The Road from Serfdom

The steady advance of technology has permanently altered work, demanding new solutions: A response to Robert Shiller

Top Stories | Wolfgang Price | December 2013 / January 2014

The aftermath of the 2008 financial crisis has wage earners unsettled, idled involuntarily and indefinitely.

Unprepared either for the hardship of scrimping, or the moments of relief from toil, the unemployed are bewildered. What is in store? Many seek relief anticipating a return to the ‘good times’ of the recent past.

In his commentary, Austerity and Demoralisation, [Commentary, TVR Nov.] 2013 Nobel laureate Robert Shiller calls the opportunity to work "a basic freedom".  He censures employers for not resorting to job sharing. He faults authorities for misguided "austerity’’ measures.

"The important thing is to achieve a fiscal stimulus that boosts job creation and puts the unemployed back to work," he writes, calling on tried and true remedies from the past. But while the trauma for the unemployed are familiar, the cause and course of their plight is new.

The fall-out unemployment from the recent recession merely amplifies a longer-range trend that has spanned two decades. This is clear from the actions of the U.S. Federal Reserve that has adjusted its standard of acceptable unemployment from 4.0% to 6.5%.

And if more certainty is required one may look at the Labour Participation Rate, which has declined from its 1990-2000 peak. Hopes for a full employment economy are the stuff of nostalgia.

Mankind’s journey from wielding a club, to blacksmith, to attendant on a modern automated assembly line hasn’t reached its terminus.

There is no circuit switch that would at some ideal perceived moment stop the clock at a climax of economic and social well-being for wage-earners – sufficient work, fitting wages, and foreseeable leisure interludes.

The transition of wage-labour to industry proceeds relentlessly into the 21st century with accelerating momentum. The period 1900-2000 saw workers trained to regulate the raw power of machines.

Now young adults entering the job market are contending with robotics. Where machines performed a portion of a yet larger finished product or service, robots will be able to fully, and independently, perfect the product or service. Where hourly work was once arranged on a human scale, work is now designed for the capabilities of a robot.

The global economy is also in flux, one where workplace activities evolve and migrate (e.g., out-sourcing). Advances in transportation enable production processes that no longer are dependent on the proximity of raw materials and labour. Production plants are assembled and shifted as needed, and the steady employment of hourly wage-earners is no longer a relevant economic element in the growth of output.

The convulsions we perceive only dimly in the West are increasingly manifest. Levels of labour displacement trend higher, while participation rates trend lower. Working hours are declining, and former full-time employment feels increasingly part-time. Numbers of the under-employed and labour market drop-outs mount.

In the midst of job shortages, young adults extend their education, believing this will enhance job prospects or protect them from lay-offs. But while education once translated into better jobs, this is unlikely to continue. The 2008 recession has left a trail of unemployed white collar, highly educated, workers in its wake.

The steady advancements of technology and ready capital investment has reversed historic employment trends. Technology no longer merely reorders employment; temporary "structural unemployment" will in future be an indefinite human "surplus labour" supply.

Dr. Shiller’s observation on the human effects of prolonged idleness deserves consideration: "Finding something satisfying to do seems inevitably to entail some sort of work."

However that does not necessarily mean a job. In fact, jobs by the current definition are a relatively recent phenomenon. In the 21st century, people will compete with robots that will take over the routine activities of manual labour.

There is ample work to be done… just not for wages. Dr. Shiller’s assertion that "unemployment is a product of capitalism" should rather be, that unemployment is a product of industrialisation and its reliance on technology. Products are not produced to create jobs.

Products are not created to utilise steel. The industrial revolution was not conceived to afford mass employment. And governments do not "create" jobs – other than those in the public employment.

A fiscal stimulus to boost job creation may alleviate unemployment for a while, but not for long.  The public cannot subsidise surplus labour indefinitely.

We will have to face the core questions: How can we transition to a "sharing economy", in which society’s concern for social development stands alongside its concern for securing private wealth?

And how can the wealth created from the robotic era be equitably distributed among those who pass their years as "surplus labour".


In Vienna since 1989, German-American economist Wolfgang Price was a U.S. diplomat with the IAEA and a consultant at UNIDO.


Other articles from this issue