The 'Jobless Future' Is A Myth
Steve Denning ,
Forbes CONTRIBUTOR
I write about
radical management, leadership, innovation & narrative
For connoisseurs of
human folly, there is hardly anything more fascinating than the spectacle of
the almost universal acceptance of an idea that is logical, obvious and wrong.
A current
occurrence is the media acceptance of the idea that, because “the robots are
coming for your jobs,” in future there will soon be “no work for human beings.”
The idea is simple
and frightening. The power of technology is increasing. Technology substitutes
for human capabilities. Soon the robots will be doing everything, including the
most sophisticated brain work and even management. Therefore there will be
steadily less need for human capabilities. Soon, there will be no need for
human workers at all.
This leads on to
even more shocking conclusions. In future, computers will do everything and
rule the world. Human beings will become their slaves. The forces driving these
trends are inexorable. Resistance is futile. There is little we can do except
crawl into a hole somewhere and await our horrifying machine-driven destiny.
According to Stephen Hawking “Full artificial intelligence could spell the end
of the human race.”
The Prophets Of
‘The Jobless Future’
Concern about the
effect of machines on work and on people has been around ever since machines
were first invented. As computers emerged and machines became more powerful and
capable, the level of angst has risen. As we shall see in a moment, Nobel-Prize
winning economist Herbert Simon addressed the issue back in 1960.
More recently, Erik
Bryjolfsson and Andrew McAfee in The Race Against The Machine (2011) and The
Second Machine Age (2014) argued that with the advance in technology, computers
can do it all. Computers now drive cars in traffic, translate between human
languages effectively, and beat the best human Jeopardy! player. Computers are
rapidly encroaching on skills that used to belong to humans alone. This
phenomenon is both broad and deep, and has profound economic implications.
Humans aren’t keeping up. Although technology isn’t destiny, humans are losing the
race against the machine. “In domain after domain,” they write, “computers race
ahead.” In calling this, “the second machine age,” the authors risk giving the
impression that machines are the inevitable victors.
Now a new book by
Martin Ford, Rise of the Robots (May 2015), proclaims even more loudly the
arrival of “the jobless future.” As technology continues to accelerate and
machines begin taking care of themselves, fewer people will be necessary.
“Artificial intelligence is already well on its way to making even good jobs
obsolete. As progress continues, blue and white collar jobs alike will
evaporate, causing massive unemployment and the implosion of the consumer
economy itself.”
Ford is currently
giving appreciative interviews left and right, as his message of “the jobless
future” sweeps the media. Others such as Bill Gates, Elon Musk, and Steve
Wozniak have expressed similar concerns. Many mainstream social scientists have
accepted the findings. The conclusions, writes the Wall Street Journal, are “all
but inevitable.”
Inevitable but
wrong.
There are a number
of flaws in the reasoning in Ford’s book.
One flaw is the
underlying assumption that whatever is feasible will occur. In science fiction,
this may be true, but not in real life.
The fact that a
Concorde can fly faster than a Boeing 767 doesn’t mean that Concordes replace
767s. The outcome depends on the costs and benefits of developing and operating
the two types of aircraft. Airlines and airline passengers have not embraced
Concordes because it’s not economical to do so.
Similarly, the fact
that a computer can do something better than a human being doesn’t mean that
the computer will replace the human being. The market will determine whether it is
economical to do so, given the costs and perceived benefits.
A second flaw in
the reasoning is the implicit assumption that computers with miraculous
performance capabilities can be developed, built, marketed, sold, operated and
replicated at practically zero cost and that they will have zero secondary
employment effects. In reality, huge teams of people are often necessary to
perform these tasks at considerable cost. So it’s not obvious either, on the
one hand, that the necessary investments will be made or, on the other hand,
that the secondary effects of the innovation on employment will be irrelevant
or negative..
A third flaw is the
failure to consider how the marketplace will react to the computer as a new
market entrant. Ford’s book assumes that superior performance on one dimension will
cause the market to rapidly embrace the computer and abandon the human worker
entirely. Actual experience shows that this is never the case with new entrants
into a marketplace. The new entrant may appeal to some customers but will not
appeal to others. In a free market, prices will determine the eventual
proportion of the market shared held by each.
A fourth flaw in
the reasoning is to assume that when machines replace human capabilities, as
they have been doing for thousands of years, nothing else changes. In reality, as
Philip Auerswald, Associate Professor of Public Policy at George Mason
University, and author of The Coming Prosperity (2012) points out, when
machines replace one kind of human capability, as they did in the transitions
from hunter/gatherer, from serf, from freehold farmer, from factory worker,
from clerical worker, from knowledge worker on to whatever comes next, in each
case, new human experiences and capabilities emerged.
Often these new
experiences and capabilities were unimaginable in the prior era. The new
experiences and capabilities were mostly higher value, and offered more
interesting work, than the experiences and capabilities that had been replaced
by machines. This was true of agriculture, industrialization, mass
production and so on. Why should it be different now?
Why Watson Failed
In Jeopardy!
These flaws in
reasoning are evident in most of the book’s many examples. Let’s take one of
his most spectacular and most frequently cited examples: the triumph of IBM’s
Watson over human champion Ken Jennings at “Jeopardy!” It’s true that the best
human contestant in history was defeated by a computer. But what was the net
result in the television marketplace? Nothing.
At the end of the
show, Jennings quipped, “‘Quiz show contestant’ may be the first job made
redundant by Watson, but I’m sure it won’t be the last.”
Jennings, like the
authors of these books, was mistaken. Jeopardy! has not been transformed into a
show where rival computers fight each other. Jeopardy! continues to be a show
with human contestants. Just ask Aaron Rodgers. The fact that Watson was able
to come up with better answers in one competition doesn’t mean that future
human contestants are replaced. The reality is that the program’s audience
wants something that Watson doesn’t have: a human personality with all the
quirks and flaws of real people. The conclusion that Watson is better as a
Jeopardy! contestant is correct—except in the one aspect that matters most to
the audience: being human.
The book gives an
interesting account of at least some of the vast expenditure of money and human
manpower over many years by IBM to create, maintain, market and sell Watson.
But when the book comes to evaluate Watson’s impact, it forgets all this
expenditure and declares Watson the absolute winner.
The economic
reality is that it’s not cost-effective for IBM or any other firm to continue
submitting Watson or its clones as a contestant on Jeopardy! when there are
much cheaper alternative contestants: i.e. human beings, who also happen to be
more interesting to the audience. As a commercial enterprise, developing
computers as Jeopardy! contestants was a wonderful one-time PR stunt, but it
was a commercial failure. Watson has no future commercial prospects in
Jeopardy! Its role in Jeopardy! has been discontinued by IBM and there is no
prospect of it being taken up by other firms.
IBM has moved
Watson and its expensive team of supporting experts on to other business
challenges, including food trucks at SXSW in Austin. Time will tell with
such business endeavors are any more sustainable than the Jeopardy! exercise.
The point is that having more intellectual capability isn’t by itself
sufficient for success: the use of computers in any setting has to be
cost-effective, including all the costs of developing, creating, selling,
marketing and maintaining the computer, integrating it with other services, and
including the market demand for the offering and the consequent price for which
it can be sold.
Is The Jobless
Future Already Here?
But surely
computers are already replacing humans, doomsayers like Ford cry. We can see it every
day! Machines are cheaper and better and more reliable! ATMs are replacing
bank tellers! PCs are replacing secretaries! It’s obvious! Jobs are already
disappearing before our very eyes! “Employment for many skilled
professionals,” writes Ford, “including lawyers, journalists, scientists, and
pharmacists— is already being significantly eroded by advancing information
technology.”
But is it true that
“the jobless future” is already here?
The question is, as
always, not whether individual jobs are being replaced, but rather what is the
net effect of all the changes in employment. ATMs and PCs for instance don’t
instantly appear out of nowhere at no cost. They have to be designed, built,
marketed, sold, introduced in the marketplace and in the workplace, and
reconciled with all the other things and systems going on. All of these
activities require large amounts of human time and effort. The net effect of
ATMs and PCs is not simply the removal of the jobs of bank tellers and the
secretaries. We have to add in all the other jobs and work that are being
created, and then see what the net effect is.
Are machines
already rapidly replacing labor on a net basis? Not according to current
statistics. If it were true, we would be seeing massive gains in worker
productivity, i.e. output per worker. But when macro-economists look at the
productivity numbers for the last decade, they find exactly the opposite.
Productivity gains as measured in conventional terms have been anemic. It
seems likely that, as in the past, the apparent loss of human jobs to machines
is still being moderated by the creation of new kinds of capabilities needed to
tend to the machines and the new experiences being generated by the machines.
We can see how this
transition plays out today, by looking at the steps being taken by a firm like
General Motors that, like all car manufacturers, is investing heavily in
automation. Most of the capabilities it is looking for in future employees
would have been unimaginable just a few years ago. Why should we think that
the capabilities required in future will be only those we know today?
Thus to understand
the future employment situation, we would have to not only subtract the human
capabilities that are being replaced but also add in the future experiences
that will be generated and the human capabilities that will be required to
deal with those experiences. When it comes to predicting the future, it’s
hard to fully imagine what those new experiences and capabilities will be. So
it’s not surprising that a failure of imagination can lead to a lot of angst
about “the looming jobless future.”
Will The Future Be
Different?
So “the workerless
future” hasn’t happened in the past. And it hasn’t happened yet. What about the
future? Ford is confident that, this time, the future will be different. His
reason: new technology.
“Up until the
moment the first aircraft achieved sustained powered flight at Kitty Hawk,
North Carolina, it was an incontrovertible fact— supported by data stretching
back to the beginning of time— that human beings, strapped into
heavier-than-air contraptions, do not fly. Just as that reality shifted in an
instant, a similar phenomenon plays out continuously in nearly every sphere of
technology. This time is always different where technology is concerned:
that, after all, is the entire point of innovation.
“Ultimately, the
question of whether smart machines will someday eclipse the capability of
average people to perform much of the work demanded by the economy will be
answered by the nature of the technology that arrives in the future— not by
lessons gleaned from economic history.”
Yet technology
cannot free itself so easily from the principles of economics. The principles of
economics still apply as much to the airline industry as to prior forms of
transportation. Planes were a new technology but they did not replace all other
forms of transport. There were some types of travel for which planes were the
best fit and others for which they weren’t. Over time, the marketplace sorted
out the price and the demand for each. Some offerings, like the Concorde (or
Watson in Jeopardy!) which are superior in one dimension—speed (or the ability
to answer Jeopardy! questions)—have ended up with no market at all.
In the same way,
the marketplace will sort out the role of machines and humans. A totally
jobless future is not among the real possibilities.
The Coup De Grace:
Comparative Advantage
Ford suggests the
need to “rethink comparative advantage.” But before we do this, we need to
understand it. Comparative advantage was developed by David Ricardo in 1817 to explain
the conundrum: why do countries engage in international trade even when one
country’s workers are more efficient at producing every single good than
workers in other countries? Why isn’t everything produced by the more developed
country? The theory of comparative advantage is regarded as one of the most
powerful yet counter-intuitive insights in economics.
In 1960,
Nobel-Prize-winning economist, Herbert Simon, applied the theory of comparative
advantage to explain the related conundrum of employment: if machines can
increasingly do whatever humans can do, why won’t everything eventually be done
by machines?
Simon explained
this in a remarkable talk entitled “The Corporation: Will It Be Managed By
Machines?” in Management and the Corporations. edited by M. L. Anshen, and
G. L. Bach. (McGraw Hill, 1960). I am indebted to Philip Auerswald for drawing
it to my attention.
In his 1960 essay,
Simon argued that the content of work will change, but because of the operation
of comparative advantage, there will be still be work for human beings who want
it:
“The change in the
occupational profile depends on a well-known economic principle, the doctrine
of comparative advantage. It may seem paradoxical to think we can increase the
productivity of mechanized techniques in all processes without displacing men somewhere.
Won’t a point be reached where men are less productive than machines in all
processes, hence economically unemployable?
“The paradox is
dissolved by supplying a missing term. Whether man or machines will be employed
in a particular process depends not simply on their relative productivity in
physical terms, but on their cost as well. And cost depends on price.
Hence–so goes the traditional argument of economics–as technology changes and
machines become more productive, the prices of labor and capital will adjust
themselves as to clear the market of both. As much of each will be employed as
offers itself at the market price, and the market price will be proportional to
the marginal productivity of that factor.
“By operation of
the market price, manpower will flow to those processes in which productivity
is high relative to the productivity of machines; it will leave those processes
in which its productivity is relatively low…
“We conclude that
human employment will become smaller relative to the total labor force in those
kinds of occupations and activities in which automatic devices have the
greatest advantage over humans; human employment will become relatively greater
in those occupations and activities in which automatic devices have the least comparative
advantage…
“…full employment
does not necessarily mean a forty-hour week, for the allocation of productive
capacity between additional goods and services and additional leisure may
continue to change as it has in the past. Full employment means that the
opportunity to work will be available to virtually all adults in the society…
“In the entire
occupied population, a larger fraction of members than at present will be
engaged in occupations where ‘personal service’ involving face-to-face human interactions
is an important part of the job.”
The final point is
crucial. As technology is introduced, humans move up the value chain from
commodities to products to experiences. The possibilities in terms of new
capabilities and experiences are literally infinite. We should therefore start
from an assumption of abundance, not one of scarcity.
All Problems Are
Technological?
To a man with a
hammer in his hand, everything can resemble a nail. And Ford, a technologist,
sees technology as the cause and the solution to pretty much everything.
Among the more
extreme examples is his treatment of the shocking gap that has emerged since
the 1970s between the increases in worker productivity and the lack of increase
in worker compensation.
To suggest, as Ford does, that the gap is
caused by technology is to overlook the well-documented role of top management
in redirecting those productivity gains to shareholders and themselves.
Real Issues In Employment
None of this is to suggest that there are not
real issues in employment today, including:
·
The fact that management practices flowing
from shareholder
value theory are inimical to full employment.
·
The fact that majority of big firms are
implementing obsolete management practices (hierarchical bureaucracy)
that cripple
investment and innovation and jobs.
·
The fact that more
than half of the off-shoring decisions taken by US business ever the last several decades were not based on the
total cost of off-shoring even at the time they were made.
·
The fact that an over-sized
financial sector is diverting money and talent away from
investment in real products and services and towards zero-sum and negative-sum
games that do not help the economy or jobs.
·
The fact that middle class jobs are hollowing
out, as new jobs tend to be at the high end or the low end, not in the middle..
·
The fact that, as the marketplace for work
increasingly becomes a freelance economy, public policies are not in place to
encourage and moderate the development.
However to understand and resolve these issues,
Ford’s book offers more confusion than help. We need to stop agonizing about an
apocryphal vision of a “jobless future” and to focus on the pressing real
issues that we can actually fix.
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