Automation should not lead to a workless society. Bad economic management could.

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The current issue of Liberator, an anti-establishment house magazine for the Lib Dems, bemoans the lack of policy on the advance of automation and robotics:

If we are heading for a world in [which] relatively few people conventionally work – because machines can perform tasks better and cheaper – how will the non-working population be paid, and what will it be paid for?

Such thoughts are prevalent in chattering circles these days. On one occasion I expressed a little scepticism in a Facebook conversation, given that current employment rates have never been higher – and I was quickly shouted down for having my head in the sand. As it happens the Lib Dems are developing policy here, with a working group on the “21st Century Economy” in the advanced stages of deliberation, having already held a consultative session at Conference. But what should liberals be thinking?

The claims about automation and robotics are not all hype, though there is a fair bit of that too. Artificial Intelligence (AI), and its harnessing of “Big Data” is in the process of revolutionising many areas of work. This has proceeded faster than I personally expected, after AI had gone through decades of marginal progress combined with absurd hype. Many jobsĀ  are now threatened, including vehicle drivers and many professional roles. Just how far this is going is very hard to say. Colossal resources are being ploughed in, and there have been some spectacular achievements, and yet few of the breathless boosters of the technology appear to have much idea of what intelligence actually is – they just project present progress into the future and assume that AI will catch up with humans. There is no magic in the human brain, after all, just cells, chemicals and electrical connections. My guess is that at some point AI will hit a point of diminishing returns, and progress will slow.

But not for a while yet. Meanwhile undoubtedly consume many jobs will be replaced there will be a lot of economic disruption. But are we heading to a near jobless society? Here I struggle. Quite a bit of progress has been made already, after all, and yet in many countries, Britain in particular, employment has never been higher. And not just that. We are constantly aware of jobs that need to be done that are being cut. This is a lot of what is behind the fuss about austerity. Not enough care workers, doctors, or police officers: the list goes on. And there are plenty of new fields of endeavour that are opening up: cancer treatments, mental health care, green energy and so on. So the jobless society looks like self-harm rather than an inevitability.

Indeed a conventional economist would say that there is nothing much to worry about. Similar things were being said in the 19th century, as new technology cut swathes through agriculture and textiles. That didn’t work out too badly in the end did it? As one industry becomes more efficient, it simply creates demand for others. I believe that a lot of this has been happening already. A lot of the new jobs are being created in low productivity sectors of the economy, meaning that overall economic growth is not advancing as much as many expected. That’s just the nature of the beast.

But that is too complacent. A closer examination of 19th Century economic development reveals a lot of human misery as workers were thrown out of modernising industries. It was not at all clear for many years that human wellbeing was being advanced. In any case economists tend to overlook the the specifics of how particular technologies affect the overall economy. The massive advances in working class and middle class welfare in many economies after 1945 until the 1970s is often attributed to good management of overall demand in the economy. And yet it had everything to do with the advance of light industry and office work, based on technological breakthroughs made in the war years, which were particularly good for the creation of medium-skilled jobs. We do have to look closely at the specific implications of technologies of the age, and adjust our economic management to ensure the best outcome for overall human wellbeing.

The post war boom was particularly happy on two fronts. It threw up a lot of new things that people wanted to buy, from cars to washing machines to cosmetics and new textiles. And producing them was intensive in mid-level jobs on the factory floor, distribution and administration. Further, other industries, like insurance, produced the same mix of things people wanted and lots of jobs. But modern technology is focusing on efficiency rather than labour intensive new products. A lot of it is about replacing labour with capital, without necessarily producing much more product or service.

But are what people are going to need more of? Overall we do not need to consume more things or eat more food, though in parts of our society that is clearly true. The technology sector itself will generate a lot of demand, in the development of new systems, and in teaching people how to make best use of them. A second obvious area is health and care. The health economy has huge potential to expand, especially here in Britain – it is much larger in the US, even when so much of the population is excluded from it by lack of insurance cover. And an ageing population will not only need more health services, but general care too. Automation and AI in health and care is also likely to generate more work, by opening up new treatments and by making diagnoses more available, faster than it destroys work by making things more efficient. That has been our consistent experience to date. And a third area of potential expansion is what is being called “experiences” – entertainment, travel, games and so on. This is mixed up a further wrinkle: a possible increase in leisure time. People may want to work fewer days and hours. This will both create work (depending on what they do in that leisure time) and reduce time available to work.

But there is an obvious problem with all this: money. And by money I do not mean limits to real resources, but the fact that if there is not an even distribution of spending power, too many people will not able to afford these things, while a minority will have more money than they can actually spend things that create work, rather than being part of a churning cycle of finance and property . That cycle of finance, incidentally will also create some jobs – but this looks more like part of the problem than the solution. The problem is that the jobs being created, in sectors with low productivity, are often too badly paid or insecure for people to buy enough services and things. This is the way things seem to be heading in too many developed societies.

Technological advance should be a good thing. It allows us to do more while consuming fewer of the world’s scarce resources. But s skewed distribution of income means that the changes to work patterns risk suffocating the economy rather than advancing wellbeing. That is one of the central challenges of our times.

 

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