The industrial revolution began in 1760 and is widely regarded as the technological feat of modern history. The implementation of machines to make agriculture and factory work more efficient was a huge blow to an already exploited and underappreciated workforce (pre-unionization). As with any major technological change though; the idea is always more troubling than the reality. Billy O’Connor tells us why we shouldn’t worry.
John Oliver did a segment on automation in 2018 on his show ‘Last Week Tonight’. He spoke in-depth about the reality of automation and its many forms throughout history. He discusses the fact that automation and AI are not new concepts and have taken various forms over the past three centuries. According to the Metropolitan Political Program, the U.S manufacturing sector produces two-times as much today as in 1984 with one-third fewer workers. The declining income share accrued by labour has famously been blamed on cheap and migrant labour. Statistically speaking, however, the likely cause for a majority of job losses, specifically in the manufacturing and agricultural sectors, is due to advances in technology despite what xenophobic political sentiment may have you believe.
ATMs were once seen as an existential threat to the livelihoods of bank tellers in the 1980s. However, as was proven through the introduction of machines like ATMs, automation tends to replace tasks not jobs as it allowed bank tellers to have more free time to focus on other aspects of their job. In fact, the Journal of Economic Prospects reported that U.S bank teller employment increased from 1980-2010.
Another example of the benign evolution of AI is that of the Chinese corporation, Foxconn. The Economist reports that Foxconn employs more than 1.5 million people from across China yet it has become a symbol of the ever-increasing threat posed by cheap and automated labour. While it is true that certain parts of the labour force are being replaced by automated workers instead, it is worth noting that Foxconn has not stopped hiring human beings but instead they are honing in on desirable skills necessary for future employees such as circuitry and other tech-savvy skills that would be needed in any tech adjacent workplace in this day and age. The OECD reports that labour captured only 62% of all income at the beginning of the new millennium, down 3% from the early 90s. It would be unlike me to not turn this into an anti-capitalistic rant denouncing the immoral nature of capitalism and the way in which it exploits and discards low skilled workers so, thankfully this piece calls for such an observation.
Due to the decreasing percentage of income going to the labour sector, owners of capital are reaping all the benefits accrued from the output. The share of income earned by the top 1% of earners has increased since the 1990s despite overall labour share falling significantly. The OECD reports that automated labour is to blame for roughly 80% of the drop in the labour share among its members. Since the beginning of modern economic history, economists have regarded the shares of labour and capital as fixed, but with the introduction of AI, labour share is increasingly looking like more of a variable factor than a fixed one.
It’s easy to find a scapegoat for redundancies in any sector, whether it be cheap migrant labour or a tumultuous economy; but it is important to remember that corporations are profit maximisers and will apply the cheapest and most efficient labour for production, whether it be human beings or machines. With that being said, AI and automation is not something we should fear. It is introduced every few decades with our convenience in mind. We must instead find a way to be able to have kitschy new technology while allowing people to continue in the workforce, whether it be through retraining programs etc. Technology isn’t going anywhere, like a washed-up celebrity after several stints in rehab, it keeps coming back and reinventing itself.