Financial Times Predicts the End of Work (and a Guaranteed Income)

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Joined: 5-02-13
Feb 5 2013 12:55
Financial Times Predicts the End of Work (and a Guaranteed Income)

At a time when the left is still hoping for a revival of traditional workplace struggles, it is interesting to note that the Financial Times are, instead, predicting the end of the workplace and work itself. The FT even expresses concern that governments may be compelled to introduce a 'guaranteed income' to keep the whole system going.

Of course, the capitalists will do all they can to prevent any such direct government involvement in people's income lest this politicise the entire economy. At best, a 'guaranteed income' would be some sort of massive extension of workfare, a sort of state capitalist neo-stalinism (and certainly nothing that genuine revolutionaries should be advocating!).

Anyway here's the article from Feb. 3 FT:

Obama must face the rise of the robots
By Edward Luce

Early in his first term Barack Obama joked that he would “keep an eye on the robots in case they try anything”. He should have known resistance is futile. During Mr Obama’s presidency, IBM’s Watson has proved computers can outfox the most agile minds, drones have become America’s weapon of choice, the driverless car is now a reality and the word “app” has been detached from its origin. No longer the realm of science fiction, the rise of robots now poses the central economic dilemma of the Obama era.

With each month, the US economy becomes steadily more automated. In January the US economy added just 4,000 manufacturing jobs, and the net increase since July is zero. Yet last month, manufacturing activity rose by its fastest rate since April, according to the Institute for Supply Management. The difference boils down to robots, which pose an increasingly nagging paradox: the more there are, the better for overall growth (since they boost productivity); yet the worse things become for the middle class. US median income has fallen in each of the last five years.

Things cannot continue as they are. Yet change is speeding up. Manufacturing employment is shrinking around the world. Among other countries, China is moving even faster towards industrial robotics, an area in which German and Japanese manufacturers dominate. Last year Foxconn, the Shenzhen-based assembler for Apple, Nokia and others, said it was buying 1m robots in the next three years to substitute for workers performing repetitive manual tasks. At the other end of the spectrum, a restaurant in Harbin, northern China, last year became the first to be entirely waited on by robots. Last month, China opened the world’s first museum of 3D printing.

The potential is huge. But in the developed world, the distribution of the benefits is unsustainable. The bulk of US jobs growth since mid-2009 has been in low-skilled areas, such as food preparation and domestic aides. In the second place is jobs growth in high-end services. Middle income jobs have cratered. According to the National Employment Law Project, low wage jobs (that pay between $7.69 and $13.83 an hour) formed 22 per cent of job losses in the recession but 58 per cent of recovery jobs since then – a mirror image of the picture for middle income jobs ($13.84 to $21.18).

Unsurprisingly, people are reverting to borrowing to stay in the game. Last week, Hero Wallet, a financial advisory firm, showed that one in four US workers were dipping into their retirement funds to meet current spending needs – in spite of the penalties that accrue. This usually involves taking out loans against their retirement accounts. The median income is almost 9 per cent lower today than when Mr Obama took office. It is unclear what he can do to prevent it from falling further, even if the US returns to a higher rate of economic growth.

The effects of technology are only just beginning to be felt in education and healthcare – the two most labour-intensive areas of the US economy that both suffer from productivity stagnation. Online education is beginning to spread. It is also meeting resistance. “The reactionaries in the faculties will eventually be grandfathered out,” says Tyler Cowen, co-founder of the Marginal Revolution University, which has pioneered free online learning in economics and other subjects. “We’ll still need Harvard as a dating service,” he jokes. “But the mid-level private universities do not know what is about to hit them.”

Even in healthcare, which reliably added jobs when every other sector was shedding them, technology is starting to look labour-saving. Last week, the Food and Drug Administration issued a patent to RP-Vita, the first “human interacting autonomous robot” for hospitals. Forget downloading diagnostic apps. At some point we will be boring Watson with our symptoms. For many of us there will be big gains. The most innovative teachers will be able to outsource lessons to the internet and focus on each child’s specific problems. The best doctors will be freed from basic diagnostics to do the same.

But the spread of the robots will leave a large and growing chunk of the US labour force in the lurch. In their excellent primer, Race Against The Machine, Erik Brynjolfsson and Andrew McAfee point out that in the contest between changing technology and education, the former is winning. Too few Americans are prepared. Some, such as Mr Cowen, fear many never will be. He believes the federal government should pay a basic guaranteed income to all Americans – a despairing view that accepts there will be permanent losers.

Mr Obama is more optimistic. In his first term, he set a target that the US should graduate every American by 2020. Even if that were possible, it may not be a panacea. Incomes for those with only a college degree have also stagnated since 2000 (and fallen for men). Yet a healthy economy cannot for long be upheld by a minority of its workforce.

At some point, policy makers will be forced to grapple with what is intuitively obvious – that sustained growth is inconsistent with declining middle class incomes. In their book, Brynjolfsson and McAfee cite a meeting between Henry Ford and Walter Reuther, the union leader. Pointing at his new robots, Mr Ford says, “How will you get union dues from them?” Mr Reuther replied: “How will you get them to buy your cars?"

Joined: 5-02-13
Feb 5 2013 13:03

On second thoughts, perhaps a more accurate title for this article would have been: 'Financial Times Fears the End of Work (and a Guaranteed Income)' !

Joined: 31-12-10
Feb 5 2013 21:09

This is something that I've been wondering about for awhile: does automation actually lead to net losses in employment? Over the past sixty years, a lot of industries have become increasingly mechanized and automated, but it seems that job losses in those industries have been offset by the growth of other industries and general economic growth. Is there a demonstrable difference in the rate of employment now than there was 60 years ago? And if there isn't, why do people think that today's and tomorrow's automation will have a different net effect on future employment?

ultraviolet's picture
Joined: 14-04-11
Feb 6 2013 00:08

interesting stuff! but i think that redsdisease is right that increasing consumption can keep pace with increasing automation to prevent a decline in employment. on the other hand, i don't think that can go on forever, even with unlimited resources (i for one think human wants do reach an eventual limit... sorry, economics textbook). and furthermore, we DON'T have unlimited resources, and the environment is already creaking under current consumption levels (and the wasteful and heavily polluting production techniques that accompany them... i'm not saying we couldn't have comparable levels of consumption if everything was greened). so i think that, with present production and consumption patterns, we'd see a global environmental catastrophe before we'd see mass-joblessness from automation, and that environmental crisis would then cause a nosedive in consumption... which i guess would then lead to mass-joblessness because everything had been made so automated.

rosy times ahead, eh? well, it will be easier to recruit for anarchist revolution, to find the silver lining...

Joined: 6-01-07
Feb 6 2013 13:53

Just to be clear that the problen here (as I see it) is not 'technology' or 'automation' perse (there is no technological imperative to either capitalism's downfall or it's permanence) but rather the inevitable tendency of capitalism, through the combined effects of market competition between different enterprises (both private and state) and the economic class struggle, to drive out labour (by increasing the technical composition of production) whilst still being dependent on labour to create surplus value.

This tendency has been the underlying factor in repeated economic crisis on an increasingly global scale requiring massive devaluation and physical destruction of capital (both constant and variable). Capitalism has through this destructive process managed to regenerate itself time and again (despite the forewarnings of some socialists and the false promises of capitalism's supporters) each time at a higher technological level, but how long it can continue to do that without massive ecological destruction and the common downfall of humanity is open to question.

The increasing disparity between the destructive tendencies of capitalism and the human potential it promises, but is unable to release, alongside it's tendency to massive economic and social crisis may trigger an ultimate stubborn refusal by people to co-operate any further in the reproduction of the system and open up a historics rupture with new possibilities - but there are no guarantees.

Dave B
Joined: 3-08-08
Feb 6 2013 19:14

We do tend to take a first world orientated view on this kind of thing as the silent dollar a day majority aren’t online much I suppose.

One phenomena of modern first world capitalism as it ‘afflicts us’ is advertising and the massive amounts of money spent on creating demand for bling, the new opium for the masses.

As much as it goes beyond encouraging us to buy one product rather than another; which it does mostly.

Many first world workers, including communists, have a richer and ‘better’ life style, minus domestic servants, than the capitalist class did hundred years ago.

Marx actually thought, as in volume one, that differences between the income levels between all workers would tend to level out to a minimum and they would all become just semi skilled over-lookers of machines in the production system.

That might be the case as industrial production is transferred increasingly to the second world eg china etc.

The thesis also depended as he pointed out in volume III on the free movement of capital and more importantly labour, which was a Adam Smith derived idea. There was free movement of labour in late 19th century Europe, the economic migrants into the UK being mainly Germans!

There isn’t a full or adequate Marxist analysis I think for the reasons why capitalist can oppose the free movement of labour.

Apparently the Chinese in the 1970-80’s put restrictions on the economic migration of labour into the industrial centres.

It appeared to be based on preventing social disruption and maintaining and ‘reproducing’ the higher ‘quality’ of labour power needed in modern industrial production.

I guess capitalism as a whole requires different qualities of ‘concrete’ labour power with the associated ‘social infra structure’ eg healthcare and education, or lack of, and it makes sense to segregate them geographically as much as possible.