Countering the modern Luddite impulse.

AuthorLehman, Tom
PositionReport

Fear of job loss attributed to increased technology in the workplace has recently reached a high point perhaps not seen since the Luddite uprisings and property destruction in British textile factories more than two hundred years ago. There is litde evidence of direct property destruction connected with modern Luddite philosophy, (1) but if we take our cues from contemporary media hyperbole over the rapid advance of technology and its connection to worker displacement, (2) it cannot be long before the "destroyers of machines" are at the gates, pitchforks at the ready.

Since the shift to an information economy and the dawn of the "Internet Age," pundits and scholars of all stripes have popularized the notion that advances in information technology embodied in robotics and automated production machinery will mean the "end of work" (the title of Jeremy Rifkin's polemic published in 1995) and perhaps the end of civilization as we know it. Even some economists, a group who should be naturally skeptical of Luddite fallacies, are instead lending credibility to them. The esteemed Lawrence Summers recently lamented that because of advances in technology and software-driven automation, 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.... If current trends continue, it could well be that a generation from now a quarter of middle-aged men will be out of work at any given moment" (2014).

The modern Luddite impulse appears not to be overtly antitechnology or antimachine per se, even though that tendency may be latent among some. Critics expressing fears about modern technology are generally careful not to reject the technology itself for fear of losing their audience altogether. They know at some level the tremendous improvements in the quality of life that information technologies have brought to the average person. Consider William Galston's skeptical nod to technology but with vague reservations: "No doubt the latest technological wave has brought gains to average Americans as consumers. But the losses it has inflicted on average Americans as producers is far more consequential" (2014).

Instead of being strictly antimachine, the modern Luddite impulse typically reflects an anti-inequality ideology (Ford 2014; Hanson 2015). Noted MIT economist David Autor openly confessed this point of view when quoted in the Wall Street Journal: "The real problem I see with automation is that it's contributed to growing inequality" (qtd. in Aeppel 2015). Recent technological advances in the workplace have disparate effects on the productivity of different types of labor, usually augmenting the productivity and wages of skilled and educated workers while having a neutral or depressing effect on the productivity and wages of less-skilled and less-educated workers (Brynjolfsson and McAfee 2014). Economists label this effect "skill-biased technological change" and have long identified it as a primary source of rising income inequality since the early 1980s. (3) Earlier generations of technological change may not have been quite so skill biased, but there is some evidence that new technologies often favored skilled workers even in the past (Chin, Juhn, and Thompson 2006; Katz and Margo 2014).

Technological advances embodied in automated machinery in the workplace are characteristically complementary to high-skilled labor while serving simultaneously as a substitute for low-skilled labor, leading to rising income inequality between low- and high-skilled wage earners. Computerized and automated manufacturing processes have generally increased the demand for and wages of elite technicians and software engineers. But these changes have also shown a tendency to temporarily displace low- or semiskilled workers, rendering their skills obsolete and increasing the wage gap. It is this rising inequality that has become the real locus of the modern Luddite's resistance to recent technological advances. If continuous advances in technology keep the demand for skilled labor increasing faster than the supply of skilled labor, rising income inequality is the result. The modern Luddite's fear is that technological advances and automation will push the skill requirements of a small (and diminishing) class of jobs far above the average worker's intelligence capabilities. In their view, these advances 3 would leave only a few high-skilled workers capable of earning premium wages, while others experience stagnant real incomes (Brynjolfsson and McAfee 2014). Too much wealth at the top, goes this line of reasoning, yields too much political power and influence in the hands of too few wealthy elites, leading to corruption in the rule of law, cronyism, as well as distortions and misrepresentations in the democratic process. Economists as diverse as Tyler Cowen (2011, 2013) and Thomas Piketty (2014) have expressed concerns about the role of modern technology in exacerbating wage inequality or lowering the returns to certain types of labor, potentially leading to the feared political and cultural problems highlighted earlier.

Although it is hard to deny the logic of supply and demand for skilled labor or the evidence for skill-biased technological change as a source of income inequality, I would nonetheless like to make the strong case in this essay that the advance of technology and automation is an unmitigated good and is broadly beneficial in a market economy where strong property rights, the rule of law, and small and limited government prevail. In a free economy, labor-saving technology, whatever its impact on income inequality, is a key source of prosperity, economic growth, and higher living standards. It makes possible an increased level of output with the same or fewer inputs, thus freeing up scarce resources (including labor) for alternative and more productive uses over time, permitting a greater level of consumption as a result. (4) And under conditions of limited state power, where property rights and voluntary market exchange are protected by the rule of law, the increase in income inequality that may result from skill-biased technological change is actually a beneficial guide to scarce resource allocation. With the proper institutions in place, the impact that income inequality might have on political influence and power relationships is attenuated by the state's neutered and constrained position. The modern Luddites' fears are thus just as overblown today as they were more than two centuries ago.

An Unconditional Economic Defense of Technological Advance

The Luddites' great culminating fear throughout history has been centered in the notions that technologically advanced machines, left unchecked, will come to dominate production and replace workers, that eventually and inevitably no human being (or an extreme few of us) will be employed doing work, and that this lack of employment will result in economic decline and dystopia. These fears, however, are a version of what economists call the "lump of labor" fallacy (Black 1997; Aeppel 2015): that there is a finite amount of work to go around; that the more work is accomplished by machines, the less work is to be done by humans; and that this process will eventually culminate in a massive wave of unemployment and poverty.

In fact, however, if we could have machines perform all functions, jobs, occupations, and duties throughout the economy, we should welcome and celebrate such an outcome. Individuals or households might simply employ their machines (robots) to produce for them, which would allow these individuals or households to experience much greater leisure time and enjoy pursuits beyond direct labor. Our income would be based on the productivity level of the machines we employed, the creativity and ingenuity with which we choose to apply them in various occupations, the revenue streams they can generate for us in service to and trade with others, and the ongoing capital investments and improvements we have made in our machines. In the extreme, the income now generated through labor would be replaced and supplanted by income generated through capital (robot) ownership, and Adam Smith's "division of labor" would evolve into a "division of capital" as structural shifts in factors of production make contemporary definitions of labor generally obsolete.

Some critics may be quick to object that the typical worker-capitalist could not possibly afford modern automated robots and that machine automation would become concentrated in the hands of a wealthy few. High-quality robots or other technological advances may be too costly for the average person to obtain, blocking the path to capital ownership for a plurality or majority of people even as capital ownership potentially becomes the sole means of earning income. However, the trends in the electronics and microprocessor industries in the past thirty years suggest just the opposite, as witnessed by the falling prices of desktop and laptop computers, smartphones, tablet and GPS devices, and, potentially, 3-D printing (Doherty 2015). Indeed, these devices are the "robots" of the present capitalist age. Rather than remaining expensive and out of reach for the normal person, they have become increasingly less expensive and more attainable at least since the 1990s (Berndt and Rappaport 2001; Whelan 2002). In fact, it may be the very attainability of such revolutionary technology and machine automation that creates fear among some modern Luddites (Ford 2014; Hanson 2015). This is especially obvious if we think of the potential implications for the manufacturing sector as 3-D printing capabilities evolve and a plausible assumption if 3-D printing hardware, software, and computer-aided product designs become less costly. In any case, direct ownership of capital in the form of personal robots need not be the only...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT