Automation and Employment

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Statistics

"Professor Moshe Vardi projected recently that more than half of the workers in the world will be replaced by robots in just 30 years from now. This is in line with a 2013 Oxford University study that put the future number of robot-replaced jobs in America at 47%." (http://bigthink.com/paul-ratner/why-elon-musk-thinks-well-have-universal-basic-income?)

Discussion

Automation is not destroying jobs

David Rotman:

"Autor, for one, is skeptical of Brynjolfsson and McAfee’s argument that the transformation of work is speeding up as technological change accelerates. Research he conducted with a fellow MIT economist, Daron Acemoglu, suggests that productivity growth is not in fact accelerating, nor is such growth concentrated in computer-intensive sectors. According to Autor, the changes wrought by digital technologies are transforming the economy, but the pace of that change is not necessarily increasing. He says that’s because progress in robotics, artificial intelligence, and such high-profile technologies as Google’s driverless car are happening more slowly than some people may think. Despite impressive anecdotal accounts, these technologies are not ready for widespread use. “You would be actually pretty hard pressed to find a robot in your day-to-day life,” he observes.

Indeed, Autor believes many tasks that people are particularly good at, such as recognizing objects and dealing with suddenly changing environments, will remain difficult or expensive to automate for decades to come. The implications for inequality are significant: it could mean that the market for middle-skill jobs may be stabilizing and the earning disparity between low- and high-skill jobs leveling off, albeit “at a very high level.” What’s more, many middle-skill workers could flourish as they increasingly learn to use digital technologies in their jobs.

It’s an unusual spot of optimism in the inequality discussion. But the underlying problem for much of the population remains. “We have a very skill-driven economy without a very skilled workforce,” Autor says. “If you have the high skills—and that’s a big if—you can make a fortune.” (http://www.technologyreview.com/featuredstory/531726/technology-and-inequality/)


The Automated Leisure Society is Impossible under Capitalism

Michael Roberts:

1.

"Employment growth is falling in the advanced capitalist eocnomies. Employment growth is way less than 1% a year in the 21st century.

Computer engineer and Silicon Valley software entrepreneur, Martin Ford puts it this way: “over time, as technology advances, industries become more capital intensive and less labour intensive. And technology can create new industries and these are nearly always capital intensive”. The struggle between capital and labour is thus intensified.

It does depend on the class struggle between labour and capital over the appropriation of the value created by the productivity of labour. And clearly labour has been losing that battle, particularly in recent decades, under the pressure of anti-trade union laws, ending of employment protection and tenure, the reduction of benefits, a growing reserve army of unemployed and underemployed and through the globalisation of manufacturing.

According to the ILO report, in 16 developed economies, labour took a 75% share of national income in the mid-1970s, but this dropped to 65% in the years just before the economic crisis. It rose in 2008 and 2009 – but only because national income itself shrank in those years – before resuming its downward course. Even in China, where wages have tripled over the past decade, workers’ share of the national income has gone down. Indeed, this is exactly what Marx meant by the ‘immiseration of the working class’.

Will it be different with robots? Marxist economics would say no: for two key reasons. First, Marxist economic theory starts from the undeniable fact that only when human beings do any work or perform labour is anything or service produced, apart from that provided by natural resources (and even then that has to be found and used). So, crucially, only labour can create value under capitalism. And value is specific to capitalism. Sure, living labour can create things and do services (what Marx called use values). But value is the substance of the capitalist mode of producing things. Capital (the owners) controls the means of production created by labour and will only put them to use in order to appropriate value created by labour. Capital does not create value itself.

Now if the whole world of technology, consumer products and services could reproduce itself without living labour going to work and could do so through robots, then things and services would be produced, but the creation of value (in particular, profit or surplus value) would not. As Martin Ford puts it: the more machines begin to run themselves, the value that the average worker adds begins to decline.” So accumulation under capitalism would cease well before that robots took over fully, because profitability would disappear under the weight of ‘capital-bias’. This contradiction cannot be resolved under capitalism.

We would never get to a robotic society; we would never get to a workless leisure society – not under capitalism. Crises and social explosions would intervene well before that." (https://thenextrecession.wordpress.com/2014/10/21/de-industrialisation-and-socialism/)


2.

"In recent work, Graetz and Michaels looked at 14 industries (mainly manufacturing industries, but also agriculture and utilities) in 17 developed countries (including European countries, Australia, South Korea, and the US) They found that industrial robots increase labour productivity, total factor productivity, and wages. At the same time, while industrial robots had no significant effect on total hours worked, there is some evidence that they reduced the employment of low skilled workers, and, to a lesser extent, also middle skilled workers.

So in essence, robots did not reduce toil (hours of work) for those who had work, on the contrary. But they did lead to a loss of jobs for the unskilled and even those with some skills. So more toil, not less hours; and more unemployment.

Two Oxford economists, Carl Benedikt Frey and Michael Osborne, looked at the likely impact of technological change on a sweeping range of 702 occupations, from podiatrists to tour guides, animal trainers to personal finance advisers and floor sanders. Their conclusions were frightening: “According to our estimates, about 47 percent of total US employment is at risk. We further provide evidence that wages and educational attainment exhibit a strong negative relationship with an occupation’s probability of computerisation…. Rather than reducing the demand for middle-income occupations, which has been the pattern over the past decades, our model predicts that computerisation will mainly substitute for low-skill and low-wage jobs in the near future. By contrast, high-skill and high-wage occupations are the least susceptible to computer capital.’ Lanchester summed up their conclusions: “So the poor will be hurt, the middle will do slightly better than it has been doing, and the rich – surprise! – will be fine.”

Lanchester makes the point in his essay that the robotic world could lead, not to a ‘post-capitalist’ utopia but instead to a ‘Pikettyworld’ “in which capital is increasingly triumphant over labour.” And he quotes the huge profits that the large techno companies are making. “In 1960, the most profitable company in the world’s biggest economy was General Motors. In today’s money, GM made $7.6 billion that year. It also employed 600,000 people. Today’s most profitable company employs 92,600. So where 600,000 workers would once generate $7.6 billion in profit, now 92,600 generate $89.9 billion, an improvement in profitability per worker of 76.65 times. Remember, this is pure profit for the company’s owners, after all workers have been paid. Capital isn’t just winning against labour: there’s no contest. If it were a boxing match, the referee would stop the fight.”

But looking at the profits of companies that have seized the value created by labour in the new sectors is not necessarily a guide to the health of capital as a whole. Is capitalism as a whole having a new lease of life as a result? After all, overall investment growth is very low in the current long depression and productivity growth as a result also. See my posts on productivity and investment.

Robots do not do away with the contradictions within capitalist accumulation. The essence of capitalist accumulation is that to increase profits and accumulate more capital, capitalists want to introduce machines that can boost the productivity of each employee and reduce costs compared to competitors. This is the great revolutionary role of capitalism in developing the productive forces available to society.

But there is a contradiction. In trying to raise the productivity of labour with the introduction of technology, there is process of labour shedding. New technology replaces labour. Yes, increased productivity might lead to increased production and open up new sectors for employment to compensate. But over time, a capital-bias or labour shedding means less new value is created (as labour is the only form of value) relative to the cost of invested capital. There is a tendency for profitability to fall as productivity rises. In turn, that leads eventually to a crisis in production that halts or even reverses the gain in production from the new technology. This is solely because investment and production depend on the profitability of capital in our modern mode of production.

So an economy increasingly dominated by the internet of things and robots under capitalism will mean more intense crises and greater inequality rather than super-abundance and prosperity." (https://thenextrecession.wordpress.com/2015/08/23/robots-and-ai-utopia-or-dystopia-part-one/)


The impact of robots and AI seen through the prism of Marx’s law of value under capitalism

Michael Roberts:

" I want to consider the impact of robots and AI seen through the prism of Marx’s law of value under capitalism. There are two key assumptions that Marx makes in order to explain the laws of motion under capitalism: 1) that only human labour creates value and 2) over time, investment by capitalists in technology and means of production will outstrip investment in human labour power – to use Marx’s terminology, there will be a rise in the organic composition of capital over time.

There is no space here to provide the empirical evidence for the latter. But you can find it here (crisis and the law for BOOK1-1). Marx explained in detail in Capital that a rising organic composition of capital is one of the key features in capitalist accumulation. Investment under capitalism takes place for profit only, not to raise output or productivity as such. If profit cannot be sufficiently raised through more labour hours (i.e. more workers and longer hours) or by intensifying efforts (speed and efficiency – time and motion), then the productivity of labour (more value per labour hour) can only be increased by better technology. So, in Marxist terms, the organic composition of capital (the amount of machinery and plant relative to the number of workers) will rise secularly. Workers can fight to keep as much of the new value that they have created as part of their ‘compensation’ but capitalism will only invest for growth if that wage share does not rise so much that it causes profitability to decline. So capitalist accumulation implies a falling share to labour over time, or what Marx would call a rising rate of exploitation (or surplus value).

The ‘capital-bias’ of technology is something continually ignored by mainstream economics.

...

in our hypothetical all-encompassing robot/AI world, productivity (of use values) would tend to infinity while profitability (surplus value to capital value) would tend to zero. Human labour would no longer be employed and exploited by Capital (owners). Instead, robots would do all. This is no longer capitalism. I think the analogy is more with a slave economy as in ancient Rome.

...

The question often posed at this point is: who are the owners of the robots and their products and services going to sell to make a profit? If workers are not working and receiving no income, then surely there is massive overproduction and underconsumption? So, in the last analysis, it is the underconsumption of the masses that brings capitalism down?

...

If the whole world of technology, consumer products and services could reproduce itself without living labour going to work and could do so through robots, then things and services would be produced, but the creation of value (in particular, profit or surplus value) would not. As Martin Ford puts it: the more machines begin to run themselves, the value that the average worker adds begins to decline.” So accumulation under capitalism would cease well before robots took over fully, because profitability would disappear under the weight of ‘capital-bias’.

The most important law of motion under capitalism, as Marx called it, would be in operation, namely the tendency for the rate of profit to fall. As ‘capital-biased’ technology increases, the organic composition of capital would also rise and thus labour would eventually create insufficient value to sustain profitability (i.e. surplus value relative to all costs of capital). We would never get to a robotic society; we would never get to a workless society – not under capitalism. Crises and social explosions would intervene well before that." (https://thenextrecession.wordpress.com/2015/08/29/robots-and-ai-utopia-or-dystopia-part-two/)


A Full Robot Economy would not be capitalist

Michael Roberts:

"Again, I think this is a misunderstanding. Such a robot economy is not capitalist any more; it is more like a slave economy. The owners of the means of production (robots) now have a super-abundant economy of things and services at zero cost (robots making robots making robots). The owners can just consume. They don’t need to make ‘a profit’, just as the aristocrat slave owners in Rome just consumed and did not run businesses to make a profit. This does not deliver an overproduction crisis in the capitalist sense (relative to profit) nor ‘underconsumption’ (lack of purchasing power or effective demand for goods on a market), except in the physical sense of poverty.

Mainstream economics continues to see the rise of the robots under capitalism as creating a crisis of underconsumption. As Jeffrey Sachs put it: “Where I see the problem on a generalised level for society as a whole is if humans are made redundant on an industrial scale (47% quoted in US) then where’s the market for the goods?” Or as Martin Ford puts it: “there is no way to envision how the private sector can solve this problem. There is simply no real alternative except for the government to provide some type of income mechanism for consumers” .Ford does not propose socialism, of course, but merely a mechanism to redirect lost wages back to ‘consumers’, but such a scheme would threaten private property and profit.

A robotic economy could mean a super-abundant world for all (post-capitalism as Paul Mason suggests); or it could mean Elysium. FT columnist, Martin Wolf put it this way: “The rise of intelligent machines is a moment in history. It will change many things, including our economy. But their potential is clear: they will make it possible for human beings to live far better lives. Whether they end up doing so depends on how the gains are produced and distributed. It is possible that the ultimate result will be a tiny minority of huge winners and a vast number of losers. But such an outcome would be a choice not a destiny. A form of techno-feudalism is unnecessary. Above all, technology itself does not dictate the outcomes. Economic and political institutions do. If the ones we have do not give the results we want, we must change them”. It’s a social ‘choice’ or more accurately, it depends of the outcome of the class struggle under capitalism.

John Lanchester is much more to the point: “It’s also worth noting what isn’t being said about this robotified future. The scenario we’re given – the one being made to feel inevitable – is of a hyper-capitalist dystopia.

There’s capital, doing better than ever; the robots, doing all the work; and the great mass of humanity, doing not much, but having fun playing with its gadgets…There is a possible alternative, however, in which ownership and control of robots is disconnected from capital in its current form. The robots liberate most of humanity from work, and everybody benefits from the proceeds: we don’t have to work in factories or go down mines or clean toilets or drive long-distance lorries, but we can choreograph and weave and garden and tell stories and invent things and set about creating a new universe of wants. This would be the world of unlimited wants described by economics, but with a distinction between the wants satisfied by humans and the work done by our machines. It seems to me that the only way that world would work is with alternative forms of ownership. The reason, the only reason, for thinking this better world is possible is that the dystopian future of capitalism-plus-robots may prove just too grim to be politically viable. This alternative future would be the kind of world dreamed of by William Morris, full of humans engaged in meaningful and sanely remunerated labour. Except with added robots. It says a lot about the current moment that as we stand facing a future which might resemble either a hyper-capitalist dystopia or a socialist paradise, the second option doesn’t get a mention.” (https://thenextrecession.wordpress.com/2015/08/29/robots-and-ai-utopia-or-dystopia-part-two/)


Why Automation doesn't always make sense

Tim Jackson:

"This perverse dynamic is played out through the relentless pursuit of labour productivity: the desire continually to increase the output delivered by each hour of working time. Rising productivity is viewed as the engine of progress. But the same dynamic is also punishing. If our economies fail to expand, unemployment rises. Higher unemployment reduces spending further and generates rising welfare costs. Higher welfare costs lead to unwieldy levels of government debt. Higher sovereign debt limits public spending, depressing demand yet again. When economic growth is hard to come by, for whatever reason, the dynamic of rising labour productivity is a harsh and unforgiving mistress.

The default wisdom is to get growth back as fast as possible. But there are two more interesting ways out of this ‘productivity trap’. One is to accept productivity growth in the economy and reap the rewards in terms of reduced hours worked per employee. To share a better work-life balance for everyone. The second is to ease up on the gas pedal of ever-increasing productivity growth. Or in other words, to shift economic activity to more labour-intensive sectors. If this latter option sounds perverse at first, it is probably because we have become so conditioned by the language of efficiency. Output is everything. Time is money. The drive for increased labour productivity occupies reams of academic literature and haunts the waking hours of CEOs and finance ministers across the world. Besides, our ability to generate more output with fewer people has lifted our lives out of drudgery. Who nowadays would prefer to keep their accounts in longhand, wash hotel sheets by hand, or mix concrete with a spade?

But there are places where chasing labour productivity growth makes much less sense. Certain kinds of tasks rely inherently on the allocation of people’s time and attention. The care and concern of one human being for another, for instance, is a peculiar ‘commodity’. It cannot be stockpiled. It does not degrade. Its quality rests primarily on the attention paid by one person to another. And yet compassion fatigue is a rising scourge in a health sector hounded by meaningless productivity targets.

Craft is another example. It is the accuracy and detail inherent in crafted goods that endows them with lasting value. It is the attention paid by the carpenter, the tailor and the designer that makes this detail possible. Likewise it is the time spent practising, rehearsing and performing that gives creative art its enduring appeal. What, aside from meaningless noise, is to be gained by asking the London Philharmonic to reduce their rehearsal time and play Beethoven’s 9th Symphony faster and faster each year? These ‘human service’ sectors of the economy — care, craft, culture — are characterised by the fact that the time spent by people in the service of each other is the core value proposition. I (and others) have argued extensively that this concept of service provides for a new vision of enterprise: not as a speculative, profit-maximising, resource-intensive division of labour, but as a form of social organisation embedded in the community, working in harmony with nature to deliver the capabilities that allow us to prosper.

Social investment is vital to this vision. Investment is vital for any economy. It embodies the deepest relationship in economics: the relationship between the present and the future. The fact that people set aside a proportion of their income at all reflects a fundamentally prudential aspect of human nature. Engaging in projects that last over time embodies our commitment to the future and is the basis for prosperity of any kind.

But the success of investment depends inherently on the destination of our savings. When large proportions of investment are dedicated towards nothing more than asset price speculation, the productive relationship between the present and the future is fundamentally distorted, destabilising the economy and undermining prosperity.

This too can be transformed. The rising influence of the international divest-invest movement bears witness to the profound possibilities for change. So far, the movement has focused on fossil fuel investments. But there are other areas where we should routinely be challenging the portfolios of our pensions and insurance companies. Why do we continue to invest in destructive supply chains populated with underpaid labour working in dangerous conditions, when there are decent alternatives and promising technologies available?

Freeing up these opportunities depends on having a financial system which is fit for purpose. Improving the ability of ordinary people to invest their savings responsibly in ways that benefit both their own community and a wider environment is paramount. Crowdfunding, peer-to-peer lending, local community bonds, all of these are helpful, but deeper and more decisive changes are also needed.

Some surprisingly conventional voices now call for an end to banks’ power to create debt-based money through a fractional reserve system, in line with the so-called Chicago Plan, which was devised by economists at the University of Chicago in the wake of the Great Depression. In The Chicago Plan Revisited, published in 2012, the IMF identified multiple advantages of a 100% reserve scheme: better control of credit cycles, the potential to eliminate bank runs, and dramatic reductions in both government and private debt. The result of such a scheme would be to return control of the money supply to the state. ‘Sovereign money’ systems eliminate the dependency of the state on commercial money markets and reduce the cost of public borrowing, allowing governments to spend (and invest) directly into the economy in support of social needs. Proposals for such systems are currently under consideration in Iceland, the Netherlands and Switzerland." (https://medium.com/rsa-journal/growing-pains-principles-for-a-socio-economic-transformation-8ca1626b889a#.g743v3bim)