At first glance this whole thing seems quite serious – even Bill Gates calls for a robot tax. Is a tech revolution lurking at us around the corner? Will it eventually lead to a shortage of job opportunities in the automated marketplace? Perhaps our anti-tech phobia is a contemporary variant of the 19th Luddite movement? Except that instead of smashing up textile machinery, we are searching reasonable alternatives to offset the adverse effects of technological unemployment.
Nothing new under the sun
Before we start projecting apocalyptic visions of the end of the workforce, let’s go back to history. After all, technological development did not begin with the advent of computers. If technology was indeed good at destroying jobs, a couple of centuries of the development of our civilisation should result in a considerable majority of occupations replaced by technology.
Meanwhile, only one in twenty people is able to generate significant food surplus. Additionally, activities, like washing and carrying water, do not raise any difficulties any more. Despite an authentic efficiency revolution in producing essential goods, people still have workplaces. Besides, the amount of products and services which are produced and consumed is still growing.
However, the structure of employment has gone through a fundamental change. The old world of serfdom in middle-aged villages along with its related occupations in towns are gone forever. Replaced by the machines and freed from painstaking and routine tasks thanks to technological advancements, people find their way in other economic sectors that did not previously exist, and which no one even imagined in the past.
At this point, we can draw two key conclusions. Firstly, technological progress has not been invented in modern times. Technological displacement of labour has been accompanying us for centuries.
It does not really matter whether we put the blame on a package-sorting robot in an Amazon warehouse or on a power loom from British manufacturers. Secondly, technological progress does not undermine all jobs indiscriminately. It affects mostly routine and repetitive occupations which are also easily ‘programmable’ and hence – easily delegated the machines.
Are new technologies creating or destroying jobs?
The mechanism of ‘technological displacement’ of occupations was described by Austrian-born economist Joseph Schumpeter in his magnum opus “Capitalism, Socialism and Democracy” in 1942. Schumpeter depicts a vision of capitalism which is subject to constant and dynamic changes; a system where the structure continually goes through changes thanks to some inducements (innovations). Innovative entrepreneurship is regarded as a ‘process of industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one incessantly creating a new one’. Creative destruction boosts the economy. Old or inefficient methods and products are replaced by more effective ones. The potential which is saved subsequently is moved to other sectors of the economy. Innovations are not only pioneering inventions; we will also find less noticeable improvements which contribute to the increase in productivity and which allow us to win the competition.
However, the continuous improvement of the capitalist system requires sacrifice. Not only entrepreneurs but also entire sectors of the economy which do not keep up with technological changes are endangered. All the multitude of human workforce in farming have been ‘replaced’ with the machines only because they turned out to be too expensive compared to technological improvements. Nowadays hardly anyone remembers crafts which were essential in the past, such as marlinespike seamanship, wheelwright or cooperage. They were all absorbed by the machines.
In these circumstances, there is one question that comes to mind – does creative destruction work to our advantage? Does it create more new job opportunities than destroys?
One scientist will agree…
What is the easiest way to call historical analogies into question? Assuming that the nature of modern transformations is fundamentally similar to past ones, even if they do not show resemblance at first glance. As far as new technologies are concerned, the fuss is about the speed of changes – pessimists believe that disrupted employment is not a genuine problem here. It’s the rate of the advancement in technology in our times that prevents us from adapting effectively to the galloping reality. Is robotic automation leading to destruction so fast and to such an extent as it has never done in the past years?
The latest report published by the technological think-thank Information Technology and Innovation Foundation (ITIF), negates these worrisome predictions. For the purposes of the report, the expert group did a thorough analysis of the census dating back to as early as… 1850!
Study results contradict the assumptions about robots supposedly destroying more jobs than creating new ones and about the galloping speed of technological progress.
The authors of the report argue that none of the decades studied did not cause disruption of manpower with technological progress. Technology has always created more jobs than it has destroyed.
Simultaneously it helped to increase the production capacity and salaries. As a consequence, technology strengthened the purchasing power in society. Next, increased demand for products that followed led to the creation of new jobs. In this way, a new effective mechanism for economic growth was established. Additionally, experts from the ITIF proved that disruption of employment has been… actually the lowest since 1850. What’s more, the disruption rate has been dropping steadily since the end of World War II, and currently, it remains approximately at 7%.
The authors of the study are more afraid of the decline in productivity growth than the substitution of manpower with technology. This is why they recommend safety measures which aim to accelerate ‘creative destruction’ to maintain in force the existing technological process of economic growth. Their demands include developing a tax system which will be favourable to innovations, research and exchange of technologies. They also request to take actions to equip workers from ‘disappearing jobs’ with a new set of skills and competencies which will be required on the new robotised marketplace.
… and the other will not
On the other side of the technological barricade stand two cyber pessimists from Oxford – Carl Frey and Michael Osbourne – who predict that as much as half of the jobs existing today can be automated within the next 20 years. How did they obtain these numbers? Firstly, thanks to the blatant methodology. The researchers created a vast catalogue of routine occupations. However, they did not take into consideration the fact that some trades that they categorised as prone to be replaced by technology, besides repetitive tasks, also require interaction between employees, adjusting tasks to changing conditions or the contact with clients. Secondly, neither facts nor specific arguments were provided to support optimism about the increasing speed of technological advancements. Lastly, the money. Frey and Osbourne do not take into account economic factors in their analysis. Neither do they reflect on costs related to any potential implementation of technological advancements, which the majority of developing countries will probably not be able to afford.
Another research led by Melanie Arntz and Terry Gregory sounds more reasonable. In the report for OECD, they estimate that approximately 9% of jobs can be automated in member countries (around 7% in Poland).
The authors apply a method based on the bundle of tasks performed in the workplace. Frey and Osborne chose a technique based on professions (occupations), which seems less accurate. It simplifies work to a great extent failing to take complexity into account. For example, store clerks not only scan products behind the counter, but also they perform less repetitive kind of work in customer service or take ownership of activities during an emergency. In this case, technological progress will contribute to improving workplace efficiency, but it will not substitute it in any case.
Not all types of occupations get automated in the same way. Daron Acemoglu and David Robinson classified work environment into four task-specific groups: intellectual, manual, routine and non-routine. Their research did not reveal any difference in an employment disruption with regards to its nature: whether it was manual or intellectual. It depended, however, on the repetitiveness of work. Regular tasks which do not require creativity and where operating procedures can be established will be automated more and more frequently. Besides the simplest tasks, also professions mainly associated with the middle class, such as data processing, sales, management at the middle and lower levels and accounting, are jeopardised in the same way.
Only representatives of professions where social interaction with another person is required or where irregular kind of tasks are performed, such as waiter service, hairdressing, babysitting and education, can feel safe.
Keynes foreshadows our problems with robots
It doesn’t matter whether we are talking about 50%, 25% or 7% of professions ‘threatened with extinction’. Each of these numbers poses a real social and economic challenge. Our contemporary problems were foreshadowed by John Maynard Keynes in 1930 in his essay Economic Possibilities for our Grandchildren where he coined a notion of technological unemployment. It occurs due to our discovery of means of economising the use of labour, which outruns the pace at which we can create new job opportunities. According to the renowned economist, both technological unemployment and income inequality in society can pose a real challenge for future generations. It is not really hard to imagine a tyranny executed by a small group capital holders who would use the rest of the population deprived of possibilities of social advancement due to technological unemployment.
Microsoft chief executive’s call for income tax on robots attempts to solve this problem. The same idea resonates in Thomas Piketty’s famous book Capital in the Twenty-First Century. His symbolic equation r>g where returns on capital exceed the rate of economic growth deepens income and wealth inequalities in society. What does it have to do with technological progress? If machine productivity will keep growing and replacing the human workforce, it looks like benefits of work will be an exclusive part of capital owners who essentially will become ‘automation owners’.
Gate’s words are a brilliant piece of propaganda. Besides, both research methodology and accurate calculations made by the author of the Capital in the Twenty-First Century have been undermined on several occasions. It does not change the fact that thousands of workers who will be displaced by the machines will need to be taken care of.
What does history suggest?
The history offers some inspirations. Firstly, let’s go back to the 16th century England. During the reigns of Elisabeth I, a clergyman and inventor William Lee devised a stocking frame knitting machine in 1589. This machine was supposed to automate labour of thousands of manual workers weaving stockings, extremely popular among women at that time. This ground-breaking invention gained recognition of neither Queen Elisabeth nor Jacob I, King of France.
William Lee was told by his Queen: ‘Sir, please imagine only the consequences that it would bring on my poor people. It would completely destroy them. Unemployment would make them poor and miserable’. Supporters of the status quo won eventually. By enforcing the state-owned monopoly, the monarchs chose political stability to the detriment of technological progress and the well-being of their people.
However, the automation was not stalled forever. Employing evolving technological advances and thanks to the inventor Edmund Cartwright, the first power loom replaced hand-weaving in 1785. The invention triggered strong reactions among people. Hand knitters, displaced from work by the machines, were actively involved in the fight against the changes and were smashing the symbol of progress – power looms which devoured their work. These disturbances can be associated with the formation of Luddites, a movement named after a legendary leader of hand knitters and manufacturers, Ned Ludd.
Adversaries of technological advances did not meet with the same favourable response as in the 16th century. They were quickly pacified and repressed by the State which had already undergone some significant changes. The absolute monarchy, opposed to advancements, was succeeded by a parliamentary system with a broad representation who cared more about well-being than about keeping the harmful status-quo.
Two ideas for dealing with technological unemployment
Contemporary Luddites who fight against automation are nowhere to be seen yet. Likewise, it is hardly possible to imagine a state which decides to suppress technological development by a decree. However, the crucial source of inspiration for activities of political nature seems to be in use.
Recently some brilliant solutions have been put forward in response to the challenges posed by technological unemployment. These are the primary income guarantee and the employee share ownership.
Opponents of the existing form of capitalism make a compelling case for the introduction of basic income – a certain amount of money paid by the state which allows every citizen to meet the essential material needs. It’s a kind of ‘social dividend’ which is due to every man based on their affiliation to a political community. This sort of ‘state allowance’ would help to balance somewhat the loss of income caused by displacement from work by the automation process.
Employee share ownership allows workers to purchase shares at favourable terms in the companies hiring them. It makes it possible to diversify the source of income of the ‘working class’. In addition to standard remuneration, employees earn money by way of capital gains from accrued dividends and with the increase in the value of shares. Employee share ownership thrives well in many companies in the US. Despite the lack of proper legislation in Poland, we will find some enterprises applying the same practice, such as the furniture manufacturer Mepromor. Interestingly, the idea of employee share ownership was recognised by the Polish Prime Minister Mateusz Morawiecki, who included it in the Responsible Development Plan.
Are these solutions efficient remedies to the technological unemployment problem? Not in my opinion.
We should focus on education reforms in the first place. The education system in Poland is established mostly on anachronistic standards of Prussia from the 19th century, which targeted professions required for the state bureaucracy.
Skills and competencies necessary in the automated marketplace should be developed at school. Neither the Luddite movement nor an autarchic feeling of being offended should be how we react to progress in the changing world. As the historical records show, we should fight to get to the forefront of change. At least to try to get there as close as our skills or accrued capital will allow us.
Translation from Polish: Małgorzata Warchoł
This publication has been cofinanced by the Ministry of Foreign Affairs of the Republic of Poland within “Cooperation in Public Diplomacy 2018” programme.
This publication reflects the views of the author and not the official stance of the Ministry of Foreign Affairs of the Republic of Poland.