ONE of the first concepts taught in economics is the circular flow of income: workers sell their labour to producers and receive income in return, which then flows back to producers in return for finished goods and services. This foundation sustains the modern economy. But the quest for higher profits accelerates the breakdown of this relationship between capital and labour. In its worship of the bottom-line, capitalism aims to drive labour costs ever lower through technological progress.
Joblessness and increasing inequality erode purchasing power and break down the circular flow. Such upheavals have occurred before, with the mechanisation of agriculture and workers crowding into urban areas in search of employment. Subsequently, as manufacturing was increasingly automated, movements such as those of the Luddites arose, fighting machines to try save their jobs. With fourth industrial revolution technologies, the scale of automation may be greater than ever before.
We can crudely view the composition of jobs in a typical economy as a pyramid structure, with an abundance of low-paid, low-skilled jobs at the bottom, and fewer higher-skilled jobs available on top. Automation began towards the bottom, with the mechanisation of agriculture and then of manufacturing. Economists and technology optimists maintained that automation is good. Humans don’t have to work menial jobs anymore; robots can do that for us.
Now, automation is creeping further up this pyramid towards a future where more unemployed workers will vie for fewer jobs on top. As machine learning and AI prove adept at diverse tasks, from detecting breast cancer to running suicide prevention hotlines, this future no longer seems out of sight.
Technology optimists claim that as automation causes unemployment, it also creates whole new categories of jobs that we may not be able to imagine at present, such as in the field of data science, which has taken off in recent years. For this possibility to occur, workers must possess the skills for these new jobs. This requires effective worker re-skilling.
The future of automation is bleak for the developing world.
Despite the optimists’ claims, there are reasons to believe that there will be fewer jobs for humans and re-skilling programmes will become increasingly ineffective. Looking at headcounts of the emerging leading companies of the world, compared with those of the past, illustrates this trend. Tesla’s market cap recently surpassed $100 billion; its employee count is under 50,000. Ford, at less than half the market cap, employs about four times as many employees.
Technological progress has given rise to a new labour category — gig workers. This category is emblematic of the fact that the relationship between the firm and worker has been severely degraded. Workers are viewed as a cost of production that must be minimised — whether that means eliminating basic benefits such as health insurance or placing workers on ever shorter contracts.
Eventually, it means eliminating the worker altogether. After all, robots don’t need time off, don’t have feelings (yet!) and, while there may be depreciation, don’t require health insurance. This is best illustrated by the evolution of the transport industry, from a regulated industry of taxi drivers, to Uber’s gig economy, and eventually to full automation with self-driving cars.
With a doomsday scenario threatening to unfold before us, what are our options? One is to view it as an opportunity. In the modern economy, humans are nothing more than their labour; their time and worth defined in monetary terms; education merely a means to a job, rather than to moral enrichment and personal betterment. Widespread automation may be a chance to redefine what it means to be human.
Bertrand Russell wrote that “the notion that the desirable activities are those that bring a profit has made everything topsy-turvy” and imagined a world where “no one is compelled to work more than four hours a day”.
Universal basic income schemes present the possibility of such a world. The benefits of technology innovation and the huge profits reaped as a result should be taxed and shared by all. Countries such as the US and China, which are leading the way in technological progress, can implement this.
The future is bleaker for the developing world. Menial offshore work such as manufacturing, call centres and data entry will be replaced by robots. Remittances sent home by working class migrants will dry up as this work is automated. Coupled with uncontrolled population growth rates, the results could be disastrous.
As policymakers think through initiatives for skills training and job creation, a successful plan requires that the number of new jobs added equals the number of people added to the labour force plus the number of jobs lost to automation. In Pakistan, both parts of the equation are likely to be massive in the future.
The writer is a development and technology policy consultant.
Published in Dawn, February 10th, 2020