[ESSAY] On Technological Unemployment

Sir,

This is to acquaint you that if your thrashing Machines

are not destroyed by you directly

we shall commence our labours

Signed

On behalf of the whole

Swing

The above is a fairly typical example of the sort of letters sent by the Swing Rioters of 1830s England. Their demands were simple- the destruction of the crude machines that reduced the number of hired farm-hands needed to bring in a harvest. Their procedure was likewise simple- they would send a letter like that above and, if their demands were not met, they would take matters into their own hands and destroy the machines themselves. The Swing Rioters destroyed their first threshing machine on 28 April 1830. By the middle of October of that year, they had destroyed more than 100. They marched in the streets by day and set fire to threshing machines, barns, mills and fences under the cover of night. Their battle-cry, heard in towns large and small throughout southwest England, was“Bread or Blood!”

The Swing Rioters were variably killed, imprisoned or exiled to Australia. Some were merely left jobless and destitute, to be swept up, as so many others were, into the Second Industrial Revolution. The “thrashing Machines” kept on bringing in the harvest. History marched on. The Swing Rioters were not the first or the last to protest the replacement of men by machines, but their experience was mostly typical. The humans lost, the machines won.

Nowadays, we do not give a thought to the intensive mechanization of agriculture- and it far exceeds that found in the days of the Swing Rioters. In 1900, 41 percent of the American populace was employed in agriculture. In 2012, only 1.5% of the American populace was likewise employed, with almost no change in the amount of land under cultivation and an increase in productivity, both total and per-person. This sea change was far beyond even the most feverish speculations of the Swing Rioters. Yet, with the exception of Depression Era populism (itself coinciding with the first halving of American agricultural employment in 1930), there were no calls for “Bread or Blood!” in twentieth century America.

John Maynard Keynes, coining the term technological unemployment, wrote in 1930: "We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come – namely, technological unemployment. This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor. But this is only a temporary phase of maladjustment.” Keynes' claim that “technological unemployment” was merely a “temporary phase of maladjustment” became the mainstream view in economics, with good reason. For much of the twentieth century, jobs replaced due to technology were replaced in short order by jobs enabled either by the new technology or due to the freeing up of labor reserves. From 1947 to 2000, productivity gains outside of agriculture and employment outside of agriculture were closely tied and followed the same general curve. Productivity gains from the economizing of labor could be said to lead to increased employment. Evidence-based economics at its finest. Technological unemployment was, in essence, self-correcting- if it existed at all.

In 2000, however, the curves became decoupled. A rise in productivity and real output was accompanied by a decline in overall employment- a trend that has continued, mostly unabated, to the present day. It is no longer clear that technological unemployment is self-correcting.

The Swing Rioters had no recourse except to violence. Trapped between the enclosure of the commons, anti-vagrancy laws and the odious Poor Laws of England, unable to imagine any economic activity other than agriculture (the primary human economic activity for much of recorded history), they burned machines and mills because there was no alternative. It was a matter of bread or blood. In contrast, the agricultural workers of the twentieth century United States had no reason to resort to violence. The United States government supported full employment as a matter of policy. The post-WWII consensus on education pushed record numbers of students through American colleges and universities. In 1956, white-collar workers finally came to outnumber blue-collar workers in America, for the first time anywhere in human history. It was easy to imagine a world where agriculture was not the primary economic activity- because it hadn't been for some time. It was a temporary phase of maladjustment.

Our situation is different and more dramatic than either. Lawrence H. Summers, former US Secretary of the Treasury, wrote in 2014: "There are many reasons to think the software revolution will be even more profound than the agricultural revolution. This time around, change will come faster and affect a much larger share of the economy. [...] There are more sectors losing jobs than creating jobs. And the general-purpose aspect of software technology means that even the industries and jobs that it creates are not forever."

The coming age of automation will not affect one sector, allowing the movement of excess labor into a new, labor-intensive endeavor. The coming age of automation strikes at all levels of and all forms of employment. Routine manual labor. Difficult cognitive tasks. Transportation. Administration. White-collar and blue-collar, alike. Algorithms may as easily be adapted for use in machine-guided cutting as in cost-benefit analysis. Machines may come to replace doctors as easily as they replace factory workers.

Whether technological unemployment will become a question of “Bread or Blood” or “a temporary phase of maladjustment” is entirely in our hands.

References

US Department of Agriculture, The 20th Century Transformation of U.S. Agriculture and Farm Policy, retrieved from Economic Information Bulletin, Economic Research Service http://www.ers.usda.gov/media/259572/eib3_1_.pdf, June 1, 2015

Keynes, John M. "Economic Possibilities For Our Grandchildren", Essays in Persuasion (1930): W.W. Norton & Co. Retrieved from Economics Department, Yale University http://www.econ.yale.edu/smith/econ116a/keynes1.pdf, June 1, 2015

US. Bureau of Labor Statistics,All Employees: Total nonfarm [PAYEMS], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/PAYEMS/, June 1, 2015.

US. Bureau of Labor Statistics,Nonfarm Business Sector: Real Output Per Hour of All Persons[OPHNFB], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/OPHNFB/, June 1, 2015.

Summers, Lawrence H. "Lawrence H. Summers on the Economic Challenge of the Future: Jobs." Editorial. Wall Street Journal 7 July 2014. Retrieved from Wall Street Journal, June 1, 2015