This series of posts will continue to examine myths or tropes that I hear repeated by people trying to make sense of the "New Dark Age" that is our fragmented social reality. If you have an idea for a trope to address, contact me on Twitter @Askews2000.

We begin with two narratives of automation. 

There’s a scene in “White People Renovating Houses”, the South Park Season 21 (!) premiere, in which a tiki-torch wielding mob of rednecks marches through the town, demanding the destruction of digital personal assistants such as Siri and Alexa. The episode was panned by critics, who thought the writers didn’t adequately skewer the presumed target of mockery (i.e. white nationalists). But what critics failed to understand is that white nationalists were not the intended target (that would have been too easy). They themselves were. Or rather, the narrative that fear of automation was driving the economic anxiety of Trump’s racist base. The incongruity between the recent facts (neo-Nazis in Charlottesville) and the explanation (fear of automation) is the point of the joke. 

As a historical counterpoint, there's a moment a third of the way into Sven Beckert’s magisterial history of capitalism, “Empire of Cotton: A Global History”, at the dawn of the Industrial Revolution in Britain when a few hundred ‘spinning jennys’ (machines for cotton weaving) begin to displace the work of hundreds of thousands of  artisans in the manufacture of cotton fabrics. Within a generation, automation had destroyed a global industry which had remained largely unchanged for a thousand years, and begun the “Great Divergence” by which the wealth of Western Europe eclipsed that of the rest of the world. Beckert describes the opposition and mob violence which was often visited upon the mills but which failed to ultimately prevent the radical transformation of land and labour relations they represented. 

Everybody’s talking about automation

Discussing automation, and its effect on social, political and economic relations, is a recurrent feature of 2017’s “New Political Dark Age”. There are new books, conferences, speeches, and essays on the topic almost daily; we must tackle the subject, we are told, to be taken seriously as a political and economic thinker. Automation, in this telling, is a miracle bestowed upon us by Silicon Valley, but which demands unemployment and political resentment as its price. It is both a moral good to be embraced and a governance challenge to be managed: the perfect talking point for a certain kind of forward-thinking technocrat. 

The automation narrative came [back] to the forefront of progressive politics during the Obama administration, by some accounts. And indeed, the topic reeks of Very Serious People  justifying their own failure to achieve lasting economic change while grappling for control of the narrative with radicals (i.e. the Sanders crowd) who see further compromises with the status quo as the problem. When you look into the issue, you find that almost every article, think piece or editorial  on the subject cites back to a famous 2013 Oxford paper, which found that 47 per cent of job categories defined the researchers were ‘at risk’ from automation. 

I don’t find that paper’s methodology particularly convincing, but smarter people than me have looked into it and come to two sorts of conclusions. Firstly, stating that automation will eliminate half the jobs in the economy is probably a wild over-estimate: the OECD have estimated that the true figure is closer to 9 per cent. Even so, those job losses won’t occur all at once, leaving plenty of time for workers to adjust, and are likely to be compensated for by new jobs created by automation. The automation problem is not, therefore, the total number of jobs in an economy but to whom those jobs are going to be distributed. Because if technological change is too quick, the prophets of automation say, then there’s no guarantee that particular people that lose their income will find a replacement.

Automation and inequality

When you boil it down, the automation narrative is similar to a moral panic: highly anecdote driven and largely divorced from any sense of historical perspective. It’s easy to talk about the installation of touchscreens at McDonalds, speculate about driverless trucks, and mourn the loss of analogue film to Snapchat. But we’ve been here before, and recently: people worried once upon a time that ATMs would replace banks, TVs would render cinema irrelevant, or that vacuum cleaners would lead to idle house-wives [sic]. McDonald's isn't even innovating: 'automats' were a thing as far as as 1895! Jason Furman, President Obama’s final Chief Economic Advisor, made this point quite well in a December 2016 presentation that still available online. The process of creative destruction is so inherent to material progress (see Chapter XII of my book) that, with the benefit of hindsight, we look back with bemusement at  luddites who feared steam-powered cotton spinning.

What really controls employment levels is the supply and demand for goods and services in the economy; the suppressed consumer demand caused by contemporary levels of inequality is what’s standing in the way of full employment, not technological churn. Increasing the productivity of labour and/or capital increases social output if and only if that output can be consumed. So technological progress doesn’t change the number of jobs in an economy, but it does change the skills those jobs require. Labour’s capacity to capture a share of the increased output and consume is dependent, in a wage-economy, on whether or not workers have the skills to work higher productivity jobs. If not, the share of profit capture by capital and high-knowledge workers increases while the labour share of income for already marginalised workers does the opposite, making inequality worse and dragging the economy. 

Furman was therefore correct to state that the problem with automation is not a risk of mass unemployment but of growing inequality. The Industrial Revolution made Britain’s merchant class fabulously wealthy, while impoverishing both peasants in India and smallhold farmers at home. When an industry goes extinct, there’s likely to be a mismatch between the demand for skills and those possessed by the existing labour force. Normally, the mismatch is resolved over time through retraining, the retirement of older workers and the entry into the market of new cohorts. This is the laissez-faire ‘attrition’ model of development and social equality; in the alternative, society can play an active role in controlling the pace of change through industrial policy, providing active support to retraining into new industries, or increasing redistribution in favour of those who can’t or won’t adapt to new patterns of work. This is how progressives deal with problems of inequality in all its forms. 

That concludes Part One, looking at the contours of the debate. Return next week for Part Two where we dive deeper into the economic and policy consequences.