Title: A World Without Work
Author: Daniel Susskind
The book is worth reading as a thoughtful reflection on the potential impact of computer automation on human work throughout the globe.
When we think about what factors will affect the global economy over the next several decades, many people quickly identify climate change. I believe two other factors that are less discussed are demographic changes and the accelerating impact of automation. Susskind focuses on the latter.
While automation has had a material and rapid impact on human work for hundreds of years, Susskind makes a convincing case that we have finally reached the point when machines will likely render a material portion of humans economically useless. While the increasing machine productivity is a positive development for the overall global economy, the growth of economically useless humans poses a real political problem.
In the first part of the book, Susskind focuses on the historical Impact of machines on human labor. Ever since the beginning of the industrial revolution in the 18th century, there has been concern regarding the impact of machines. For example, the Luddites were early 19th century mill workers who lost their jobs and, in protest, subsequently destroyed cotton and wool machines.
Human labor involves three different capabilities … manual, cognitive and affective. Machines initially replaced human manual labor, allowing for more effort to be focused on cognitive and affective labor. In recent years, however, computers have been rapidly replacing humans in more complex cognitive work tasks. Even tasks that require affective skills, historically requiring human interaction, are being replaced by robots. Primarily due to demographic challenges, Japan is a global leader in developing robots to assist in eldercare. For example, there has been a surge in the sales of talking dolls as companions for those who suffer dementia. In addition, the Japanese government has been funding and testing several types of robots to serve a variety of tasks in nursing homes.
As computers have begun to replace cognitive tasks, a common solution has been to acquire additional education or retraining in alternative fields. However, there is a great deal of friction related to retraining. The result is an increasing inability for the unemployed to find meaningful alternative employment. Susskind emphasizes that the pace of computer automation is accelerating. He predicts that ultimately a material portion of the world population will not be able to produce economically viable work. He labels this Frictional Technological Employment.
He believes there will always be a portion of the world that will have gainful employment. However, due to the relentless improvement in computerized labor, only a portion of the world will be required. The growing portion of humanity that has no economic purpose will be a very difficult political problem to solve. Income and wealth inequality will continue to grow, inducing population unrest. In addition to the lack of income, the non-working population will suffer from a lack of meaning in the world.
The result is a world that is prosperous overall but with a problem with distribution of that prosperity. Susskind’s primary solution is Conditional Basic Income (CBI). He defines this as base income that requires the recipient to work. In effect, it is work that is subsidized by the government so that people can compete with automated labor.
* * *
At Eastgate, we take an historical approach to investing and consider a wide variety of perspectives in our analysis. While they are not directly applicable to investment decisions, books such as these can give us greater breadth to make sense of what we see today and are likely to see tomorrow. If you want to talk about the books, investments, or anything else, call or email me.
All information presented in this article is the personal opinion of the author only. This article does not constitute professional advice. Past performance does not guarantee future results.