Undercover Economist

Man v machine (again)

‘The Luddite anxiety has been dormant for many years but has recently enjoyed a resurgence’

I’m writing these words in York, the city in which, two centuries ago, the British justice system meted out harsh punishments — including execution — to men found guilty of participating in Luddite attacks on spinning and weaving machines. By a curious coincidence, I’ve just read Walter Isaacson’s article in the FT explaining how wrong-headed the Luddites were. I’m not so sure.

“Back then, some believed technology would create unemployment,” writes Isaacson. “They were wrong.”

No doubt such befuddled people did exist, and they still do today. But this is a straw man: we can all see, as Isaacson does, that technology has made us richer while employment is as high as ever. (The least appreciated job-creating invention may well have been the washing machine, which helped turn housewives into women with salaries.)

The Luddites themselves had a more subtle view than Isaacson suggests, and one which is as relevant as ever. They believed that the machines were altering economic power in the textile industry, favouring factory owners and low-skilled labourers at the expense of skilled craftsmen. They wanted to defend their interests and they did so violently. As the historian Eric Hobsbawm put it, their frame-breaking activity was “collective bargaining by riot” and “simply a technique of trade unionism” in the days before formal unions existed.

To put it another way, the Luddites weren’t idiots who thought that machines would destroy jobs in general; they were skilled workers who thought that machines would devalue their specific jobs and their specific skills. They were right about that, and sufficiently determined that stopping them required more than 10,000 troops at a time when the British army might have preferred to focus on Napoleon.

The Luddite anxiety has been dormant for many years but has recently enjoyed a resurgence. This is partly because journalists fear for their own jobs. Technological change has hit us in several ways — by moving attention online, where (so far) it is harder to charge money for subscriptions or advertising; by empowering unpaid writers to reach a large audience through blogging; and even by introducing robo-hacks, algorithms that can and do extract data from corporate reports and turn them into financial journalism written in plain(ish) English. No wonder human journalists have started writing about the economic damage the robots may wreak.

Another reason for the robo-panic is concern about the economic situation in general. Bored of blaming bankers, we blame robots too, and not entirely without reason. Inequality has risen sharply over the past 30 years. Many economists believe that this is partly because technological change has favoured a few highly skilled workers (and perhaps also more mundane trades such as cleaning) at the expense of the middle classes.

Finally, there is the observation that computers continue to develop at an exponential pace and are starting to make inroads in hitherto unexpected places — witness the self-driving car, voice-activated personal assistants and automated language translation. It is a long way from the spinning jenny to Siri.

What are we to make of all this? One view is that this is business as usual. We’ve had dramatic technological change for the past 300 years but it’s fine: we adapt, we still have jobs, we are incomparably richer — and the big headache of modernity isn’t unemployment but climate change.

A second view is that this time is radically different: the robots will, before long, render many people economically valueless — simply incapable of earning a living wage in a market economy. There will be plenty of money around but it will flow to the owners of the machines, and maybe also to the government through taxation. In principle, all could be well in such a future but it would require a radical reimagining of how an economy could work. The state, not the market, would be the arbiter of who gets what. Such a world is probably not imminent but, by 2050, who knows?

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The third perspective is what we might call the neo-Luddite view: that technology may not destroy jobs in aggregate but rather changes the demand for skills in ways that are real and troubling. Median incomes in the US have been stagnant for decades. There are many explanations for that, including globalisation and the decline of collective bargaining, but technological change is foremost among them.

If the neo-Luddites are right, then the challenge in front of us is simply to adapt. Individual workers, companies and the political system will have to deal with wrenching economic changes as old industries are destroyed and new ones created. That seems a plausible view of the near future.

But there is a final perspective that doesn’t get as much attention as it might: it’s that technological change is too slow, not too fast. The robo-booster theory implies a short-term surge in jobs, as all those lovely new machines are designed and built and installed, followed by a long-term surge in productivity as the robots make the economy ruthlessly efficient. It is hard to see much sign of either trend in the economic statistics. Productivity, in particular, has been disappointing in the US and utterly dismal in the UK. Where are the robots when we need them?

Written for and first published at ft.com.