Technological unemployment: a genuine threat, a great opportunity

Below is my attempt at a journalistic-like article which aims to shift people's thinking about money, cost, value, wealth, work and resources (I know, foolishly ambitious). I sent it to some newspapers, magazines and journalists, but have excited no interest with it. My intention is to broaden the debate, but to do so the ideas the article contains need a better distribution outlet than this humble blog. I strongly believe the broader public is now ready for this debate, and thus that something as simple as this article is appropriate at this time. So, in the absence of anything else, I am using this platform to at least have this formulation out there. Do with it as you will. It is not standard Econosophy format, but it is standard Econosophy argumentation. There's nothing new in it for frequent visitors of this site.

[Edited on 25 October 2014 to improve logical flow]

Recent months have seen many articles tackling the Luddite bugbear of technological unemployment – automation replacing jobs. I welcome this attention. Not because I welcome increased suffering, nor because I see no way out. No, I strongly believe technological unemployment is and always has been an inspiring challenge to humanity’s ideas about work, value and societal contribution. In this challenge I see great opportunity.

However, my impression from these articles and from reader responses to them is that we are not taking Einstein’s famous admonition sufficiently to heart: “We can’t solve problems by using the same kind of thinking we used when we created them.” Robots taking our jobs is only a problem if we fail to think outside the box in which it must remain a problem.

(Three points undergird this article: firstly, we are not in pursuit of Utopia; there can be no such thing. Secondly, we must ask the right questions to see intractable challenges from fresh perspectives. Thirdly, let’s not lose sight of the kind of world we want to live in.)

Currently, if the economy isn’t growing, it’s collapsing. Wages fall, unemployment rises, hope fades, the chance of war increases. This sad historical correlation lies behind President Obama’s recent characterisation of economic growth as an “imperative”. But even though it is a systemic requirement, perpetual economic growth is impossible. If we want to survive as a species, our relationships with GDP growth and orthodox economics must change, not to usher in Utopia, but to adjust intelligently to new knowledge and circumstances.

Why is the impossible an imperative?

For two main reasons. Firstly, the way money is designed requires growth; money is created as interest-bearing debt, and compound interest is exponential growth. Our system is wired to grow exponentially. Secondly, redirecting the economy from the growth track requires radical change, change that vested interests do not want. Nevertheless, either we push on with the impossible, or we do something different.

Something different would be an economy as happy with growth as with de-growth (steady-state). This only sounds crazy because de-growth currently causes social distress. Space does not allow an exploration of the many proposals for alternative money systems currently being discussed, but this is a technical challenge humanity can solve.

A steady-state economy powered by an appropriate money system would not cause social distress, it would free us to enjoy a healthy work-life balance. Think about it: what is economic growth? Ever more economic activity. What is economic activity? Production, buying and selling. Are these the source of all human happiness? We do more of them today than ever before. Are we happier than ever before? Most of us realise rampant consumerism is bad for environment and community alike, so not only is perpetual economic growth unsustainable, we don’t actually want it. It's a cultural addiction, not a genetic requirement.

How does this relate to technological unemployment? Well, we don’t need ourselves economically as we once did. When we contemplate economic de-growth exacerbated by technological unemployment, we see an ever-diminishing role for humanity, we fear “robot overlords”. But a dystopian future only awaits us if we refuse to accept that unpaid work can be more valuable to society than paid work. What does society value more: good parenting or investment banking? If money is our guide, the latter. Otherwise, the former (and similar social contributions). We need new money and money-distribution mechanisms that honour the former. With such systems in place, we would welcome technological developments that free us from boring jobs.

Looked at coldly, wages are a mechanism for distributing money to people. Wages imply that the work they reward is good for society, but this may only sometimes be true and then only partly. We also value contributions to society that cannot be remunerated by the market. In light of technological advances and the need to de-grow our economy, we should implement a Basic Income Guarantee (“BIG”), a new mechanism for getting money to people. To want to do this, we must first re-envision money as a public utility that both frees us to contribute meaningfully to society and rewards us for work the market deems valuable.

If you believe we cannot afford a BIG, you probably think it is money that affords. Resources and know-how afford (what is money without natural resources?). Let’s say we need 30% of the adult population to produce enough to keep everyone housed, warmed, fed and clothed. I.e., there’s enough of the basics, but not enough jobs. In this narrow example, market mechanisms must fail to provide everyone with purchasing power. Abundant supply meets impotent demand. Here the market is the problem, not ‘lazy’ people.

Just because we no longer need people economically does not mean we cannot learn to value what they might contribute when freed to do so by a BIG. Nor does it mean that giving money away must lead to inflation; the need for a BIG arises from the fact of what I’ve termed “impotent demand”.

Technological unemployment is real because production can exceed consumption. The “lump of labour fallacy” rightly argues there is no fixed amount of economic work for humans to do. Correct. It can shrink. Or it can be forced to grow against our better judgement; we neither want nor can the environment afford perpetual economic growth. The lump of labour ‘fallacy’ is thus a red herring. Far more important is redefining our cultural definitions of work, value and reward, and how we design and distribute money.

The cultural habits ingrained in us over recent centuries have dangerously narrowed our thinking. There are good alternatives to ever more jobs. BIG is perhaps the best of them, though just a first step. We have come to mistake money for wealth, and are having a hard time accepting that we can indeed afford to de-grow, that consumerism does not create health and happiness, that economic activity is not a panacea. If we automate more, consume less, move to renewable energies, set up a more appropriate money system, our work-life balance will improve. Indeed, work would become more and more pleasant, until our work becomes our passion, our life.

This is the potential of technological unemployment. From employment in meaningless, environmentally-damaging jobs, to meaningful work for society. To seize this opportunity, we must heed Einstein and transcend the thinking that got us into this mess.


Addendum, 25.02.2013:

Anyone seeking an insight into this would do well to consult a terrific report by Sarah O'Connor, the Financial Times's economics correspondent. She visited Amazon's vast distribution centre at Rugeley in Staffordshire and her account of what she found there makes sobering reading.

She saw hundreds of people in orange vests pushing trolleys around a space the size of nine football pitches, glancing down at the screens of their handheld satnav computers for directions on where to walk next and what to pick up when they get there. They do not dawdle because "the devices in their hands are also measuring their productivity in real time". They walk between seven and 15 miles a day and everything they do is determined by Amazon's software. "You're sort of like a robot, but in human form," one manager told Ms O'Connor. "It's human automation, if you like."

Source

Anyone seeking to understand what technological unemployment (and underemployment) is about, ought to think deeply about what these two quoted paragraphs are telling us. In short: money is more important than both humanity and environment in this system. Until we address this, this tightly controlled, robotic insanity is going to get worse and worse, simply to sustain consumerism and perpetual economic growth, both of which are unsustainable.

Lump of labour revisited

The comment I posted below in response to a Financial Times article was apparently deleted. The article is here. (I have re-written my post from memory, so the original, should it ever re-appear, will be slightly different.)

"Not mentioned in the article is technological unemployment. Typically the concept is dismissed by economists as a lump of labour fallacy, but I humbly beg to differ.

The observation that the abilities, of which the human “machine” is capable, are replicable by technological developments (such as the printing press), and that human labour can therefore be displaced by mechanical, is not a claim that the amount of work in an economy is fixed, either implicitly or explicitly.

As biological organisms made of skeleton, muscle, and brain, collectively affording them a certain manual and mental dexterity and physical strength, humans are able to perform a limited range of tasks to a limited level of skill, to be exchanged as labour in an economy. One of the things we are getting better and better at is replicating, via technological means, our own abilities in the workplace. This process began in agriculture, progressed to manufacturing, and is working its magic in services.

Machines can do more or less work as the economy demands, and can perform more and more complicated tasks, as the economy demands. The range of labour that can be performed by humans is limited, though the amount of work to be done in an economy is not (at least theoretically). As the types of labour performable only by humans diminishes, so the demand for human labour will decline. This is evidenced in stagnating wages, diminishing union power, and the stealthily climbing amount of unemployment considered by economists as “natural.” I think it was 3% in the sixties. Recent estimates suggest 7% is healthy. Soon we will be at 10%.

Technological unemployment, though uneven and fitful in its effect, is a serious issue whose connotations must be openly and bravely discussed. Trying to solve it by slowing development down only delays the inevitable, and prevents us from transitioning more smoothly to the model which must follow waged labour."

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 fewer and fewer humans are able to exchange their abilities for a wage, that is if fewer and fewer 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.