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Must Oligarchy and Technological Unemployment Continue to Decimate the Middle Class?

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(Article changed on January 26, 2014 at 09:08)

In 1930, when the world was "suffering from a bad attack of economic pessimism," John Maynard Keynes wrote a broadly optimistic essay, "Economic Possibilities for our Grandchildren."   It imagined a middle way between revolution and stagnation that would leave the said grandchildren a great deal richer than their grandparents.   But the path was not without dangers.


One of the worries Keynes admitted was a "new disease": "technological unemployment" due to our discovery of means of economizing the use of labor that would outrun the pace at which we can find new uses for labor."   His readers might not have heard of the problem, he suggested--but they were certain to hear a lot more about it in the years to come.


For the most part, however, they did not hear about it.   And nowadays, the majority of economists confidently wave such worries away.   By raising productivity, they argue, any automation which economizes on the use of labor will increase incomes.   That will generate demand for new products and services, which will in turn create new jobs for displaced workers.   To think otherwise was a career killer, for it meant being tarred as a Luddite--the name taken by 19th-century textile workers who smashed the machines they thought were taking their jobs.


For much of the 20th century, those arguing that technology brought ever more jobs and prosperity seemed to have the better of the debate.   Real incomes in Britain and the US tripled from 1570 to 1875.   And they more than tripled from 1875 to 1975.   Industrialization did not end up eliminating the need for human workers.   On the contrary, it created employment opportunities sufficient to soak up the 20th century's exploding population.   Keynes's vision of everyone in the 2030s being a lot richer was largely achieved.   However, his belief that they would work just 15 hours or so a week has not come to pass.   Why not?


In America the median wage (corrected for inflation and measured in constant dollars) is stagnant and has hardly budged over the past four decades.   Even in places like Britain and Germany, where employment is touching new highs, wages have been flat for a decade.   Recent research suggests that this is because substituting capital (i.e. automation) for labor is increasingly attractive in the business world;   and, as a result, owners of capital have captured ever more of the world's income since the 1980s, while the share going to labor has fallen -- until now when we have 85 people who have managed to accumulate a body of wealth so large that it is equal in amount to that gathered by fully half the world's population.


At the same time, even in relatively egalitarian places like Sweden, inequality among the employed has risen sharply, with the share going to the highest earners soaring.   For those not in the elite, argues David Graeber, an anthropologist at the London School of Economics, much of modern labor consists of stultifying "bullshit jobs" -- low- and mid-level computer-screen-sitting that serves mostly to just occupy workers for whom the economy no longer has much need.   Keeping them employed, and shopping, Mr Graeber argues, is not an economic choice;   it is a political one, i.e. it is something the ruling class does mostly just to keep control over the lives of these millions, who, if too many of them were to become well educated and well informed, and then well-organized politically (instead of falling prey to shopaholism and workaholism), could easily become a major threat to the ruling class, politically.   As John Maynard Keynes could have pointed out, they could all be working 15-hour weeks (or 3-month years) were it not for their devotion to the fanciest new consumer items that rule most of their lives, and the devotion to warfare and war spending that results from the perverse needs of our military-industrial complex.


Be that as it may, drudgery may soon enough give way to ever more stark amounts of unemployment.   There is already a long-term trend towards lower levels of employment in some rich countries.   The proportion of American adults participating in the labor force recently hit its lowest level since 1978, and although some of that is due to the effects of aging, some is not.   In a recent speech that was modeled in part on Keynes's "Possibilities," Larry Summers, a former American treasury secretary, looked at employment trends among American men between 25 and 54.   In the 1960s only one in 20 of those men was not working.   According to Mr. Summers's extrapolations, in ten years that number could well be one in 7.


This is one indication, Mr. Summers says, that technical change is increasingly taking the form of "capital that effectively substitutes for labor".  And there may be a lot more for such capital to do in the near future.   To wit:   A 2013 paper by Carl Benedikt Frey and Michael Osborne, of the University of Oxford, argued that jobs are at high risk of being automated in 47% of the occupational categories into which work is customarily sorted.   That includes accountancy, legal work, technical writing and a lot of other white-collar occupations.

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)

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