Wednesday, 26 August 2015

Technological unemployment and the Luddite fallacy

Essentially, what the former post 
Futures Forum: Artificial Intelligence: 'complements labor and increase its productivity'

... is arguing is the idea of the 'Luddite fallacy':

Luddite Fallacy

The Luddite fallacy is an opinion in development economics related to the belief that labour-saving technologies (i.e., technologies that increase output-per-worker) increase unemployment by reducing demand for labour. The concept is named after the Luddites of early nineteenth century England.

This is considered fallacious because, according to neoclassical economists, labour-saving technologies will increase output per worker and thus the production of goods, causing the costs of goods to decline and demand for goods to increase. As a result, the demand for workers to produce those goods will not decrease. Thus, the "fallacy" of the Luddites lay in their assumption that employers would keep production constant by employing a smaller albeit more productive workforce instead of allowing production to grow while keeping workforce size constant.[1] Economist Alex Tabarrok summarises the neoclassical presentation of the fallacy as such:

If the Luddite fallacy were true we would all be out of work because productivity has been increasing for two centuries.[2]

Besides job destruction, Luddites claimed that automation made the rich richer and the poor poorer. Economists have found that between 1980 and 2005, American jobs vulnerable to automation were lost, forcing workers into either low paying manual work or high paying technical work that is inherently difficult to automate. One study by MIT economist David Autor and David Dorn drew on evidence from the United States Department of Labor to show that automation caused sharp losses of middle class jobs, forcing a polarization of wages and greater income inequality.

Luddite fallacy - Wikipedia, the free encyclopedia 

This then takes us to the rival notion: 

Technological unemployment

Rifkin's End of Work,[9] published in 1995, predicted that automation-induced unemployment would begin to be widespread within the next decade. However, the book's concept of how IT would evolve over the next decade was incomplete (the book mentioned the Internet once in passing and the World Wide Web not at all; its IT focus was mostly on robotics); and its timeline prediction turned out to be wrong. It also did not provide much detailed explanation of any solution to the problem. The book's subtitle called the solution a "post-market economy", but its concluding chapters did not clearly lay out how such an economy could be engineered, leaving readers to conclude that a non-market solution involving a planned economy was implied between the lines.

In terms of political economy implications, there was no clear differentiation at the time between the ideas of authors like Noble or Rifkin (on the one hand) and traditional leftist agitation (on the other hand). To the extent that readers could ask "What point is this person getting to?" and answer the question with "socialism" or "a welfare state", they dismissed these authors.

Writers such as Rifkin,[9] Brain,[11] and Ford[3] often suggest that the structure of the economy will have to shift to a basic income because its present structural foundation (trading labor for income) will no longer be an available option on a full employment basis

Technological unemployment - Wikipedia, the free encyclopedia Sept 2011

Technological unemployment is unemployment primarily caused by technological change, such as a reduction of employment in an economic sector or profession due to increases of productivity. Since the early 1800s, economists have observed that technology can have a positive influence on the global employment rate: as technological change increased productivity, prices for commodities fell, resulting in increased demand, thereby increasing demand for labor. The notion of technological unemployment leading to structural unemployment (and being macroeconomically injurious) is called the Luddite fallacy.

Marshall Brain[16] and Martin Ford[17] are IT engineers who have worried that advancing IT will displace workers faster than current economic structures can absorb them into new kinds of jobs. [18] Ford presents an argument for why the Luddite premise, although it was fallacious for two centuries, might lose its fallaciousness as machines become qualitatively different from those of the past.
Technological unemployment - Wikipedia, the free encyclopedia Sept 2012

Today’s Luddites continue to raise moral and ethical arguments against the excesses of modern technology to the extent that our inventions and our technical systems have evolved to control us rather than to serve us and to the extent that such leviathans can threaten our essential humanity.

Theory of Technology
Neo-Luddism - Wikipedia, the free encyclopedia

Luddites and radical labor unions such as the Industrial Workers of the World (IWW) have advocated sabotage as a means of self-defense and direct action against unfair working conditions.

The IWW was shaped in part by the industrial unionism philosophy of Big Bill Haywood, and in 1910 Haywood was exposed to sabotage while touring Europe:

The experience that had the most lasting impact on Haywood was witnessing a general strike on the French railroads. Tired of waiting for parliament to act on their demands, railroad workers walked off their jobs all across the country. The French government responded by drafting the strikers into the army and then ordering them back to work. Undaunted, the workers carried their strike to the job. Suddenly, they could not seem to do anything right. Perishables sat for weeks, sidetracked and forgotten. Freight bound for Paris was misdirected to Lyon or Marseille instead. This tactic — the French called it "sabotage" — won the strikers their demands and impressed Bill Haywood.[4][5]

For the IWW, sabotage came to mean any withdrawal of efficiency — including the slowdown, the strikeworking to rule or creative bungling of job assignments.[6]

Sabotage - Wikipedia, the free encyclopedia

Which leads back to the connect between technological innovation and how the economy works:

Technological Unemployment

James S. Albus, a US government engineer and a prolific pioneering inventor of intelligent systems, automation and robotics, was concerned for many years about the potential social impact of advanced intelligent systems. Dr. Albus was optimistic about the wealth producing capabilities of intelligent machines, but concerned about the elimination of jobs and the downward pressures advanced automation placed on human wages and incomes. 

In his 1976 book titled "Peoples' Capitalism: The Economics of the Robot Revolution", and on his websites he lays out a plan to broaden capital ownership to the point where, in his view, every citizen becomes a capitalist with a substantial income from personal ownership of capital assets, leading, in his view, to achieving a future economic system where income from ownership of capital assets supplements, and eventually supplants, wages and salaries as the primary source of income for the average citizen.

Technological Unemployment | The Daily Omnivore

For a more radical view:

How Not to Promote Economic Equality

Kevin Carson | July 28th, 2015

The most notable aspect of recent technological development is the radical cheapening of manufacturing technology, and the rapid shrinking of the optimal scale of production. A garage factory with $20,000 worth of open-source, tabletop computer numeric controlled (CNC) drill presses, lathes, routers, laser cutters, 3D printers and scanners, induction furnaces, circuitry printers, etc., can produce goods that would have taken a multi-million dollar factory a few decades ago.

Technological unemployment is a problem, I repeat, only because of who owns the machines. The technology itself is ideally suited to worker ownership and control. The industrial model of wage laborers working in an absentee-owned factory originally came about because of a technological shift from affordable, general purpose craft tools owned by the workers who used them, to extremely expensive large-scale production machinery that could only be owned by the very rich — who hired poor people to work them. Today we’re experiencing a reverse of that transition, with a shift back to cheap, high-tech craft machinery.

The reason the new technology hasn’t been incorporated into an economy of worker-controlled neighborhood factories is that the old corporate dinosaurs, in league with the state, use “intellectual property” and other forms of state-enforced artificial scarcity to enclose the new technologies of abundance as a source of rents for themselves, within a corporate framework.

Center for a Stateless Society » How Not to Promote Economic Equality

Uber: NOT the Networked Successor Economy You’re Looking For

Kevin Carson | August 22nd, 2015

In the early 20th century, technological historian Lewis Mumford coined the term “cultural pseudomorph” to describe the cooptation of new, liberatory technologies — technologies which opened the possibility of fundamentally new social and economic relations — into a preexisting, technologically superfluous institutional framework. His example was the central technology of the new neotechnic era — electrically powered machinery — which was ideally suited to a new economic model of relocalized craft production with machinery scaled to the flow of production, production flow scaled to orders, and small manufacturing shops sited near the point of consumption, all on a lean, demand-pull basis. 

Instead, thanks to an alliance between the capitalist state and the dominant economic players, electrical power was incorporated into mass production, a newer version of the paleotechnic Dark Satanic Mills of the 19th century. Mass production threw away all the efficiency advantages of scaling production to demand at the point of consumption, and instead built a model based on running enormously expensive, large-scale, specialized machinery full speed to produce large batches totally divorced from preexisting demand. This required all the inefficiencies of supply-push, batch-and-queue distribution — the cost of which more than offset the reduced unit costs of production in the factories themselves.

And the Uber/Airbnb “sharing economy” model — another intermediate form that involves putting new wine in old bottles — is likewise unsustainable. In the case of “ride-sharing” services falsely so-called, the sharing economy is ideally suited to genuine p2p organizational forms — horizontal and open-source, owned and self-organized by the actual drivers and/or passengers themselves. Uber and Lyft, despite the fact that new network technologies render the corporate form entirely superfluous, are — just like Nike and Apple and other corporations that don’t actually produce anything any more — attempting to use “intellectual property” (in this case a proprietary, walled-garden app), enforced by their capitalist state, to enclose the new technologies of abundance and extract rent from them.

If you wonder how that’s going to work out for them, just ask the music industry.

Center for a Stateless Society » Uber: NOT the Networked Successor Economy You’re Looking For

To finish:

Technological Unemployment

Technological unemployment is unemployment primarily caused by technological change, and a theory that technological innovations like AI, robotics and 3D manufacturing will eventually destroy many more jobs than are created. In the past technological change created as many new, unrelated jobs as it destroyed. The notion of technological unemployment leading to structural unemployment (and being macroeconomically injurious) is therefore often derided as the “Luddite fallacy.” That economic orthodoxy is now being challenged however by the rapid achievements in the disintermediation of the economy by the Internet, the growing abilities of artificial intelligence and robotics, the decline in the employed proportion of the population, and the growing precarity and low wages of the remaining jobs.

Marshall Brain and Martin Ford, author of the 2009 book The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future are IT engineers who worry that advancing IT will displace workers faster than current economic structures can absorb them back into the economy. Ford presents an argument[3] for why the Luddite premise, although fallacious for two centuries, might nevertheless become valid as the speed of development of new machine technology differs substantially from the past. He compares this to the standard warning in financial prospectuses that “past performance is not a guarantee of future results”. Brain and Ford both advocate pursuing some permutation of basic income or guaranteed minimum income, simply to keep the recirculation of value throughout the economy from stalling due to low employment. Although the earliest variants of these ideas involve direct support from the government, which could tax highly automated companies and use the revenue for both basic income and select reemployment, they have also evolved to include market-based mechanisms, comparable to minimum wage laws, requiring the private sector to employ humans but leaving the job descriptions to private innovation. In these lines of thinking, it is recognized that automation can continue to yield ever higher per capita standards of living (in contrast to classical Luddism), but the basic income or new markets decouple consumer purchasing power and confidence from the traditional labor market, which can suffer from fluctuations in the business cycle or (as Ford argues) even potential market failure. In its place would grow a new labor market insulated from these concerns.

In their books The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies and Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy, MIT professors Andrew McAfee and Erik Brynjolfsson write that the pace of automation has picked up in recent years due to a combination of increasingly clever advanced digital technologies. They write these technologies are making people more innovative, productive and financially richer, both in the short- and long-term, but at the cost of increasing wealth inequality in society. In the authors’ view, one of the main in-egalitarian consequences of digital technological developments is its potentially negative impact on well-paid employment. The authors recommend governments consider modifying public education systems to place greater emphasis on teaching creativity and entrepreneurship, increasing investments in infrastructure and basic research, and revising tax policies to reward employers for hiring people and to increase the tax rates on wealthy individuals. The authors advocate for a collaborative partnership between computers and humans as the road to future job creation. “In medicine, law, finance, retailing, manufacturing and even scientific discovery,” they write, “the key to winning the race is not to compete against machines but to compete with machines.”

Special Issue of JET on Tech Unemployment and BIG
Taxonomy of Technological Unemployment Solutions (and Defeaters) by Jon Perry
Ten Responses to the Technological Unemployment Problem by Jon Perry
A Strategic Opening for a Basic Income Guarantee in the Global Crisis Being Created by AI, Robots, Desktop Manufacturing and BioMedicine by James J. Hughes
Wikipedia on Technological Unemployment
Smart machines probably won’t kill us all—but they’ll definitely take our jobs, and sooner than you think. Mother Jones June 2013

Technological Unemployment | Technoprogressive Wiki

Ultimately, though, it is about who controls that technology:
Futures Forum: Developing an alternative economy >>> 'stimulated by a climate of changing technology and increasing individual power'
Futures Forum: Transitioning to a post-scarcity world
Futures Forum: Solidarity, the DIY-aid movement and civil society >>> transitioning to a sustainable society, a resilient economy
Futures Forum: A history of predicting technological advances >>> Tomorrow's World at 50 on BBC Radio 4
Futures Forum: The sharing economy >>> “A lot of people want to do the right thing but they are struggling because the systems and culture aren’t right. Companies and governments have got a big role to play in doing that.”
Futures Forum: Decentralized Manufacturing
Futures Forum: Planned Obsolescence: and The Men Who Made Us Spend
Futures Forum: Open Source Ecology >>> Homebrew Industrial Revolution >>> Do-it-yourself sustainable development
Futures Forum: Community energy cooperatives: "bootstrapping the alternative economy"
Futures Forum: Lewis Mumford: "The physical design of cities and their economic functions are secondary to their relationship to the natural environment."

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