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Technological unemployment is the loss of jobs caused by
technological change
Technological change (TC) or technological development is the overall process of invention, innovation and diffusion of technology or processes.From ''The New Palgrave Dictionary otechnical change by S. Metcalfe. •biased and biased techno ...
. It is a key type of
structural unemployment.
Technological change typically includes the introduction of labour-saving "mechanical-muscle" machines or more efficient "mechanical-mind" processes (
automation
Automation describes a wide range of technologies that reduce human intervention in processes, namely by predetermining decision criteria, subprocess relationships, and related actions, as well as embodying those predeterminations in machines ...
), and humans' role in these processes are minimized. Just as horses were gradually made obsolete as transport by the automobile and as labourer by the tractor, humans' jobs have also been affected throughout
modern history. Historical examples include
artisan weavers reduced to poverty after the introduction of
mechanized looms. During
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposing ...
,
Alan Turing
Alan Mathison Turing (; 23 June 1912 – 7 June 1954) was an English mathematician, computer scientist, logician, cryptanalyst, philosopher, and theoretical biologist. Turing was highly influential in the development of theoretical co ...
's
Bombe
The bombe () was an electro-mechanical device used by British cryptologists to help decipher German Enigma-machine-encrypted secret messages during World War II. The US Navy and US Army later produced their own machines to the same functi ...
machine compressed and decoded thousands of man-years worth of encrypted data in a matter of hours. A contemporary example of technological unemployment is the displacement of retail cashiers by
self-service tills and
cashierless stores.
That technological change can cause short-term job losses is widely accepted. The view that it can lead to lasting increases in unemployment has long been controversial. Participants in the technological unemployment debates can be broadly divided into optimists and pessimists. ''Optimists'' agree that innovation may be disruptive to jobs in the short term, yet hold that various compensation effects ensure there is never a long-term negative impact on jobs. Whereas ''pessimists'' contend that at least in some circumstances, new technologies can lead to a lasting decline in the total number of workers in employment. The phrase "technological unemployment" was popularised by
John Maynard Keynes
John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
in the 1930s, who said it was "only a temporary phase of maladjustment". Yet the issue of machines displacing human labour has been discussed since at least
Aristotle
Aristotle (; grc-gre, Ἀριστοτέλης ''Aristotélēs'', ; 384–322 BC) was a Greek philosopher and polymath during the Classical period in Ancient Greece. Taught by Plato, he was the founder of the Peripatetic school of ph ...
's time.
Prior to the 18th century, both the elite and
common people
A commoner, also known as the ''common man'', ''commoners'', the ''common people'' or the ''masses'', was in earlier use an ordinary person in a community or nation who did not have any significant social status, especially a member of neither ...
would generally take the pessimistic view on technological unemployment, at least in cases where the issue arose. Due to generally low unemployment in much of pre-modern history, the topic was rarely a prominent concern. In the 18th century fears over the impact of machinery on jobs intensified with the growth of mass unemployment, especially in Great Britain which was then at the forefront of the
Industrial Revolution
The Industrial Revolution was the transition to new manufacturing processes in Great Britain, continental Europe, and the United States, that occurred during the period from around 1760 to about 1820–1840. This transition included going f ...
. Yet some economic thinkers began to argue against these fears, claiming that overall innovation would not have negative effects on jobs. These arguments were formalised in the early 19th century by the
classical economists
Classical economics, classical political economy, or Smithian economics is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith ...
. During the second half of the 19th century, it became increasingly apparent that technological progress was benefiting all sections of society, including the working class. Concerns over the negative impact of innovation diminished. The term "
Luddite
The Luddites were a secret oath-based organisation of English textile workers in the 19th century who formed a radical faction which destroyed textile machinery. The group is believed to have taken its name from Ned Ludd, a legendary weaver ...
fallacy" was coined to describe the thinking that innovation would have lasting harmful effects on employment.
The view that technology is unlikely to lead to long-term unemployment has been repeatedly challenged by a minority of economists. In the early 1800s these included
David Ricardo
David Ricardo (18 April 1772 – 11 September 1823) was a British political economist. He was one of the most influential of the classical economists along with Thomas Malthus, Adam Smith and James Mill. Ricardo was also a politician, and a ...
himself. There were dozens of economists warning about technological unemployment during brief intensifications of the debate that spiked in the 1930s and 1960s. Especially in Europe, there were further warnings in the closing two decades of the twentieth century, as commentators noted an enduring rise in unemployment suffered by many industrialised nations since the 1970s. Yet a clear majority of both professional economists and the interested general public held the optimistic view through most of the 20th century.
In the second decade of the 21st century, a number of studies have been released suggesting that technological unemployment may be increasing worldwide. Oxford Professors
Carl Benedikt Frey
Carl Benedikt Frey is a Swedish-German economist and economic historian. He is Oxford Martin Citi Fellow at Oxford University where he directs the programme on the Future of Work at the Oxford Martin School.
Career
After studying economics, his ...
and Michael Osborne, for example, have estimated that 47 percent of U.S. jobs are at risk of automation. However, their findings have frequently been misinterpreted, and on the PBS NewsHours they again made clear that their findings do not necessarily imply future technological unemployment. While many economists and commentators still argue such fears are unfounded, as was widely accepted for most of the previous two centuries, concern over technological unemployment is growing once again.
A report in ''
Wired
''Wired'' (stylized as ''WIRED'') is a monthly American magazine, published in print and online editions, that focuses on how emerging technologies affect culture, the economy, and politics. Owned by Condé Nast, it is headquartered in San ...
'' in 2017 quotes knowledgeable people such as economist
Gene Sperling
Eugene Benton Sperling (born December 24, 1958) is an American lawyer who was director of the National Economic Council and assistant to the president for economic policy under Presidents Bill Clinton and Barack Obama. He is the only person to s ...
and management professor
Andrew McAfee
Andrew Paul McAfee (born ), a principal research scientist at MIT, is cofounder and codirector of the MIT Initiative on the Digital Economy at the MIT Sloan School of Management. He studies how digital technologies are changing the world.
Life ...
on the idea that handling existing and impending job loss to automation is a "significant issue".
Recent technological innovations have the potential to displace humans in the professional, white-collar, low-skilled, creative fields, and other "mental jobs".
The
World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
's
World Development Report
The World Development Report (WDR) is an annual report published since 1978 by the International Bank for Reconstruction and Development (IBRD) or World Bank. Each WDR provides in-depth analysis of a specific aspect of economic development. Past r ...
2019 argues that while automation displaces workers, technological innovation creates more new industries and jobs on balance.
Issues within the debates
Long-term effects on employment
Participants in the technological employment debates agree that temporary job losses can result from technological innovation. Similarly, there is no dispute that innovation sometimes has positive effects on workers. Disagreement focuses on whether it is possible for innovation to have a lasting negative impact on overall employment. Levels of persistent unemployment can be quantified empirically, but the causes are subject to debate. Optimists accept short term unemployment may be caused by innovation, yet claim that after a while, ''compensation effects'' will always create at least as many jobs as were originally destroyed. While this optimistic view has been continually challenged, it was dominant among mainstream economists for most of the 19th and 20th centuries.
For example, labor economists
Jacob Mincer
Jacob Mincer (July 15, 1922 – August 20, 2006), was a father of modern labor economics. He was Joseph L. Buttenwieser Professor of Economics and Social Relations at Columbia University for most of his active life.
Biography
Born in Tomaszó ...
and Stephan Danninger developed an empirical study using data from the
Panel Study of Income Dynamics The Panel Study of Income Dynamics (PSID) is a longitudinal panel survey of American families, conducted by the Survey Research Center at the University of Michigan.
The PSID measures economic, social, and health factors over the life course of f ...
, and find that although in the short run, technological progress seems to have unclear effects on aggregate unemployment, it reduces unemployment in the long run. When they include a 5-year lag, however, the evidence supporting a short-run employment effect of technology seems to disappear as well, suggesting that technological unemployment "appears to be a myth".
The concept of
structural unemployment, a lasting level of joblessness that does not disappear even at the high point of the
business cycle
Business cycles are intervals of expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examin ...
, became popular in the 1960s. For pessimists, technological unemployment is one of the factors driving the wider phenomena of structural unemployment. Since the 1980s, even optimistic economists have increasingly accepted that structural unemployment has indeed risen in advanced economies, but they have tended to attribute this on
globalisation and
offshoring rather than technological change. Others claim a chief cause of the lasting increase in unemployment has been the reluctance of governments to pursue
expansionary policies since the
displacement of Keynesianism
The post-war displacement of Keynesianism was a series of events which from mostly unobserved beginnings in the late 1940s, had by the early 1980s led to the replacement of Keynesian economics as the leading theoretical influence on economic life ...
that occurred in the 1970s and early 80s.
In the 21st century, and especially since 2013, pessimists have been arguing with increasing frequency that lasting worldwide technological unemployment is a growing threat.
Compensation effects
![BrownManchesterMuralJohnKay](https://upload.wikimedia.org/wikipedia/commons/4/47/BrownManchesterMuralJohnKay.jpg)
Compensation effects are labour-friendly consequences of innovation which "compensate" workers for job losses initially caused by new technology. In the 1820s, several compensation effects were described by
Jean-Baptiste Say in response to Ricardo's statement that long-term technological unemployment could occur. Soon after, a whole system of effects was developed by
Ramsey McCulloch. The system was labelled "compensation theory" by
Karl Marx
Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
, who criticized its ideas, arguing that none of the effects were guaranteed to operate. Disagreement over the effectiveness of compensation effects has remained a central part of academic debates on technological unemployment ever since.
Compensation effects include:
# By new machines. (The labour needed to build the new equipment that applied innovation requires.)
# By new investments. (Enabled by the cost savings and therefore increased profits from the new technology.)
# By changes in wages. (In cases where unemployment does occur, this can cause a lowering of wages, thus allowing more workers to be re-employed at the now lower cost. On the other hand, sometimes workers will enjoy wage increases as their profitability rises. This leads to increased income and therefore increased spending, which in turn encourages job creation.)
# By lower prices. (Which then lead to more demand, and therefore more employment.) Lower prices can also help offset wage cuts, as cheaper goods will increase workers' buying power.
# By new products. (Where innovation directly creates new jobs.)
The "by new machines" effect is now rarely discussed by economists; it is often accepted that Marx successfully refuted it.
Even pessimists often concede that product innovation associated with the "by new products" effect can sometimes have a positive effect on employment. An important distinction can be drawn between 'process' and 'product' innovations.
[Labour-displacing technologies can be classified under the headings of ]mechanization
Mechanization is the process of changing from working largely or exclusively by hand or with animals to doing that work with machinery. In an early engineering text a machine is defined as follows:
In some fields, mechanization includes the ...
, automation
Automation describes a wide range of technologies that reduce human intervention in processes, namely by predetermining decision criteria, subprocess relationships, and related actions, as well as embodying those predeterminations in machines ...
, and process improvement. The first two fundamentally involve transferring tasks from humans to machines. The third often involves the elimination of tasks altogether. The common theme of all three is that tasks are removed from the workforce, decreasing employment. In practice, the categories often overlap: a process improvement can include an automating or mechanizing achievement. The line between mechanization and automation is also subjective, as sometimes mechanization can involve sufficient control
Control may refer to:
Basic meanings Economics and business
* Control (management), an element of management
* Control, an element of management accounting
* Comptroller (or controller), a senior financial officer in an organization
* Controllin ...
to be viewed as part of automation. Evidence from Latin America seems to suggest that
product innovation
Product innovation is the creation and subsequent introduction of a good or service that is either new, or an improved version of previous goods or services. This is broader than the normally accepted definition of innovation that includes the ...
significantly contributes to the employment growth at the firm level, more so than process innovation. The extent to which the other effects are successful in compensating the workforce for job losses has been extensively debated throughout the history of modern economics; the issue is still not resolved.
[
][
] One such effect that potentially complements the compensation effect is job
multiplier. According to research developed by
Enrico Moretti
Enrico Moretti is an Italian economist and the Michael Peevey and Donald Vial Professor of Economics at the University of California, Berkeley. He is also a research associate at the National Bureau of Economic Research (Cambridge), and a researc ...
, with each additional skilled job created in high tech industries in a given city, more than two jobs are created in the
non-tradable sector The tradable sector of a country's economy is made up of the industry sectors whose output in terms of goods and services are traded internationally, or could be traded internationally given a plausible variation in relative prices. Most commonly, ...
. His findings suggest that technological growth and the resulting job-creation in high-tech industries might have a more significant
spillover effect
In economics a spillover is an economic event in one context that occurs because of something else in a seemingly unrelated context. For example, externalities of economic activity are non-monetary spillover effects upon non-participants. Odors f ...
than anticipated. Evidence from Europe also supports such a job multiplier effect, showing local high-tech jobs could create five additional low-tech jobs.
Many economists pessimistic about technological unemployment accept that compensation effects did largely operate as the optimists claimed through most of the 19th and 20th century. Yet they hold that the advent of computerisation means that compensation effects have become less effective. An early example of this argument was made by
Wassily Leontief
Wassily Wassilyevich Leontief (russian: Васи́лий Васи́льевич Лео́нтьев; August 5, 1905 – February 5, 1999), was a Soviet-American economist known for his research on input–output analysis and how changes in one ec ...
in 1983. He conceded that after some disruption, the advance of
mechanization
Mechanization is the process of changing from working largely or exclusively by hand or with animals to doing that work with machinery. In an early engineering text a machine is defined as follows:
In some fields, mechanization includes the ...
during the Industrial Revolution increased the demand for labour as well as increasing pay due to effects that flow from increased
productivity
Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
.
While early machines lowered the demand for muscle power, they were unintelligent and needed large numbers of human operators to remain productive. Yet since the introduction of computers into the workplace, there is now less need not just for muscle power but also for human brain power. Hence even as productivity continues to rise, the lower demand for human labour may mean less pay and employment.
However, this argument is not fully supported by more recent empirical studies. One research done by
Erik Brynjolfsson
Erik Brynjolfsson (born 1962) is an American academic, author and inventor. He is the Jerry Yang and Akiko Yamazaki Professor and a Senior Fellow at Stanford University where he directs thDigital Economy Labat the Stanford Institute for Human-Cen ...
and
Lorin M. Hitt in 2003 presents direct evidence that suggests a positive short-term effect of computerization on firm-level measured productivity and output growth. In addition, they find the long-term productivity contribution of computerization and technological changes might even be greater.
Luddite fallacy
The term "Luddite fallacy" is sometimes used to express the view that those concerned about long-term technological unemployment are committing a fallacy, as they fail to account for compensation effects. People who use the term typically expect that technological progress will have no long-term impact on employment levels, and eventually will raise wages for all workers, because progress helps to increase the overall wealth of society. The term is based on the
Luddites
The Luddites were a secret oath-based organisation of English textile workers in the 19th century who formed a radical faction which destroyed textile machinery. The group is believed to have taken its name from Ned Ludd, a legendary weaver ...
, members of an early 19th century English anti-textile-machinery organisation. During the 20th century and the first decade of the 21st century, the dominant view among economists has been that belief in long-term technological unemployment was indeed a
fallacy. More recently, there has been increased support for the view that the benefits of automation are not equally distributed.
[
][
]
There are two different theories for why long-term difficulty could develop.
# Traditionally ascribed to the Luddites (accurately or not), that there is a finite amount of work available and if machines do it, there can be none left for humans. Economists may call this the
lump of labour fallacy
In economics, the lump of labour fallacy is the misconception that there is a fixed amount of work—a lump of labour—to be done within an economy which can be distributed to create more or fewer jobs. It was considered a fallacy in 1891 by eco ...
, arguing that in reality no such limitation exists.
# A long-term difficulty can arise that has nothing to do with any lump of labour. In this view, the amount of work that can exist is infinite, but
::* machines can do most of the "easy" work that requires less skill, talent, knowledge, or insight
::* the definition of what is "easy" expands as information technology progresses, and
::* the work that lies beyond "easy" may require greater brainpower than most people have.
This second view is supported by many modern advocates of the possibility of long-term, systemic technological unemployment.
Skill levels and technological unemployment
A frequent view among those discussing the effect of innovation on the labour market has been that it mainly hurts those with low skills, while often benefiting skilled workers. According to scholars such as
Lawrence F. Katz, this may have been true for much of the twentieth century, yet in the 19th century, innovations in the workplace largely displaced costly skilled artisans, and generally benefited the low skilled. While 21st century innovation has been replacing some unskilled work, other low skilled occupations remain resistant to automation, while white collar work requiring intermediate skills is increasingly being performed by autonomous computer programs.
[
]
Some recent studies however, such as a 2015 paper by Georg Graetz and Guy Michaels, found that at least in the area they studied – the impact of industrial robots – innovation is boosting pay for highly skilled workers while having a more negative impact on those with low to medium skills.
A 2015 report by
Carl Benedikt Frey
Carl Benedikt Frey is a Swedish-German economist and economic historian. He is Oxford Martin Citi Fellow at Oxford University where he directs the programme on the Future of Work at the Oxford Martin School.
Career
After studying economics, his ...
, Michael Osborne and
Citi Research agreed that innovation had been disruptive mostly to middle-skilled jobs, yet predicted that in the next ten years the impact of automation would fall most heavily on those with low skills.
[
]
Geoffrey Colvin at ''
Forbes
''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also r ...
'' argued that predictions on the kind of work a computer will never be able to do have proven inaccurate. A better approach to anticipate the skills on which humans will provide value would be to find out activities where we will insist that humans remain accountable for important decisions, such as with judges,
CEOs
Kea ( el, Κέα), also known as Tzia ( el, Τζια) and in antiquity Keos ( el, Κέως, la, Ceos), is a Greek island in the Cyclades archipelago in the Aegean Sea. Kea is part of the Kea-Kythnos regional unit.
Geography
It is the island of ...
, bus drivers and government leaders, or where human nature can only be satisfied by deep interpersonal connections, even if those tasks could be automated.
In contrast, others see even skilled human laborers being obsolete. Oxford academics Carl Benedikt Frey and Michael A Osborne have predicted computerization could make nearly half of jobs redundant; of the 702 professions assessed, they found a strong correlation between education and income with ability to be automated, with office jobs and service work being some of the more at risk. In 2012 co-founder of
Sun Microsystems Vinod Khosla
Vinod Khosla (born 28 January 1955) is an Indian-American businessman and venture capitalist. He is a co-founder of Sun Microsystems and the founder of Khosla Ventures. Khosla made his wealth from early venture capital investments in areas suc ...
predicted that 80% of medical doctors' jobs would be lost in the next two decades to automated machine learning
medical diagnostic software.
The issue of redundant job places is elaborated by the 2019 paper by Natalya Kozlova, according to which over 50% of workers in
Russia
Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-eig ...
perform work that requires low levels of education and can be replaced by applying digital technologies. Only 13% of those people possess education that exceeds the level of intellectual computer systems present today and expected within the following decade.
Empirical findings
There has been a significant amount of empirical research that attempts to quantify the impact of technological unemployment, mainly at the microeconomic level. Most existing firm-level research has found a labor-friendly nature of technological innovations. For example, German economists Stefan Lachenmaier and Horst Rottmann find that both product and process innovation have a positive effect on employment. They also find that process innovation has a more significant job creation effect than product innovation. This result is supported by evidence in the United States as well, which shows that manufacturing firm innovations have a positive effect on the total number of jobs, not just limited to firm-specific behavior.
At the industry level, however, researchers have found mixed results with regard to the employment effect of technological changes. A 2017 study on manufacturing and service sectors in 11 European countries suggests that positive employment effects of technological innovations only exist in the medium- and high-tech sectors. There also seems to be a negative correlation between employment and
capital formation
Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways:
*It is a specific statistical concept, also known as net inve ...
, which suggests that technological progress could potentially be labor-saving given that process innovation is often incorporated in investment.
Limited macroeconomic analysis has been done to study the relationship between technological shocks and unemployment. The small amount of existing research, however, suggests mixed results. Italian economist
Marco Vivarelli finds that the labor-saving effect of process innovation appears to have affected the Italian economy more negatively than the United States. On the other hand, the job creating effect of product innovation could only be observed in the United States, not Italy. Another study in 2013 finds a more transitory, rather than permanent, unemployment effect of technological change.
Measures of technological innovation
There have been four main approaches that attempt to capture and document technological innovation quantitatively. The first one, proposed by
Jordi Gali in 1999 and further developed by Neville Francis and Valerie A. Ramey in 2005, is to use long-run restrictions in a
vector autoregression
Vector autoregression (VAR) is a statistical model used to capture the relationship between multiple quantities as they change over time. VAR is a type of stochastic process model. VAR models generalize the single-variable (univariate) autoregres ...
(VAR) to identify
technological shocks, assuming that only technology affects long-run productivity.
The second approach is from Susanto Basu, John Fernald and
Miles Kimball. They create a measure of aggregate technology change with augmented
Solow residual The Solow residual is a number describing empirical productivity growth in an economy from year to year and decade to decade. Robert Solow, the Nobel Memorial Prize in Economic Sciences-winning economist, defined rising productivity as rising outpu ...
s, controlling for aggregate, non-technological effects such as non-constant returns and imperfect competition.
The third method, initially developed by John Shea in 1999, takes a more direct approach and employs observable indicators such as research and development (R&D) spending, and number of patent applications. This measure of technological innovation is widely used in empirical research, since it does not rely on the assumption that only technology affects long-run productivity, and fairly accurately captures output variation based on input variation. However, there are limitations with direct measures such as R&D. For example, since R&D only measures the input in innovation, the output is unlikely to be perfectly correlated with the input. In addition, R&D fails to capture the indeterminate lag between developing a new product or service, and bringing it to market.
The fourth approach, constructed by Michelle Alexopoulos, looks at the number of new titles published in the fields of technology and computer science to reflect technological progress, which he found to be consistent with R&D expenditure data. Compared with R&D, this indicator captures the lag between changes in technology.
History
Classical era
![Vespasianus03 pushkin](https://upload.wikimedia.org/wikipedia/commons/f/f5/Vespasianus03_pushkin.jpg)
According to author Gregory Woirol, the phenomenon of technological unemployment is likely to have existed since at least the invention of the wheel. Ancient societies had various methods for relieving the poverty of those unable to support themselves with their own labour.
Ancient China and
ancient Egypt may have had various centrally run relief programmes in response to technological unemployment dating back to at least the second millennium BC.
[
] Ancient Hebrews and adherents of the
ancient Vedic religion had decentralised responses where aiding the poor was encouraged by their faiths.
In
ancient Greece
Ancient Greece ( el, Ἑλλάς, Hellás) was a northeastern Mediterranean Sea, Mediterranean civilization, existing from the Greek Dark Ages of the 12th–9th centuries BC to the end of Classical Antiquity, classical antiquity ( AD 600), th ...
, large numbers of free labourers could find themselves unemployed due to both the effects of
ancient labour saving technology and to competition from slaves ("machines of flesh and blood"). Sometimes, these unemployed workers would starve to death or were forced into slavery themselves although in other cases they were supported by handouts.
Pericles
Pericles (; grc-gre, Περικλῆς; c. 495 – 429 BC) was a Greek politician and general during the Golden Age of Athens. He was prominent and influential in Athenian politics, particularly between the Greco-Persian Wars and the Pelo ...
responded to perceived technological unemployment by launching
public works
Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
programmes to provide paid work to the jobless. Some people criticized Pericle's programmes as wasting public money but were defeated.
Perhaps the earliest example of a scholar discussing the phenomenon of technological unemployment occurs with
Aristotle
Aristotle (; grc-gre, Ἀριστοτέλης ''Aristotélēs'', ; 384–322 BC) was a Greek philosopher and polymath during the Classical period in Ancient Greece. Taught by Plato, he was the founder of the Peripatetic school of ph ...
, who speculated in Book One of ''
Politics
Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of resources or status. The branch of social science that stud ...
'' that if machines could become sufficiently advanced, there would be no more need for human labour.
Similar to the Greeks,
ancient Romans
In modern historiography, ancient Rome refers to Roman civilisation from the founding of the city of Rome in the 8th century BC to the collapse of the Western Roman Empire in the 5th century AD. It encompasses the Roman Kingdom (753–509 ...
responded to the problem of technological unemployment by relieving poverty with handouts (such as the ). Several hundred thousand families were sometimes supported like this at once.
Less often, jobs were directly created with
public works
Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
programmes, such as those launched by the
Gracchi. Various emperors even went as far as to refuse or ban labour saving innovations. In one instance, the introduction of a labor-saving invention was blocked, when Emperor
Vespasian
Vespasian (; la, Vespasianus ; 17 November AD 9 – 23/24 June 79) was a Roman emperor who reigned from AD 69 to 79. The fourth and last emperor who reigned in the Year of the Four Emperors, he founded the Flavian dynasty that ruled the Empi ...
refused to allow a new method of low-cost transportation of heavy goods, saying "You must allow my poor hauliers to earn their bread." Labour shortages began to develop in the Roman empire towards the end of the second century AD, and from this point mass unemployment in Europe appears to have largely receded for over a millennium.
Post-classical era
The
medieval
In the history of Europe, the Middle Ages or medieval period lasted approximately from the late 5th to the late 15th centuries, similar to the post-classical period of global history. It began with the fall of the Western Roman Empire ...
and early
renaissance period
The Renaissance ( , ) , from , with the same meanings. is a period in European history marking the transition from the Middle Ages to modernity and covering the 15th and 16th centuries, characterized by an effort to revive and surpass idea ...
saw the widespread adoption of newly invented technologies, as well as older ones which had been conceived yet barely used in the Classical era. Some were invented in Europe while others were invented in more Eastern countries like China, India, Arabia and Persia. The
Black Death left fewer workers across Europe. Mass unemployment began to reappear in Europe, especially in Western, Central and Southern Europe in the 15th century, partly as a result of population growth, and partly due to changes in the availability of land for subsistence farming caused by
early enclosures.
As a result of the threat of unemployment, there was less tolerance for disruptive new technologies. European authorities would often side with groups representing subsections of the working population, such as
Guilds, banning new technologies and sometimes even executing those who tried to promote or trade in them.
16th to 18th century
![Elizabeth I Rainbow Portrait3](https://upload.wikimedia.org/wikipedia/commons/5/5a/Elizabeth_I_Rainbow_Portrait3.jpg)
In Great Britain, the ruling elite began to take a less restrictive approach to innovation somewhat earlier than in much of continental Europe, which has been cited as a possible reason for Britain's early lead in driving the
Industrial Revolution
The Industrial Revolution was the transition to new manufacturing processes in Great Britain, continental Europe, and the United States, that occurred during the period from around 1760 to about 1820–1840. This transition included going f ...
. Yet concern over the impact of innovation on employment remained strong through the 16th and early 17th century. A famous example of new technology being refused occurred when the inventor
William Lee invited Queen
Elizabeth I
Elizabeth I (7 September 153324 March 1603) was List of English monarchs, Queen of England and List of Irish monarchs, Ireland from 17 November 1558 until her death in 1603. Elizabeth was the last of the five House of Tudor monarchs and is ...
to view a labour saving knitting machine. The Queen declined to issue a patent on the grounds that the technology might cause unemployment among textile workers. After moving to France and also failing to achieve success in promoting his invention, Lee returned to England but was again refused by Elizabeth's successor
James I James I may refer to:
People
*James I of Aragon (1208–1276)
*James I of Sicily or James II of Aragon (1267–1327)
*James I, Count of La Marche (1319–1362), Count of Ponthieu
*James I, Count of Urgell (1321–1347)
*James I of Cyprus (1334–13 ...
for the same reason.
After the
Glorious Revolution, authorities became less sympathetic to workers concerns about losing their jobs due to innovation. An increasingly influential strand of
Mercantilist
Mercantilism is an economic policy that is designed to maximize the exports and minimize the imports for an economy. It promotes imperialism, colonialism, tariffs and subsidies on traded goods to achieve that goal. The policy aims to reduce ...
thought held that introducing labour saving technology would actually reduce unemployment, as it would allow British firms to increase their market share against foreign competition. From the early 18th century workers could no longer rely on support from the authorities against the perceived threat of technological unemployment. They would sometimes take
direct action, such as machine breaking, in attempts to protect themselves from disruptive innovation.
Joseph Schumpeter
Joseph Alois Schumpeter (; February 8, 1883 – January 8, 1950) was an Austrian-born political economist. He served briefly as Finance Minister of German-Austria in 1919. In 1932, he emigrated to the United States to become a professor at H ...
notes that as the 18th century progressed, thinkers would raise the alarm about technological unemployment with increasing frequency, with
von Justi being a prominent example. Yet Schumpeter also notes that the prevailing view among the elite solidified on the position that technological unemployment would not be a long-term problem.
19th century
It was only in the 19th century that debates over technological unemployment became intense, especially in Great Britain where many economic thinkers of the time were concentrated. Building on the work of
Dean Tucker
Josiah Tucker (also Josias) (December 1713 – 4 November 1799), also known as Dean Tucker, was a Welsh churchman, known as an economist and political writer. He was concerned in his works with free trade, Jewish emancipation and American indep ...
and
Adam Smith,
political economists
Political economy is the study of how economic systems (e.g. markets and national economies) and political systems (e.g. law, institutions, government) are linked. Widely studied phenomena within the discipline are systems such as labour ma ...
began to create what would become the modern discipline of
economics
Economics () is the social science that studies the production, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...
.
[Smith did not directly address the problem of technological unemployment, but the Dean had, saying in 1757 that in the long term, the introduction of machinery would allow more employment than would have been possible without them.] While rejecting much of mercantilism, members of the new discipline largely agreed that technological unemployment would not be an enduring problem. In the first few decades of the 19th century, several prominent political economists did, however, argue against the optimistic view, claiming that innovation could cause long-term unemployment. These included
Sismondi,
Malthus,
J S Mill, and from 1821,
David Ricardo
David Ricardo (18 April 1772 – 11 September 1823) was a British political economist. He was one of the most influential of the classical economists along with Thomas Malthus, Adam Smith and James Mill. Ricardo was also a politician, and a ...
himself. As arguably the most respected political economist of his age, Ricardo's view was challenging to others in the discipline. The first major economist to respond was
Jean-Baptiste Say, who argued that no one would introduce machinery if they were going to reduce the amount of product,
[Typically the introduction of machinery would both increase output and lower cost per unit.] and that as
Say's Law
In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product. So, production is the source ...
states that supply creates its own demand, any displaced workers would automatically find work elsewhere once the market had had time to adjust.
Ramsey McCulloch expanded and formalised Say's optimistic views on technological unemployment, and was supported by others such as
Charles Babbage,
Nassau Senior
Nassau William Senior (; 26 September 1790 – 4 June 1864), was an English lawyer known as an economist. He was also a government adviser over several decades on economic and social policy on which he wrote extensively.
Early life
He was born ...
and many other lesser known political economists. Towards the middle of the 19th century,
Karl Marx
Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
joined the debates. Building on the work of Ricardo and Mill, Marx went much further, presenting a deeply pessimistic view of technological unemployment; his views attracted many followers and founded an enduring school of thought but mainstream economics was not dramatically changed. By the 1870s, at least in Great Britain, technological unemployment faded both as a popular concern and as an issue for academic debate. It had become increasingly apparent that innovation was increasing prosperity for all sections of British society, including the working class. As the classical school of thought gave way to
neoclassical economics
Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...
, mainstream thinking was tightened to take into account and refute the pessimistic arguments of Mill and Ricardo.
20th century
![1980s computer worker, Centers for Disease Control](https://upload.wikimedia.org/wikipedia/commons/1/14/1980s_computer_worker%2C_Centers_for_Disease_Control.jpg)
For the first two decades of the 20th century, mass unemployment was not the major problem it had been in the first half of the 19th. While the
Marxist school and a few other thinkers continued to challenge the optimistic view, technological unemployment was not a significant concern for mainstream economic thinking until the mid to late 1920s. In the 1920s mass unemployment re-emerged as a pressing issue within Europe. At this time the U.S. was generally more prosperous, but even there urban unemployment had begun to increase from 1927.
Rural American workers had been suffering job losses from the start of the 1920s; many had been displaced by improved agricultural technology, such as the
tractor
A tractor is an engineering vehicle specifically designed to deliver a high tractive effort (or torque) at slow speeds, for the purposes of hauling a trailer or machinery such as that used in agriculture, mining or construction. Most commo ...
. The centre of gravity for economic debates had by this time moved from Great Britain to the United States, and it was here that the 20th century's two great periods of debate over technological unemployment largely occurred.
The peak periods for the two debates were in the 1930s and the 1960s. According to economic historian Gregory R Woirol, the two episodes share several similarities.
In both cases academic debates were preceded by an outbreak of popular concern, sparked by recent rises in unemployment. In both cases the debates were not conclusively settled, but faded away as unemployment was reduced by an outbreak of war –
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposing ...
for the debate of the 1930s, and the
Vietnam War
The Vietnam War (also known by other names) was a conflict in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. It was the second of the Indochina Wars and was officially fought between North Vietnam a ...
for the 1960s episodes. In both cases, the debates were conducted within the prevailing paradigm at the time, with little reference to earlier thought. In the 1930s, optimists based their arguments largely on neo-classical beliefs in the self-correcting power of markets to reduce any short-term unemployment via compensation effects. In the 1960s, belief in compensation effects was less strong, but the mainstream
Keynesian economists of the time largely believed government intervention would be able to counter any persistent technological unemployment that was not cleared by market forces. Another similarity was the publication of a major Federal study towards the end of each episode, which broadly found that long-term technological unemployment was not occurring (though the studies did agree innovation was a major factor in the short term displacement of workers, and advised government action to provide assistance).
[In the 1930s, this study was
''Unemployment and technological change''(Report no. G-70, 1940) by Corrington Calhoun Gill of the 'National Research Project on Reemployment Opportunities and Recent changes in Industrial Techniques'. Some earlier Federal reports took a pessimistic view of technological unemployment, e.g. ''Memorandum on Technological Unemployment'' (1933) by Ewan Clague Bureau of Labor Statistics. Some authorities – e.g. Udo Sautter in Chpt 5 of ''Three Cheers for the Unemployed: Government and Unemployment Before the New Deal'' (Cambridge University Press, 1991) – say that in the early 1930s there was near consensus among US experts that technological unemployment was a major problem. Other's though like ]Bruce Bartlett
Bruce Reeves Bartlett (born October 11, 1951) is an American historian and author. He served as a domestic policy adviser to Ronald Reagan and as a Treasury official under George H. W. Bush. Bartlett also writes for the New York Times Economi ...
i
Is Industrial Innovation Destroying Jobs (Cato Journal 1984)
argue that most economists remained optimistic even during the 1930s. In the 1960s episode, the major Federal study that bookmarked the end of the period of intense debate was ''Technology and the American economy'' (1966) by the 'National Commission on Technology, Automation, and Economic Progress
established by president Lyndon Jonhson in 1964
/ref>
As the golden age of capitalism
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private pr ...
came to a close in the 1970s, unemployment once again rose, and this time generally remained relatively high for the rest of the century, across most advanced economies. Several economists once again argued that this may be due to innovation, with perhaps the most prominent being Paul Samuelson
Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he " ...
. Overall, the closing decades of the 20th century saw most concern expressed over technological unemployment in Europe, though there were several examples in the U.S. A number of popular works warning of technological unemployment were also published. These included James S. Albus
James Sacra Albus (May 4, 1935 – April 17, 2011) was an American engineer, Senior NIST Fellow and founder and former chief of the Intelligent Systems Division of the Manufacturing Engineering Laboratory at the National Institute of Standards an ...
's 1976 book titled ''Peoples' Capitalism: The Economics of the Robot Revolution'';James S. Albus
James Sacra Albus (May 4, 1935 – April 17, 2011) was an American engineer, Senior NIST Fellow and founder and former chief of the Intelligent Systems Division of the Manufacturing Engineering Laboratory at the National Institute of Standards an ...
Peoples' Capitalism: The Economics of the Robot Revolution
(free download)James S. Albus
James Sacra Albus (May 4, 1935 – April 17, 2011) was an American engineer, Senior NIST Fellow and founder and former chief of the Intelligent Systems Division of the Manufacturing Engineering Laboratory at the National Institute of Standards an ...
People's Capitalism main website
/ref> David F. Noble
David Franklin Noble (July 22, 1945 – December 27, 2010Morrow, Adria"David Noble, academic and activist, dies at 65" ''The Globe and Mail'', December 28, 2010, accessed December 30, 2010.) was a historian and critic of technology, science ...
with works published in 1984 and 1993;[.] Jeremy Rifkin
Jeremy Rifkin (born January 26, 1945) is an American economic and social theorist, writer, public speaker, political advisor, and activist. Rifkin is the author of 23 books about the impact of scientific and technological changes on the economy, ...
and his 1995 book ''The End of Work
''The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era'' is a non-fiction book by American economist Jeremy Rifkin, published in 1995 by Putnam Publishing Group.
Synopsis
In 1995, Rifkin contended that worl ...
''; and the 1996 book '' The Global Trap''. Yet for the most part, other than during the periods of intense debate in the 1930s and 60s, the consensus in the 20th century among both professional economists and the general public remained that technology does not cause long-term joblessness.
21st century
Opinions
The general consensus that innovation does not cause long-term unemployment held strong for the first decade of the 21st century although it continued to be challenged by a number of academic works, and by popular works such as Marshall Brain
Marshall David Brain II (born May 17, 1961) is an American author, public speaker, futurist, and entrepreneur who specializes in making complex topics easy to understand. Brain is the founder of HowStuffWorks.com and the author of the ''How Stuff ...
's ''Robotic Nation''[.] and Martin Ford's ''The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future''.[.]
Since the publication of their 2011 book ''Race Against the Machine
''Race Against the Machine'' is a non-fiction book from 2011 by Erik Brynjolfsson and Andrew McAfee about the interaction of digital technology, employment and organization. The full title of the book is: ''Race Against the Machine: How the Dig ...
'', MIT
The Massachusetts Institute of Technology (MIT) is a private land-grant research university in Cambridge, Massachusetts. Established in 1861, MIT has played a key role in the development of modern technology and science, and is one of the m ...
professors Andrew McAfee
Andrew Paul McAfee (born ), a principal research scientist at MIT, is cofounder and codirector of the MIT Initiative on the Digital Economy at the MIT Sloan School of Management. He studies how digital technologies are changing the world.
Life ...
and Erik Brynjolfsson
Erik Brynjolfsson (born 1962) is an American academic, author and inventor. He is the Jerry Yang and Akiko Yamazaki Professor and a Senior Fellow at Stanford University where he directs thDigital Economy Labat the Stanford Institute for Human-Cen ...
have been prominent among those raising concern about technological unemployment. The two professors remain relatively optimistic, however, stating "the key to winning the race is not to compete ''against'' machines but to compete ''with'' machines".Andrew Keen
Andrew Keen (born c. 1960Saracevic, Alan T. (15 October 2006)Debate 2.0 / Weighing the merits of the new Webocracy.''San Francisco Chronicle'' ("Age: 46")) is a British-American entrepreneur and author. He is particularly known for his view tha ...
,
Keen On How The Internet Is Making Us Both Richer and More Unequal (TCTV)
'' interview with Andrew McAfee
Andrew Paul McAfee (born ), a principal research scientist at MIT, is cofounder and codirector of the MIT Initiative on the Digital Economy at the MIT Sloan School of Management. He studies how digital technologies are changing the world.
Life ...
and Erik Brynjolfsson
Erik Brynjolfsson (born 1962) is an American academic, author and inventor. He is the Jerry Yang and Akiko Yamazaki Professor and a Senior Fellow at Stanford University where he directs thDigital Economy Labat the Stanford Institute for Human-Cen ...
, TechCrunch
TechCrunch is an American online newspaper focusing on high tech and startup companies. It was founded in June 2005 by Archimedes Ventures, led by partners Michael Arrington and Keith Teare.
In 2010, AOL acquired the company for approximately $ ...
, 2011.11.15
Concern about technological unemployment grew in 2013 due in part to a number of studies predicting substantially increased technological unemployment in forthcoming decades and empirical evidence that, in certain sectors, employment is falling worldwide despite rising output, thus discounting globalization and offshoring as the only causes of increasing unemployment.
In 2013, professor Nick Bloom of Stanford University stated there had recently been a major change of heart concerning technological unemployment among his fellow economists. In 2014 the ''Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Ni ...
'' reported that the impact of innovation on jobs has been a dominant theme in recent economic discussion. According to the academic and former politician Michael Ignatieff
Michael Grant Ignatieff (; born May 12, 1947) is a Canadian author, academic and former politician who served as the leader of the Liberal Party of Canada and Leader of the Official Opposition from 2008 until 2011. Known for his work as a histo ...
writing in 2014, questions concerning the effects of technological change have been "haunting democratic politics everywhere". Concerns have included evidence showing worldwide falls in employment across sectors such as manufacturing; falls in pay for low and medium skilled workers stretching back several decades even as productivity continues to rise; the increase in often precarious platform mediated employment; and the occurrence of "jobless recoveries" after recent recessions. The 21st century has seen a variety of skilled tasks partially taken over by machines, including translation, legal research and even low level journalism. Care work, entertainment, and other tasks requiring empathy, previously thought safe from automation, have also begun to be performed by robots.
Former U.S. Treasury Secretary and Harvard economics professor Lawrence Summers
Lawrence Henry Summers (born November 30, 1954) is an American economist who served as the 71st United States secretary of the treasury from 1999 to 2001 and as director of the National Economic Council from 2009 to 2010. He also served as pres ...
stated in 2014 that he no longer believed automation would always create new jobs and that "This isn't some hypothetical future possibility. This is something that's emerging before us right now." Summers noted that already, more labor sectors were losing jobs than creating new ones.[Other recent statements by Summers include warnings on the "devastating consequences" for those who perform routine tasks arising from robots, 3-D printing, artificial intelligence, and similar technologies. In his view, "already there are more American men on disability insurance than doing production work in manufacturing. And the trends are all in the wrong direction, particularly for the less skilled, as the capacity of capital embodying artificial intelligence to replace white-collar as well as blue-collar work will increase rapidly in the years ahead." Summers has also said that " ere are many reasons to think the software revolution will be even more profound than the agricultural revolution. This time around, change will come faster and affect a much larger share of the economy. .. ere are more sectors losing jobs than creating jobs. And the general-purpose aspect of software technology means that even the industries and jobs that it creates are not forever. ..If current trends continue, it could well be that a generation from now a quarter of middle-aged men will be out of work at any given moment."][Larry Summers]
The Inequality Puzzle
'' Democracy: A Journal of Ideas'', Issue #32, Spring 2014 While himself doubtful about technological unemployment, professor Mark MacCarthy stated in the fall of 2014 that it is now the "prevailing opinion" that the era of technological unemployment has arrived.
At the 2014 Davos meeting, Thomas Friedman
Thomas Loren Friedman (; born July 20, 1953) is an American political commentator and author. He is a three-time Pulitzer Prize winner who is a weekly columnist for ''The New York Times''. He has written extensively on foreign affairs, global ...
reported that the link between technology and unemployment seemed to have been the dominant theme of that year's discussions. A survey at Davos 2014 found that 80% of 147 respondents agreed that technology was driving jobless growth. At the 2015 Davos, Gillian Tett
Gillian Tett (born 10 July 1967) is a British author and journalist at the ''Financial Times'', where she is chair of the editorial board and editor-at-large, US. She has written about the financial instruments that were part of the cause of the ...
found that almost all delegates attending a discussion on inequality and technology expected an increase in inequality over the next five years, and gives the reason for this as the technological displacement of jobs. 2015 saw Martin Ford win the Financial Times and McKinsey Business Book of the Year Award
''Financial Times'' Business Book of the Year Award is an annual award given to the best business book of the year as determined by the ''Financial Times''. It aims to find the book that has 'the most compelling and enjoyable insight into modern ...
for his ''Rise of the Robots: Technology and the Threat of a Jobless Future'', and saw the first world summit on technological unemployment, held in New York. In late 2015, further warnings of potential worsening for technological unemployment came from Andy Haldane
Andrew G. Haldane, (; born 18 August 1967) is a British economist who worked at the Bank of England between 1989 and 2021 as the chief economist and executive director of monetary analysis and statistics. He resigned from the Bank of England i ...
, the Bank of England's chief economist, and from Ignazio Visco
Ignazio Visco (; born 21 November 1949) is an Italian economist and central banker and the current Governor of the Bank of Italy.
Early life and education
Visco was born in Naples on 21 November 1949. He obtained a '' summa cum laude'' degree ...
, the governor of the Bank of Italy
The Bank of Italy ( Italian: ''Banca d'Italia'', informally referred to as ''Bankitalia''), (), is the central bank of Italy and part of the European System of Central Banks. It is located in Palazzo Koch, via Nazionale, Rome. The bank's cur ...
.[
] In an October 2016 interview, US President Barack Obama
Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the ...
said that due to the growth of artificial intelligence, society would be debating "unconditional free money for everyone" within 10 to 20 years. In 2019, computer scientist and artificial intelligence expert Stuart J. Russell
Stuart Jonathan Russell (born 1962) is a British computer scientist known for his contributions to artificial intelligence (AI). He is a professor of computer science at the University of California, Berkeley and was from 2008 to 2011 an adjunct ...
stated that "in the long run nearly all current jobs will go away, so we need fairly radical policy changes to prepare for a very different future economy." In a book he authored, Russell claims that "One rapidly emerging picture is that of an economy where far fewer people work because work is unnecessary." However, he predicted that employment in healthcare, home care, and construction would increase.
Other economists have argued that long-term technological unemployment is unlikely. In 2014, Pew Research canvassed 1,896 technology professionals and economists and found a split of opinion: 48% of respondents believed that new technologies would displace more jobs than they would create by the year 2025, while 52% maintained that they would not. Economics professor Bruce Chapman from Australian National University
The Australian National University (ANU) is a public research university located in Canberra, the capital of Australia. Its main campus in Acton encompasses seven teaching and research colleges, in addition to several national academies an ...
has advised that studies such as Frey and Osborne's tend to overstate the probability of future job losses, as they don't account for new employment likely to be created, due to technology, in what are currently unknown areas.
General public surveys have often found an expectation that automation would impact jobs widely, but not the jobs held by those particular people surveyed.
Studies
A number of studies have predicted that automation will take a large proportion of jobs in the future, but estimates of the level of unemployment this will cause vary. Research by Carl Benedikt Frey
Carl Benedikt Frey is a Swedish-German economist and economic historian. He is Oxford Martin Citi Fellow at Oxford University where he directs the programme on the Future of Work at the Oxford Martin School.
Career
After studying economics, his ...
and Michael Osborne of the Oxford Martin School
The Oxford Martin School is a research and policy unit based in the Social Sciences Division of the University of Oxford. It was founded in June 2005 as the James Martin 21st Century School and is located in the original building of the Indian I ...
showed that employees engaged in "tasks following well-defined procedures that can easily be performed by sophisticated algorithms" are at risk of displacement. The study, published in 2013, shows that automation can affect both skilled and unskilled work and both high and low-paying occupations; however, low-paid physical occupations are most at risk. It estimated that 47% of US jobs were at high risk of automation. In 2014, the economic think tank Bruegel released a study, based on the Frey and Osborne approach, claiming that across the European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
's 28 member states, 54% of jobs were at risk of automation. The countries where jobs were least vulnerable to automation were Sweden, with 46.69% of jobs vulnerable, the UK at 47.17%, the Netherlands
)
, anthem = ( en, "William of Nassau")
, image_map =
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Kingdom of the Netherlands
, established_title = Before independence
, established_date = Spanish Netherl ...
at 49.50%, and France
France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of overseas regions and territories in the Americas and the Atlantic, Pacific and Indian Oceans. Its metropolitan area ...
and Denmark
)
, song = ( en, "King Christian stood by the lofty mast")
, song_type = National and royal anthem
, image_map = EU-Denmark.svg
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Kingdom of Denmark
, establish ...
, both at 49.54%. The countries where jobs were found to be most vulnerable were Romania
Romania ( ; ro, România ) is a country located at the crossroads of Central, Eastern, and Southeastern Europe. It borders Bulgaria to the south, Ukraine to the north, Hungary to the west, Serbia to the southwest, Moldova to the east, and ...
at 61.93%, Portugal
Portugal, officially the Portuguese Republic ( pt, República Portuguesa, links=yes ), is a country whose mainland is located on the Iberian Peninsula of Southwestern Europe, and whose territory also includes the Atlantic archipelagos of ...
at 58.94%, Croatia
, image_flag = Flag of Croatia.svg
, image_coat = Coat of arms of Croatia.svg
, anthem = "Lijepa naša domovino"("Our Beautiful Homeland")
, image_map =
, map_caption =
, capit ...
at 57.9%, and Bulgaria
Bulgaria (; bg, България, Bǎlgariya), officially the Republic of Bulgaria,, ) is a country in Southeast Europe. It is situated on the eastern flank of the Balkans, and is bordered by Romania to the north, Serbia and North Macedo ...
at 56.56%. A 2015 report by the Taub Center found that 41% of jobs in Israel
Israel (; he, יִשְׂרָאֵל, ; ar, إِسْرَائِيل, ), officially the State of Israel ( he, מְדִינַת יִשְׂרָאֵל, label=none, translit=Medīnat Yīsrāʾēl; ), is a country in Western Asia. It is situated ...
were at risk of being automated within the next two decades. In January 2016, a joint study by the Oxford Martin School
The Oxford Martin School is a research and policy unit based in the Social Sciences Division of the University of Oxford. It was founded in June 2005 as the James Martin 21st Century School and is located in the original building of the Indian I ...
and Citibank, based on previous studies on automation and data from the World Bank
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, found that the risk of automation in developing countries was much higher than in developed countries. It found that 77% of jobs in China, 69% of jobs in India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
, 85% of jobs in Ethiopia
Ethiopia, , om, Itiyoophiyaa, so, Itoobiya, ti, ኢትዮጵያ, Ítiyop'iya, aa, Itiyoppiya officially the Federal Democratic Republic of Ethiopia, is a landlocked country in the Horn of Africa. It shares borders with Eritrea to the ...
, and 55% of jobs in Uzbekistan
Uzbekistan (, ; uz, Ozbekiston, italic=yes / , ; russian: Узбекистан), officially the Republic of Uzbekistan ( uz, Ozbekiston Respublikasi, italic=yes / ; russian: Республика Узбекистан), is a doubly landlocked co ...
were at risk of automation. The World Bank similarly employed the methodology of Frey
Freyr (Old Norse: 'Lord'), sometimes anglicized as Frey, is a widely attested god in Norse mythology, associated with kingship, fertility, peace, and weather. Freyr, sometimes referred to as Yngvi-Freyr, was especially associated with Sweden a ...
and Osborne. A 2016 study by the International Labour Organization
The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice by setting international labour standards. Founded in October 1919 under the League of Nations, it is the first and o ...
found 74% of salaried electrical & electronics industry positions in Thailand
Thailand ( ), historically known as Siam () and officially the Kingdom of Thailand, is a country in Southeast Asia, located at the centre of the Indochinese Peninsula, spanning , with a population of almost 70 million. The country is b ...
, 75% of salaried electrical & electronics industry positions in Vietnam
Vietnam or Viet Nam ( vi, Việt Nam, ), officially the Socialist Republic of Vietnam,., group="n" is a country in Southeast Asia, at the eastern edge of mainland Southeast Asia, with an area of and population of 96 million, making i ...
, 63% of salaried electrical & electronics industry positions in Indonesia
Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania between the Indian and Pacific oceans. It consists of over 17,000 islands, including Sumatra, Java, Sulawesi, and parts of Borneo and New Guine ...
, and 81% of salaried electrical & electronics industry positions in the Philippines
The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no),
* bik, Republika kan Filipinas
* ceb, Republika sa Pilipinas
* cbk, República de Filipinas
* hil, Republ ...
were at high risk of automation. A 2016 United Nations
The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and security, develop friendly relations among nations, achieve international cooperation, and be a centre for harmoniz ...
report stated that 75% of jobs in the developing world were at risk of automation, and predicted that more jobs might be lost when corporations stop outsourcing to developing countries after automation in industrialized countries makes it less lucrative to outsource to countries with lower labor costs.
The Council of Economic Advisers, a US government agency tasked with providing economic research for the White House, in the 2016 Economic Report of the President
The Council of Economic Advisers (CEA) is a United States agency within the Executive Office of the President established in 1946, which advises the President of the United States on economic policy. The CEA provides much of the empirical resea ...
, used the data from the Frey and Osborne study to estimate that 83% of jobs with an hourly wage below $20, 31% of jobs with an hourly wage between $20 and $40, and 4% of jobs with an hourly wage above $40 were at risk of automation. A 2016 study by Ryerson University
Toronto Metropolitan University (TMU or Toronto Met) is a public research university located in Toronto, Ontario, Canada. The university's core campus is situated within the Garden District, although it also operates facilities elsewhere in Tor ...
found that 42% of jobs in Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
were at risk of automation, dividing them into two categories - "high risk" jobs and "low risk" jobs. High risk jobs were mainly lower-income jobs that required lower education levels than average. Low risk jobs were on average more skilled positions. The report found a 70% chance that high risk jobs and a 30% chance that low risk jobs would be affected by automation in the next 10–20 years. A 2017 study by PricewaterhouseCoopers
PricewaterhouseCoopers is an international professional services brand of firms, operating as partnerships under the PwC brand. It is the second-largest professional services network in the world and is considered one of the Big Four accounti ...
found that up to 38% of jobs in the US, 35% of jobs in Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
, 30% of jobs in the UK, and 21% of jobs in Japan were at high risk of being automated by the early 2030s. A 2017 study by Ball State University found about half of American jobs were at risk of automation, many of them low-income jobs. A September 2017 report by McKinsey & Company found that as of 2015, 478 billion out of 749 billion working hours per year dedicated to manufacturing, or $2.7 trillion out of $5.1 trillion in labor, were already automatable. In low-skill areas, 82% of labor in apparel goods, 80% of agriculture processing, 76% of food manufacturing, and 60% of beverage manufacturing were subject to automation. In mid-skill areas, 72% of basic materials production and 70% of furniture manufacturing was automatable. In high-skill areas, 52% of aerospace and defense labor and 50% of advanced electronics labor could be automated. In October 2017, a survey of information technology
Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of Data (computing), data . and information. IT forms part of information and communications technology (ICT). An information te ...
decision makers in the US and UK found that a majority believed that most business processes could be automated by 2022. On average, they said that 59%
of business processes were subject to automation. A November 2017 report by the McKinsey Global Institute that analyzed around 800 occupations in 46 countries estimated that between 400 million and 800 million jobs could be lost due to robotic automation by 2030. It estimated that jobs were more at risk in developed countries than developing countries due to a greater availability of capital to invest in automation. Job losses and downward mobility blamed on automation has been cited as one of many factors in the resurgence of nationalist
Nationalism is an idea and movement that holds that the nation should be congruent with the state. As a movement, nationalism tends to promote the interests of a particular nation (as in a group of people), Smith, Anthony. ''Nationalism: Th ...
and protectionist
Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. ...
politics in the US, UK and France, among other countries.
However, not all recent empirical studies have found evidence to support the idea that automation will cause widespread unemployment. A study released in 2015, examining the impact of industrial robots in 17 countries between 1993 and 2007, found no overall reduction in employment was caused by the robots, and that there was a slight increase in overall wages.[
] According to a study published in McKinsey Quarterly
The ''McKinsey Quarterly'' is a business magazine focused on management and organizational theory. It is written primarily by McKinsey
McKinsey & Company is a global management consulting firm founded in 1926 by University of Chicago profess ...
in 2015 the impact of computerization in most cases is not replacement of employees but automation of portions of the tasks they perform. A 2016 OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
study found that among the 21 OECD countries surveyed, on average only 9% of jobs were in foreseeable danger of automation, but this varied greatly among countries: for example in South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korean Peninsula and sharing a land border with North Korea. Its western border is formed by the Yellow Sea, while its eas ...
the figure of at-risk jobs was 6% while in Austria
Austria, , bar, Östareich officially the Republic of Austria, is a country in the southern part of Central Europe, lying in the Eastern Alps. It is a federation of nine states, one of which is the capital, Vienna, the most populous ...
it was 12%. In contrast to other studies, the OECD study does not primarily base its assessment on the tasks that a job entails, but also includes demographic variables, including sex, education and age. It is not clear however why a job should be more or less automatise just because it is performed by a woman. In 2017, Forrester estimated that automation would result in a net loss of about 7% of jobs in the US by 2027, replacing 17% of jobs while creating new jobs equivalent to 10% of the workforce. Another study argued that the risk of US jobs to automation had been overestimated due to factors such as the heterogeneity of tasks within occupations and the adaptability of jobs being neglected. The study found that once this was taken into account, the number of occupations at risk to automation in the US drops, ceteris paribus, from 38% to 9%. A 2017 study on the effect of automation on Germany found no evidence that automation caused total job losses but that they do effect the jobs people are employed in; losses in the industrial sector due to automation were offset by gains in the service sector. Manufacturing workers were also not at risk from automation and were in fact more likely to remain employed, though not necessarily doing the same tasks. However, automation did result in a decrease in labour's income share as it raised productivity but not wages.
A 2018 Brookings Institution
The Brookings Institution, often stylized as simply Brookings, is an American research group founded in 1916. Located on Think Tank Row in Washington, D.C., the organization conducts research and education in the social sciences, primarily in e ...
study that analyzed 28 industries in 18 OECD countries from 1970 to 2018 found that automation was responsible for holding down wages. Although it concluded that automation did not reduce the overall number of jobs available and even increased them, it found that from the 1970s to the 2010s, it had reduced the share of human labor in the value added to the work, and thus had helped to slow wage growth. In April 2018, Adair Turner
Jonathan Adair Turner, Baron Turner of Ecchinswell (born 5 October 1955) is a British businessman and academic and was Chairman of the Financial Services Authority until its abolition in March 2013. He is a former Chairman of the Pensions Commiss ...
, former Chairman of the Financial Services Authority and head of the Institute for New Economic Thinking
The Institute for New Economic Thinking (INET) is a New York City–based nonprofit think tank. It was founded in October 2009 as a result of the 2007–2012 global financial crisis, and runs a variety of affiliated programs at major universiti ...
, stated that it would already be possible to automate 50% of jobs with current technology, and that it will be possible to automate all jobs by 2060.
Premature deindustrialization
Premature deindustrialization occurs when developing nations deindustrialize without first becoming rich, as happened with the advanced economies. The concept was popularized by Dani Rodrik
Dani Rodrik (born August 14, 1957) is a Turkish economist and Ford Foundation Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University. He was formerly the Albert O. Hirschman Professor of t ...
in 2013, who went on to publish several papers showing the growing empirical evidence for the phenomena. Premature deindustrialization adds to concern over technological unemployment for developing countries - as traditional compensation effects that advanced economy workers enjoyed, such being able to get well paid work in the service sector after losing their factory jobs - may not be available.
Some commentators, such as Carl Benedikt Frey, argue that with the right responses, the negative effects of further automation on workers in developing economies can still be avoided.
Artificial intelligence
Since about 2017, a new wave of concern over technological unemployment had become prominent, this time over the effects of artificial intelligence (AI).
Commentators including Calum Chace and Daniel Hulme have warned that if unchecked, AI threatens to cause an "economic singularity", with job churn too rapid for humans to adapt to, leading to widespread technological unemployment. Though they also advise that with the right responses by business leaders, policy makers and society, the impact of AI could be a net positive for workers.
Morgan R. Frank ''et al.'' cautions that there are several barriers preventing researchers from making accurate predictions of the effects AI will have on future job markets. Marian Krakovsky has argued that the jobs most likely to be completely replaced by AI are in middle-class areas, such as professional services. Often, the practical solution is to find another job, but workers may not have the qualifications for high-level jobs and so must drop to lower level jobs. However, Krakovsky (2018) predicts that AI will largely take the route of "complementing people," rather than "replicating people." Suggesting that the goal of people implementing AI is to improve the life of workers, not replace them. Studies have also shown that rather than solely destroying jobs AI can also create work: albeit low-skill jobs to train AI in low-income countries.
Following President Putin's 2017 statement that which ever country first achieves mastery in AI "will become the ruler of the world", various national and supranational Supranational or supra-national may refer to:
* Supranational union, a type of multinational political union
* Supranational law, a form of international law
* Supranational legislature, a form of international legislature
* Supranational curre ...
governments have announced AI strategies. Concerns on not falling behind in the AI arms race have been more prominent than worries over AI's potential to cause unemployment. Several strategies suggest that achieving a leading role in AI should help their citizens get more rewarding jobs. Finland has aimed to help the citizens of other EU nations acquire the skills they need to compete in the post AI jobs market, making a free course on "The Elements of AI" available in multiple European languages.
Oracle CEO Mark Hurd
Mark Vincent Hurd (January 1, 1957 – October 18, 2019) was an American technology executive who served as Co-CEO and as a member of the board of directors of Oracle Corporation. He had previously served as Chairman, Chief Executive Officer ...
predicted that AI "will actually create more jobs, not less jobs" as humans will be needed to manage AI systems.
Martin Ford argues that many jobs are routine, repetitive and (to an AI) predictable; Ford warns that these jobs may be automated in the next couple of decades, and that many of the new jobs may not be "accessible to people with average capability", even with retraining.
Certain digital technologies are predicted to result in more job losses than others. For example, in recent years, the adoption of modern robotics has led to net employment growth. However, many businesses anticipate that automation, or employing robots would result in job losses in the future. This is especially true for companies in Central and Eastern Europe
Eastern Europe is a subregion of the European continent. As a largely ambiguous term, it has a wide range of geopolitical, geographical, ethnic, cultural, and socio-economic connotations. The vast majority of the region is covered by Russia, whic ...
.
Other digital technologies, such as platforms or big data, are projected to have a more neutral impact on employment.
Solutions
Preventing net job losses
Banning/refusing innovation
Historically, innovations were sometimes banned due to concerns about their impact on employment. Since the development of modern economics, however, this option has generally not even been considered as a solution, at least not for the advanced economies. Even commentators who are pessimistic about long-term technological unemployment invariably consider innovation to be an overall benefit to society, with J. S. Mill being perhaps the only prominent western political economist to have suggested prohibiting the use of technology as a possible solution to unemployment.
Gandhian economics
Gandhian economics is a school of economic thought based on the spiritual and socio-economic principles expounded by Indian leader Mahatma Gandhi. It is largely characterised by rejection of the concept of the human being as a rational actor alway ...
called for a delay in the uptake of labour saving machines until unemployment was alleviated, however this advice was largely rejected by Nehru
Pandit Jawaharlal Nehru (; ; ; 14 November 1889 – 27 May 1964) was an Indian anti-colonial nationalist, secular humanist, social democrat—
*
*
*
* and author who was a central figure in India during the middle of the 20t ...
who was to become prime minister once India achieved its independence. The policy of slowing the introduction of innovation so as to avoid technological unemployment was, however, implemented in the 20th century within China under Mao's administration.
Shorter working hours
In 1870, the average American worker clocked up about 75 hours per week. Just prior to World War II working hours had fallen to about 42 per week, and the fall was similar in other advanced economies. According to Wassily Leontief
Wassily Wassilyevich Leontief (russian: Васи́лий Васи́льевич Лео́нтьев; August 5, 1905 – February 5, 1999), was a Soviet-American economist known for his research on input–output analysis and how changes in one ec ...
, this was a voluntary increase in technological unemployment. The reduction in working hours helped share out available work, and was favoured by workers who were happy to reduce hours to gain extra leisure, as innovation was at the time generally helping to increase their rates of pay.[
]
Further reductions in working hours have been proposed as a possible solution to unemployment by economists including John R. Commons
John Rogers Commons (October 13, 1862 – May 11, 1945) was an American institutional economist, Georgist, progressive and labor historian at the University of Wisconsin–Madison.
Early years
John R. Commons was born in Hollansburg, Ohio on ...
, Lord Keynes and Luigi Pasinetti
Luigi L. Pasinetti (born 12 September 1930) is an Italian economist of the post-Keynesian school. Pasinetti is considered the heir of the " Cambridge Keynesians" and a student of Piero Sraffa and Richard Kahn. Along with them, as well as Joan Rob ...
. Yet once working hours have reached about 40 hours per week, workers have been less enthusiastic about further reductions, both to prevent loss of income and as many value engaging in work for its own sake. Generally, 20th-century economists had argued against further reductions as a solution to unemployment, saying it reflects a lump of labour fallacy
In economics, the lump of labour fallacy is the misconception that there is a fixed amount of work—a lump of labour—to be done within an economy which can be distributed to create more or fewer jobs. It was considered a fallacy in 1891 by eco ...
.
In 2014, Google's co-founder, Larry Page
Lawrence Edward Page (born March 26, 1973) is an American business magnate, computer scientist and internet entrepreneur. He is best known for co-founding Google with Sergey Brin.
Page was the chief executive officer of Google from 1997 unti ...
, suggested a four-day workweek, so as technology continues to displace jobs, more people can find employment.[
]
Public works
Programmes of public works
Public works are a broad category of infrastructure projects, financed and constructed by the government, for recreational, employment, and health and safety uses in the greater community. They include public buildings ( municipal buildings, sc ...
have traditionally been used as way for governments to directly boost employment, though this has often been opposed by some, but not all, conservatives. Jean-Baptiste Say, although generally associated with free market economics, advised that public works could be a solution to technological unemployment. Some commentators, such as professor Mathew Forstater, have advised that public works and guaranteed jobs in the public sector may be the ideal solution to technological unemployment, as unlike welfare or guaranteed income schemes they provide people with the social recognition and meaningful engagement that comes with work.[
]
For less developed economies, public works may be an easier to administrate solution compared to universal welfare programmes. As of 2015, calls for public works in the advanced economies have been less frequent even from progressives, due to concerns about sovereign debt
A country's gross government debt (also called public debt, or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit o ...
. A partial exception is for spending on infrastructure, which has been recommended as a solution to technological unemployment even by economists previously associated with a neoliberal agenda, such as Larry Summers
Lawrence Henry Summers (born November 30, 1954) is an American economist who served as the 71st United States secretary of the treasury from 1999 to 2001 and as director of the National Economic Council from 2009 to 2010. He also served as pres ...
.[
]
Education
Improved availability to quality education, including skills training for adults and other active labour market policies
Active labour market policies (ALMPs) are government programmes that intervene in the labour market to help the unemployed find work. Many of these programmes grew out of earlier public works projects, in the United States particularly those impl ...
, is a solution that in principle at least is not opposed by any side of the political spectrum, and welcomed even by those who are optimistic about long-term technological employment. Improved education paid for by government tends to be especially popular with industry.
Proponents of this brand of policy assert higher level, more specialized learning is a way to capitalize from the growing technology industry. Leading technology research university MIT published an open letter to policymakers advocating for the "reinvention of education", namely a shift "away from rote learning" and towards STEM disciplines. Similar statements released by the U.S President's Council of Advisors on Science and Technology ( PACST) have also been used to support this STEM emphasis on enrollment choice in higher learning. Education reform is also a part of the U.K government's "Industrial Strategy", a plan announcing the nation's intent to invest millions into a "technical education system". The proposal includes the establishment of a retraining program for workers who wish to adapt their skill-sets. These suggestions combat the concerns over automation
Automation describes a wide range of technologies that reduce human intervention in processes, namely by predetermining decision criteria, subprocess relationships, and related actions, as well as embodying those predeterminations in machines ...
through policy choices aiming to meet the emerging needs of society via updated information. Of the professionals within the academic community who applaud such moves, often noted is a gap between economic security and formal education —a disparity exacerbated by the rising demand for specialized skills—and education's potential to reduce it.
However, several academics have also argued that improved education alone will not be sufficient to solve technological unemployment, pointing to recent declines in the demand for many intermediate skills, and suggesting that not everyone is capable in becoming proficient in the most advanced skills. Kim Taipale has said that "The era of bell curve distributions that supported a bulging social middle class is over... Education per se is not going to make up the difference."[
] while an op-ed piece from 2011, Paul Krugman
Paul Robin Krugman ( ; born February 28, 1953) is an American economist, who is Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for ''The New York Times''. In 2008, Krugman was ...
, an economics professor and columnist for the ''New York Times'', argued that better education would be an insufficient solution to technological unemployment, as it "actually reduces the demand for highly educated workers".[
]
Living with technological unemployment
Welfare payments
The use of various forms of subsidies has often been accepted as a solution to technological unemployment even by conservatives and by those who are optimistic about the long-term effect on jobs. Welfare programmes have historically tended to be more durable once established, compared with other solutions to unemployment such as directly creating jobs with public works. Despite being the first person to create a formal system describing compensation effects, Ramsey McCulloch and most other classical economists advocated government aid for those suffering from technological unemployment, as they understood that market adjustment to new technology was not instantaneous and that those displaced by labour-saving technology would not always be able to immediately obtain alternative employment through their own efforts.
Basic income
Several commentators have argued that traditional forms of welfare payment may be inadequate as a response to the future challenges posed by technological unemployment, and have suggested a basic income as an alternative. People advocating some form of basic income as a solution to technological unemployment include Martin Ford,
Erik Brynjolfsson
Erik Brynjolfsson (born 1962) is an American academic, author and inventor. He is the Jerry Yang and Akiko Yamazaki Professor and a Senior Fellow at Stanford University where he directs thDigital Economy Labat the Stanford Institute for Human-Cen ...
, Robert Reich
Robert Bernard Reich (; born June 24, 1946) is an American professor, author, lawyer, and political commentator. He worked in the administrations of Presidents Gerald Ford and Jimmy Carter, and served as Secretary of Labor from 1993 to 1997 in ...
, Andrew Yang
Andrew Yang (born January 13, 1975) is an American businessman, attorney, lobbyist, and politician. Yang was a candidate in the 2020 Democratic Party presidential primaries and the 2021 New York City Democratic mayoral primary. He is the co-c ...
, Elon Musk
Elon Reeve Musk ( ; born June 28, 1971) is a business magnate and investor. He is the founder, CEO and chief engineer of SpaceX; angel investor, CEO and product architect of Tesla, Inc.; owner and CEO of Twitter, Inc.; founder of The ...
, Zoltan Istvan
Zoltan Istvan Gyurko, professionally known as Zoltan Istvan (born March 30, 1973), is an American transhumanist, journalist, entrepreneur, political candidate, and futurist.
Formerly a reporter for the National Geographic Channel, Istvan now wr ...
, and Guy Standing. Reich has gone as far as to say the introduction of a basic income, perhaps implemented as a negative income tax
In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level; in other words, earners above that level pay money to the state while earners below it receive money, as ...
is "almost inevitable", while Standing has said he considers that a basic income is becoming "politically essential".
Since late 2015, new basic income pilots have been announced in Finland, the Netherlands, and Canada. Further recent advocacy for basic income has arisen from a number of technology entrepreneurs, the most prominent being Sam Altman
Samuel H. Altman ( ; born April 22, 1985) is an American entrepreneur, investor, programmer, and blogger. He is the CEO of OpenAI and the former president of Y Combinator.
Early life and education
Altman grew up in St. Louis, Missouri; his mothe ...
, president of Y Combinator
Y Combinator (YC) is an American technology startup accelerator launched in March 2005. It has been used to launch more than 3,000 companies, including Airbnb, Coinbase, Cruise, DoorDash, Dropbox, Instacart, Quora, PagerDuty, Reddit, St ...
.
Skepticism about basic income includes both right and left elements, and proposals for different forms of it have come from all segments of the spectrum. For example, while the best-known proposed forms (with taxation and distribution) are usually thought of as left-leaning ideas that right-leaning people try to defend against, other forms have been proposed even by libertarians
Libertarianism (from french: libertaire, "libertarian"; from la, libertas, "freedom") is a political philosophy that upholds liberty as a core value. Libertarians seek to maximize autonomy and political freedom, and minimize the state's enc ...
, such as von Hayek and Friedman. In the United States, President Richard Nixon
Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 to 1974. A member of the Republican Party, he previously served as a representative and senator from California and was ...
's Family Assistance Plan (FAP) of 1969, which had much in common with basic income, passed in the House but was defeated in the Senate.
One objection to basic income is that it could be a disincentive to work, but evidence from older pilots in India, Africa, and Canada indicates that this does not happen and that a basic income encourages low-level entrepreneurship
Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...
and more productive, collaborative work. Another objection is that funding it sustainably is a huge challenge. While new revenue-raising ideas have been proposed such as Martin Ford's wage recapture tax, how to fund a generous basic income remains a debated question, and skeptics have dismissed it as utopian. Even from a progressive viewpoint, there are concerns that a basic income set too low may not help the economically vulnerable, especially if financed largely from cuts to other forms of welfare.
To better address both the funding concerns and concerns about government control, one alternative model is that the cost and control would be distributed across the private sector instead of the public sector. Companies across the economy would be required to employ humans, but the job descriptions would be left to private innovation, and individuals would have to compete to be hired and retained. This would be a for-profit sector analog of basic income, that is, a market-based form of basic income. It differs from a job guarantee in that the government is not the employer (rather, companies are) and there is no aspect of having employees who "cannot be fired", a problem that interferes with economic dynamism. The economic salvation in this model is not that every individual is guaranteed a job, but rather just that enough jobs exist that massive unemployment is avoided and employment is no longer solely the privilege of only the very smartest or highly trained 20% of the population. Another option for a market-based form of basic income has been proposed by the Center for Economic and Social Justice
The Center for Economic and Social Justice (CESJ) is a non-profit, educational and research institution organized under § 501(c)(3) of the United States Internal Revenue Code. The think tank is registered as a non-stock corporation in Washington ...
(CESJ) as part of "a Just Third Way" (a Third Way
The Third Way is a centrist political position that attempts to reconcile right-wing and left-wing politics by advocating a varying synthesis of centre-right economic policies with centre-left social policies. The Third Way was born from ...
with greater justice) through widely distributed power and liberty. Called the Capital Homestead Act, it is reminiscent of James S. Albus
James Sacra Albus (May 4, 1935 – April 17, 2011) was an American engineer, Senior NIST Fellow and founder and former chief of the Intelligent Systems Division of the Manufacturing Engineering Laboratory at the National Institute of Standards an ...
's Peoples' Capitalism in that money creation and securities ownership are widely and directly distributed to individuals rather than flowing through, or being concentrated in, centralized or elite mechanisms.
Broadening the ownership of technological assets
Several solutions have been proposed which do not fall easily into the traditional left-right political spectrum. This includes broadening the ownership of robots and other productive capital assets. Enlarging the ownership of technologies has been advocated by people including James S. Albus
James Sacra Albus (May 4, 1935 – April 17, 2011) was an American engineer, Senior NIST Fellow and founder and former chief of the Intelligent Systems Division of the Manufacturing Engineering Laboratory at the National Institute of Standards an ...
John Lanchester
John Henry Lanchester (born 25 February 1962) is a British journalist and novelist. He was born in Hamburg, brought up in Hong Kong and educated in England; between 1972 and 1980 at Gresham's School in Holt, Norfolk, then at St John's College, ...
, Richard B. Freeman, and Noah Smith.
Jaron Lanier
Jaron Zepel Lanier (, born May 3, 1960) is an American computer scientist, visual artist, computer philosophy writer, technologist, futurist, and composer of contemporary classical music. Considered a founder of the field of virtual reality, La ...
has proposed a somewhat similar solution: a mechanism where ordinary people receive " nano payments" for the big data they generate by their regular surfing and other aspects of their online presence.
Structural changes towards a post-scarcity economy
The Zeitgeist Movement
The Zeitgeist Movement is an activist movement established in the United States in 2008 by Peter Joseph. The group is critical of market capitalism, describing it as structurally corrupt and wasteful of resources. The group dismisses historic ...
(TZM), The Venus Project
The Venus Project is a nonprofit organization founded by a Florida-based, architect and social engineer Jacque Fresco. Fresco with his partner Roxanne Meadows founded this organization with a socioeconomic model to develop a resource-based econo ...
(TVP) as well as various individuals and organizations propose structural change
In economics, structural change is a shift or change in the basic ways a market or economy functions or operates.
Such change can be caused by such factors as economic development, global shifts in capital and labor, changes in resource availabil ...
s towards a form of a post-scarcity economy
Post-scarcity is a theoretical economic situation in which most goods can be produced in great abundance with minimal human labor needed, so that they become available to all very cheaply or even freely.
Post-scarcity does not mean that scarc ...
in which people are 'freed' from their automatable, monotonous jobs, instead of 'losing' their jobs. In the system proposed by TZM all jobs are either automated, abolished for bringing no true value for society (such as ordinary advertising
Advertising is the practice and techniques employed to bring attention to a product or service. Advertising aims to put a product or service in the spotlight in hopes of drawing it attention from consumers. It is typically used to promote a ...
), rationalized by more efficient, sustainable and open
Open or OPEN may refer to:
Music
* Open (band), Australian pop/rock band
* The Open (band), English indie rock band
* ''Open'' (Blues Image album), 1969
* ''Open'' (Gotthard album), 1999
* ''Open'' (Cowboy Junkies album), 2001
* ''Open'' ( ...
processes and collaboration or carried out based on altruism and social relevance, opposed to compulsion or monetary gain. The movement also speculates that the free time made available to people will permit a renaissance of creativity, invention, community and social capital as well as reducing stress.[
]
Other approaches
The threat of technological unemployment has occasionally been used by free market economists as a justification for supply side reforms, to make it easier for employers to hire and fire workers. Conversely, it has also been used as a reason to justify an increase in employee protection.[Labour's Declining Share - A Spectre to Worry About?]
''The Economist
''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Eco ...
'', 2013.11.05
Economists including Larry Summers
Lawrence Henry Summers (born November 30, 1954) is an American economist who served as the 71st United States secretary of the treasury from 1999 to 2001 and as director of the National Economic Council from 2009 to 2010. He also served as pres ...
have advised a package of measures may be needed. He advised vigorous cooperative efforts to address the "myriad devices" – such as tax havens, bank secrecy, money laundering, and regulatory arbitrage – which enable the holders of great wealth to avoid paying taxes, and to make it more difficult to accumulate great fortunes without requiring "great social contributions" in return. Summers suggested more vigorous enforcement of anti-monopoly laws; reductions in "excessive" protection for intellectual property; greater encouragement of profit-sharing schemes that may benefit workers and give them a stake in wealth accumulation; strengthening of collective bargaining arrangements; improvements in corporate governance; strengthening of financial regulation to eliminate subsidies to financial activity; easing of land-use restrictions that may cause estates to keep rising in value; better training for young people and retraining for displaced workers; and increased public and private investment in infrastructure development, such as energy production and transportation.
Michael Spence has advised that responding to the future impact of technology will require a detailed understanding of the global forces and flows technology has set in motion. Adapting to them "will require shifts in mindsets, policies, investments (especially in human capital), and quite possibly models of employment and distribution".[Spence also wrote that "Now comes a ... powerful, wave of digital technology that is replacing labor in increasingly complex tasks. This process of labor substitution and disintermediation has been underway for some time in service sectors – think of ATMs, online banking, enterprise resource planning, customer relationship management, mobile payment systems, and much more. This revolution is spreading to the production of goods, where robots and 3D printing are displacing labor." In his view, the vast majority of the cost of digital technologies comes at the start, in the design of hardware (e.g. sensors) and, more important, in creating the software that enables machines to carry out various tasks. "Once this is achieved, the marginal cost of the hardware is relatively low (and declines as scale rises), and the marginal cost of replicating the software is essentially zero. With a huge potential global market to amortize the upfront fixed costs of design and testing, the incentives to invest n digital technologiesare compelling." Spence believes that, unlike prior digital technologies, which drove firms to deploy underutilized pools of valuable labor around the world, the motivating force in the current wave of digital technologies "is cost reduction via the replacement of labor." For example, as the cost of 3D printing technology declines, it is "easy to imagine" that production may become "extremely" local and customized. Moreover, production may occur in response to actual demand, not anticipated or forecast demand. "Meanwhile, the impact of robotics ... is not confined to production. Though self-driving cars and drones are the most attention-getting examples, the impact on logistics is no less transformative. Computers and robotic cranes that schedule and move containers around and load ships now control the Port of Singapore, one of the most efficient in the world." Spence believes that labor, no matter how inexpensive, will become a less important asset for growth and employment expansion, with labor-intensive, process-oriented manufacturing becoming less effective, and that re-localization will appear globally. In his view, production will not disappear, but it will be less labor-intensive, and all countries will eventually need to rebuild their growth models around digital technologies and the human capital supporting their deployment and expansion.][Michael Spence]
Labor’s Digital Displacement
(2014-05-22), '' Project Syndicate''
See also
Notes
References
Citations
Sources
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Further reading
*
*
*John Maynard Keynes
John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
,
The Economic Possibilities of our Grandchildren
' (1930)
*E McGaughey, 'Will Robots Automate Your Job Away? Full Employment, Basic Income, and Economic Democracy' (2018
ssrn.com, part 2(2)
*
* Ross, Alec (2016), '' The Industries of the Future'', USA: Simon & Schuster.
*
{{Robotics
Impact of Automation
Technological change
Unemployment