The clash between man and machine is capitalism’s ultimate challenge
If our world leaders fail to solve the mounting productivity-employment gap, the human race is in peril
Ever wondered why so many tech billionaires are reaching for the stars with dreams of settling on Mars? Even acclaimed cosmologist Stephen Hawking reckons we only have 100 years left on Earth before Doomsday descends. Something is going badly wrong on our planet and it is not just climate change, pollution and destruction of our ecosystem which threaten our very survival.
We are becoming too successful for our own good, with the pace of technological progress so rapid, humanity risks being left behind. As machines take over from man, it is a massive problem for our world, with its current population of 7.6 billion heading for 11 billion by 2100 according to United Nations’ estimates. The growing conflict between man and machine poses capitalism’s ultimate challenge. If our world leaders fail to solve the mounting productivity-employment gap, the human race is in peril.
There is no doubting the digital age is full of potential, offering fabulous rewards for mankind. Automation, robotics, artificial intelligence, social media and algorithm-run market mechanisms have brought untold benefits for economic growth, global prosperity and personal leisure that we are only just beginning to understand. It is the dawning of a new age propelling the human race into an exciting era of innovation and achievement. But it brings its own inherent risks.
It is not the sensationalist threat of killer bots running amok and taking over the world in some latter day incarnation of an Arnold Schwarzenegger’s Terminator movie. It is the more subtle trend towards automation and mechanisation which is driving workers out of jobs as businesses invest in more cost-effective plants and machinery to boost productivity, improve competitiveness and reap bigger profits.
When algorithms and robots put people out of work it is no good for growth if it concentrates the rewards in fewer hands and society is left worse off, with a growing army of disaffected unemployed. It is fine if capital-intensive, productivity-driven growth boosts employment, raises prosperity and benefits society as a whole. But the growing disparity in work opportunities, the widening wealth gap and deepening social divisions put all our futures at risk.
Fulfilling faster growth, better job creation and keeping the masses happy at all times should be the Holy Grail for world leaders. Without it, the risks of economic discontent, social disorder and political upheaval loom large. It is a problem being felt the world over right now, especially as the global economy struggles to get back into better shape after the 2008 financial crash.
The world economy is still feeling grave aftershocks from austerity, debt deflation and balance sheet restructuring. Recovery may be underway, but maintaining annual average growth rates of 3.5 per cent for global GDP and 5 per cent for world trade will be doubly difficult now policymakers are reverting back to belt-tightening on fiscal and monetary policies after the last decade’s super-stimulus binge.
Industrial strategy must be employment-friendly. That means building job-skills, improving education standards and the training of workers so that labour becomes more adaptable and flexible as workplace practises change. Zero contract hours and the advent of gig-economy workers may be good news for corporate margins and profitability in the short run, but are no way to run a successful economy long term.
For old economies like Britain, where free-market neo-liberalism has broken down badly, there are major risks. After years of laissez-faire practices, mass privatisation, thumping austerity and deregulation, the UK economy is on its beam ends. Productivity growth is flat and wage growth looks likely to stay muted for years to come. Shocking the UK workforce into better competitive zeal through more automation, mechanisation and redundancies looks destined to fail without a better thought-through national plan.
For newer, labour-rich industrialising economies, embracing the digital age has advantages for growth, but governments must keep a careful eye on the trade-off between productivity and future job creation. Staying competitive in global trade markets is fine, but not at the cost of mass lay-offs for the sake of showboating wanton technological change.
There is no stopping the march of technology, but capitalism must adapt to soften the blow to society. Finland is pioneering a basic universal income as a solution to automation and an alternative to lifetime work. It is an old idea propounded by political theorist Thomas Paine as long ago as 1797.
It’s time to put man before machine and fix our ailing world before it’s too late.
David Brown is chief executive of New View Economics