Joseph Walker of Control Techniques reviews ‘The Rise of the Robots’ by Martin Ford – winner of the 2015 Financial Times & McKinsey business book of the year award.
In 1900 around 50% of US workers were employed on farms. By 2000 that was under 2%. Striking though this statistic is, it actually understates the incredible pace of change in the labour market over the last century. The person who would have worked on a farm in 1900 was working on a factory production line by 1950. By 2000 that person was probably working as a supermarket cashier.
Economists usually see this accelerating pace of change as a positive thing, despite the obvious upheavals it has caused for workers. Automation of older forms of work has always increased productivity, which has always translated into improved living standards, because new industries always spring up to take the place of the old.
To understand the argument about improving living standards, imagine how a farm worker in 1900 might have lived compared to a factory worker in 1950, and how a factory worker in 1950 lived compared to a supermarket cashier now, and you get the picture.
In his book The Rise of the Robots – technology and the threat of mass unemployment, Martin Ford argues that automation technology is once again about to cause an upheaval in the global economy. He says the result of this will be a huge increase in productivity. However, Ford, a successful silicon valley entrepreneur, disagrees with conventional economic theory and argues that “this time is different”. Ford believes that, unlike in the past, new jobs will not be created to replace those that are lost to the robots.
It is important to understand first of all that Ford’s definition of a robot is wide. For him, a robot is more than just an automated arm in a car plant. A dishwasher is also a robot. And so is a software algorithm if it can perform a task, or part of a task, without human intervention. To understand why the definition is important. Think about the job of a marketing manager – traditionally a job seen as creative and difficult to automate. The idea that a robot could do large parts of the job of a marketing manager sounds unlikely. But the idea that a sophisticated piece of software could do it somehow sounds a lot more plausible.
The reason Ford thinks this time is different is because automation technology, particularly information technology, can be applied to almost every organisation:
“We are, in all likelihood, at the leading edge of an explosive wave of innovation that will ultimately produce robots geared toward nearly every conceivable commercial, industrial and consumer task.”
Ford’s research has shown some compelling examples that back up his case. Consider the text extract below from an article covering an American baseball game between the Los Angeles Angels and the Boston Red Sox:
Things looked bleak for the Angels when they trailed by two runs in the ninth inning, but Los Angeles recovered thanks to a key single from Vladimir Guerrero to pull out a 7-6 victory over the Boston Red Sox at Fenway Park on Sunday.
The story the extract is from was, as you’ve probably guessed, written by a computer program – StatsMonkey. By transforming data about a game into a narrative, StatsMonkey shows a level of creativity that most would assume to be the exclusive realm of humans.
The book is full of slightly terrifying examples of robots encroaching on human labour. Iamus, a Spanish firm, makes software that composes unique classical compositions that are proven to evoke emotional responses from audiences. Iamus has produced millions of unique compositions in the modernist classical style and these are sold in an online store on a royalty free basis allowing purchasers to use the music in any way they wish. Iamus shows how creative industries, hitherto unaffected by automation, could have their business models destroyed overnight.
He makes the same point about skilled ‘knowledge economy’ jobs. For example, John Koza, a Stanford professor, has used algorithms to create new electric circuit, mechanical system, optics, software repair and civil engineering designs. In at least two instances, these inventions, designed with no human input, have been patented. Meanwhile, in an interview with Ford, Roman Stanek, the CEO of Good Data, a San Francisco company that uses Amazon’s cloud services to perform data analysis for about 6,000 clients said “[b]efore each [client] company needed at least five people to do this work. That is 30,000 people. I do it with 180. I don’t know what all those other people will do now, but this isn’t work they can do anymore. It’s a winner-takes-all consolidation.”
New technologies allowing small numbers of people to become extremely wealthy, while employing hardly any people, is a key theme of the book.
First he cites three relatively well known examples from silicon valley:
However he brings the idea to life when he moves outside the hi-tech sector, where such stories are common, to show how technology could destroy jobs while creating huge wealth in sectors such as construction.
Regarding construction, he points to Behrokh Khoshnevis, an engineer at the University of South Carolina. Khosnevis is building a giant 3D printer that runs on temporary rails. The printer can print a house out of concrete in 24 hours, using a nozzle to deposit concrete in layers.
Ford points out that construction is one of the most labour intensive areas in the UK and the US – currently employing 2.1 million in the UK alone, and 110 million globally.
A theme that fascinates me regarding the debate on jobs and automation, is just how long this debate has been going on. This blog has previously covered the Luddites who were famously opposed to automated machinery, but Ford has uncovered yet more interesting examples. In particular he shows that automation’s impact on the labour market was a particular concern of President Kennedy who in 1963 told CBS News that “too many machines are throwing people out [of the labour market]”. According to Ford, there had been continuous panic about automation since the end of World War II. So much so that even Dr Martin Luther King referred to it in his speeches.
In the final chapter Ford does concede that “there is no question that the economy will remain heavily dependent on human labour for the forseeable future” which seems to undermine his own case somewhat, nevertheless there are clearly many points in this book which merit strong consideration.
Should automation destroy too many jobs, Ford says it would undermine the economy since, if workers don’t have jobs, they cannot buy the products and services that the economy produces. His proposed solution to the problem of mass unemployment is a universal basic income: a free income that is given to every citizen by the state, paid for by taxation. Clearly this is not politically tenable in today’s economy but, in the future… who knows?
Martin Ford’s ‘Rise of the Robots’ is a Oneworld publication. Buy a copy here.