Despite the argument on machines vs humans, most experts agree that investment in human capital is important
The imminent arrival of drones delivering parcels, of cars run by Google, and the looming prospect of robots taking over shop floors have led many to worry about the future of jobs. But such concerns are not entirely new. In one of his most famous essays titled, Economic Possibilities for our Grandchildren, John Maynard Keynes, arguably the greatest economist of the 20th century, first envisioned a future when machines will take over almost all the work humans do. Writing in 1930, at the height of the Great Depression, Keynes was sanguine about our society freeing itself from both want and work.
Keynes considered the huge improvements in productivity the industrial revolution had brought as a force for good, and argued that such forces would render much of human labour obsolete over time. While new technologies could displace labour faster than the pace at which society could find new uses for labour, Keynes argued that technological change would also improve living standards rapidly so that no one would have to live in want or misery.
“I draw the conclusion that, assuming no important wars and no important increase in population, the economic problem may be solved, or be at least within sight of solution, within a hundred years,” wrote Keynes. “…for the first time since his creation man will be faced with his real, his permanent problem-how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well,” wrote Keynes.
Keynes acknowledged that the disappearance of work from our lives may be painfully destabilizing, robbing us of a sense of purpose. But Keynes, who must have been in a really cheerful mood while writing that essay, argued that three hour shifts or a fifteen hour work week may yet put off the problem for quite some time.
The world changed rapidly in the years following the publication of Keynes’s essay. As industrialization created more jobs than it destroyed in the developed world and increased real wages across income classes, Keynes’s prediction was nearly forgotten. But growing wage inequality and the rising automation of jobs over the past few years have rekindled a debate on the future of jobs.
The idea that we may have to redefine our conception of work is gaining currency once again. An August report by the Pew Research Center based on a survey of technology experts pointed out that many experts believed that the changes in automation will “allow us to renegotiate the existing social compact around work and employment”. The industrial age notion of what a job is could change, and it might mean less drudgery and more leisure for most people as more and more robots take up tasks humans are now doing.
To be sure, not everyone believes the robots are going to destroy more jobs than they create. Roughly half the respondents in the Pew survey believed that there will be more new jobs than before. But the very fact that there is a divide among experts today on the future of jobs is notable, and marks an important break from the past.
In the early 19th century, a group of English textile artisans calling themselves the Luddites staged a machine-trashing rebellion in protest against the mechanization in the textile industry because they feared they would lose their livelihoods. Since then, the term Luddite has been usually used in a disparaging sense, especially by economists, to describe those who stand against technological progress. The history of modernization and industrialization seemed to prove the Luddites wrong as rising productivity did not shrink the number of jobs; rather the workforce expanded in many countries even as more women started taking up jobs. The mechanization of farming took away many farm jobs in advanced economies but the industrial revolution ensured that those displaced found better paying jobs in factories.
But the past few years seem to have rekindled old fears about machines, and their impact on the labour market. Labour economists who had long forsaken the possibility that mechanization and automation could ever reduce aggregate employment are now beginning to have second thoughts.
There is a growing realization that robots and smart machines will obliterate some professions rapidly although experts still remain divided over whether their net impact over the long run will expand or shrink employment opportunities.
“Three possible scenarios could happen with this current wave of technology,” said Andrew McAfee, associate director of the Center for Digital Business at the MIT Sloan School of Management in an interview published in Slate magazine. “One is that it is going to hit the economy, and it might take a while to work itself out, but in the end we will reach a happy equilibrium. The Industrial Revolution was great news, eventually, for British workers. Electrification of factories eventually led to a large, stable, and prosperous American middle class. That pattern should give us confidence that we will wind up in another happy equilibrium.”
“Scenario two is that we see successive waves: artificial intelligence, automated driving that will impact people who drive for a living, robotics that will impact manufacturing. If scenario two happens, the problem is a bit worse because it will be difficult for the economy to keep adjusting and for workers to keep retraining.”
“Scenario three is that we finally transition into this science-fiction economy, where you just don’t need a lot of labor.”
“I believe that in my lifetime—I’m in my mid-40s—we’re going to see that third scenario,” said McAfee. “We won’t see a zero-labor economy, but we’re going to head into a labor-light economy. Of course, people like me have been saying some version of that for 200 years. The Luddites, John Maynard Keynes, a lot of people have said it and been wrong. But when I look at the encroachment of digital stuff into the total bundle of skills and abilities that humans have, I think this time it is different.”
This is an excerpt from New Age Economics: From Facebook to Net Neutrality by Mint Books.