It’s Not the Technology That Causes “Technological Unemployment”

Discussions of technological change in the media are generally coupled with discussions of technological unemployment and the increasing polarization of wealth. A good example is a piece by Eduardo Porter in the New York Times (“Tech Leaps, Job Losses and Rising Inequality,” April 15). Amid talk of all the technological wonders issuing from Silicon Valley, Porter observes that in recent years employers have seized on the falling cost of capital relative to labor that results from such improvements as an opportunity to substitute capital for labor. The effect has been growing technological unemployment and the capture of most economic growth in the form of exploding wealth for the already super-wealthy.

The phenomenon of capital cheapening relative to labor should raise an obvious question, but of course it does not because we have been conditioned to think of work as something we are given by the owning and employing classes in the form of “jobs” rather than something we do.

About eighty years ago Albert Nock remarked on how odd it was, considering all the vacant land held out of use and all the unemployed labor available to work it, that work was viewed as something given by the employer. Today, likewise, when we hear that workers are unemployed because employers use radically cheapening production tools as a substitute for labor, the question that should — but doesn’t — automatically come to mind is “If the tools are so cheap, why don’t we just use them to work for ourselves and let the employers eat their money?” After all the reason for the factory and wage systems in the first place was a technological shift from cheap, general-purpose craft tools that individual workers could afford to extremely expensive large-scale machinery that only the rich could afford to buy, and then hire others to work.

Now six months factory wages will buy a shop full of open-source tabletop CNC machine tools that can produce goods that once required a million-dollar factory. Since we’re experiencing a shift back to a high-tech version of cheap, general-purpose craft tools, why do we need the wage system at all? Why not work cooperatively and organize our own horizontal mechanisms for pooling risk, providing mutual aid and insuring against sickness and poverty?

The answer is that a whole host of institutional and legal mechanisms exist precisely to keep us from doing so.

The term “technological unemployment” is a wrongheaded way of framing the issue. When technological improvement results in less work to produce the same standard of living, that’s a good thing. That’s why we have a standard work week of forty hours in the U.S. today, as opposed to 70 or 80 as in the early days of the Industrial Revolution.

The problem is not that it takes fewer hours of work to produce what we consume, but that there’s not a proportional drop in the number of hours we have to work to pay for what we consume. And the ultimate source of that problem is not the technology, but who owns it; it’s the wrong people substituting labor for technology. Rather than workers substituting technology for our own labor in order to live better, what we have is those who own the technology and hire labor to work it substituting technology for the labor of those they pay wages.

An observation by Tyler Cowen in Porter’s article inadvertently gives this away.

…[H]e looks around the world to find the relatively scarce factors of production and finds two: natural resources, which are dwindling, and good ideas, which can reach larger markets than ever before.

If you possess one of those, then you will reap most of the rewards of growth. If you don’t, you will not.

Exactly. When we own all the benefits of increasing our efficiency, we celebrate anything that results in less work. A farmer who finds a way to grow just as much corn with half the labor, she doesn’t lament being “put out of work,” because all the benefits accrue to her.

On the other hand our maldistribution of wealth results from who currently owns both the natural resources and the ideas. But neoliberal economics treats that pattern of ownership as a fact of nature, and the laws of economics as a neutral means by which market-clearing prices are established under any circumstances regardless of the pattern of ownership. So to address the problem we have to look at the structure of the economy, not as something that just happened, but something with causes — and motives! — behind it.

Capitalism is not some universal phenomenon of nature governed by neutral rules. It had a beginning in history. And that beginning was far from spontaneous or inevitable. For example, the concentrated ownership of natural resources and arable land that Cowen talks about results from a process of violent robbery in late medieval and early modern times in Europe, and more recently in the colonial world. Before the Industrial Revolution most arable land of Britain had been enclosed by landed elites, and the peasantry transformed into a propertyless proletariat with no alternative but to sell their labor on whatever terms were offered by the owning classes. In settler societies like North America and Australia, states preempted ownership of land and then granted it to land barons who fenced it off and charged rents to those who would work it. The Enclosures were reenacted in the Third World in colonial and post-colonial times, with tens and hundreds of millions of peasants evicted from land that is now owned by local landed elites and used to grow cash crops for export.

The oil and mineral wealth of the world, likewise, was enclosed by colonial authorities and then doled it out to Western-owned extractive industries. The mineral wealth of southern Africa, for example, and the oil fields of Nigeria and Indonesia that are protected from the local population by death squads hired by Shell. Or the federal lands that passed directly into the government domain from France and Mexico, to which extractive industries like oil, mining, lumber and ranching now have preferential access.

Cowen’s other category, the “ownership” of ideas, is especially key to the corporate enclosure of technological progress as a source of rents. “Intellectual property” is the reason that a Windows or Office CD costs $200, as opposed to Open Office or Ubuntu for $5, and a pill that costs Pfizer a dime to produce costs you five bucks. It’s the reason most of the price of your consumer electronics and appliances comes from embedded rents on patents, rather than labor and material. Patents and trademarks play the same protectionist role for global corporations today that tariffs did for national corporations a century ago, only they operate at the boundaries between corporations and the rest of the world rather than the boundaries between nations. But just like patents, they restrict who has the right to sell what in a given market. It’s only because of “intellectual property” that Nike can outsource all its actual production to independently owned sweatshops for $5 a pair and charge a $200 Swoosh markup in Western retail chains: Nike has a legal monopoly on the right to decide who produces a certain kind of sneakers, and a legal monopoly on disposal of the product.

Both the absentee ownership of land and resources that were not acquired through direct labor, and the ownership of ideas, are examples of the same phenomenon: Artificial property rights. Franz Oppenheimer argued, in The State, that economic exploitation was possible only when all independent access to productive opportunities had been enclosed, so that employers no longer had to compete for labor with the possibility of self-employment. Having erected these toll gates, the propertied classes are able to charge tribute for access to the basic means of production and subsistence, and charge a monopoly markup on the necessities of life.

The natural outcome of a free and competitive market, when it comes to the fruits of technological progress, is communism. Competition causes the productivity and efficiency benefits of new technology to be socialized in the form of imploding consumer prices and shortened work weeks. Artificial property rights in ideas, on the other hand, enable corporations and plutocrats to enclose these benefits as a private source of rents. And artificial property rights in land and natural resources — like, for example, the Enclosures in Britain 250 years ago — close off competing opportunities for self-employment and comfortable subsistence and leave people with no alternative but to compete for the dwindling supply of jobs that is left.

So the question is not whether technological progress is beneficial, but who owns the benefit: A state-allied class of parasitic rentiers, or us?