After my post last week on the future of work/the coming robot revolution, a friend passed along some excellent links from other bloggers who have been reaching similar conclusions. Turns out I am far from alone in my conviction that the future isn’t going to look anything like the past…
In The Great Decoupling of the US Economy, Andrew McAfee argues that the things workers care about, jobs and wages, have become decoupled from other economic indicators, such as output (GDP) and worker productivity. McAfee includes some excellent graphs demonstrating this decoupling:
And he argues that technological advancement is to blame:
Our argument, in brief, is that digital technologies have been able to do routine work for a while now. This allows them to substitute for less-skilled and -educated workers, and puts a lot of downward pressure on the median wage. As computers and robots get more and more powerful while simultaneously getting cheaper and more widespread this phenomenon spreads, to the point where economically rational employers prefer buying more technology over hiring more workers. In other words, they prefer capital over labor. This preference affects both wages and job volumes. And the situation will only accelerate as robots and computers learn to do more and more, and to take over jobs that we currently think of not as ‘routine,’ but as requiring a lot of skill and/or education.
An excellent post over at Thought Expression, The Jobs are Never Coming Back, expands a little on this line of thought, and offers some potential policy solutions:
We must accept this uncomfortable fact: There is no natural, physical, economic or legal law which states that economic growth creates more jobs. Yes, jobs have traditionally been a side-benefit of a strong economy but believing that somehow if we just maintain a strong economy, jobs will eventually come back is nothing more then a collective delusion.
The author suggests that:
There exist policy changes that could help greatly to reinvigorate the job market of today. If there is not enough work to go around, then we can take measures to share the work more equally. Perhaps by decreasing retirement age, we can encourage employers to hire younger people. Shortening the work week could be another approach. How ironic it is that austerity measures everywhere are pushing to raise retirement age and decrease holidays? And this creates more jobs how?
Incidentally, I think an important complementary solution is to encourage unionization and worker organization in hard to out-source industries like fast food and retail, so that not all of the changes we make are coming from the top down.
But my immediate response to these suggestions, although I agree with them, is that they remain within a fairly narrow conception of economics built around market forces imagined as natural forces, like erosion or gravity. But are market forces natural and inevitable? Or do they arise out of aspects of human society, behavior, and psychology which can be changed or modified? More importantly, market forces are not the only forces shaping human society—they can be challenged, and in fact are challenged routinely by politicians, corporations, and even individuals, who shape, twist, distort, step outside of, push back against, and manipulate capitalist markets and market forces.
Rather than finding ways for everyone to work less, why not set higher aims for our society? Just because market forces won’t create good jobs doesn’t mean that our society can’t. Nor does it mean that we have to transition to a planned economy. We simply need to set some high goals for our society, and then strive to reach them. Rather than seeing robots as time savers, creating leisure, why not see them—once again, as the science fiction writers of the 20th century predicted—as the tools we need to push our civilization ever outward.
If we realigned our economy to focus on creating jobs and wages, rather than growth and productivity, what would happen? Would growth and productivity fall? That seems unlikely if in fact growth and productivity have been decoupled from jobs and wages. They don’t have some scary new inverse relationship, they simply aren’t impacting each other the way they used to. Then again, I fear that I may be missing something important here…
In any case, there are plenty of wonderful things people could be employed to do. We could distort the market place to encourage people to start small-scale, local, organic farms. Or we could re-invigorate the space program, and employ people and robots building rockets. We could hire engineers to work on pie-in-the-sky projects that will almost certainly never come to fruition, like terraforming mars or building a space elevator—not in the hope that those things will happen one day, but rather, to see what the engineers will come up with; to stretch out their and our imaginations, and simply to create jobs. Of course, the government already does a lot of this. Imagine what would happen to the economy if every government funded research project dried up tomorrow!
Although I fear centralized power and bureaucratic-authoritarianism as much as the next fellow, I don’t think that distorting markets to further support this kind of work, or even just having the government outright hire people to do it, poses quite the threat to free-market enterprise that people imagine. For one thing, it seems to me that nothing distorts and manipulates markets more insidiously than power imbalances. Market forces, on a fundamental level, have trouble functioning normally in situations of vast inequality.
This is obvious if you think of markets as marketplaces. If you show up at the market place with the tomatoes and goat cheese you wish to sell, you can meet with other people and the laws of supply and demand will, generally speaking, distribute your goods in an efficient and reasonable way. People who want your goat cheese will get it, and you will get the things you need. But what if you show up to the market, and the person who runs the market takes his gun and waves you over to the corner? “You sit here,” he says, waving his gun in your face and scaring your goat, “and I’ll control who buys your goat cheese.” Pretty soon, the man doesn’t have to wave his gun around—you just have to know he has it. His power over you distorts the market. It isn’t free anymore.
This is the situation I see in global capitalism today. It’s pretending to be a free market, it looks like a free market, but everybody knows who has the guns. And so it’s not a free market. This is also how I see the economy of the United States. Everybody knows who has the money. The vast inequality of the American economy inherently makes our economy unfree. It distorts our markets, because workers do not have the same voice at the table as stockholders. Because more than half of all congresspeople are millionaires.
So yes, a spectacularly ambitious space program would distort the free market. But putting money into peoples pockets, and evening out the distribution of wealth, would help market forces function, not hinder them. By advancing these goals, large-scale employment projects might well do more good for free market principles than damage.
Of course, these solutions are not exactly groundbreaking. Over at Terra Nova, Edward Castronova reminds me (in a post from 2010 that I recently stumbled upon) that my view is still very narrow when it comes to the impact of new technologies on the future of the economy. Castronova suggests that we may be seeing the first signs of a new kind of economic problem: an exodus recession.
Suppose economic activity moves from the real world into the virtual world. Human happiness is unaffected or even goes up, however, the goods that produce the happiness are now produced and consumed in a virtual environment rather than the real one. Measurements of economic activity, being all based in the real economy, would begin to show weakness. . . . contemporary political and economic control systems do not tolerate much weakness, thus, there might well be some sort of crisis in the real world, for no good reason, simply because production and consumption was going “off the books” and into virtual environments. One term for this would be an “exodus recession” – an economic downturn caused by the movement of human attention and energy into virtual environments.
I think this is an incredibly compelling idea—the kind of idea so obvious that it verges on common sense (you mean, if people do things online that they used to do in real life that means people will do fewer things in real life!) and yet nobody seems to have really come to terms with it. Is it possible that what I see as a fall in demand for labor based on mechanization is actually a fall in demand for goods and services created by digitization?
The truth is, we don’t have any idea what influence technology will have on the future, because we don’t have much idea what the technology of the future will look like. But one thing I think we can safely say, is that we can’t count on “free” capitalist markets to create the future that we want ourselves and our children to live and work in, because even thought capitalism was an incredible engine of prosperity in the 20th century, it is not inherently so. We need to imagine what a prosperous future looks like. It it sitting around at the pool sipping milkshakes? Or building rockets to send manned missions to Jupiter’s moons? Or some hybrid of both? Or neither? And then we need to find a way to create that future. Because it won’t create itself.