Social Europe

politics, economy and employment & labour

  • Themes
    • Global cities
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter
  • Membership

How Technology Can Eradicate Unemployment And Jobs At The Same Time

Branko Milanovic 29th October 2015

Branko Milanovic

Branko Milanovic

Several days ago Steven Hill presented at the Graduate Center CUNY in New York his new book “Raw Deal: How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers”. It discusses (according to Steven’s presentation – I have not read the book yet) the decline of trade unions, the future of jobs and robotics. It struck me that there are (in his presentation as well as in most of what we read), when it comes to the future of work, two narratives that often seem contradictory. There is a narrative of job-automatization and robotics whereby most of our jobs end up being taken by the robots. Then there is a narrative of people working more and more hours as work intrudes into their leisure time: instead of taking it easy throughout the day as the first narrative implies, we would use our “free” time to rent apartments we own or drive our cars as taxis. According to the first narrative, we are in danger of having too much leisure time; according to the second, of having none.

Let’s consider the two scenarios in turn, and separately.

Suppose first that most of “routine” jobs are replaced by robots. This seems quite possible (from today’s perspective). If capital replaces labor easily, we shall have the elasticity of substitution exceed 1 (a point argued by Piketty in his “Capital in the 21st Century”), and the return to capital will not fall in proportion to the increase in the capital/labor ratio. This means that more and more of net income will belong to capitalists, and thus to the owners of the robot-producing companies. Suppose Google cars become ubiquitous, and Google drives (so to speak) Mercedes, Ford, Volkswagen… out of business. The money will be made by the owners of Google.

In that future, the distribution will move even further against labor, income inequality will increase, unemployment will be higher and there would be a generalized problem of finding a job. Since the economy will have become richer (there is just more stuff), there may be some kind of income support paid to everybody. Society would look as follows: lots of people on the minimal guaranteed income with loads of free time, the employed with incomes somewhat higher than the social minimum working mostly in services, and relatively few fabulously rich owners of the means of productions. Basically, Mark Zuckerbergs, personal trainers and the unemployed guys living in Miami.

How would the alternative scenario look? There we have robotics as well but what robotics does is to break jobs into the tiniest possible segments, parcel off each of these segments to people who are temporarily hired to do that tiny parcel alone, and then combines hundreds of such tasks into one final product. Instead of having a worker W working for a company C full time and doing a task T, such that on the task T there is a bilateral exclusive commitment between the worker and the company, we would have task T broken into T1, T2,… Tn, and branched off to workers W1, W2… Wn. Now the workers will in turn each also work on other tasks and for other employers: so the worker W1 will in the same day work on tasks T, Z and Y, each for a different company.

There would be multiplicity (non-exclusivity) on both sides: workers will no longer be committed to a single employer, nor will the employer depend for task T on a single worker. Since tasks are so segmented, it makes it possible to hire less professional and thus cheaper labor, often using their “free” time. This is why professional taxi drivers are now being replaced by guys who spend 1/3 of their workday as sales agent, 1/3 as bar tenders, and 1/3 driving their own cars as cabs. Or why hotels are in competition with people who rent their own rooms. Or why I might use every minute of my leisure time to do jobs for which I have no training and that would replace people who have trained for them and done them for years.

Under that scenario, we should see a dramatic reduction in specialization (say, vocational education would end), blurring of the difference between leisure and work, and pressure on the labor share. Everybody would be a jack of all trades and master of none. There would be only limited unemployment (since practically everybody could do some extremely simple tasks into which all jobs are divided).


Become a Social Europe Member


Support independent publishing and progressive ideas by becoming a Social Europe member for less than 5 Euro per month. Your support makes all the difference!


Click here to become a member

But perhaps it may be better to think of the two scenarios as just one scenario that would combine lots of labor substitution with heavy segmentation of tasks (and much more intense labor discipline made possible thanks to automation). In that case, jobs to which we have become accustomed would cease to exist: lots of today’s functions would be automated, and for many others, “amateurs”, not professionals, would do them.

And we should not fall for the “lump of labor” fallacy: the amount of jobs is not limited to the jobs that we know today. There will be entirely new jobs that we cannot even imagine. Steven gave one such example that exists already now: “invisible girlfriend”. People pay to receive, at some intervals, text messages which are ostensibly sent by their girlfriends. In the eyes of other people their esteem goes up: many girlfriends compete for their attention. In reality, some mustachioed guy in short sleeves is writing these messages and getting paid for them.

Or to give another example: women whose job is to be surrogate mothers to either gay couples or heterosexual couples who cannot have kids. Now, that job did not exist until recently, that is until (a) legal changes allowed for surrogate motherhood (and also for gay marriage) and (b) technological progress that made “artificial” insemination possible. When I give this example, people often ask me: but can male auto-workers from Detroit become surrogate mothers? No, but this is always the case in the transition period when the occupation is on its way out. But after a while there would be no more auto-workers at all, and yes, some women can become surrogate mothers and have that as their main income-earning job.

Technology will create new jobs, and if anything, I think we shall have more to worry about not having any free time than having too much. As commercialization of our lives progresses, we shall perceive (as we already do) every hour spent without directly or indirectly contributing to more money as wasted. Unemployment will become impossible. Being unemployed implies that you are specialized and that there is a (relative) shortage of such specific jobs. But not so in a new economy: everybody can carry Thai food from one place to another, everybody can exhibit himself or herself naked on the Internet, everybody can open doors, pack bags, or even write blogs. No one would be unemployed and no one would hold a job.

This blogpost was first published on Branko Milanovic’ Blog.

This contribution is part of our project on the future of work and the digital revolution.

Pics3
Branko Milanovic

Branko Milanovic is a Serbian-American economist. A development and inequality specialist, he is visiting presidential professor at the Graduate Center of City University of New York and an affiliated senior scholar at the Luxembourg Income Study. He was formerly lead economist in the World Bank's research department.

You are here: Home / Economy / How Technology Can Eradicate Unemployment And Jobs At The Same Time

Most Popular Posts

new world order,state,citizen A new world order: from warring states to citizensPaul Mason
Tesla,IF Metall,electric car,union US electric-car maker faces Swedish union shockGerman Bender
Israel,Hamas Israel and Hamas: the debasement of discourseRobert Misik
Israel-Palestine,refugee,refugees Israel-Palestine: a comparative perspectiveBo Rothstein
Germany,sick,economic Germany’s true economic diseasePeter Bofinger

Most Recent Posts

healthcare,hospitals,social dialogue,pandemic Healthcare depends on the health of social dialogueJorge Cabrita and Victoria Cojocariu
multi-level,Europe,networks,sovereignty Barking up the wrong European treeJan Zielonka
renewable,fossil-fuel,energy,renewables,inflation,prices The renewable answer to Europe’s fossil-fuel inflationFelix Heilmann and Maximilian Krahé
energy transition,climate,EU,NECP Energy transition: more ambition needed from EU27Chiara Martinelli
racism,Agency for Fundamental Rights, EU,FRA Tackling the scourge of racism across the EUMichael O'Flaherty

Other Social Europe Publications

Global cities cover pdf Global cities
strategic autonomy Strategic autonomy
Bildschirmfoto 2023 05 08 um 21.36.25 scaled 1 RE No. 13: Failed Market Approaches to Long-Term Care
front cover Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans

ETUI advertisement

Response measures to the energy crisis: a missed opportunity to feed the socio-ecological contract

With winter coming and Europe ready to get through it without energy shortages, power cuts and recession, new research conducted by the ETUI in seven EU member states (AT-FR-DE-GR-IT-PL-ES) highlights that, with some 80 per cent of spending being directed to broad-based measures, short-term national government support during the recent energy crisis was poorly targeted. As a result, both social- and climate-policy goals were rather sidelined, with the biggest beneficiaries of public fossil-fuel subsidies being higher income groups and the wealthiest people.


AVAILABLE HERE

Eurofound advertisement

How will Europe’s green transition impact employment?

Climate-change objectives and decarbonisation measures are vital for the future of Europe. But how will these objectives affect employment and the labour market?

In the latest episode of the Eurofound Talks podcast series, Mary McCaughey speaks with the Eurofound senior research manager John Hurley about new research which shows a marginal increase in net employment from EU decarbonisation measures—but also potentially broad shifts in the labour market which could have a profound impact in several areas.


LISTEN HERE

Foundation for European Progressive Studies Advertisement

Transforming capitalism in the age of AI

Will the EU once again accept Big Tech's power as a fait accompli while belatedly trying to mitigate risks, or can it chart a different course?

Join our conference on the EU approach to the digital transition. On Wednesday, December 6th, FEPS and the Friedrich-Ebert-Stiftung Competence Centre on the Future of Work are co-organising an evening of high-level debates on the digital future of Europe. There will be keynotes by the European Commissioner for Jobs and Social Rights, Nicolas Schmit; Evgeny Morozov, founder of The Syllabus; and Phoebe V Moore, globally recognised expert on digitalisation and the workplace. The event will be moderated by John Thornhill, innovation editor at the Financial Times.


MORE HERE

Hans Böckler Stiftung Advertisement

WSI European Collective Bargaining Report 2022 / 2023

With real wages falling by 4 per cent in 2022, workers in the European Union suffered an unprecedented loss in purchasing power. The reason for this was the rapid increase in consumer prices, behind which nominal wage growth fell significantly. Meanwhile, inflation is no longer driven by energy import prices, but by domestic factors. The increased profit margins of companies are a major reason for persistent inflation. In this difficult environment, trade unions are faced with the challenge of securing real wages—and companies have the responsibility of making their contribution to returning to the path of political stability by reducing excess profits.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on LinkedIn

Follow us on YouTube

Social Europe ISSN 2628-7641