Thursday, December 06, 2018

The Future of Work if Workers Are No Longer Needed

by Neil H. Buchanan

Last week, General Motors announced mass layoffs as part of a plan to close multiple manufacturing plants in North America.  Politicians of all stripes expressed varying combinations of anger and dismay, and Donald Trump predictably failed to comprehend the problem or his role in it (just as he had tried to bully Harley-Davidson last year when they rationally responded to his economic policies by planning to move manufacturing abroad).

On this blog last Tuesday, Professor Dorf offered some interesting thoughts about what the future of employment might look like.  (Those thoughts, in turn, expanded on a column that he wrote two years ago.)  Dorf wrote: "So far, no one on either the right or the left has really begun to imagine a future in which automation leaves just too few jobs for the number of able-bodied adults who need them."

That is correct, but with a twist.  The mainstream lefty intellectual par excellence, the great economist John Maynard Keynes, wrote a short essay in 1930 that anticipated much of this debate.  That essay does not inform the current debate, however, so Dorf is correct that virtually no one on either side of today's political debate has had much to say about the long-term consequences of the manufacturing economy's decline.

Here, I want to discuss the optimistic and pessimistic versions of the future of work.  Keynes's essay then becomes relevant, but not necessarily as The Answer to what the future might hold.  Indeed, Keynes's optimism is striking, compared to what might truly await our children and grandchildren.

Automation simultaneously impresses and scares people.  It makes possible large-scale increases in measured standards of living (providing the masses with "cheap stuff") but does so with fewer workers needed to produce any given amount of output.  That is not a problem if we can redeploy people from one task to another, which then leads to still more cheap stuff for everyone.

Another notable (but deeply problematic in other ways) mid-Twentieth Century economist, Joseph Schumpeter, referred to this as "creative destruction," that is, destroying one set of economic arrangements (ditch-digging by hand, say) with another (digging more and deeper ditches with machines operated by former ditch-digging laborers).

In theory, that process need never end.  Putting aside environmental matters (which admittedly sounds like an "Other than that, how was the play, Mrs. Lincoln?" move, but it is actually not as cynical as it sounds), the notion of producing more and more cheap stuff ad infinitum is entirely reasonable.  But as Dorf suggested in his columns, the question is whether we will reach a point where there is no more creativity to the destruction.  Maybe as jobs are destroyed, at some point there will be no new jobs to replace them.

We thus have two diametrically opposed possibilities.  The optimistic picture is that there will always be new ways for people to be productive and for displaced workers to find new callings.  The pessimistic picture is that, at some point, the manufacturing worker (or his children) who became either a website designer or a barista is in turn replaced by artificially intelligent software that writes software and by employee-less coffee shops -- with no new types of jobs available.

Of course, even the optimistic scenario presents its own challenges, because even if there is something for former website designers and baristas to do for a living, that living might be at a much lower standard for almost everyone -- as the very difference between those two jobs illustrates.  Imagine that lawyers are at some point almost completely replaced by software, but a Schumpeterian says, "No problem, there are plenty of jobs as personal valets for the people who own the software companies!"  That is hardly an outcome that would be appealing to most people.

But it is the pessimistic story that is fascinating, and here, I think that Dorf might be a bit too optimistic in his pessimism.  He recalls Henry Ford's insight that auto company profits are ultimately only possible if there are customers to buy the cars, which means that capitalists have a motivation to give people the means to buy the cheap stuff that capitalist enterprises are selling.  This might then lead even rock-ribbed conservative business types to support a basic income.

Maybe.  Dorf notes that business leaders may not see (or at least act on) the possibilities of enlightened self-interest, but the problem could go deeper than that.  Ultimately, if non-human production techniques can provide all of the things that the tiny class of owners could possibly desire, then it will not be necessary to keep other humans around at all.

That is, the optimistic view is that what capitalists want ultimately requires customers, who must be the workers to whom Ford paid his famous five dollar daily wage.  But if capitalists want things that do not require either workers or customers, then a whole lot of people become expendable.

That might not seem to make sense, because one would think that of course capitalists always need customers.  The flaw in that thinking is that the people whom we call capitalists are capitalists for instrumental reasons, and if capitalism becomes an unnecessary instrument to satisfy their needs, then post-capitalists might well be happy to cut the rest of humanity loose.

This is what dystopian science fiction is made of.  One underrated film that depicted a version of such a world is 2013's "Elysium," in which South African director Neill Blomkamp (who is best known for his brilliant allegory for apartheid, "District 9") depicts a future in which the rich people have literally left Earth behind, inhabiting a huge man-made satellite with all of the comforts of life (including trees, parks, and so on) while the vast bulk of humanity lives on the dying earth below, impoverished and oppressed.  The favored class living above Earth does not need to economically exploit the unlucky people any more, so it simply leaves them to rot.

Keynes's vision could not be more different.  In "Economic Possibilities for Our Grandchildren," he is in the immediate sense telling everyone not to imagine that the Great Depression (which, in 1930, was just getting started) meant that economic progress was at an end.  Mankind's living standard had been stagnant for millennia, only to skyrocket when capitalism came into full bloom, driven by technological advances.  And, he says, that process will resume after the Depression ends.

That is not the type of story that one would typically associate with Keynes, at least not if one takes seriously the right-wing attacks on Keynes as an anti-capitalist demon who enabled Rooseveltian socialism.  But those attacks have always been foolish, and Keynes (and FDR) are best understood as capitalism's saviors, not its enemies.

But in his 1930 essay, Keynes then turns his attentions to the long-term future and asks: "What can we reasonably expect the level of our economic life to be a hundred years hence?"  His optimism is astonishing, an optimism best captured in his frequently misunderstood final sentence: "If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid!"

Keynes was most definitely not saying that economists needed to stop being such arrogant pricks.  He himself was anything but modest, and he was neither self-deluded nor a hypocrite.  His point was that  "the economic problem" -- which he short-hands as "the struggle for subsistence" -- would be solved in the not-too-distant future.  At that point, economists would become essentially maintenance workers, experts who do the equivalent of oil changes and tire replacements for the economy as a whole -- or, in his analogy, people who do the important but uninspiring work of maintaining people's dental health.  Important work, to be sure, but humble.

And that truly would be splendid.  Why?  Keynes thought that such a future would allow people to achieve a higher level of satisfaction.  Freed from the drudgery of spending most of their waking hours paving roads or designing computers (or writing about the causes of economic prosperity), people could follow their passions.  Subsistence having been guaranteed, we would be able to think about higher matters.

Because Keynes was part of the famed Bloomsbury Group, his version of non-subsistence concerns included poetry, art, and the like.  Note that that does not mean that he was imagining that people would earn a living by becoming musicians or novelists.  Although he was witnessing the first wave of the technologies that allows one artist to replace many lesser artists (in-person performances in every local concert hall being replaced by ear buds hooked up to iPhones, for example), he was not talking there about creative destruction.  People would be reading books and listening to concertos, and perhaps they would be writing poetry and performing operas as well, but in all cases they would be doing so for their own enjoyment, not as a means to address The Economic Problem.

Keynes concedes that there is a category of human economic activities that are designed to "satisfy the desire for superiority, [which] may indeed be insatiable."  His point is simply that meeting human needs will, because of the advance of technology, become economically simple.  But simple is not the same thing as easy, and all of the political problems that lead to economic inequality are simply not part of Keynes's analysis.

Where does that leave us?  One possibility is that "the desire for superiority" might ironically lead economic elites to keep the non-elites alive, simply to have people around to whom they can feel superior.  But is an Elysium-like future (which, if we are to be honest, is already the reality in huge parts of the world) imaginable?

If the children of people like Jeff Bezos and other mega-billionaires decide that they can be as rich as they want to be without keeping potential customers alive, what will they do?  If even dentists and humble economists can be replaced by technology, what then?

At best, we would have to believe that some other capitalists would come along to exploit other people's needs, starting the cycle all over again.  But if established capitalists have no reason to license their technology to others, the rest of us could be economically orphaned, facing a future in which the technology that made life comfortable is no longer available.  In short, we could see the return of pre-capitalist life.  That is not a prediction, but it is a possibility.

1 comment:

David Ricardo said...

I believe much of the analysis here and elsewhere, while correct within the concept of the discussion, gives too little emphasis to the change from a manufacturing economy to a service economy. Automation has and will displace manufacturing jobs; that has been a trend for several centuries now.

However the service economy, while susceptible to job loss from technology and automation, is notably labor intensive. Health care for the increasingly older population has limited automation/technology opportunities. Maintenance of the increasingly complex technology in computing, communications, entertainment etc is labor intensive. The middle class retired population wants support services in home maintenance. You think a plumber costs a lot now . . . . HVAC techs, electricians etc will be in high demand, and one can already see the wage inflation in these areas.

What might happen is labor dislocation. Workers trained in the manufacturing or low tech service sector may not be able to transition as their opportunities decrease. But this will be a micro socio-economic problem, not one for lack of demand for labor in the macro sense.

Don't let your children grow up to be cowboys. Let them be server techs, home health care providers, web site supporters . . . instead.