Saturday, 7 February 2015

Can Economists Learn from History?

Many economists are predicting a huge loss of jobs as humans are increasingly replaced by robots who can perform the same tasks at less cost. This process is already under way. Since 2001, jobs such as clerks, sales assistants, library workers, secretaries and travel agents have fallen by 40 per cent. Increasingly, machines performing tasks it was assumed only humans could do: driving cars, diagnosing illness, processing insurance claims. Robots are replacing postmen, care workers and security guards. China is now the world’s largest buyer of industrial robots.

Jobs requiring judgment, common sense, creativity, adaptability or detection are, for now, safe. The sports trainer, actor, priest, social worker, fireman and MP are unlikely to be replaced any time soon. Robotic journalists may come sooner: last March the Los Angeles Times published the first automatic breaking news story, using an algorithm that writes up a short article when an earthquake occurs.

Few economists dispute that this revolution is under way but they disagree on its implications. Some predict mass unemployment and social dislocation, a strange new world in which machines run themselves. But others point to history as proof that the advance of technology is always a long-term economic blessing, that economies are already adapting and that robots will create more jobs than they destroy.

In 1779 Ned Ludd smashed two stocking frames and became the enduring poster boy for protest against labour-reducing machinery. But the Luddites were wrong: the Industrial Revolution vastly increased productivity, created many more jobs and increased real wages across all classes. The same may be true of the robotic revolution if it prioritises new jobs that value human ingenuity and imagination over monotonous rote work. If robots increase productivity, the reduced costs and increased profits will feed back into the wider economy, benefiting all.

This suggests that it is impossible to predict the outcome of change, economic or otherwise. And whilst history can give us a good indication, it can never provide a definite answer.