John Maynard Keynes: technological unemployment

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pages: 279 words: 87,910

How Much Is Enough?: Money and the Good Life by Robert Skidelsky, Edward Skidelsky

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banking crisis, Bertrand Russell: In Praise of Idleness, Bonfire of the Vanities, call centre, David Ricardo: comparative advantage, death of newspapers, financial innovation, Francis Fukuyama: the end of history, full employment, happiness index / gross national happiness, income inequality, income per capita, informal economy, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, lump of labour, market clearing, market fundamentalism, profit motive, purchasing power parity, Ralph Waldo Emerson, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, union organizing, University of East Anglia, wage slave, World Values Survey

ALSO BY ROBERT SKIDELSKY Keynes: The Return of the Master (2009) John Maynard Keynes 1883–1946: Economist, Philosopher, Statesman (2004) John Maynard Keynes: Fighting for Britain, 1937–1946 (2000) 2002 Arthur Ross Book Award Gold Medal 2001 Lionel Gelber Prize The World After Communism: A Polemic for our Times (1995) Interests and Obsessions: Historical Essays (1993) John Maynard Keynes: The Economist as Saviour, 1920–1937 (1992) John Maynard Keynes: Hopes Betrayed, 1883–1920 (1983) Oswald Mosley (1975) English Progressive Schools (1969) Politicians and the Slump: The Labour Government of 1929–1931 (1967) ALSO BY EDWARD SKIDELSKY Ernst Cassirer: The Last Philosopher of Culture (2009) Copyright © 2012 Robert Skidelsky and Edward Skidelsky Production Editor: Yvonne E.

Evidently, its persuasive power declines in conditions of abundance, when cheapness is no longer the main consideration. Notes INTRODUCTION 1. John Maynard Keynes, Essays in Persuasion, The Collected Writings of John Maynard Keynes, vol. 9 (Cambridge: Cambridge University Press, 1978), p. 293. 2. George Orwell, The Road to Wigan Pier (London: Penguin, 1989), p. 182. 3. W. Stanley Jevons, The Theory of Political Economy (London: Macmillan, 1911), p. 37. 4. Bertrand Russell, In Praise of Idleness and Other Essays (London: Routledge, 2004), p. 11. 5. Charles Baudelaire, Journaux intimes (Paris: Mercure de France, 1938), p. 61. 6. John Maynard Keynes, The General Theory of Employment, Interest, and Money, The Collected Writings of John Maynard Keynes, vol. 7 (Cambridge: Cambridge University Press, 1973), p. 374. 7. IMSciences.net, accessed 09/09/11. 8.

.: Digireads.com, 2009; first publ. 1759), p. 40; Alfred Marshall, Principles of Economics (London: Prometheus Books, 1920), p. 1; Lionel Robbins, An Essay on the Nature and Significance of Economic Science (London: Macmillan, 1932), p. 16. 10. Keynes, Essays in Persuasion, p. 332. CHAPTER 1. KEYNES’S MISTAKE 1. Quoted in Robert Skidelsky, John Maynard Keynes: The Economist as Saviour 1920–1937 (London: Macmillan, 1992), pp. 72, 235. 2. For the essay as a whole see John Maynard Keynes, Essays in Persuasion, The Collected Writings of John Maynard Keynes, vol. 9 (Cambridge: Cambridge University Press, 1978), pp. 321–32. It is reprinted from Keynes’s 1931 Essays in Persuasion. For the earlier outings, see Skidelsky, Keynes: The Economist as Saviour, p. 634, n. 53. 3. G. E. Moore, Principia Ethica (Cambridge: Cambridge University Press, 1903), pp. 188–9. 4.

 

pages: 330 words: 77,729

Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes by Mark Skousen

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Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, business climate, David Ricardo: comparative advantage, delayed gratification, experimental economics, financial independence, Financial Instability Hypothesis, full employment, Hernando de Soto, housing crisis, Hyman Minsky, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, laissez-faire capitalism, liquidity trap, means of production, microcredit, minimum wage unemployment, open economy, paradox of thrift, price stability, pushing on a string, rent control, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Shiller, rolodex, Ronald Coase, Ronald Reagan, school choice, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, unorthodox policies

Columbia professor Johr Austrian Eugen Bohm-Bawerk (1851- (1847-1938) countered l\ 1914) was the first economist to critique tation theory of labor with Marxist theory of capitalism. productivity theory. Yale Professor Irving Fi Cambridge professor Alfred Marshall 1947) created the first p (1842-1924) helped transform eco- and developed the qu£ T H E G E N E R A L T H E O R Y OF E M P L O Y M E N T I N T E R E S T A N D M O N E Y JOHN MAYNARD KEYNES MACMILLAN AND CO.. LIMITED ST. MARTIN'S STREET. LONDON 1936 John Maynard Keynes ( 1 8 8 3 - 1 9 4 6 ) , B r i t i s h e c o n o m i s t and s t a t e s m a n , published his influential General Theory in 1936: "I believe myself to be writing a book which will largely revolutionise the way the world thinks about economic problems." Keynes was a financial wizard who made Keynes shocked his Bloom Keynes, meeting Harry Dexter W h i t e MIT Professor Paul Anthony at Bretton Woods, New Hampshire, in ( 1 9 1 5 - ) and his p o p u l a r 1944, helped frame the post-war inter-Economics (1948), made Ke national e c o n o m i c s y s t e m based on the standard theory in the p fixed exchange rates and the creation of riod.

A Tract on Monetary Reform. London: Macmillan. . 1930. A Treatise on Money. 2 vols. London: Macmillan. . 1951 [1931]. Essays in Persuasion. New York: W.W. Norton. . 1963 [1930]. Essays in Biography. New York: W.W. Norton. . 1971. Activities 1906-1914: India and Cambridge. The Collected Works of John Maynard Keynes. Vol. 15. London: Macmillan. . 1973a [1936]. The General Theory of Employment, Interest and Money. London: Macmillan. . 1973b. The General Theory and After, Part I, Preparation. The Collected Works of John Maynard Keynes. Vol. 13, ed. by Donald Moggridge. London: Macmillan. Klamer, Arjo, and David Colander. 1990. The Making of an Economist. Boulder, CO: Westview. Knight, Frank H. 1959. "Review of Ricardian Economics." Southern Journal of Economics 25, 3 (January): 363-65. . 1982 [1947]. Freedom and Reform.

The Grabbing Hand: Government Pathologies and Their Cures. Cambridge, MA: Harvard University Press. Siegel, Jeremy J. 2005. The Future for Investors. New York: Crown/Business. Simon, Julian L., ed. 1995. The State of Humanity. Cambridge, UK: Blackwell. . 1996. The Ultimate Resource 2. Princeton, NJ: Princeton University Press. Skidelsky, Robert. 1992. John Maynard Keynes: The Economist as Saviour, 1920-1937. London: Macmillan. . 2003. John Maynard Keynes: Economist, Philosopher, Statesman. New York: Penguin Books. Skousen, Mark. 1990. The Structure of Production. New York: New York University Press. , ed. 1992. Dissent on Keynes: A Critical Appraisal of Keynesian Economics. New York: Praeger. . 2001. The Making of Modern Economics. Armonk, NY: M.E. Sharpe. . 2005. Vienna and Chicago, Friends or Foes?

 

pages: 235 words: 62,862

Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek by Rutger Bregman

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autonomous vehicles, banking crisis, Bartolomé de las Casas, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, happiness index / gross national happiness, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, income inequality, invention of gunpowder, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, labour market flexibility, labour mobility, low skilled workers, means of production, megacity, meta analysis, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Peter Thiel, post-industrial society, precariat, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, telemarketer, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen: Great Stagnation, universal basic income, wage slave, War on Poverty, We wanted flying cars, instead we got 140 characters, wikimedia commons, women in the workforce, working poor, World Values Survey

Antoin Murphy, “Money in an Economy Without Banks – the Case of Ireland,” The Manchester School (March 1978), pp. 44-45. 9. Donal Buckley, “How six-month bank strike rocked the nation,” Independent (December 29, 1999). 10. Umair Haque, op. cit. 11. Roger Bootle, “Why the economy needs to stress creation over distribution,” The Telegraph (October 17, 2009). 12. John Maynard Keynes, “Economic Possibilities for our Grandchildren,” in: John Maynard Keynes, Essays in Persuasion (New York, 1963), pp. 358-373. 13. Alfred Kleinknecht, Ro Naastepad, and Servaas Storm, “Overdaad schaadt: meer management, minder productiviteitsgroei,” ESB (September 8, 2006). 14. See: Tony Schwartz and Christine Poratz, “Why You Hate Work,” The New York Times (May 30, 2014). http://www.nytimes.com/2014/06/01/opinion/sunday/why-you-hate-work.html?

This also seems to be precisely where neoliberalism – and Friedman himself – went wrong. 22. Stephanie Mudge, “The Social Bases of Austerity. European Tunnel Vision & the Curious Case of the Missing Left,” SPERI Paper No.9 (February 2014). http://speri.dept.shef.ac.uk/wp-content/up-loads/2013/01/SPERI-Paper-No.9-The-Social-Bases-of-Austerity-PDF-579KB.pdf 23. John Maynard Keynes, The General Theory of Employment, Interest and Money (1936), last paragraph. 24. Quoted in: Burgin, The Great Persuasion, p. 217. 25. John Maynard Keynes, General Theory, last paragraph. Acknowledgments No book is ever written alone, but never before have I had such a wealth of support. My thanks firstly to the members of The Correspondent, who provided input and tips on articles and books, as well as pointing out various errors. Also to my coworkers who read all or parts of the manuscript – Jesse Frederik, Andreas Jonkers, Erica Moore, Travis Mushett, and Rob Wijnberg – I owe a huge debt of gratitude.

In that sense, I’m heartened by our dissatisfaction, because dissatisfaction is a world away from indifference. The widespread nostalgia, the yearning for a past that never really was, suggests that we still have ideals, even if we have buried them alive. True progress begins with something no knowledge economy can produce: wisdom about what it means to live well. We have to do what great thinkers like John Stuart Mill, Bertrand Russell, and John Maynard Keynes were already advocating 100 years ago: to “value ends above means and prefer the good to the useful.”31 We have to direct our minds to the future. To stop consuming our own discontent through polls and the relentlessly bad-news media. To consider alternatives and form new collectives. To transcend this confining zeitgeist and recognize our shared idealism. Maybe then we’ll also be able to again look beyond ourselves and out at the world.

 

pages: 339 words: 88,732

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, American Society of Civil Engineers: Report Card, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, British Empire, business intelligence, business process, call centre, clean water, combinatorial explosion, computer age, computer vision, congestion charging, corporate governance, crowdsourcing, David Ricardo: comparative advantage, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, falling living standards, Filter Bubble, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, full employment, game design, global village, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, inventory management, James Watt: steam engine, Jeff Bezos, jimmy wales, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Mark Zuckerberg, Mars Rover, means of production, Narrative Science, Nate Silver, natural language processing, Network effects, new economy, New Urbanism, Nicholas Carr, Occupy movement, oil shale / tar sands, oil shock, pattern recognition, payday loans, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Rodney Brooks, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Simon Kuznets, six sigma, Skype, software patent, sovereign wealth fund, speech recognition, statistical model, Steve Jobs, Steven Pinker, Stuxnet, supply-chain management, TaskRabbit, technological singularity, telepresence, The Bell Curve by Richard Herrnstein and Charles Murray, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen: Great Stagnation, Vernor Vinge, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K

He described unemployment as something close to a mirage: “the army of the unemployed is no more unemployed than are firemen who wait in fire-houses for the alarm to sound, or the reserve police force ready to meet the next call.”14 The creative forces of capitalism, in short, required a supply of ready labor, which came from people displaced by previous instances of technological progress. John Maynard Keynes was less confident that things would always work out so well for workers. His 1930 essay “Economic Possibilities for our Grandchildren,” while mostly optimistic, nicely articulated the position of the second camp—that automation could in fact put people out of work permanently, especially if more and more things kept getting automated. His essay looked past the immediate hard times of the Great Depression and offered a prediction: “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.”15 The extended joblessness of the Great Depression seemed to confirm Keynes’s ideas, but it eventually eased.

Because of these and other factors, we often hear from business leaders something very close to what Eric Spiegel, the CEO of Siemens USA, said in an interview: “The U.S. is a great place for manufacturing these days. We’re making things here in the U.S. that we’re shipping over to China. . . . We just need to make sure that we’ve . . . got the infrastructure in place to be able to handle the increased work.”25 There’s an interesting historical wrinkle in discussions about infrastructure investment. The legendary economist John Maynard Keynes, whose name is attached to a school of thought that advocates stimulus spending, famously suggested in 1936 that during recessions the government should put money in bottles, bury the bottles deep in old coal mines, then sell the rights to dig them up.26 Doing so, he argued only partly in jest, would “be better than nothing” because it would create demand during periods when labor and capital would otherwise go unused.

Inequality,” Huffington Post, March 11, 2012, http://www.huffingtonpost.com/daron-acemoglu/us-inequality_b_1338118.html (accessed August 13, 2013). 13. John Bates Clark, Essentials of Economic Theory as Applied to Modern Problem of Industry and Public Policy, (London: Macmillan, 1907), p. 45. 14. W. M. Leiserson, The Problem of Unemployment Today 31, Political Science Quarterly (1916), http://archive.org/details/jstor-2141701, p. 12. 15. John Maynard Keynes, Essays in Persuasion (New York: W. W. Norton & Company, 1963), p. 358. 16. Linus Pauling, The Triple Revolution (Santa Barbara, CA: Ad Hoc Committee on the Triple Revolution, 1964), http://osulibrary.oregonstate.edu/specialcollections/coll/pauling/peace/papers/1964p.7-02.html. 17. Wassily Leontief, “National Perspective: The Definition of Problems and Opportunities,” The Long-Term Impact of Technology on Employment and Unemployment (National Academy of Engeneering, 1983): 3–7. 18.

 

pages: 72 words: 21,361

Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy by Erik Brynjolfsson

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Amazon Mechanical Turk, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, business process, call centre, combinatorial explosion, corporate governance, crowdsourcing, David Ricardo: comparative advantage, easy for humans, difficult for computers, Erik Brynjolfsson, factory automation, first square of the chessboard, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, hiring and firing, income inequality, job automation, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Khan Academy, Kickstarter, knowledge worker, labour mobility, Loebner Prize, low skilled workers, minimum wage unemployment, patent troll, pattern recognition, Ray Kurzweil, rising living standards, Robert Gordon, self-driving car, shareholder value, Skype, too big to fail, Turing test, Tyler Cowen: Great Stagnation, Watson beat the top human players on Jeopardy!, winner-take-all economy

contestants are shown answers and must ask questions that would yield these answers. Chapter 3. Creative Destruction: The Economics of Accelerating Technology and Disappearing Jobs We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour. —John Maynard Keynes, 1930 The individual technologies and the broader technological acceleration discussed in Chapter 2 are creating enormous value. There is no question that they increase productivity, and thus our collective wealth. But at the same time, the computer, like all general purpose technologies, requires parallel innovation in business models, organizational processes structures, institutions, and skills.

“In the years ahead,” Rifkin wrote, “more sophisticated software technologies are going to bring civilization ever closer to a near-workerless world. … Today, all … sectors of the economy … are experiencing technological displacement, forcing millions onto the unemployment roles.” Coping with this displacement, he wrote, was “likely to be the single most pressing social issue of the coming century.” The end-of-work argument has been made by, among many others, economist John Maynard Keynes, management theorist Peter Drucker, and Nobel Prize winner Wassily Leontief, who stated in 1983 that “the role of humans as the most important factor of production is bound to diminish in the same way that the role of horses in agricultural production was first diminished and then eliminated by the introduction of tractors.” In his 2009 book The Lights in the Tunnel, software executive Martin Ford agreed, stating that “at some point in the future—it might be many years or decades from now—machines will be able to do the jobs of a large percentage of the ‘average’ people in our population, and these people will not be able to find new jobs.”

If wages can freely adjust, then the losers keep their jobs in exchange for accepting ever-lower compensation as technology continues to improve. But there’s a limit to this adjustment. Shortly after the Luddites began smashing the machinery that they thought threatened their jobs, the economist David Ricardo, who initially thought that advances in technology would benefit all, developed an abstract model that showed the possibility of technological unemployment. The basic idea was that at some point, the equilibrium wages for workers might fall below the level needed for subsistence. A rational human would see no point in taking a job at a wage that low, so the worker would go unemployed and the work would be done by a machine instead. Of course, this was only an abstract model. But in his book A Farewell to Alms, A Farewell to Alms, economist Gregory Clark gives an eerie real-world example of this phenomenon in action: There was a type of employee at the beginning of the Industrial Revolution whose job and livelihood largely vanished in the early twentieth century.

 

pages: 484 words: 104,873

Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford

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3D printing, additive manufacturing, Affordable Care Act / Obamacare, AI winter, algorithmic trading, Amazon Mechanical Turk, artificial general intelligence, autonomous vehicles, banking crisis, Baxter: Rethink Robotics, Bernie Madoff, Bill Joy: nanobots, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chris Urmson, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, computer age, debt deflation, deskilling, diversified portfolio, Erik Brynjolfsson, factory automation, financial innovation, Flash crash, Fractional reserve banking, Freestyle chess, full employment, Goldman Sachs: Vampire Squid, High speed trading, income inequality, indoor plumbing, industrial robot, informal economy, iterative process, Jaron Lanier, job automation, John Maynard Keynes: technological unemployment, John von Neumann, Khan Academy, knowledge worker, labor-force participation, labour mobility, liquidity trap, low skilled workers, low-wage service sector, Lyft, manufacturing employment, McJob, moral hazard, Narrative Science, Network effects, new economy, Nicholas Carr, Norbert Wiener, obamacare, optical character recognition, passive income, performance metric, Peter Thiel, Plutocrats, plutocrats, post scarcity, precision agriculture, price mechanism, Ray Kurzweil, rent control, rent-seeking, reshoring, RFID, Richard Feynman, Richard Feynman, Rodney Brooks, secular stagnation, self-driving car, Silicon Valley, Silicon Valley startup, single-payer health, software is eating the world, sovereign wealth fund, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, Steven Pinker, strong AI, Stuxnet, technological singularity, telepresence, telepresence robot, The Bell Curve by Richard Herrnstein and Charles Murray, The Coming Technological Singularity, Thomas L Friedman, too big to fail, Tyler Cowen: Great Stagnation, union organizing, Vernor Vinge, very high income, Watson beat the top human players on Jeopardy!, women in the workforce

Productivity Growth Versus Compensation Growth SOURCE: US Bureau of Labor Statistics.14 A Bear Market for Labor’s Share, and a Raging Bull for Corporations Early in the twentieth century, the British economist and statistician Arthur Bowley delved into decades of national income data for the United Kingdom and showed that the fraction of national income going to labor and capital respectively remained relatively constant, at least over long periods. This apparently fixed relationship ultimately became an accepted economic principle known as “Bowley’s Law.” John Maynard Keynes, perhaps the most famous economist of all time, would later say that Bowley’s Law was “one of the most surprising, yet best established facts in the whole range of economic statistics.”17 As Figure 2.3 shows, during the postwar period, the share of US national income going to labor moved in a fairly tight range, just as Bowley’s Law would have predicted. From the mid-1970s on, however, Bowley’s Law began to fall apart as labor’s share went first into a gradual decline and then into a seeming free fall just after the turn of the century.

More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy.”15 I think there are good reasons to be concerned about a similar failure of the economists’ mathematical models as the exponential advance of information technology increasingly disrupts the economy. Adding to the problem is that many of these models employ simplistic—and in some cases seemingly absurd—assumptions about the way consumers, workers, and businesses behave and interact. John Maynard Keynes may have said it best, writing nearly eighty years ago in The General Theory of Employment, Interest and Money, the book that arguably founded economics as a modern field of study: “Too large a proportion of recent ‘mathematical’ economics are merely concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.”16 Complexity, Feedback Effects, Consumer Behavior, and “Where Is That Soaring Productivity?”

Taylor and Akila Weerapana, Principles of Economics (Mason, OH: Cengage Learning, 2012), p. 344. In particular, see the bar chart and commentary in the left margin. Taylor is a very highly regarded economist, known especially for the “Taylor Rule,” a monetary policy guideline used by central banks (including the Federal Reserve) to set interest rates. 16. Robert H. Frank and Ben S. Bernanke, Principles of Economics, 3rd ed. (New York: McGraw Hill/Irwin, 2007), pp. 596–597. 17. John Maynard Keynes, as quoted in David Hackett Fischer, The Great Wave: Price Revolutions and the Rhythm of History (New York: Oxford University Press, 1996), p. 294. 18. Labor Share Graph, Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Nonfarm Business Sector: Labor Share, Index 2009=100, Seasonally Adjusted [PRS85006173]; US Department of Labor: Bureau of Labor Statistics; https://research.stlouisfed.org/fred2/series/PRS85006173; accessed April 29, 2014.

 

pages: 742 words: 137,937

The Future of the Professions: How Technology Will Transform the Work of Human Experts by Richard Susskind, Daniel Susskind

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In the professions, though, our general view is that this (often nostalgic) preference for the old ways of working will be too high a price to pay, especially if the quality of service is demonstrably lower than that provided by a machine. 7.3. Technological unemployment? In 1930, speculating about ‘the economic possibilities for our grandchildren’, John Maynard Keynes introduced the concept of ‘technological unemployment’.23 The basic idea is simple—that new technologies might put people out of work. The question to which we now turn is whether there will be technological unemployment in the professions in the very long term. The short answer is, ‘there will’. We can find no economic law that will somehow secure employment for professionals in the face of increasingly capable machines.24 However, it is uncertain how extensive the job-loss will be. In this and the following section we explain why there is uncertainty here, and we provide a new framework for thinking in a systematic way about technological unemployment in the professions.

A very big thank-you also to Darcy Hill for helping us so diligently with the bibliography, and to Patricia Cato and Suzanne Richmond for their assistance with early drafts of the book. Our friends at Oxford University Press have been notably patient. David Musson has been an ongoing source of encouragement and of wise counsel; and we are grateful also at OUP to Kim Behrens, Kate Farquhar-Thomson, Phil Henderson, and Clare Kennedy for their enthusiasm and professionalism. Thank you also to Jeff New for his superb copy-editing. The epigraph by John Maynard Keynes, The General Theory of Employment, Interest and Money (1936), © The Royal Economic Society, published by Cambridge University Press, is reproduced with permission. Alan Susskind reviewed the entire manuscript. His observations and his ongoing support were very much appreciated. At the same time, Werner Susskind merits special mention for keeping us fully supplied with relevant articles from the BMJ.

Only when, in addition to just institutions, the increase of mankind shall be under the deliberate guidance of judicious foresight, can the conquests made from the powers of nature by the intellect and energy of scientific discoverers become the common property of the species, and the means of improving and elevating the universal lot. John Stuart Mill The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds. John Maynard Keynes Contents List of Boxes and Figure Introduction PART I. CHANGE 1. The Grand Bargain 1.1 Everyday conceptions 1.2 The scope of the professions 1.3 Historical context 1.4 The bargain explained 1.5 Theories of the professions 1.6 Four central questions 1.7 Disconcerting problems 1.8 A new mindset 1.9 Some common biases 2. From the Vanguard 2.1 Health 2.2 Education 2.3 Divinity 2.4 Law 2.5 Journalism 2.6 Management consulting 2.7 Tax and audit 2.8 Architecture 3.

 

pages: 261 words: 10,785

The Lights in the Tunnel by Martin Ford

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Albert Einstein, Bill Joy: nanobots, Black-Scholes formula, call centre, cloud computing, collateralized debt obligation, credit crunch, double helix, en.wikipedia.org, factory automation, full employment, income inequality, index card, industrial robot, inventory management, invisible hand, Isaac Newton, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, knowledge worker, low skilled workers, moral hazard, pattern recognition, prediction markets, Productivity paradox, Ray Kurzweil, Search for Extraterrestrial Intelligence, Silicon Valley, Stephen Hawking, strong AI, superintelligent machines, technological singularity, Thomas L Friedman, Turing test, Vernor Vinge, War on Poverty

Transitional Economy Average Income Value Consumers and Workers Decoupled Machines Getting Better Machines Becoming Autonomous Time Copyrighted Material – Paperback/Kindle available @ Amazon Transition / 189 Keynesian Grandchildren While few contemporary economists seem particularly concerned about the seemingly inevitable transition to an automated economy, one legendary economist did have remarkable insight into the future. In 1930, as the world plunged into the Great Depression, John Maynard Keynes wrote an essay entitled “Economic Possibilities for our Grandchildren.”53 In his essay, Keynes coined the term “technological unemployment,” writing: We are being inflicted with a new disease of which some readers many not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.* Keynes recognized that, in 1930, technological unemployment would be a temporary phenomenon and that the economy would eventually absorb the excess workers. The main thrust of his essay was to attempt to look much furToday, when economists discuss the causes of the Great Depression, they tend to focus almost exclusively on the monetary policy of the Federal Reserve.

Not Much”, NewYork Times, August 30, 2005, web: http://www.nytimes.com/2005/08/30/science/30profile.html 52 See Chris Anderson’s The LongTail: Whythe Future of Business is Selling Less of More, a book based on an article in Wired Magazine, October 2004. Web: http://www.wired.com/wired/archive/12.10/tail.html 53 John Maynard Keynes, “Economic Possibilities for our Grandchildren,” (written in 1930), Essays in Persuasion, NewYork, W.W. Norton, 1963. Web: http://www.econ.yale.edu/smith/econ116a/keynes1.pdf p. 195 footnote, Einstein’s viewon technological unemployment, see: Walter Isaacson, Einstein: His Life and Universe, NewYork, Simon & Schuster, 2007, p.403. Chapter 5: The Green Light For more on the challenges of addressing poverty, see: William Easterly, The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, Cambridge, MA, MIT Press, 2002. 54 Appendix / Final Thoughts 55 A.M Turing, “Computing Machinery and Intelligence”, Mind, 1950.

Library of Congress Cataloging-in-Publication Data Ford, Martin R. The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future / Martin Ford p. cm. Includes bibliographical references ISBN-10 1-4486-5981-7 ISBN-13 978-1-4486-5981-4 1. Economics—Future Trends 2. Economics—Impact of Advanced Technology on 3. Artificial Intelligence and Robotics 4. Computer Technology and Civilization 5. Technological Unemployment I. Title This book is available for purchase or download in paper and electronic formats at: www.TheLightsintheTunnel.com Paperback and Kindle versions are also available at Amazon.com. Copyrighted Material – Paperback/Kindle available @ Amazon Copyright / License Notice This eBook is copyrighted material. However, it may be freely downloaded, redistributed and shared with others (feel free to email the PDF file directly to others or upload it), subject to the following restrictions: § § § The PDF file may not be modified or reformatted in any way, or converted to other formats.

 

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The Fourth Industrial Revolution by Klaus Schwab

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We need, however, to also recognize and manage the negative impacts it can have, particularly with regard to inequality, employment and labour markets. 3.1.2 Employment Despite the potential positive impact of technology on economic growth, it is nonetheless essential to address its possible negative impact, at least in the short term, on the labour market. Fears about the impact of technology on jobs are not new. In 1931, the economist John Maynard Keynes famously warned about widespread technological unemployment “due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour”.22 This proved to be wrong but what if this time it were true? Over the past few years, the debate has been reignited by evidence of computers substituting for a number of jobs, most notably bookkeepers, cashiers and telephone operators.

http://www.frbsf.org/economic-research/publications/economic-letter/2015/february/economic-growth-information-technology-factor-productivity/ 21 The economist Brad DeLong makes this point in: J. Bradford DeLong, “Making Do With More”, Project Syndicate, 26 February 2015. http://www.project-syndicate.org/commentary/abundance-without-living-standards-growth-by-j--bradford-delong-2015-02 22 John Maynard Keynes, “Economic Possibilities for our Grandchildren” in Essays in Persuasion, Harcourt Brace, 1931. 23 Carl Benedikt Frey and Michael Osborne, “The Future of Employment: How Susceptible Are Jobs to Computerisation?”, Oxford Martin School, Programme on the Impacts of Future Technology, University of Oxford, 17 September 2013. http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf 24 Shelley Podolny, “If an Algorithm Wrote This, How Would You Even Know?”

But the key here is the timing and extent to which the capitalization effect supersedes the destruction effect, and how quickly the substitution will take. There are roughly two opposing camps when it comes to the impact of emerging technologies on the labour market: those who believe in a happy ending – in which workers displaced by technology will find new jobs, and where technology will unleash a new era of prosperity; and those who believe it will lead to a progressive social and political Armageddon by creating technological unemployment on a massive scale. History shows that the outcome is likely to be somewhere in the middle. The question is: What should we do to foster more positive outcomes and help those caught in the transition? It has always been the case that technological innovation destroys some jobs, which it replaces in turn with new ones in a different activity and possibly in another place. Take agriculture as an example.

 

pages: 565 words: 151,129

The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism by Jeremy Rifkin

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Many, though not all, of the old guard in the commercial arena can’t imagine how economic life would proceed in a world where most goods and services are nearly free, profit is defunct, property is meaningless, and the market is superfluous. What then? Some are just beginning to ask that question. They might find some solace in the fact that several of the great architects of modern economic thinking glimpsed the problem long ago. John Maynard Keynes, Robert Heilbroner, and Wassily Leontief, to name a few, pondered the critical contradiction that drove capitalism forward. They wondered whether, in the distant future, new technologies might so boost productivity and lower prices as to create the coming state of affairs. Oskar Lange, a University of Chicago professor of the early twentieth century, captured a sense of the conundrum underlying a mature capitalism in which the search for new technological innovations to advance productivity and cheapen prices put the system at war with itself.

That, I think, would be terrible.47 Gandhi understood that mass production was designed to use more sophisticated machines to produce more goods with less labor and at a cheaper cost. He saw, however, an inherent contradiction in the organizational logic of mass production that limited its promise. Gandhi reasoned that “if all countries adopted the system of mass production, there would not be a big enough market for their products. Mass production must then come to a stop.”48 Like Karl Marx, John Maynard Keynes, Wassily Leontief, Robert Heilbroner, and other distinguished economists, he argued that the capitalists’ desire for efficiency and productivity would result in an unyielding drive to replace human labor with automation, leaving more and more people unemployed and without sufficient purchasing power to buy the products being produced. Gandhi’s alternative proposal was local production by the masses in their own homes and neighborhoods—what he called Swadeshi.

But this aside, the Johns Hopkins study of 42 countries revealed that contrary to the view of many economists, approximately 50 percent of the aggregate revenue of the nonprofit sector operating on the Commons already comes from fees for services, while government support accounts for only 36 percent of the revenues, and private philanthropy for only 14 percent.43 I expect that by midcentury, if not much sooner, a majority of the employed around the world will be in the nonprofit sector on the Collaborative Commons, busily engaged in advancing the social economy, and purchasing at least some of their goods and services in the conventional marketplace. The traditional capitalist economy will be managed by intelligent technology attended by small professional and technical workforces. John Maynard Keynes’s futurist essay, written more than 80 years ago for his grandchildren and alluded to in chapter 1, envisioned a world where machines have freed up human beings from toil in the marketplace to engage in deep cultural play on the Commons in the pursuit of more lofty and transcendent goals. It might prove to be his most accurate economic forecast. The business at hand will be to provide both retraining for the existing workforce and the appropriate skill development for students coming into the labor market to ease the transition into the new job categories and business opportunities that come with a massive build-out of an Internet of Things infrastructure around the world.

 

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The Glass Cage: Automation and Us by Nicholas Carr

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Airbnb, Andy Kessler, Atul Gawande, autonomous vehicles, business process, call centre, Captain Sullenberger Hudson, Checklist Manifesto, cloud computing, David Brooks, deliberate practice, deskilling, Elon Musk, Erik Brynjolfsson, Flash crash, Frank Gehry, Frank Levy and Richard Murnane: The New Division of Labor, Frederick Winslow Taylor, future of work, global supply chain, Google Glasses, Google Hangouts, High speed trading, indoor plumbing, industrial robot, Internet of things, Jacquard loom, Jacquard loom, James Watt: steam engine, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, knowledge worker, Lyft, Mark Zuckerberg, means of production, natural language processing, new economy, Nicholas Carr, Norbert Wiener, Oculus Rift, pattern recognition, Peter Thiel, place-making, Plutocrats, plutocrats, profit motive, Ralph Waldo Emerson, RAND corporation, randomized controlled trial, Ray Kurzweil, recommendation engine, robot derives from the Czech word robota Czech, meaning slave, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley ideology, software is eating the world, Stephen Hawking, Steve Jobs, TaskRabbit, technoutopianism, The Wealth of Nations by Adam Smith, Watson beat the top human players on Jeopardy!

The uncontrolled acceleration of progress, its author wrote, had left society chronically unprepared to deal with the consequences.19 But the Depression did not entirely extinguish the Wildean dream of a machine paradise. In some ways, it rendered the utopian vision of progress more vivid, more necessary. The more we saw machines as our foes, the more we yearned for them to be our friends. “We are being afflicted,” wrote the great British economist John Maynard Keynes in 1930, “with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment.” The ability of machines to take over jobs had outpaced the economy’s ability to create valuable new work for people to do. But the problem, Keynes assured his readers, was merely a symptom of “a temporary phase of maladjustment.” Growth and prosperity would return. Per-capita income would rise. And soon, thanks to the ingenuity and efficiency of our mechanical slaves, we wouldn’t have to worry about jobs at all.

Levasseur, “The Concentration of Industry, and Machinery in the United States,” Publications of the American Academy of Political and Social Science, no. 193 (1897): 178–197. 16.Oscar Wilde, “The Soul of Man under Socialism,” in The Collected Works of Oscar Wilde (Ware, U.K.: Wordsworth Editions, 2007), 1051. 17.Quoted in Amy Sue Bix, Inventing Ourselves out of Jobs? America’s Debate over Technological Unemployment, 1929–1981 (Baltimore: Johns Hopkins University Press, 2000), 117–118. 18.Ibid., 50. 19.Ibid., 55. 20.John Maynard Keynes, “Economic Possibilities for Our Grandchildren,” in Essays in Persuasion (New York: W. W. Norton, 1963), 358–373. 21.John F. Kennedy, “Remarks at the Wheeling Stadium,” in John F. Kennedy: Containing the Public Messages, Speeches, and Statements of the President (Washington, D.C.: U.S. Government Printing Office, 1962), 721. 22.Stanley Aronowitz and William DiFazio, The Jobless Future: Sci-Tech and the Dogma of Work (Minneapolis: University of Minnesota Press, 1994), 14.

Although Brynjolfsson and McAfee were anything but technophobes—they remained “hugely optimistic” about the ability of computers and robots to boost productivity and improve people’s lives over the long run—they made a strong case that technological unemployment was real, that it had become pervasive, and that it would likely get much worse. Human beings, they warned, were losing the race against the machine.24 Their ebook was like a match thrown onto a dry field. It sparked a vigorous and sometimes caustic debate among economists, a debate that soon drew the attention of journalists. The phrase “technological unemployment,” which had faded from use after the Great Depression, took a new grip on the public mind. At the start of 2013, the TV news program 60 Minutes ran a segment, called “March of the Machines,” that examined how businesses were using new technologies in place of workers at warehouses, hospitals, law firms, and manufacturing plants.

 

pages: 353 words: 98,267

The Price of Everything: And the Hidden Logic of Value by Eduardo Porter

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They were slicing up the mortgages and gluing them back together into structured products called “Residential Mortgage-Backed Securities”—RMBS in the jargon—that they sold to other financial institutions, who often had no idea of what they contained. By 2007 the mortgage-backed securities market was worth $6.9 trillion, from $3 trillion in 2000. This euphoria had little to do with hard-nosed analysis of the “real” value of homes. Some eighty years ago the great British economist John Maynard Keynes provided a subtle explanation of how investors can take prices badly astray. In his book The General Theory of Employment, Interest and Money, Keynes compared picking stocks to a reverse beauty contest in which investors didn’t have to choose the most beautiful face but the face that was most popular among other investors. “It is not a case of choosing those [faces] which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest,” Keynes wrote.

“The South-Sea Project” is in The Poems of Jonathan Swift, Vol. 1 (London: William Ernst Browning, 1910), pp. 198-207. The description of new high-tech mortgages and the boom of mortgage-backed securities is in Jane Dokko, Brian Doyle, Michael Kiley, Jinill Kim, Shane Sherlund, Jae Sim, and Skander Van den Heuvel, “Monetary Policy and the Housing Bubble,” Federal Reserve Board, Finance and Economics Discussion Series, December 22, 2009. Keynes’s description of the reverse beauty contest is in John Maynard Keynes, The General Theory of Employment, Interest and Money (New Delhi: Atlantic Publishers, 2006), p. 140. Charles Prince’s view of dancing is reported in Michiyo Nakamoto and David Wighton, “Citigroup Chief Stays Bullish on Buy-outs,” Financial Times, July 9, 2007. 233-236 Should We Pop Them?: Discussion of the potential social, economic, and political fallout from the financial crisis of 2008 draws from Fernando Ferreira, Joseph Gyourko, and Joseph Tracy, “Housing Busts and Household Mobility,” NBER Working Paper, September 2008; Philip Oreopoulos, Till von Wachter, and Andrew Heisz, “The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates,” NBER Working Paper, April 2006; and Markus Brückner and Hans Grüner, “Economic Growth and the Rise of Political Extremism: Theory and Evidence,” CEPR Discussion Paper, March 2010.

Lansing, “Speculative Growth, Overreaction, and the Welfare Cost of Technology-Driven Bubbles,” Federal Reserve Bank of San Francisco Working Paper, August 2009 (www.frbsf.org/publications/economics/papers/2008/wp08-08bk.pdf, accessed 08/08/2010); and James Edward Meeker, The Work of the Stock Exchange (New York: The Ronald Press Company, 1922), p. 419. The tally of countries that have escaped banking crises is by Carmen Reinhart and Kenneth Rogoff, “Banking Crises: An Equal Opportunity Menace,” NBER Working Paper, December 2008. 236-239 What Rationality?: Eugene Fama’s quote is in Douglas Clement, “Interview with Eugene Fama,” The Region, Federal Reserve Bank of Minnesota, December 2007. Keynes’s quote is in John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: Harcourt Brace and World, 1965), p. 161. Robert Shiller’s theory is described in George Akerlof and Robert Shiller, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (Princeton: Princeton University Press, 2010). 240-246 Economics for a New World: Limits to the assumption of human rationality and self-regard are discussed in Herbert Gintis, “Five Principles for the Unification of the Behavioral Sciences,” Working Paper, May 13, 2008.

 

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Only Humans Need Apply: Winners and Losers in the Age of Smart Machines by Thomas H. Davenport, Julia Kirby

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Other Depression-era job creation programs included the Civilian Conservation Corps, a program for young men focused on planting trees and building parks. It’s important to be clear that the Depression was the result of a massive failure of the financial system and not due to the automation of work that was proceeding apace in the nation’s factories. Still, the potential threat to jobs that automation also posed had certainly been noted. John Maynard Keynes, most famously, diagnosed in his 1930 essay “Economic Possibilities for Our Grandchildren” what he called a “new disease” in the world’s largest economies. He called it “technological unemployment” and explained that it was “due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.” And a clever YouTube video, “No Humans Need Apply,” points out that it wouldn’t be that difficult for automation to lead to the same levels of unemployment—about 25 percent in the United States—found in the Depression.

But when the intent is to augment human capabilities, any kind of digital intelligence can be put to the task. Working in partnership with a machine can let you be you, only better. And it can let you keep your job, while making it a better one. Whatever Happened to the Fifteen-Hour Workweek? If you were reading this book half a century ago, you might be very surprised to find us referring to augmentation as something that would help you retain your work, not be rid of it. In 1928, John Maynard Keynes penned an essay he titled “Economic Prospects for Our Grandchildren,” which argued that decades of productivity and technology improvements would leave those progeny with a new kind of problem: figuring out what to do with their vast leisure time. He wrote: “For the first time since his creation man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won.”9 Keynes expected that by now we’d all be working about fifteen hours per week.

Maddy Myers, “Google Glass: Inspired by Terminator,” Slice of MIT, May 30, 2013, https://slice.mit.edu/2013/05/30/google-glass-inspired-by-terminator/. 7. David Scott, remarks at the opening of the Computer Museum, June 10, 1982, transcript accessed October 29, 2015, http://klabs.org/history/history_docs/ech/agc_scott.pdf. 8. David A. Mindell, Digital Apollo: Human and Machine in Spaceflight (Cambridge, MA: MIT Press, 2008). 9. John Maynard Keynes, Essays in Persuasion (New York: Norton, 1963), 358–73. 10. David H. Autor, “Polanyi’s Paradox and the Shape of Employment Growth,” prepared for the Federal Reserve Bank of Kansas City’s economic policy symposium on “Reevaluating Labor Market Dynamics,” September 3, 2014, http://economics.mit.edu/files/9835. 11. Tyler Cowen, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013). 12.

 

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Inventing the Future: Postcapitalism and a World Without Work by Nick Srnicek, Alex Williams

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3D printing, additive manufacturing, air freight, algorithmic trading, anti-work, back-to-the-land, banking crisis, battle of ideas, blockchain, Bretton Woods, call centre, capital controls, carbon footprint, Cass Sunstein, centre right, collective bargaining, crowdsourcing, cryptocurrency, David Graeber, decarbonisation, deindustrialization, deskilling, Doha Development Round, Elon Musk, Erik Brynjolfsson, Ferguson, Missouri, financial independence, food miles, Francis Fukuyama: the end of history, full employment, future of work, gender pay gap, housing crisis, income inequality, industrial robot, informal economy, intermodal, Internet Archive, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, late capitalism, low skilled workers, manufacturing employment, market design, Martin Wolf, means of production, minimum wage unemployment, Mont Pelerin Society, neoliberal agenda, New Urbanism, Occupy movement, oil shale / tar sands, oil shock, patent troll, pattern recognition, post scarcity, postnationalism / post nation state, precariat, price stability, profit motive, quantitative easing, reshoring, Richard Florida, rising living standards, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Slavoj Žižek, social web, stakhanovite, Steve Jobs, surplus humans, the built environment, The Chicago School, Tyler Cowen: Great Stagnation, universal basic income, wages for housework, We are the 99%, women in the workforce, working poor, working-age population

Rather than settling for marginal improvements in battery life and computer power, the left should mobilise dreams of decarbonising the economy, space travel, robot economies – all the traditional touchstones of science fiction – in order to prepare for a day beyond capitalism. Neoliberalism, as secure as it may seem today, contains no guarantee of future survival. Like every social system we have ever known, it will not last forever. Our task now is to invent what happens next. Notes INTRODUCTION 1.John Maynard Keynes, ‘Economic Possibilities for Our Grandchildren’, in Essays in Persuasion (New York: W. W. Norton & Co., 1963); George Young, The Russian Cosmists: The Esoteric Futurism of Nikolai Fedorov and His Followers (Oxford: Oxford University Press, 2012); Mark Dery, ‘Black to the Future: Interviews with Samuel R. Delany, Greg Tate, and Tricia Rose’, in Mark Dery, ed., Flame Wars: The Discourse of Cyberculture (Durham, NC: Duke University Press, 1994); Shulamith Firestone, The Dialectic of Sex: The Case for Feminist Revolution (New York: Morrow, 1970). 2.For exemplars of this stance, see Franco Berardi, After the Future (Edinburgh: AK Press, 2011); T.

, Organization, 2013, at sagepub.com. 58.Witold Rybczynski, Waiting for the Weekend (New York: Penguin, 1991), pp. 115–17; Thompson, ‘Time, Work-Discipline, and Industrial Capitalism’, p. 76. 59.Rybczynski, Waiting for the Weekend, p. 133. 60.Hunnicutt, Work Without End, p. 1. 61.Ibid., p. 155. 62.Ibid., pp. 147–9. 63.Paul Lafargue, ‘The Right to Be Lazy’, in Bernard Marszalek, ed., The Right to Be Lazy: Essays by Paul Lafargue (Oakland: AK Press, 2011), p. 34. 64.John Maynard Keynes, ‘Economic Possibilities for Our Grandchildren’, in Essays in Persuasion (New York: W. W. Norton, 1963); Hunnicutt, Work Without End, p. 155. 65.Marx, Capital, Volume III, p. 820. 66.Hunnicutt, Work Without End, Chapter 7. 67.A handful of EU countries – most notably France – have reduced the working week to as little as thirty-five hours, but the overall trend has been to maintain a forty-hour working week.

In a third situation, labour-saving technologies can be of such general use that they diffuse across the entire economy, dampening the overall demand for labour.24 In this circumstance, even if new industries are created, they will require increasingly less labour because these technologies have a wide range of applicability.25 If any of the above conditions hold, then technological change can lead to increased unemployment. As we will see, there are good reasons to believe a number of these conditions do hold. But while technological unemployment is the most prominent reason today for swelling surplus populations, it is not the only one. Another mechanism that actively changes the size of the surplus is one we have already noted: primitive accumulation.26 This is not just an origin story of capitalism, but also an ongoing process that involves the transformation of pre-capitalist subsistence economies into capitalist economies.

 

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Machines of Loving Grace: The Quest for Common Ground Between Humans and Robots by John Markoff

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A Declaration of the Independence of Cyberspace, AI winter, airport security, Apple II, artificial general intelligence, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, Bill Duvall, bioinformatics, Brewster Kahle, Burning Man, call centre, cellular automata, Chris Urmson, Claude Shannon: information theory, Clayton Christensen, clean water, cloud computing, collective bargaining, computer age, computer vision, crowdsourcing, Danny Hillis, DARPA: Urban Challenge, data acquisition, Dean Kamen, deskilling, don't be evil, Douglas Engelbart, Douglas Hofstadter, Dynabook, Edward Snowden, Elon Musk, Erik Brynjolfsson, factory automation, From Mathematics to the Technologies of Life and Death, future of work, Galaxy Zoo, Google Glasses, Google X / Alphabet X, Grace Hopper, Gödel, Escher, Bach, Hacker Ethic, haute couture, hive mind, hypertext link, indoor plumbing, industrial robot, information retrieval, Internet Archive, Internet of things, invention of the wheel, Jacques de Vaucanson, Jaron Lanier, Jeff Bezos, job automation, John Conway, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, knowledge worker, Kodak vs Instagram, labor-force participation, loose coupling, Mark Zuckerberg, Marshall McLuhan, medical residency, Menlo Park, Mother of all demos, natural language processing, new economy, Norbert Wiener, PageRank, pattern recognition, pre–internet, RAND corporation, Ray Kurzweil, Richard Stallman, Robert Gordon, Rodney Brooks, Sand Hill Road, Second Machine Age, self-driving car, semantic web, shareholder value, side project, Silicon Valley, Silicon Valley startup, Singularitarianism, skunkworks, Skype, social software, speech recognition, stealth mode startup, Stephen Hawking, Steve Ballmer, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, strong AI, superintelligent machines, technological singularity, Ted Nelson, telemarketer, telepresence, telepresence robot, Tenerife airport disaster, The Coming Technological Singularity, the medium is the message, Thorstein Veblen, Turing test, Vannevar Bush, Vernor Vinge, Watson beat the top human players on Jeopardy!, Whole Earth Catalog, William Shockley: the traitorous eight

Despite Wiener’s early efforts to play a technological Paul Revere, after the automation debates of the 1950s and 1960s tailed off, fears of unemployment caused by technology would vanish from the public consciousness until sometime around 2011. Mainstream economists generally agreed on what they described as the “Luddite fallacy.” As early as 1930, John Maynard Keynes had articulated the general view on the broad impact of new technology: “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor. But this is only a temporary phase of maladjustment.”21 Keynes was early to point out that technology was a powerful generator of new categories of employment.

“Machines Smarter Than Men? Interview with Dr. Norbert Wiener, Noted Scientist,” U.S. News & World Report, February 24, 1964, http://21stcenturywiener.org/wp-content/uploads/2013/11/Machines-Smarter-Than-Man-Interview-with-Norbert-Wiener.pdf. 20.Defense Science Board, “The Role of Autonomy in DoD Systems,” U.S. Department of Defense, July 2012, http://www.acq.osd.mil/dsb/reports/AutonomyReport.pdf. 21.John Maynard Keynes, “Economic Possibilities for Our Grandchildren,” in Essays in Persuasion (New York: W.W. Norton & Co, 1963), 358–373. 22.Jeremy Rifkin, The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era (New York: Putnam, 1995), xvii. 23.John Markoff, “Armies of Expensive Lawyers, Replaced by Cheaper Software,” New York Times, March 4, 2011, http://www.nytimes.com/2011/03/05/science/05legal.html?

A 2014 working paper released by the National Bureau of Economic Research confirmed the trend, and yet Henry Siu, an associate professor at the University of British Columbia and one of the authors of the report, clung to the conventional Keynesian view on technological unemployment. He explained: “Over the very long run, technological progress is good for everybody, but over shorter time horizons, it’s not that everybody’s a winner.”1 It is probably worth noting that Keynes also pointed out that in the long run, we are all dead. Indeed, Keynes’s actuarial logic is impeccable, but his economic logic is now under assault. There is an emerging perspective among technologists and some economists that Keynesian assumptions about technological unemployment—that individual jobs are lost but the overall amount of work stays constant—no longer hold true. AI systems that can move, see, touch, and reason are fundamentally altering the equation for human job creation.

 

pages: 144 words: 43,356

Surviving AI: The Promise and Peril of Artificial Intelligence by Calum Chace

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3D printing, Ada Lovelace, AI winter, Airbnb, artificial general intelligence, augmented reality, barriers to entry, bitcoin, blockchain, brain emulation, Buckminster Fuller, cloud computing, computer age, computer vision, correlation does not imply causation, credit crunch, cryptocurrency, cuban missile crisis, dematerialisation, discovery of the americas, disintermediation, don't be evil, Elon Musk, en.wikipedia.org, epigenetics, Erik Brynjolfsson, everywhere but in the productivity statistics, Flash crash, friendly AI, Google Glasses, industrial robot, Internet of things, invention of agriculture, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, life extension, low skilled workers, Mahatma Gandhi, means of production, mutually assured destruction, Nicholas Carr, pattern recognition, Peter Thiel, Ray Kurzweil, Rodney Brooks, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley ideology, Skype, South Sea Bubble, speech recognition, Stanislav Petrov, Stephen Hawking, Steve Jobs, strong AI, technological singularity, theory of mind, Turing machine, Turing test, universal basic income, Vernor Vinge, wage slave, Wall-E

As we saw in chapter 1, the word “computer” originally meant a person who does calculations, but the days when offices were filled with battalions of young (usually male) human computers are long gone. The humble PC has also removed the need for legions of (usually female) secretaries. The fear that automation would lead to mass unemployment is not new. In 1930, the British economist John Maynard Keynes wrote “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come – namely technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.” (19) Decades later, in the late 1970s, a powerful BBC Horizon documentary called Now the Chips are Down alerted a new generation to the idea (and showcased some truly appalling ties.) (20) Up to now the replacement of humans by machines has been a gradual process.

Dan Goodman, lecturer, Intelligent Systems and Networks Group, Imperial College In Surviving AI, Calum Chace provides a marvellously accessible guide to the swirls of controversy that surround discussion of what is likely to be the single most important event in human history – the emergence of artificial superintelligence. Throughout, Surviving AI remains clear and jargon-free, enabling newcomers to the subject to understand why many of today’s most prominent thinkers have felt compelled to speak out publicly about it. David Wood, chair, London Futurists Artificial intelligence is the most important technology of our era. Technological unemployment could force us to adopt an entirely new economic structure, and the creation of superintelligence would be the biggest event in human history. Surviving AI is a first-class introduction to all of this. Brad Feld, co-founder Techstars The promises and perils of machine superintelligence are much debated nowadays. But between the complex and sometimes esoteric writings of AI theorists and academics like Nick Bostrom, and the popular-press prognostications of Elon Musk, Bill Gates and Stephen Hawking, there is something of a gap.

It wasn’t and couldn’t have been predicted in advance, but in hindsight what could be more logical than our most powerful technology, AI, becoming available to most of us in the form of a communication device? Thirty years ago we didn’t know how the mobile phone market would develop. Today we don’t know how the digital disruption which is transforming so many industries will evolve over the next thirty years. We don’t know whether technological unemployment will be the result of the automation of jobs by AI, or whether humans will find new jobs in the way we have done since the start of the industrial revolution. What is the equivalent of the smartphone phenomenon for digital disruption and automation? Chances are it will be something different from what most people expect today, but it will look entirely natural and predictable in hindsight.

 

The Economic Singularity: Artificial intelligence and the death of capitalism by Calum Chace

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3D printing, additive manufacturing, agricultural Revolution, AI winter, Airbnb, artificial general intelligence, augmented reality, autonomous vehicles, banking crisis, Baxter: Rethink Robotics, Berlin Wall, Bernie Sanders, bitcoin, blockchain, call centre, Chris Urmson, congestion charging, credit crunch, David Ricardo: comparative advantage, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Flynn Effect, full employment, future of work, gender pay gap, gig economy, Google Glasses, Google X / Alphabet X, income inequality, industrial robot, Internet of things, invention of the telephone, invisible hand, James Watt: steam engine, Jaron Lanier, Jeff Bezos, job automation, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, knowledge worker, lump of labour, Lyft, Mark Zuckerberg, Martin Wolf, McJob, means of production, Milgram experiment, Narrative Science, natural language processing, new economy, Occupy movement, Oculus Rift, PageRank, pattern recognition, post scarcity, post-industrial society, precariat, prediction markets, QWERTY keyboard, railway mania, RAND corporation, Ray Kurzweil, RFID, Rodney Brooks, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, software is eating the world, speech recognition, Stephen Hawking, Steve Jobs, TaskRabbit, technological singularity, Thomas Malthus, transaction costs, Tyler Cowen: Great Stagnation, Uber for X, universal basic income, Vernor Vinge, working-age population, Y Combinator, young professional

Say's Law, named after French economist Jean-Baptiste Say, holds that supply creates its own demand, and Say argued that there could not be a “general glut” of any particular goods. Of course we do see gluts in sectors of the economy, but an adherent of Say's Law would argue these are the unintended consequences of interventions in free markets, usually by governments. This law became a major tenet of classical economics, but it was rejected emphatically by British economist John Maynard Keynes, and is not widely accepted today. But many economists would accept a broader interpretation of the law which states that reducing the cost of a significant product or service will free up money which was previously allocated to it. This money can then be spent to buy more of the item, or other items, thereby raising demand generally, and creating jobs. This assumes, however, that the money freed up is not spent on expensive assets that generate no employment, or invested in companies that employ very few people.

For time-starved journalists, “good news is no news” and “if it bleeds it leads”, so the comments of Hawking and the others were widely mis-represented as pure doom-saying, and almost every article about AI carried a picture of the Terminator. AI researchers and others hastened to warn us (rightly) not to throw the baby of AI out with the bathwater of unfriendly superintelligence, and the debate is now more nuanced. Technological unemployment and the economic singularity So for me at least, the term “singularity” no longer seems so awkward. And it seems reasonable to apply it to another event which is likely to take place well before the technological singularity. I call this event “the economic singularity”. There is a lot of talk in the media at the moment about technological unemployment – the process of people becoming unemployed because machines can do any job that they could do, and do it cheaper, faster and better. There is widespread disagreement about whether this is happening already, whether it will happen in the future, and whether it is a good or a bad thing.

This disagreement is natural and inevitable: one of the main features of a singularity is that what lies beyond its event horizon is hard to see[v]. Nevertheless we must try to peer into the hazy future if we are to prepare ourselves for it. In this book I will argue that technological unemployment is not happening yet (or at least, not much), that it will happen in the next few decades, and that it can be a very good thing indeed – if we prepare for it, and manage the transition successfully. Naturally, there are challenges. As we will see, a lot of people believe that Universal Basic Income (UBI) is a silver bullet that will solve the problem of technological unemployment. UBI is a guaranteed income paid to all citizens simply because they are citizens. It may take some time for the idea of UBI to be accepted, especially in the USA, where resistance to anything that smacks of socialism is often fierce – almost visceral.

 

pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

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Affordable Care Act / Obamacare, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land reform, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population, World Values Survey

.* Having said that, the (neo-)Schumpeterian school may be criticized for focusing overly on technology and innovation and relatively neglecting other economic issues, such as labour, finance and macroeconomics. To be fair, other schools too focus on particular issues, but the Schumpeterian school exhibits a narrower focus than most. The Keynesian School One-sentence summary: What is good for individuals may not be good for the whole economy. Born in the same year as Schumpeter and sharing the honour of having a whole school named after him is John Maynard Keynes (1883–1946). In terms of intellectual influence, there is no comparison between the two. Keynes was arguably the most important economist of the twentieth century. He redefined the subject by inventing the field of macroeconomics – the branch of economics that analyses the whole economy as an entity that is different from the sum total of its parts. Before Keynes, most people agreed with Adam Smith when he said, ‘What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.’

The trouble is that this process is not instantaneous. It takes time for people to search for new jobs and for companies to find the right people. The result is that some people end up spending some time unemployed in the process. This is known as frictional unemployment. Some skills are not wanted any more: technological unemployment Then there is unemployment due to the mismatch between the types of workers demanded and the available workers. This is usually known as technological unemployment or structural unemployment. This is unemployment that we have seen in movies like Roger and Me, the first movie made by Mike Moore, in which he documents the consequence of the closure of a GM car factory in his town, Flint, Michigan, or in The Full Monty, in which six unemployed steel workers in Sheffield, UK, after a draining period of unemployment, launch themselves as a male stripper group.

According to standard economic theory, these workers could have acquired skills in ‘sunrise’ industries and moved to other areas – the electronics industry in California and investment banking in London would have been, respectively, the obvious alternatives. In reality, smooth transitions almost never happen, if you leave things to the market alone. Even with systematic government subsidies and institutional supports for retraining and relocation (e.g., a bridging loan to buy a house where the new job is before the current one is sold), as used in the Scandinavian countries, it is a struggle to eliminate technological unemployment. Governments and unions create unemployment: political unemployment Believing in the modern version of Say’s Law, many Neoclassical economists have argued that, except in the short run, the law of supply and demand ensures that everyone who wants to work will find a job at the going wage rates. If some people are unemployed, these economists argue, it is because something – the government or trade unions – is preventing them from accepting the wage rates that will clear the market.

 

pages: 372 words: 152

The End of Work by Jeremy Rifkin

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banking crisis, Bertrand Russell: In Praise of Idleness, blue-collar work, cashless society, collective bargaining, computer age, deskilling, Dissolution of the Soviet Union, employer provided health coverage, Erik Brynjolfsson, full employment, future of work, general-purpose programming language, George Gilder, global village, hiring and firing, informal economy, interchangeable parts, invention of the telegraph, Jacques de Vaucanson, job automation, John Maynard Keynes: technological unemployment, knowledge economy, knowledge worker, land reform, low skilled workers, means of production, new economy, New Urbanism, pink-collar, post-industrial society, Productivity paradox, Richard Florida, Ronald Reagan, Silicon Valley, speech recognition, strikebreaker, technoutopianism, Thorstein Veblen, Toyota Production System, trade route, trickle-down economics, women in the workforce, working poor, working-age population, Works Progress Administration

Trapped by an ever-worsening depression, many companies continued to cut costs by substituting machines for workers, hoping to boost productivity-only to add fuel to the fire. At the depth of the depression, the British economist John Maynard Keynes published The General Theory of Employment, Interest and Money, which was to fundamentally alter the way governments regulate economic policy. In a prescient passage, he warned his readers of a new and dangerous phenomenon whose impact in the years ahead was likely to be profound: "We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come-namely 'technological unemployment: This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor."27 Trickle-dnwn Technology and Market Realities 25 By the 1930s, many mainstream economists were suggesting that increased efficiency and rising productivity, brought on by laborsaving technology, was only exacerbating the economic plight of every industrial nation.

Nearly $46 out of every $100 of new capital went to the military economy.55 Even with the addition of a permanent military-industrial complex, the postwar boom was threatened by continued technological unemployment in the 1950S and 1960s resulting from breakthroughs in automation. New products-especially television and consumer electronics-helped cushion the blow and provide jobs for workers displaced by machines in other industries. The service sector also grew significantly, in part to fill the vacuum left by millions of women leaving the home to work in the economy. Government spending continued to provide jobs as well, dampening the effect of technological unemployment. In 1929 government spending was only 12 percent of the gross national product. By 1975 total government spending was more than 33.2 percent of the nation's GNP.56 The National Defense Highway Act of the 1950S, the most costly public-works project in history, spawned a new highway and suburban culture and opened up new employment opportunities in every region of the country.

The Great Society programs in the 1960s provided jobs for many of the nation's poor, again mitigating the negative impact of rising productivity and growing technological unemployment. The Cold War and the Vietnam War led to an accelerated flow of government dollars into defense industries, insuring an expanding economy Trickle-down Technology and Market Realities 33 and employment for many who might otherwise have been displaced by new technologies. Finally, by the mid-1970S more than 19 percent of all u.s. workers had jobs in the public sector, making the government the largest employer in the United States. 57 NEW REALITIES The new economic realities of the coming century make it far less likely that either the marketplace or public sector will once again be able to rescue the economy from increasing technological unemployment and weakened consumer demand. Information and telecommunication technologies threaten a loss of tens of millions of jobs in the years ahead and the steady decline of work in many industries and employment categories.

 

pages: 317 words: 84,400

Automate This: How Algorithms Came to Rule Our World by Christopher Steiner

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23andMe, Ada Lovelace, airport security, Al Roth, algorithmic trading, backtesting, big-box store, Black-Scholes formula, call centre, cloud computing, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, delta neutral, Donald Trump, Douglas Hofstadter, dumpster diving, Flash crash, Gödel, Escher, Bach, High speed trading, Howard Rheingold, index fund, Isaac Newton, John Maynard Keynes: technological unemployment, knowledge economy, late fees, Mark Zuckerberg, market bubble, medical residency, Narrative Science, PageRank, pattern recognition, Paul Graham, prediction markets, quantitative hedge fund, Renaissance Technologies, ride hailing / ride sharing, risk tolerance, Sergey Aleynikov, side project, Silicon Valley, Skype, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, transaction costs, upwardly mobile, Watson beat the top human players on Jeopardy!, Y Combinator

In a landmark paper, two economists at MIT, Eric Brynjolfsson and Andrew P. McAfee, wrote, “Many workers, in short, are losing the race against the machine.”3 The median worker, the average white-collar accountant, the MIT pair warn, should prepare to be replaced. Academics have made such predictions before. When machines began taking over manufacturing tasks in the 1920s and 1930s, John Maynard Keynes sounded the alarm for a “new disease” he termed “technological unemployment,” which happens when jobs can’t be replaced as fast as they’re eliminated by automation.4 Keynes’s warning was blown off as hyperbolic when it didn’t prove out. But perhaps his theory was simply ninety years early. Since the end of the recession in June 2009, according to Brynjolfsson and McAfee, corporations have spent 26 percent more on technology and software but haven’t raised their payrolls at all.

 

pages: 332 words: 89,668

Two Nations, Indivisible: A History of Inequality in America: A History of Inequality in America by Jamie Bronstein

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Affordable Care Act / Obamacare, back-to-the-land, barriers to entry, Bernie Sanders, big-box store, blue-collar work, Branko Milanovic, British Empire, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, collateralized debt obligation, collective bargaining, Community Supported Agriculture, corporate personhood, crony capitalism, deindustrialization, desegregation, Donald Trump, ending welfare as we know it, Frederick Winslow Taylor, full employment, Gini coefficient, income inequality, interchangeable parts, invisible hand, job automation, John Maynard Keynes: technological unemployment, labor-force participation, land reform, land tenure, low skilled workers, low-wage service sector, minimum wage unemployment, moral hazard, mortgage debt, New Urbanism, non-tariff barriers, obamacare, occupational segregation, Occupy movement, oil shock, Plutocrats, plutocrats, price discrimination, race to the bottom, rent control, road to serfdom, Ronald Reagan, Scientific racism, Simon Kuznets, single-payer health, strikebreaker, too big to fail, trade route, transcontinental railway, Triangle Shirtwaist Factory, trickle-down economics, universal basic income, Upton Sinclair, upwardly mobile, urban renewal, wage slave, War on Poverty, women in the workforce, working poor, Works Progress Administration

Hoover and his cabinet opposed intervention, fearing that government “relief would itself become an instrument of patronage and the means of creating a totalitarian state,” as well as undermining American individualism and creating dependency.6 He at first attempted to stoke the economy by issuing optimistic statements that the economy would right itself. He requested, and was granted by Congress, corporate and personal tax cuts. Hoover also requested that unions hold the line on wage increase requests, that employers not cut their payrolls, and that state governors consider undertaking infrastructure projects.7 But Hoover was neither willing nor able to compel businesses to hire workers, nor states to spend money, and even the economist John Maynard Keynes had not, by Hoover’s term in office, fully developed his theory that government spending could “prime the pump” for economic recovery.8 Although businesses could not be compelled, workers could. Beginning in 1931, Hoover’s Secretary of Labor, William Doak, responded to unemployment by seeking out migrants without a legal immigration status through a series of government-sponsored raids on low-wage industries.

On the other hand, she advocated for black state directors of black NYA activities (although she tolerated the payment of disproportionately low salaries).39 Like McLeod Bethune, the New Deal adjusted to the South’s ongoing commitment to white supremacy. BEYOND THE NEW DEAL The New Deal was an experiment in the use of government tools to solve economic problems, but Roosevelt encountered pressure from more radical suggestions for redistribution of income. Some who called for change pointed to technological unemployment; in the modern economy, some lost jobs were just not coming back, as the tractor could do a job faster than the hoe. Others argued that economic growth was hindered by lack of economic distribution.40 For example, the philosopher John Dewey headed the People’s Lobby, one of many groups to argue that the Great Depression had been caused by underconsumption as workers could not afford to purchase consumer goods.

 

pages: 1,205 words: 308,891

Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre N. McCloskey

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Admiral Zheng, agricultural Revolution, Albert Einstein, BRICs, British Empire, butterfly effect, Carmen Reinhart, clockwork universe, computer age, Corn Laws, dark matter, David Ricardo: comparative advantage, Donald Trump, Edward Lorenz: Chaos theory, European colonialism, experimental economics, financial innovation, Fractional reserve banking, full employment, George Akerlof, germ theory of disease, Gini coefficient, greed is good, Howard Zinn, income per capita, interchangeable parts, invention of agriculture, invention of air conditioning, invention of writing, invisible hand, Isaac Newton, James Watt: steam engine, John Maynard Keynes: technological unemployment, John Snow's cholera map, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, means of production, Naomi Klein, New Economic Geography, New Urbanism, purchasing power parity, rent-seeking, road to serfdom, Robert Gordon, Ronald Coase, Ronald Reagan, Scientific racism, Scramble for Africa, Shenzhen was a fishing village, Simon Kuznets, Slavoj Žižek, spinning jenny, Steven Pinker, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, tulip mania, union organizing, Upton Sinclair, urban renewal, V2 rocket, very high income, working poor, World Values Survey, Yogi Berra

A world without a United States might have permanently turned after 1945 against the Industrial Revolution, just as a world without Britain and Holland would not have developed bourgeois dignity and liberty in the first place.57 A deeper reply is that the turn to the left, and many of the turns to the right, did in fact stop the Industrial Revolution, at any rate in the places where anti-innovation was well and truly tried. To be sure, in 1945 it looked like market societies were exhausted, and that giving socialism and the welfare state a serious trial even in the United States was in the cards. The best economists, such as Joseph Schumpeter, Alvin Hansen, John Maynard Keynes, Oskar Lange, Paul Samuelson, and Abba Lerner, thought at the time — with greater or lesser pleasure at the thought — that the world was moving from capitalism to socialism, whether or not the embattled democracies survived. Many people were impressed by the Soviet successes of the 1930s, whatever their human costs, and were very impressed by Stalin’s victory over Hitler. They could not see that in the longer run, when opportunities for imitation had been used up, central-planning socialism could not achieve real innovation.

All such denying of trade as the crucial engine of growth, though, is not to say that the expansion foreign trade was literally a nullity. Some goods — the banana for the Englishman’s breakfast table was the popular instance late in the nineteenth century, raw cotton the most important instance throughout — simply cannot be had in England’s clime, short of hot houses. The regional economist Gerald Silverberg has made the case to me for cotton as special because the technological unemployment caused by its expansion was felt not by political connected guildsmen at home but by the bleached bones of Indians starving when their hand industry was replaced by Manchester.57 The truth in Silverberg’s argument is that trades like porcelain and cotton textiles in Britain could expand in country locations out of reach of the nay-sayers in established guild towns like Norwich or London.