Depending on your outlook, the future of work is either bleak or blissful. Ryan Avent, in his essential, must-read short book The Wealth of Humans, is more in the former camp than the latter.
His title is well chosen, but not for the reasons one might immediately think. Avent does analyse Adam Smith’s 18th-century economic treatise The Wealth of Nations in some detail, but in Avent’s view the ‘wealth’ referred to here is more a burden than a blessing. There are simply too many of us needing and seeking work – what Avent calls “an abundance of labour”.
Says Avent: “Workers are basically losing out: losing bargaining power, status and the ability to capture their fair share. These problems are probably going to get a lot worse because machine intelligence and AI seem to be improving faster than we thought they would, and that has implications right across the economy. It places pressure not just on workers on factory floors who are doing relatively routine things, but also people in professional settings, in shops and so on. At the same time we don’t have the usual cushions to ease the process such as education. Advanced economies are already really educated. We can’t upskill people to the extent that we could in the past. So we have a race between technology and human skill levels. Technology is going to get better a lot faster than we can improve skill levels.”
Avent believes the situation is somewhat different in emerging economies where there is more room to develop. “Cheap labour is no longer going to be an attraction to companies. It’s much easier to automate. In a lot of emerging economies you will have a relatively small group of really skilled professionals who are able, because of information technologies, to sell their services around the world: coding for companies or perhaps doing diagnostic work for hospitals in the rich world. Even if you are able to educate the great bulk of the people, there still aren’t going to be good jobs with good wages for most people in emerging economies.”
Avent quotes a startling statistic from Oxford University academics, who claim that 47 per cent of jobs will be automated over the next three decades. The OECD puts that figure at a more modest 11 per cent. Either way it is an enormous group of people who will, quite simply, have no work to do. “Precisely how much automation depends on how cheap workers are. If workers continue to lose out and wages don’t rise then there will be less incentive to build the robots that are taking those very jobs.” Adds Avent: “You don’t have to have 50 per cent of people out of work for there to be pretty big social disruption. Even 10 per cent is a huge amount and would be very disruptive.”
So what would people do? “It’s an enormous problem,” says Avent. “Work plays a fundamental role in society – it’s not just about allocating money and giving people purpose, something to do with their days. We will have to evolve a broader concept of what it means to work and to contribute to society and that will need to entail things that people do that aren’t necessarily salaried or wage work, things like voluntarism or self-enrichment. We’ll have to start thinking of things as just as important to society as work. This way, we can develop the social cues and measures to keep people involved in those ways without just sitting on the couch at home.
“These people also have to have a way of staying alive. That means in time we will have to have a lot more redistribution, or if people are working many fewer hours then we’ll need wage subsidies of some sort. I think we will expand our definition of what it means to contribute through work to make the whole thing much broader. To get there we need a lot of politicians to have a huge change in mindset, and that is a long process that could be pretty messy. It’s completely unknown territory.”
We have one experience in the past of going through this kind of thing, says Avent in his book, and that is the industrial revolution. “I used that as my model, and I say the good news was that we eventually arrived at a world where the gains and growth were relatively evenly spread, people lived longer and healthier lives with more consumption options, and that was all good.
“The reason to be pessimistic is it took a very long time to get there. There were fierce battles to get unions recognised, as well as battles between rival ideologies and global wars. But I am optimistic that 100 years from now these new technologies will make us all a lot better off and we will have come up with ways of sharing the gains relatively evenly. But in our lifetimes I think things will get a lot more interesting – and not necessarily in a good way.”
Ryan Avent is a Senior Editor and Economics Columnist for The Economist.
The Wealth of Humans is out now in paperback, published by Allen Lane. Also available as an e-book.
As Brexit begins to impact one of the UK’s most internationally-connected sectors, Alex Acland an...
Adam Gates, a Principal in Odgers Connect, examines the ways in which independent consultants can...