Monthly Archives: August 2013

Technological Progress and The Good Life

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By Nikhil Datta

If you haven’t already seen it, Brent council have bought a hologram to replace a human receptionist as it is cheaper (Google it and you’ll find a ton of related news articles).

Observing reactions to this new phenomenon will be interesting. There will evidently be those with similar views on the issue of technological replacement to the Luddites during the industrial revolution: that ‘human labour’ will become redundant and we will see some form of technological unemployment – and they may be right. Especially during a time of mass unemployment, such fears are warranted – unemployment in the short term for individuals is likely. However, if we examine unemployment levels over the last century, technological growth has not resulted in increasing unemployment. (see fig 1) Thus, such fears are generally referred to in Economics as the ‘Luddite fallacy’ which assumes technology will result in structural unemployment issues. To quote Keynes, such unemployment ‘is only a temporary phase of maladjustment.’

What we have seen is the emergence of more and more useless ‘non-productive’ industries – zero sum game (where one participants’ gain is equivalent to another participants’ loss), if you will. Examples of these exist everywhere in the tertiary sector. Significant examples are advertising, insurance, and (you’ve guessed it) the trading/banking sector (see fig 2) – industries where nothing is actually produced (While I’m sure numerous traders would try to argue that investment in financial markets offer growth scope for an economy, I’d like to ask the aforementioned individuals how much of their trading is for long term investment, and how much of it is short term speculation – as there needs to be a clear distinction between the two). Here in this sector people simply fight over existent produce/market shares – nonsensical when you examine it for what it is. For our union murdering friends at Coca-Cola and our eating disorder-fuelling friends at Pepsi, when competing for market share, the best solution for both companies would be not to advertise. Individuals are fully aware of the existence of both companies and would pick to drink whichever is their usual; however, due to strategic decision making (see game theory 101 – ‘The prisoners dilemma’) both will end up spending on advertising, maintaining their market share and wasting resources – ultimately nothing is produced. Parallels can be drawn in other industries: think of two traders, one betting in favour of a bond, the other betting against it. In the end one shall win and one shall lose – there is no pareto improvement, and nothing is produced.

So, there are people working jobs where they are simply running on a treadmill as a result of inefficiencies inherent to the current system; if they were to all suddenly stop one day there would be no reduction in the wealth of the economy.

Robert & Edward Skidelsky cover this in a large amount of detail in their book ‘How Much is Enough?: Money and the Good Life’ – I highly recommend it. The Skidelskys highlight advertising in particular as being significantly damaging to society, increasing our wants for products that we don’t require and regularly don’t use. We must remember that for each of those products we buy and don’t really use someone has spent unnecessary time producing it – time which they could have enjoyed having a life. The environmental impact of this is also significant, (however this would be the subject of another article.)

If we had a system set up which adequately maximised on technology and was able to reduce the amount of conspicuous/unnecessary consumption we’d probably see people welcoming such things with open arms – with technological improvements we’d ultimately expect everyone’s work load to simply reduce, giving us more of an opportunity to actually enjoy our time. While we have seen this happening historically, (manufacturing hours dropped from 66 hours per week in 1850 to 38.5 hours p/w in 1955) the rate of reduction in our work hours has recently slowed to the point of almost stopping, and in certain industries we actually see it increasing. Reasons for this are most likely to point towards growth in consumerism and growth in zero sum industries such as advertising and banking.

Knock on effects of this technological growth consist of reductions in real wages and decreased living standards for unskilled workers and those farther down the ladder. Obviously for property owners (and by property I refer to the means of production) this is fantastic as it enables them to cut costs and increase profits, undoubtedly increasing  wage and wealthy inequality levels, which we know have been increasing at a rapid pace since the mid 70’s [see fig 3]. It should be noted that technological change in the 20th century has been generally biased towards skilled workers. Most research points to an increase in demand for skilled workers, thus negatively affecting unskilled workers. This is the reverse of what happened during the Luddite riots of the 19th century when the skilled artisans were being replaced by factory lines.

This holographic case spells great news for the Tories who can cut public sector spending and employment levels – a solid solution to a demand-led recession (note the sarcasm).

While there exist some possible short term fixes to the issues outlined above (increased regulation/taxation on advertising and other zero-sum industries, legislation in favour of decreasing the working week etc), I suspect that ultimately we’d require some more solid long term solutions to tackle the root cause of some of the issues raised. I think these primarily need to start with an overhaul of our education system – an increase in time spent on the arts, on creation, on individual research and discovery is a must if we hope to move away from this ‘age of consumption..’ As educationalist Sir Ken Robinson says, what is necessary is ‘to put students in an environment where they want to learn and where they can naturally discover their true passions.’

Currently from a young age these interests are practically kicked out of us, and thanks to Michael Gove we are seeing syllabi concentrating a lot more on rote learning. An improvement to our education system combined with a reduction in exposure to advertising will hopefully aid in laying the grounds for future generations with interests that stretch beyond (to paraphrase David Ramsey) ‘buying things they don’t need with money they don’t have to impress people they don’t like.’

Furthermore, in order for a system to support technological improvements and increase the standard of living for all, we’d need to envision industries run by syndicates – self managed groups of workers functioning purely democratically so as to ensure that all benefitted. While private property still exists such improvements are undoubtedly going to have a bias towards owners in contrast to wage workers. While this may sound like it’s a long way off, a key way of working towards this could be through the unions, similar to the traditions seen in the Anarcho-Syndicalist school of thought.

I suppose the most frightening part of this type of technological advance is the relentless reduction we’re seeing in human interaction. I write this piece from my room, on my laptop, I’ll email it to a friend, and it will be put up online. Tomorrow you’ll enter your local council building and talk to a holographic receptionist, next week you’ll order your (Zionist sponsored) coffee from Starbucks by talking to a robotic Barista, give it a couple of years and we’re basically going to be communicating solely via virtual Avatars, living in a screen-filled room somewhat resembling Charlie Brooker’s 2nd episode of Black Mirror ’15 Million Merits.’

Well not in my future. If anyone needs me you can contact me via carrier pigeon, on my anarcho commune on the northern tip of New Zealand.

Fig 1. (http://commons.wikimedia.org/wiki/File:US_Unemployment_1890-2009.gif –visit site for a description of the data used to create this graph)

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Fig 2) Source: Phillipon, T: The Evolution of the US Financial Industry from 1860 to 2007: Theory and Evidence; NBER

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Fig 3) For a definition and understanding of the gini coefficient check here.

Source: Olivier Berruyer adapted from figures from the Institute of Fiscal Studies.

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References:

i John Maynard Keynes, ‘Economic Possibilities for Our Grandchildren’  (1930)
[Taken from: John Maynard Keynes, ‘Essays in Persuasion,’ (New York: W. W. Norton & Co., 1963) pp. 358-373]

ii Sibylla Brodzinsky, ‘Coca-Cola boycott launched after killings at Colombian plants,’ The Guardian, 24 July 2003.  http://www.theguardian.com/media/2003/jul/24/marketingandpr.colombia

iii Sarah Skidmore, ‘Diet Pepsi ‘skinny’ can stirs up big controversy,’ NBCNEWS, 11 February 2011
http://www.nbcnews.com/id/41540062/ns/business-us_business/t/diet-pepsi-skinny-can-stirs-big-controversy

iv ‘an action done in an economy that harms no one and helps at least one person’ – Definition taken from  http://www.Investopedia.com

v  Robert Whaples, ‘Hours of Work in U.S. History’. (EH.Net Encylopedia 2001) eh.net/encyclopedia/article/whaples.work.hours.us

vi Daron Acemoglu, ‘Technology and Inequality’ National Bureau of Economic Research 2003
http://www.nber.org/reporter/winter03/technologyandinequality.html

vii Ken Robinson, ‘The Element: How Finding Your Passion Changes Everything’ (London: Penguin, 2010)

viii Peter Walker, ‘Tough exams and learning by rote are the keys to success, says Michael Gove,’ The Guardian, 14 November 2012
http://www.theguardian.com/politics/2012/nov/14/michael-gove-backs-learning-by-rote

ix Dave Ramsey, ‘The Total Money Makeover: A Proven Plan for Financial Fitness’ (Nashville: Thomas Nelson; 3 edition: 2009)

x For anyone wanting to read more into this I advise starting with ‘Anarcho Syndicalism’ by Anarchist writer and activist Rudolph Rocker, you can download and view the pdf version of this for free here: http://www.anarchija.lt/images/pdf/rudolf/Rocker%20Rudolf%20-%20Anarchosyndicalism.pdf