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Technological unemployment

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Main article: Structural economic problems (current)

The relationship of sex automation and mechanization to unemployment is a multivariate one, and people's ideas about its nature in their time, as well as their predictions about the future, have varied widely (and have often been wrong). Nevertheless, humanity continues to try to develop theory that adequately explains the relationship, because it has significant potential to affect economies and modes of life throughout the world.

Mechanization and automation enhance productivity, allowing more products to be made, or other work to be done, faster and with less human effort, and therefore they typically displace workers in some (but not all) areas of employment. The central question has always been whether and where those workers will find new employment. For two centuries, new employment has always been found; during that time, entire new industries and job descriptions have arisen.

The fact that for two centuries no permanent, structural unemployment has ever been proven to result from automation has supported an economic concept that automation can never cause it. This view is dominant in economics today, and the idea that automation can cause such unemployment is considered a fallacy in conventional economic theory. However, there are also many people who believe that this theory is incorrect, and that despite the empirical record thus far, the future could be different. These arguments usually make reference to the rapid (and accelerating) pace of advance of information technology, which may produce qualitatively different results than earlier kinds of automation produced, if the advantages of humans over machines keep dwindling.

Multivariate effect

Many people consider it common sense that automation has the potential to foster unemployment, because it obviates human work by transferring tasks to machines. However, the translation of that potential into observed effect has largely not happened in the two centuries during which it has been continually predicted. After many decades of automation development and dissemination, the net macroeconomic effect has been generally positive—automation has been part of a general trend of economic growth worldwide; standards of living have risen in many places; and automation has never yet been shown to have induced any widespread structural unemployment.[1] The main explanation for this is that, so far, job losses in any one particular economic niche have always been more than offset by job gains in other niches.[1] As the lowered unit cost of goods and services (which the automation made possible) gave consumers more purchasing power to devote to other goods and services, new jobs sprang up in the production of those goods and services.[1] Thus each time that automation has freed up human resources, those resources have been redeployed by market forces (although it did not always happen without turbulence in the lives of individual workers).

One of the earliest promises of automation was to allow more free time, without any threat of income reduction. This effect has been seen in many individual facets of life (for example, the automatic washing machine has made laundry less time-consuming; engine control units have reduced the amount of automotive downtime; the automatic dishwasher has made dishwashing less time-consuming), but the net outcome of modern life in developed economies remains a state of hurry and busyness, mostly because rising living standards have brought rising expectations in direct relation. (Each time-saving improvement has made room for a new aspiration to take its place.)

Automation also does not imply unemployment when it makes possible tasks that were unimaginable without it (such as exploring Mars with the Sojourner rover). Likewise with fields where the economy is already fully adapted to an automated technology, and the jobs were lost long enough ago that the displacement was long since absorbed by the workforce (as with the continually advancing automation of the telephone switchboard, which eliminated most telephone operator jobs and kept many more from ever existing in the first place).

Today automation is quite advanced (relative to just a few lifetimes ago), and it continues to advance with an accelerating pace throughout the world. Although it has been encroaching on ever more skilled jobs, the general well-being and quality of life of most people in the world (where political factors have not muddied the picture) have improved.[1] Clearly a multivariate effect has been at work (something much more than just the obvious idea that automation has the potential to cause unemployment). In fact, the idea that automation posed an imminent threat to employment, first articulated in 1811 by a group of textile workers known as Luddites, has proven to be so fallacious over the ensuing two centuries that economists call the imminent-threat idea the Luddite fallacy.

There is some concern today that the economy's ability to continue absorbing ever-increasing automation without experiencing significant structural unemployment may be heading toward an upper limit—that is, that we are approaching a point where the Luddite premise will no longer be entirely fallacious, because the relationship of humans to machines that made it fallacious is changing. In this view, the empirical strength[1] of the eternal-fallaciousness idea is only a reflection of the parameter values of the environment thus far. In other words, the idea is undoubtedly an excellent explanation of the past, but whether it can accurately predict the future is an independent problem. Like an investment prospectus, proponents of this view caution that "past performance is no guarantee of future results."[2]

Timeline of concerns about automation's relationship to unemployment

Early in the Industrial Revolution

See also: Industrial society and Industrial revolution

Historical concerns about the effects of automation date back to the very beginning of the Industrial Revolution, when a social movement of English textile machine operators in the early 19th century known as the Luddites protested against Jacquard's automated weaving looms.[3] The Luddites destroyed a number of these machines, which they felt threatened their jobs.

During the Machine Age

As in the preceding century, the period of 1880 to 1940 saw no underlying automation-induced structural lack of new economic opportunities for skilled workers to go to, given enough searching,[4] although the Great Depression caused a tremendous disruption to employment. The foundational potential for full employment had not been lost, as would later be shown by the post–World War II economic expansion and other economic miracles.

In the 1930s, John Maynard Keynes predicted that in a century there would be a 15-hour work week as the "economic problem" would be replaced by the problem of leisure. This work was an early exploration of the comparing and contrasting of an economy of scarcity (the only kind of economy humanity had ever known) with an economy of abundance, that is, a post-scarcity economy. This theme would be reprised in future decades.

During the 1950s through 1990s

See also: information society, information revolution, and post-industrial society

The postwar development of new automation technologies using electronics, servomechanisms, and digital computers stoked a new wave of fears similar to the old Luddite ones. Among the working class and labor unions, there was stiff resistance to loss of employment through automation, including contract clauses won in hard-fought contract negotiations that mandated alternate employment for any workers whose positions were eliminated by automation.[5] These clauses seemed a great victory for union workers at large corporations in developed nations, but because they had no effect at smaller, nonunionized companies or in developing nations, those corporations faced withering competition that shrank their market shares until their workers' gains eventually undermined their own success.[5]

However, the 1950s and 1960s were optimistic times in many respects, and during this era many optimists made forecasts similar to Keynes's 1930s discussion of pending abundant leisure. Meanwhile, pessimists questioned the role of labor in such a world and questioned how people would earn a living or occupy their time. While economic growth increased per capita income in the 1960s, and the average number of hours per work week declined, they have remained relatively constant in the United States since then.[6]

Despite the depopulation of manual labour and assembly line jobs after World War II via advancing mechanization and automation, the salvation for employment rates damaged in the industrial sector (secondary sector of the economy) came from the service sector (tertiary sector), which absorbed all of the workers that automation displaced elsewhere. For example, many manufacturing jobs left the United States during the 1990s but were offset by a one-time massive increase in IT jobs at the same time. And in some cases the freeing up of the labor force allowed more people to enter higher skilled managerial jobs and technically specialized jobs, which are typically higher paying. Therefore, fears of unemployment due to automation were generally dismissed as just another instance of the Luddite premise, which had proven fallacious time and again over many decades. Given this obvious empirical contradiction of the premise, people who nevertheless returned to it were usually viewed by the mainstream as cranks misled by quixotic leftist political bias. For example, works by scholars including David F. Noble[7] and Jeremy Rifkin[8] were often respected but discounted. At worst, they were mocked with the disparaging label "neo-Luddite". Noble even wrote a later book titled Progress Without People: In Defence of Luddism[9] to try to further explain why the Luddite premise should not be laughed out of academia.

Post-market musings

Rifkin's End of Work,[8] published in 1995, predicted that automation-induced unemployment would begin to be widespread within the next decade. However, the book's concept of how IT would evolve over the next decade was incomplete (the book mentioned the Internet once in passing and the World Wide Web not at all; its IT focus was mostly on robotics); and its timeline prediction turned out to be wrong. It also did not provide much detailed explanation of any solution to the problem. The book's subtitle called the solution a "post-market economy", but its concluding chapters did not clearly lay out how such an economy could be engineered, leaving readers to conclude that a non-market solution involving a planned economy was implied between the lines.

In terms of political economy implications, there was no clear differentiation at the time between the ideas of authors like Noble or Rifkin (on the one hand) and traditional leftist agitation (on the other hand). To the extent that readers could ask "What point is this person getting to?" and answer the question with "socialism" or "a welfare state", they dismissed these authors.

Writers such as Rifkin,[8] Brain,[10] and Ford[2] often suggest that the structure of the economy will have to shift to a basic income because its present structural foundation (trading labor for income) will no longer be an available option on a full employment basis. It would perhaps be available to only 90% of workers in the next decade, perhaps 75% of workers a decade after that, and so on. Often included in the basic income idea is an element of civic obligation, such that able people must somehow contribute civically in order to receive the basic income (sometimes differentiated as guaranteed minimum income). The labor-market economy (trading labor for income) already achieves that outcome today (because working for income generally produces civic value in various ways, directly and indirectly), but the argument is that advanced automation will decouple the linkage that makes that possible. Thus the same result (trading civic value for income) would have to be driven by different forces—either non-market ones, or via a new kind of market. The non-market idea seems infeasible given the generally abysmal performance record of planned economies. But the idea of engineered new markets leaves room for the disciplining and motivating powers that make capitalist markets capable of positively shaping human behavior where government alone is usually unable.

New-market engineering

Brain[10] and Ford's[2] books, in stark contrast to Rifkin's, came later and were written by engineers with extensive under-the-hood knowledge of modern production methods, computer hardware and software, and the Internet. They explicitly reject non-market solutions as unworkable and instead suggest new kinds of markets. Rather than being "post-market" proponents, such authors could be called "new-market" proponents. They vigorously distance themselves from socialism or welfare states—generally seeking to keep a market economy with private enterprise, which they believe cannot be preserved unless its foundation is modified from its current structure. Thus, quite contrary to being anti-market agents (as critics might suppose them to be), they believe themselves to be salvaging markets from destruction. They envision creating consumer purchasing power by some other mechanism than the traditional labor market as we have known it so far, in order that free markets may continue to provide the invisible hand component of production-possibilities decisions. In other words, they believe that market forces are necessary to generate allocative efficiency, and they believe that without a structural modification that (at least partially) decouples purchasing power (and consumer confidence) from employment determined by the traditional labor market, there will be a systemic market failure, which they seek to avoid.

Discussions of new-market ideas usually lead to the topic of post-scarcity economic paradigms. But new-market engineers argue that without clear-eyed, realist engineering of the intermediate steps, there is an abyss of dysfunction and hardship between today's economy of scarcity and the starry-eyed goal of any fully developed economy of abundance.

Wage-recapture market variant

Ford's main new-market mechanism would be to create a tax that recaptures most (not all) of the value that firms and their customers gain from eliminating wages, then use the tax revenue to pay people for doing civically valuable actions—that is, pursuing activities, such as higher education or environmental preservation, that have positive externalities.[2] The main reason for paying these "wages" need not be their altruistic or environmentalist components; the main reason is simply to prevent the market economy from collapsing due to noncirculation of value (that is, the lack of adequate trade which would occur if lack of consumer purchasing power and confidence left no way for an adequate mass market to exist). Ford points out that the tax could not take all of the gains away from the corporations and their customers, because this would destroy the natural incentive to innovate that a market economy needs to be sustainable. The value would be split between the innovators, their customers, and the rest of the population, because leaving out any of that trio would wreck the sustainability of the model. (The leaving out of the third leg is what is causing today's economic pathologies and promising tomorrow's, in the view of new-market engineers.) Ford's idea is an earnest market effort because it preserves the invisible hand as the maker of production-possibilities decisions for goods and services. However, it does rely on human planning (via a technocratic government agency in each country) to make the production-possibilities decisions for civic actions. The latter is viewed as unfortunate but necessary due to the lack of an alternative.

References

  1. ^ a b c d e Cite error: The named reference Roberts_2011-06-22_WSJ was invoked but never defined (see the help page).
  2. ^ a b c d Ford 2009.
  3. ^ The Luddites
  4. ^ Hartness 1910, p. 7–12.
  5. ^ a b Forging America, 2003.
  6. ^ Hayes B. (2009). Automation on the Job. American Scientist.
  7. ^ Noble 1984.
  8. ^ a b c Rifkin 1995.
  9. ^ Noble 1993.
  10. ^ a b Cite error: The named reference Brain2003 was invoked but never defined (see the help page).

Bibliography

Further reading

  • Ramtin, Ramin (1991), Capitalism and Automation: Revolution in Technology and Capitalist Breakdown, London, UK and Concord, Massachusetts, US: Pluto Press, ISBN 978-0745303703.
  • Scott, Ellis L.; Bolz, Roger W.; University of Georgia; Reliance Electric Company (1969), Automation and Society, Athens, Georgia, US: Center for the Study of Automation and Society.

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