Daniel Stone
Tuesday, 2 July 2013
Daniel Stone
Tuesday, 2 July 2013
To say the early 1800s were a tense time in England would be an understatement. The economy was rapidly industrialising, powered by automated machinery, which increased the production of goods significantly. However, this also led to widespread unemployment, and for those who still had jobs, the work became more dangerous and dissatisfying.
It’s in this environment we find the roots of the modern Labour Movement – with working people coming together to advance their interest in democratic unions or “combinations”. The power exercised by these communities was surprisingly simple. If employers wanted more than workers could safely or reasonably give – then workers would give nothing at all. They would go on strike.
Therefore, a flourishing economy needed workers and employers to find an acceptable middle ground. Employers providing the environment, resources and opportunity to work, and everyday people providing their skill, time and labour.
This fundamental concept – an equitable and productive partnership negotiated between ordinary people standing together and those who hold capital – has fuelled the massive increase in living standards worldwide for over two centuries and formed the foundation of our modern liberal democracies.
But the rapid automation of many jobs may be throwing this partnership out of balance.
For almost as long, we’ve been distrustful of the role of machinery in the workplace. Indeed, the Luddites were one of the earliest examples of organised labour in action—a group of Nottingham textile workers who passionately smashed the machines which had replaced them.
John Maynard Keynes singled out his own anxiety about the role of machinery in his 1930 essay “Economic Possibilities for our Grandchildren”. He described “technological unemployment” as a “new disease” caused by “our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.”
For the last two hundred years, it has been an unfounded anxiety. Dismissed as “the Luddites Fallacy”, many economists argue that by raising productivity, any automation which reduces the complexity of labour will increase our incomes. All that extra money will then generate demand for new products and services, which in turn create new jobs for those redundant workers.
The advocates of this view certainly have history on their side. The fact I now carry a small device that connects me to almost every other person in the world and a vast body of human knowledge is a testament to that, let alone the fact that I can afford to buy one.
We’ve seen exponential technological growth over the last 200 years, a skyrocketing rate of real wages, and national economies, which have grown fast enough to accommodate a much larger global population.
However, some leading economists believe this theory may not hold up in a world driven by modern computers. These machines are distinctly different from the printing presses or mechanised looms of past times.
Erik Brynjolfsson and Andrew McAfee pointed to this troubling trend a few years ago when they observed that although modern computing power continues to hold true to Moore’s Law (doubling their power by two every two years), real wages in rich countries are largely stagnant. In Australia, wage growth has been steadily easing for years, and earlier this year fell below inflation to its lowest point in 17 years. Britain and Germany tell a similar story over the last decade, and in America, the real wage has been virtually flat for nearly forty years. In short – the idea that new technology will create higher income and, as a result, new jobs is no longer proving to be true.
They suggest this is because the wealthy are increasingly replacing labour with automation where possible. Consequently, owners of capital are effectively creating a closed system where they have retained an increasing slice of the world’s income since the 1980s while simultaneously reducing the share going to labour over that time.
One economist, David Graeber from the London School of Economics, suggests there’s more than just a growing divide between capital and working people. He suggests the divide between those who work is becoming more dramatically stratified, with elite professionals getting paid significantly more and a rise in what he charmingly calls “Bullshit Jobs”. These are jobs whose primary purpose is to occupy and bore those in the lower and middle levels of the economy who no longer have much use. Graeber, perhaps controversially, suggests that it’s not even an economic choice – but rather a conscious decision by the ruling class to keep control over the lives of others.
I doubt all but the most hardened conspiracy theorists would believe there is a calculated intention to create this kind of job market. Still, there is little doubt that western societies have a radically increasing problem with inequality on their hands.
Amongst many impacts of this shift, one of the greatest is on our civil society. The middle class – a uniquely 20th-century innovation – has been a massively important political and social development worldwide. The squeezing out of that class could generate a much more antagonistic, disengaged and unstable political life. If, as Picketty suggests, there is no reason for us to safely believe capitalism in its current form will ‘naturally’ reverse this rising inequality – we need to think about what that means for our democracies.
As machines took on repetitive manual tasks over the last 200 years, the Luddites were proven wrong. Despite the exponential increase in technological sophistication and capabilities, unemployment has remained low. Many jobs previously believed to be unpleasant no longer exist, and we’ve found new jobs for these people.
However, this mechanisation isn’t restrained to manual and repetitive tasks anymore; we’re seeing automation of jobs that require judgement and discretion, things we previously believed only people could do. There is a growing concern that we may be approaching a tipping point where automation is happening faster and more broadly, causing more churn than the job market can absorb.
A recent study by the Oxford Martin Programme on the Impacts of Future Technology found that up to 47% of all jobs in the United States could be threatened by artificial intelligence and automation within the next 10 to 20 years.
These are jobs like journalists, taxi drivers, tax agents, real estate agents, travel agents, junior lawyers and a whole range of other knowledge and information processing roles.
Ten years ago, many would have considered computers driving our cars, trucks and buses an impossible fantasy. However, Google and several auto manufacturers have built that very thing. Some have already been registered for use on public roads.
Not to mention the massive changes we’ve seen that already seem commonplace. My father still speaks with whimsy about a time when watches with computer screens were an alien fantasy. I can’t wait until he discovers Siri!
Indeed the only jobs Frey and Osborne consider safe are those which require creative and social intelligence. These jobs involve consulting other people, negotiating agreements and otherwise interacting and engaging in human relationships.
But here’s the rub: the jobs requiring human intuition and interaction will also become extremely expensive.
In the 1960s, William J. Baumol and William G. Bowen discovered that as manufacturing and other service industries became more efficient, and goods became more affordable, the relative cost of some services became more expensive. They called this Cost Disease.
Their study focused on the performing arts using the example of a Symphony. This performance still takes the same labour time as in the 1800s. But the seats, instruments, venues, the transport to get people there have all fallen in cost dramatically over those 200 years. Each performer is also being paid at competitive modern rates – which is significantly more than a performer from the 1800s, even though there has been no reflective increase in productivity. When held in comparison, this makes the cost of a single performance significantly more expensive and less ‘efficient’ when compared to manufactured goods.
This theory also holds true in other vital areas of our society, like healthcare and education. You can’t generate ‘efficiencies’ when it comes to teaching algebra. It takes the time it takes. In the US, we’ve seen the cost of a university education rise at three times the speed of inflation. By exposing industries with a fixed time commitment to the market, the US has not managed to create efficiencies or productivity improvements – only increasing the cost and reducing the accessibility of these services.
This should stand as an ominous sign for Australia, where the Abbott Government is keen to expose our University and Healthcare systems to the market while using arguments about productivity as the justification.
The current situation is unsustainable if societal advancements benefit only an elite few, leaving the majority with limited job opportunities, stagnant wages, and inaccessible education and healthcare services.
To guarantee that everyone enjoys the benefits of technological progress, we must actively mold our future society now. This means strengthening our democratic institutions and safeguarding a sustainable system grounded in fairness.
To achieve this, we must utilise the resources at our disposal. If withdrawing our labour holds less power than before, we need to develop new approaches to ensure democratic accountability in the future.
State and federal governments remain our primary avenue for realising these goals. Our foremost priority is to safeguard these institutions from corruption and capital influence, a considerable challenge.
Moreover, we should demand that those who accumulate wealth and distort our economy contribute to the sectors most affected by ‘cost disease’, such as education, healthcare, law enforcement, and firefighting.
As influential employees in our workplaces, we should be trying to kill these ‘bullshit jobs’. If machines are able to carry a bigger slice of the load, then you and I should enjoy the benefits of this as much as our employers. This means freeing people up to focus on things which will enrich our civil society rather than running ourselves into the ground, chasing an impossible productivity target.
We must also reassess the skills taught in schools and universities, as well as their funding methods, to ensure all students acquire the relational and interpretative skills vital for the future.
We shouldn’t be scared about what comes next – but we do need to play an active role in shaping it.
