Posts Tagged ‘inequality’

Will robots lead to communism? Three strategies to ensure automation works for the common good

Could the consequences of automation lead to the growth of communism, as Mark Carney has warned? Mathew Lawrence writes that deep technological change opens up two divergent paths: one where technologies are managed and owned to our collective advancement against one where they deepen inequalities. He draws on IPPR research to outline three strategies that will ensure automation works for the common good.

A spectre is haunting economists, the spectre of automation. Mass unemployment, wage stagnation and the intellectual and political revival of communism – these are just some of the outcomes Mark Carney foresaw over the weekend when discussing the potential economic impact of technological change. Nothing is determined; how we manage automation will determine whether it immiserates or helps emancipate.

We are not on the cusp of a ‘post-human’ economy, with breathless rhetoric about the imminent rise of the robots and technologically-induced mass unemployment overblown. Nonetheless, the governor of the Bank of England was right to argue the accelerating capability of automating technologies could shake foundational economic and social assumptions: the role of employment as the primary means of distributing economic reward, labour’s position as the central factor in production, notions of scarcity, and how we organise working time, among others.

The reason why the coming wave of automation could, in time, be different to previous waves – more rapid, pervasive, and disruptive – is because of the growing power of artificial intelligence. Whereas past waves of automation typically required machines to have a clear set of instructions in structured environments to enable them to perform tasks once done by humans, today’s machines can act without explicit instruction in complex environments. In other words, machines are increasingly able to problem-solve, and ‘learn’, independently; and are able to perform an expanding range of both physical and mental tasks better and more cheaply than we can.

Under these conditions, automation could emancipate or immiserate. Managed well, automation could build a future of shared economic plenty, the productivity gains of technological change allowing us all to live better and more freely. Managed poorly, automation could create a ‘paradox of plenty’, in which we produce more, yet the fruits are less equally shared, as the benefits of technological change flow to the owners of capital.

Critically, the nature of the machine age will be human-shaped. This is because the pace, extent, and distributional effects of automation are determined by institutional arrangements, and the broader distribution of economic power in society. The future is not technologically determined. Automation is not an external force acting on us, but something shaped by our collective choices, with public policy powerfully steering how technologies are developed, used, and for whose benefit.

IPPR’s report on managing automation set out three core strategies to ensure it works for the common good.

First, we need a managed acceleration of automation to reap the full productivity benefits and enable higher wages and living standards. Due to the UK’s low investment rates, poor management practices, and long tail of low-wage, low-productivity firms, it is the relative absence of robots in the UK economy, not their imminent rise, that is the biggest challenge. To address this, the more rapid adoption of digital technologies, including automation, should become one of the national ‘missions’ of the government’s industrial strategy. A new partnership body, Productivity UK, should also be established with the goal of raising firm-level productivity, including the acceleration of investment in automation technologies. It should focus on the adoption of digital and other technologies for firms in the non-frontier ‘everyday economy’, where technological adoption rates are low, and support ordinary workers to develop and implement technological solutions.

Second, as the fallout from Facebook’s actions continue, it is clear we need to act to ensure the ethical and regulatory architecture shaping the use of digital technologies is publicly determined, not left in the hands of tech giants. We therefore recommended the establishment of An Authority for the Ethical Use of Robotics and Artificial Intelligence to regulate the use of automating technologies. Interestingly, there appears to be growing momentum towards such an outcome; whether the government’s new Centre for Data Ethics and Innovation will be sufficient will be worth watching.

Finally, if automation is to underpin a future of shared prosperity, we urgently need to develop new models of collective ownership. As automation grows, ‘Who owns the robots?’ becomes a vital determinant of the distribution of prosperity. If the share of national income flowing to the owners of capital increases, then existing, deeply unequal levels of capital ownership will accelerate inequality. To make sure that the dividends of automation are broadly shared, we need new models of ownership that hold wealth in common and democratise capital at scale.These could include a Citizens’ Wealth Fund that owns a broad portfolio of assets on behalf of the public and pays out a universal capital dividend and the creation of employee ownership trusts to give workers a stronger stake in the firms for which they work – and an ownership claim on the value they help create.

Carney was right to highlight Marx and Engels as useful guides to an age of automation. When considering the divergent paths deep technological change is opening up – a world where technologies are managed and owned to our collective advancement against one where they deepen inequalities of power and reward – we have one political choice confronting us: socialism or barbarism.

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About the Author

Mathew Lawrence is a senior research fellow and co-author of IPPR’s report on automation. He tweets @dantonshead.

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Wikimedia Commons (Public Domain).

Linda Yueh: History’s ‘greatest economists’ and how their ideas can help us today

How can the ideas of history’s greatest economists from Adam Smith and David Ricardo through Joan Robinson and Milton Friedman to Douglass North and Robert Solow – help us think about the biggest economic challenges of our time? Linda Yueh‘s new book seeks to answer this question through studying 12 economists whose thinking has changed the world. She discusses her work with Artemis Photiadou.

 The Great Economists: How Their Ideas Can Help Us Today is available to buy here.

What was your main aim in writing this book and how did you choose which individuals to include?

I was interested in finding ways to address our biggest economic challenges, such as why are wages so low? Learning the lessons from history and from the ideas of the great economic thinkers seemed like a good way to start. I also enjoy biographies, so this book offered a chance to write about the lives of some of the most influential people over the past two centuries. Although they were all successful in shaping the world around them, it was intriguing how many of them were critical of their productivity and not doing more!

Did studying economists from different schools of thought make you rethink any of your own assumptions about how the economy works?

Especially because my work is based on data, my empirical research including my Macroeconomics textbook (co-authored with Graeme Chamberlin) embody quite a lot of the ‘new neoclassical synthesis’ that characterises macroeconomics today. In other words, the work of many academic economists draws from the most pertinent parts of New Keynesianism, New Classical Economics, and Monetarists. Even Marxist thinking has come back in some fashion, though my work in my previous books (e.g., China’s Growth) had shown how little of the communist approach to economics exists even in the most successful country to have adopted it.

Over the past decade the economics profession has been criticised for a perceived collective failure to identify the systemic weaknesses that led to the 2008 financial crisis. Do you feel that that critique is fair, and does it tell a story about the decline of the discipline from when it was defined by these ‘great economists’?

It’s a fair critique and strongly suggests that there are lessons to be learned from the 2008 crisis. There is a shift in the economics profession towards more empirical analysis, coupled with a push for greater engagement with the ‘real world’, both of which would help. Indeed, the Great Economists that I write about actively engaged with the big issues of the day even if the answers were imperfect. Today’s academic economists tend to have a narrower focus, so there are fewer generalists than before. Generalists are the ones who would be well placed to spot links between the financial markets and economic forecasting since they would be working on the big economic picture, rather than the current divide between those who work on financial economics and the forecasters.

When it comes to responses to the financial crisis, would any of the individuals in the book have supported the British government’s decision to pursue austerity?

I have a chapter dedicated to this very question. The chapter starts with the austerity debate during the 1930s when the Keynesian revolution took off and goes through the later critiques of Keynesianism by other great economists from the other side of spectrum who were opposed to government deficit spending. I then discuss the current austerity debate and how these decisions will affect our future economic growth.

One of the key themes in policy debates since the recession is the ‘left behind’. Is there one particular economist whose thinking could help the losers of globalisation?

Paul Samuelson, who I write about in the chapter on globalisation, is best placed to help us think about how to help those who have been left behind. America’s first Nobel Laureate developed the theory of factor price equalisation that showed how globalisation depresses the wages of workers in the sectors opened up to trade in rich countries. He was a generalist like the others, so he also wrote about how to fashion optimal economic policy to address this issue, which requires adopting the stance of an ethical observer. Akin to John Rawls’ ‘veil of ignorance,’ Samuelson’s idea is for policymakers to position themselves on a policy without knowing how they would be affected. But, he also pointed out how difficult it is to get policymakers to act sometimes. An advisor to US Presidents, he observed: “I can’t think of a President who has been over-burdened by a knowledge of economics.”

Considering the years you cover, it was almost inevitable that the ‘great economists’ would be white and all but one would be male. Would you say there is diversity in who influences economic thinking today, or are 21st century ‘great economists’ still white men?

The Great Economists of an earlier vintage who wrote the models that define the profession were indeed working at a time when there were numerous barriers for women and little diversity. But, their ideas have been modified by a more diverse set of economists. Even among the Greats in my book, I include the Cambridge economist Joan Robinson who further developed Keynesianism by establishing the new field of imperfect competition in the 1930s. I also write about Arthur Lewis from St Lucia whose work on development (Lewis model) was recognised with the award of the highest prize in economics, the Nobel Prize, in 1979. But, I also write about the persistent gender imbalance in the subject. Of the more than 50,000 academic and research economists whose work is listed in RePEc, less than one-fifth are women. But seeing the interesting research being done in economics, I’m confident that the 21st great economists would be a more diverse mix.

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Note: Linda was speaking at an LSE IDEAS event in April 2018; a podcast is available here.

About the Author

Linda Yueh (@lindayueh) is a Fellow in Economics at St Edmund Hall, Oxford University, Adjunct Professor of Economics at London Business School, and a Visiting Senior Fellow at LSE IDEAS.

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.

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