Wednesday, October 7, 2009

Technological unemployment and lump of labour

“Technology doesn't destroy jobs. What technology does is make possible and make necessary either increased consumption, increased leisure or both. Unemployment results not from a quantity of jobs deficit but from an adjustment deficit. Unemployment results, that is to say, from a failure to establish a new income, consumption and work time regime commensurate with the new production potential offered by the technological advance.”
econospeak.blogspot.com

The above prompted me to write the following.

I find this to be a semantic argument. To say that technological unemployment is the result of an inability to adjust to the new realities created by some technological advance sounds mighty similar to saying technological advance destroys jobs to me. If I fail to adjust to the new reality of a mountain falling on my head, am I not destroyed by the crushing weight of rock?

The proportion of people working in agriculture is way down on where it was a century or so ago. Where are those jobs if not destroyed (assuming for the sake of this discussion that a job is at all a destroyable thing)? Manufacturing is undergoing a similar transformation in terms of how much human labour is needed to produce more and more goods. Services is at the beginning of its decline. Also, the phrasing heavily implies it should always be possible to make these adjustments no matter what. And yet the pattern is clear; jobs disappear. They are “destroyed,” then, hopefully, new ones are created elsewhere.

“Destroyed” is an emotive word, as if violently done. The truth is less colourful. When jobs disappear from the human world because, for example, robots do them better, historically new jobs have been created to take up the unemployment slack. Whether or not this process is destructive is a semantic issue. Important to note is that the desperate need to exchange labour for a wage is a massive pressure on human creativity to create new waged work. That new work needs to be created suggests old work is gone. Destroyed if you like. After agriculture came manufacturing, after manufacturing came services, after services comes mystery sector X that saves the model again. This is adjustment as reaction to the destruction of jobs.

However, the author rightly identifies the problem of weekly hours worked and amount consumed. This is in part a supply and demand problem, with advertising feverishly deployed to keep up demand as purchasing power falls – with built-in and perceived obsolescence attempting the same thing – while the other is a more philosophical problem, where there is a cultural block regarding value and self-worth as defined by how successfully you can exchange your labour for a wage. The more money your labour commands, the more successful you are. This measure of a human’s value is arbitrary – as are all measures by the way – albeit rooted deeply in almost all cultures. Not to work is to be lazy, and idle hands, as we all know, make the devil’s work. These combined truisms equate working less hours per week with failure, at some deep cultural level.

The real adjustment that needs to be made, I therefore humbly suggest, is to recognise that waged labour itself is becoming redundant. Surely work will always be with us, but exchanging it for a wage is now a serious problem. In the economic sphere of human existence, our technological dexterity has trumped our manual. With the advent of AI this will soon apply to our computational and processing abilities too.

Logically, the “doing more with less” arc of technological development means, inescapably, that we need less and less human labour – labour being one of the components of production – to produce more and more goods and services. How this does not inevitably lead to lowering demand for human labour escapes me. That human labour has less power in the market place is evidenced in no real wage growth in America for three decades, diminishing union power, and falling hours worked per week. Increasing domestic debt is also a sign, as the success of advertising to stoke demand, combined with built-in obsolescence, prods consumers to spend beyond their means.

As to the author's referencing the lump of labour fallacy, I don’t see how it applies to technological unemployment. The idea that the economy needs less and less human labour due to technological advances does not rest on the assumption that the amount of labour (or work) to be done in an economy is fixed. It states quite simply that machines, automation and AI are steadily replacing the need for humans in the work place. Just because there is no human doing work does not mean there is no work being done, or that technology cannot be improved to take on more and more work. To suggest human labour can be replaced is not to suggest there is a fixed amount of work. The more helpful question is not about fixed or dynamic amounts of work in the economy, but whether human usefulness to the economy can stay sufficiently high for waged labour to remain a viable model.

The human being is, from the economy’s point of view, a fixed item, which has a range of potential utility. It has a certain skeleton capable of bearing certain loads, comes with hands with opposable thumbs capable of a certain dexterity, a highly intelligent brain, and has a complex of requirements for healthy operation. Our ability to replicate technically, at a higher level and lower energy cost, what the human “machine” can conceivably do in the economy as waged labour, is steadily improving over time. Therefore, technological unemployment as an ongoing and fitful process refers to the need to deploy the human machine less and less pervasively, and not in any way to the amount of work to be done per se.

As an aside, since the advent of the steam and internal combustion engines labour for horses has diminished considerably. In that there has been little social pressure to bring them back, we can safely say that they have been rendered technologically unemployed as means of transportation. Their jobs were destroyed. But who cares?

The fallacy lies, I feel, in a misinterpretation of the process. Machines will do more and more work, humans less and less waged work. If less and less humans are able to exchange their abilities for a wage, that is if less and less human abilities are technically irreplaceable, purchasing power will correspondingly diminish. This has only a little to do with lump of labour, and everything to do with our collective technical ability to replace humans in the work place. The stagnation of wage growth and subsequent increasing consumer debt mentioned above could well be signs of human labour’s diminishing appeal.

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