, profit maximization with humanoids robots (HR) is achievable through high total revenues (driven by increased sales from firms using humanoids robots (HR) intensively in the production process) combined with lower production costs, benefiting both firms and households through reduced prices in the market.

 5.     Conclusion

In conclusion, we believe that the use of humanoid robots (HR) in the near future is an unavoidable reality, prompting a shift from job disruption to job relocation and adaptation. To prevent unemployment and keep labour as an active factor in the production equation, the continuous development of human creativity and interaction (HCI) is essential. This will allow us to compete with humanoid robots (HR) and artificial intelligence (AI), which must be supported by innovative educational reforms from elementary to higher education.

 However, we have found that firms will achieve faster and higher profit maximization in the short term with the intensive use of humanoid robots (HR), as labour dependency decreases. Production costs will shift from variable to fixed. Depreciation, energy expenses (electricity), and maintenance will become consistent, leading to predictable monthly and yearly fixed costs.

 Finally, profit maximization occurs when a firm selects an output level where marginal revenue equals marginal cost. This rule applies to all types of businesses, including oligopolies and monopolies. The optimal point is reached when marginal revenue (sales) is higher and marginal cost (due to mass production and economies of scale) is lower in the short term. We assume that humanoid robots will not lead to diseconomies of scale.

 Reference

Barbieri, L., Mussida, C., Piva, M., & Vivarelli, M. (2019). Testing the Employment Impact of Automation, Robots and AI: A Survey and Some Methodological Issues. IZA - Institute of Labor Economics.

Barth, E., Røed, M., Schøne, P., & Umblijs, J. (2020). How Robots Change Within-Firm Wage Inequality. IZA - Institute of Labor Economics.

Cilekoglu, A. A., Moreno, R., & Ramos, R. (2021). The Impact of Robot Adoption on Global Sourcing. IZA - Institute of Labor Economics.

Dautenhahn, K. (2007). Socially Intelligent Robots: Dimensions of Human-Robot Interaction. Philosophical Transactions: Biological Sciences, 362(1480), 679–704.

Graetz, G., & Michaels, G. (2018). ROBOTS AT WORK. The Review of Economics and Statistics, 100(5), 753–768.

Montobbio, F., Staccioli, J., Virgillito, M. E., & Vivarelli, M. (2020). Robots and the Origin of Their Labour-Saving Impact. IZA - Institute of Labor Economics.

Ruiz Estrada, M.A., Park, D., Staniewski, M. (2023). Artificial Intelligence (AI) can change the way of doing policy modelling, Journal of Policy Modeling, 45(6): 1099-1112.

West, D. M. (2018). ROBOTS. In The Future of Work: Robots, AI, and Automation (pp. 3–18). Brookings Institution Press.

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