John Buell

Don’t Blame the Robots

Corporate media today tout an economic recovery and declining levels of unemployment. They devote much less attention to the quality of jobs to which middle class Americans increasingly find themselves relegated.

Alissa Quart, editor of the Economic Hardship Reporting Project, comments: “Precariousness is not just a working-class thing. In recent interviews, dozens of academics and schoolteachers, administrators, librarians, journalists and even coders have told me they too are falling prey to an unstable new America. I’ve started to think of this just-scraping-by group as the Middle Precariat.

The word Precariat was popularized five or so years ago to describe a rapidly expanding working class with unstable, low-paid jobs. What I call the Middle Precariat, in contrast, are supposed to be properly, comfortably middle class, but it’s not quite working out this way.”

Some critics blame robots, artificial intelligence, or technology more broadly for this deterioration of middle class life. Others see these trends as market led advances that will benefit us all.in the long run. Yet those who celebrate—or lament—robots may be equally wrong. Human decisions, not technology or market forces—will play a large role in determining what technologies are developed, who will receive the benefits and absorb the losses from these new technologies.

Mainstream economists justify the difficult financial straights of this Middle Precariat as the outcome of market forces. Yet such arguments are contradicted even within the orthodox economic paradigm. Economics 101 teaches us that wages depend on the marginal productivity of workers. In the last 45 years worker productivity has more than doubled yet incomes in real, inflation-adjusted terms, have stayed the same.

The finance sector is a microcosm of these trends. Dean Baker comments: “The narrow securities and commodities trading sector has quintupled relative to the size of the economy over the last four decades. Is there any evidence this has caused capital to be allocated more efficiently? If we cut back the sector to half its current size (a financial transactions tax could do this quickly), it would eliminate around $140 billion a year in wasteful trading.” I would only add that not only has finance failed to allocate more efficiently, it has destabilized the entire economy. Its negative marginal product has been offset by massive bailouts, leaving the major investment houses even bigger than before the global financial crisis.

Technological advance creates both opportunities and problems for capitalist economies. Productivity in the 1947-1973 period grew at almost 3% a year, far in excess of the gains since. Unemployment was generally low. Why weren’t earlier generations of robots, computers etc destroying jobs by producing more cars than consumers could purchase? A probably apocryphal story reveals part of the answer. Walter Reuther, president of the UAW, and Henry Ford are touring a modern automated assembly line. Henry asks: “Walter, how are you going to get these robots to pay union dues.? Walter responds: “Henry, how are you going to get these robots to buy Ford cars?” The answer lay in a set of institutional relationships between labor and management that guaranteed labor pay that reflected ongoing productivity increases.

It is just these legal and institutional features that corporate globalization has undermined. These agreements are touted as removing tariff barriers to trade, but in fact have done much more. These modern agreements go beyond exchange of goods and services to protect the ability of capital (in both the monetary sense and plant and equipment0 to relocate at will. Corporations are protected against expropriation whereas no sanctions for unfair labor practices are provided. These treaties are instruments of upward redistribution.

Brown University economist Mark Blyth has pointed out that if agreements like NAFTA were only about tariffs they would be at most a few pages rather than the hundreds of page legal tomes they in fact are. Rather than opening markets to all comers, these deals determine just who will or will not be subject to the bracing winds of global competition, how winners will be protected, and how losers disciplined. Dean Baker has repeatedly pointed out that these trade agreements protect highly educated professionals such as physicians and lawyers while opening the market to competition from service workers in low paid, non-union sectors. In addition these agreements strengthen protection of intellectual property, to the disadvantage of citizens everywhere.

Technology need not destroy jobs, as post World War II capitalism demonstrated. But private sector retraining or psychotherapy programs for the losers, the preferred market response, are likely to add further burdens to a stressed Middle Precariat. A stronger union movement that could guarantee workers who tend and build the robots pay commensurate with their productivity is crucial. Historically, capitalism has also often responded to productivity gains by stimulating new needs and desires for more and different goods and services. Thus Henry Ford and his compatriot/competitors fostered planned obsolescence and newer prestige lines of auto and auto related products. The suburbs made possible by the auto created needs for whole new industries.

The problem with robots today is not the enhanced productivity they enable, but rather the question of who will claim ownership of these gains and how these gains will be used. Perhaps in a world of scarce resources productivity gains might be used to enhance quality of life rather than more goods and commodified services. More on this in future columns.

John Buell lives in Southwest Harbor, Maine, and writes regularly on labor and environmental issues. Email jbuell@acadia.net.

From The Progressive Populist, August 15, 2016

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