The future of work has become a major theme of political disputes. Some predict a loss of jobs due to globalization or automation. Others argue that since we live longer, we should also work longer. A contradiction? Only apparently.
In his inaugural speech Donald Trump promised that he would stop the American carnage, an important aspect of which is the degradation of the economy due to globalization. Loudly and with devastating effect, the new president of the United States repeated what had been said in the debate about globalization for a long time – companies move their factories to countries offering cheaper labor and more favorable business environment (read: lower environmental standards, less protection of social and labor rights). As a result, American regions which half a century ago were the richest in the country are now called the Rust Belt, while Detroit—a global arsenal during the Second World War and the pearl in the crown of the industrial era—is a bankrupt city.
It was no different with industrial centers of Great Britain, France, Germany. Youngstown, Ohio, about which Bruce Springsteen sang so poignantly, lost in the 1970s 50,000 jobs in the steel industry in just six years, the annual income of the population decreased by $1.3 billion and the unemployment reached 25% in 1983. And would have probably remained at a similar level, were it not for the depopulation of the city: from 170,000 inhabitants in the period of prosperity it shrunk to 67,000. A carnage indeed. But can it really be stopped? Is it true that the main reason for the job losses has been their transfer to Mexico, China, Poland, Romania?
The Growing Effectiveness of Capital Accumulation
To find the answer, it is worth looking, for example, at the US economic statistics. They will show that in the last decade American factories increased production by over 30%, but at the same time they employ 30% less workers than in the first years of the 21st century. In the developed countries, employment in manufacturing fell from 63 million in the late 20th century to 40 million. Demand for labor, despite the increase in production volume, went down in Japan and South Korea, and starts to decrease in China. The main culprit is not the transfer of factories, but a phenomenon inherent in capitalism, namely a growing effectiveness of capital accumulation.
Industry, whether operating in the conditions of global open markets or national protectionism, seeks the so-called technological boundary – the best available technologies for making a given product. The most developed countries receive a bonus due to the fact that they control this boundary and can produce what such nations as Poland or Hungary are unable to make.
The main culprit is not the transfer of factories, but a phenomenon inherent in capitalism, namely a growing effectiveness of capital accumulation
Wanting to increase the level of accumulation, and thus profitability of capital, the countries which are catching up have to approach the technological boundary. Not only in order to manufacture the most modern products, but to make products which would sell at contemporary markets at all.
For this reason, production of furniture is not defined as high-tech industry, yet furniture or windows factories must use high-tech instrumentation guaranteeing adequate quality and efficiency.
A Later Industrialization Brings an Early Saturation
The conclusions from this trivial observations are not trivial. It turns out that those who enter the path of industrialization later face a more difficult task, regardless of how much they exploit labor. Because regardless of the degree of exploitation, you have to invest in technological infrastructure. If in the times of early industrialization capital investments in industry at the level of 5-7% GDP were sufficient, today they must reach 20% or more. This much is needed to enter the game at all. And it comes with the painful awareness that you will be rewarded by premature deindustrialization.
This term is promoted by Dani Rodric – it means that you cannot indefinitely increase the share of industrial production in the structure of the economy. This share tends towards the maximum “peak industrialization,” when extensive expansion is no longer profitable and you should increase the intensity of production. The problem is that the later you start to industrialize, the earlier you reach saturation. In the period of the greatest flourishing of its industry in the 1970s, Germany employed in industry 35% of professionally active citizens. South Korea reached “peak industrialization” at the level of almost 30% employed in industry. China achieved saturation in the late 1990s at the level of about 18% and India at the level of just 13%.Developed countries reached saturation with industry a long time ago and no amount of protectionism can make the American Rust Belt shine again with the
Developed countries reached saturation with industry a long time ago and no amount of protectionism can make the American Rust Belt shine again with the chromonickel of rebuild production. This is difficult to imagine even if we assume the possibility of transforming the American economic model into state capitalism.
Those who enter the path of industrialization later face a more difficult task, regardless of how much they exploit labor.
Yet industry is only a part of the puzzle which became famous due to the fact that it regards an important part of the electorate in the developed countries: white men and their families, who are furious that as a result of the post-industrial transformation they became the largest and most neglected (in their view) minority.
A more serious problem today is another stage of modernization, that this automation of intellectual work and the resulting downfall of the middle class. Thanks to digital information systems, one American lawyer is capable of performing the work of several hundred people who were needed 30-40 years ago to collect the trial documentation. Automated systems of information processing constitute, as the American economist W. Brian Arthur calls it, the “second economy” – an economic sphere of accumulation based exclusively on the work of automata. A good illustration of the “second economy” are automata responsible for over a half of stock market transactions – they make the decisions, among other things, on the basis of information produced by automated economic services. According to Arthur, the worth of the “second economy” may even reach 25% of the global GDP.
Machines Are Effective and Guarantee Operating Possibilities
The next stage is the development of artificial intelligence systems, designed to replace not only intelligent officials but also decision-makers themselves. For if a machine is capable of winning a game of Jeopardy!, Go, or poker against the best players in the world, then why should it be less competent in, for example, medical diagnostics? The famous 2013 study by Carl Frey and Michael Osborne conducted in the United States showed that 47% of employees have a job with a high risk of automation. Only 33% may feel relatively safe. A similar study by Dominik Batorski and Marek Błażewicz from the University of Warsaw (2015) showed that the situation in Poland is even more dramatic: 57% of employees are in the group with the highest risk of automation, while only 17% can feel safe.
Developed countries reached saturation with industry a long time ago and no amount of protectionism can make the American Rust Belt shine again with the chromonickel of rebuild production.
We start to comprehend the scale of the problem – it turns out that even before we found work for the victims of “post-industrial carnage” in post-industrial sectors of the economy, those sectors succumbed to the same logic which recently devastated industry. The pressure at increased effectiveness of accumulation results in the fact that machines now come not only to factories but also to offices. The aim is not only cost saving, but also the technological boundary I spoke about earlier. Machines not only are more effective but they also guarantee operating possibilities unavailable to people. So what about the furious working-class men and their families, now joined by furious middle-class men and women? Is it really so, as many economists argue, that they should approach the matter without emotion and simply retrain?
Henry Ford’s Old Dilemma
The matter is more complex and in fact does not regard automation, but the essence of capitalism. It was already Karl Marx who noticed that the logic of technological progress did not result from the Promethean will of engineers to create better technological solutions, it was driven by the logic of accumulation. Machines and automats are the embodiment of capital, whereas the foundation of accumulation is, as Marx claimed, labor, or to be more precise, exploitation of labor. So is it not true that the capitalist system is reaching the boundary – if all labor is automated, the possibility of exploitation, and hence accumulation, will end? We see here the old dilemma of Henry Ford – who will buy the products and services offered by capitalist workplaces? Or to put it more generally, how to ensure demand?
In answer to this question, Henry Ford raised the salaries of his workers and encouraged other capitalists to do the same. A similar strategy has been adopted in China, where salaries grow faster than the GDP since 2008. As a result, the Chinese economy is increasingly less dependent on exports and to a growing extent driven by domestic demand. However, in 26 developed countries the median income has declined by 24.6% in 2008-2013. The power of real income cannot be replaced by demand created through debt, although it is in this way that the system is trying to save itself.
Henry Ford raised the salaries of his workers and encouraged other capitalists to do the same. A similar strategy has been adopted in China, where salaries grow faster than the GDP since 2008.
Interestingly, in the United States the fastest-growing category of debt is loans for education. In the early 2017 it reached $1.3 billion – this amount is spread among 44 million people, and the average debt grew in one year by 6% to $37,712. This is the cost of trying to escape the machines and automation. In fact, the debtors gained the least and the biggest beneficiary is the capital, handling the crisis it has created itself.
Paid Work Could Not Exist without Work Provided Free of Charge
There is no point in moralizing, for the capitalist system is amoral and non-teleological, driven by the logic of accumulation to which, as we often forget, not only the market coordinated economy, but the whole social sphere is subordinated. The sector of paid work could not exist without work provided free of charge, especially by women at homes. In France the volume of unpaid work is two times bigger than the volume of paid work. Similarly, the legal market sector could not function without the so-called grey zone (informal economy) giving employment—as Robert Neuwirth counted in his book The Stealth of Nations—to half of those working around the world and generating more than $10 trillion dollars a year.
The capitalist economy today is not only the economic game played on the market but also products and services made in the automated sphere (W. Brian Arthur’s second economy), the unpaid work sector, and the informal sector. It has always been so, but today the situation is changing in this respect that the boundaries between sectors are blurring. Unpaid work, once consisting of women working at home, is today developed as a model of making many products and services, for example GNU/LINUX software or Wikipedia. These socialized models of producing real value are copied by capital corporations, which absorb them into their business models. After all, the value of Facebook is created by all those who fill the site with content and communication traffic. Contemporary Economy Is a Complex EntityAutomation and replacing the work of people with machines is only one aspect of the transformation of
Contemporary Economy Is a Complex Entity
Automation and replacing the work of people with machines is only one aspect of the transformation of contemporary economy, which is a multidimensional and complex entity. The capitalist system, driven by the simple logic of growing accumulation, will use every opportunity leading to that – the potential of artificial intelligence, the free work of Facebook users, the bodies of women from developing countries to satisfy the sexual needs of inhabitants of developed countries, and trading the organs of prisoners in the still-existing gulags in quasi-totalitarian countries. We know this logic and should not forget about it.
The capitalist economy today is not only the economic game played on the market but also products and services made in the automated sphere, the unpaid work sector, and the informal sector.
A more important question regards politics – are we capable of submitting to democratic political control not the automation, but the logic of capitalist accumulation, to force the amoral machine to pursue morally adequate aims through political action?
Unfortunately, no system of artificial intelligence will generate an answer to this question. And the choices made recently by electorates in democratic countries do not bring us closer to adequate solutions. On the contrary, Donald Trump in the office of US president symbolizes the triumph of capital over politics and democracy.
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