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Now the robots may no longer be called Frankenstein or R2D2, but Siri, Alexa, AlphaGo or Yaskawa Motoman

Smart Machines and Service Work: Automation in an Age of Stagnation, Automation and the Future of Work
GROWTH / Through "creative destruction" and technological disruption, capitalism created the conditions for a new cycle of economic growth. But now the trend seems to continue towards zero. Is it a vicious circle of global competition, falling prices, overcapacity, technological inertia (rather than innovation) and falling incentives to invest – which is the cause of capitalism's protracted crisis?


It's a rarely commented coincidence, however, when Apple launched its iPhone in June 2007, the financial crisis was actually already underway. A risky debt construction called subprime US housing market, and in 2007 housing prices began to fall dramatically. The stock market reacted, at first hesitantly, then with massive withdrawal of investments. In September 2008, the American investment house Lehman Brothers collapsed, with severe upheavals in the financial world and the world economy as a result. So the period in recent history where we were all connected by smart machines with sleek interfaces was also a period of economic meltdown, political crisis management, austerity, insurgency, tumult, and class struggle – in the midst of otherwise tenacious attempts to restore the status quo. The story is familiar, the contrast striking. While several nation states were on the brink of bankruptcy and decidedly social collapse, Apple earned about $ 2500 trillion in the first decade after the crisis.

The story we are most often presented with is about crisis and about successful recovery. A story of how capitalism through «creative destruction» and technological disruption created the conditions for a new economic growth cycle driven by technological innovation and individual entrepreneurship. The story of Silicon Valley, Big Tech and Steve Jobs, in other words.

The pandemic and the ongoing crisis are a parenthesis in this story. Coronathe vaccine and the election of Joe Biden suggest that capitalism will soon be fired up again. Just as the steam engine heralded the first industrial revolution, was the smartphone an early warning of the third industrial revolution, a new era of «smart machines» connected in one big network: smart homes, smart cars, smart cities and a smart planet. Tighten the helmet and buckle up.

The tendency of profitability to decline

While you wait for the pandemic to subside, you can read two excellent books that effectively burst the bubble of illusions that many investors and futurists continue to live in. If you want to understand what the future holds, then you are probably better off reading Smart Machines and Service Work: Automation in the Age of Stagnation by Jason E. Smith, and Automation and the Future of Work by Aaron Benanav – than you are reading mainstream economic forecasts or the latest accelerationist literature.

As both Smith and Benanav point out, we are – despite the explosion in smart Gadgets, self-driving cars, advanced robots, self-learning algorithms and automation – still confronted with the basic fact that productivity has been steadily declining for decades. Increases in productivity, whether due to micro-management or automation, are otherwise an indispensable condition for economic growth. However, productivity and growth have been declining and the trend appears to be continuing asymptotically towards zero.

Although the advances in processor power, storage capacity and hardware were enormous in
the early era of the computer, productivity growth was far from expectations.

In his book, Jason E. Smith points out that it is no longer reserved for Marxist crisis theorists to point to the tendency for profit rates to fall. The fact that profits have fallen over several decades since the early 1970s is a simple statistical fact, a phenomenon that, among others, economist Larry Summers, who was an economic adviser to the Clinton administration, has called "secular stagnation." So how can it be that, well over ten years into the 'smart' revolution, we still do not see the results reflected in productivity gains and growth creation?

As early as 1987, the Nobel Prize-winning American economist described Robert Solow a similar paradox: "The power of new supercomputers and information technology," wrote Solow, "appears everywhere but in the productivity statistics." Although advances in processor power, storage capacity, and hardware were enormous in the early days of the computer – only a little over a decade passed from Intel sending the first commercial microchip to the market in 1971 before IBM could introduce the personal computer or PC in 1981 (and Jobs followed suit in 1984 with the cult machine Macintosh) – then Solow could see that the increase in productivity that was to drive the economic results forward was very far from expectations. Why?

Economic stagnation

Smith shows in Smart Machines how economists over time have set up a sea of ​​more or less plausible hypotheses to (away) explain the lack of productivity increases. Few of these hypotheses are convincing, some are pure wishful thinking, and several of them are decidedly contradictory. Smith reviews the main arguments in the economic mainstream, and pillars the data sets that form the basis for future forecasts of an impending productivityboost apart.

He points out that much of the confusion surrounding the lack of growth is simply due to the assumption that past economic development patterns will necessarily repeat themselves. Many economists do not have an eye for the historically specific conditions of opportunity for economic growth. The first industrial revolution created value and profits through the exploitation of cheap labor from the land, as well as from the former slave colonies and plantations. New industrial extraction, processing, and distribution processes were to supply a rapidly growing world market, and the demand for both labor and goods increased in step with the pulse of the fossil-fueling steam engines, the "satanic cotton mills," which kept the wheels of capitalist machinery running. Similarly, the "second" industrial revolution, as the period after World War II is typically called, was characterized by optimal conditions for growth and value creation. A combination of expanded labor markets, technological advances and mature outlets for a wide range of new industrial mass products – cars, refrigerators, washing machines, televisions and vacuum cleaners – were among the ingredients of the post-war economic tree in the 1940s, 50s and 60s: the golden era of capitalism.

The conditions for economic growth – as during the previous industrial revolutions – are
no longer present today.

But Smith's fundamental point is that the conditions for economic growth during the previous industrial revolutions are no longer present today. It is this historical difference that both optimists and pessimists overlook when discussing how automation will play out during the ongoing “third” industrial revolution of the smart machine era: “Call it automation 2.0. But where the first wave of automation took place during the post-war boom, the current discussions are about an upcoming one disruption of the labor market during severe and prolonged economic stagnation. "


For Smith, the key is that growth has historically been driven by industry. But the industry is retiring. Everywhere from Detroit to Nakskov we see the clear signs of de-industrialization. And as the title of Smith's book suggests, the emerging service sector, which according to one estimate has now absorbed over 50 percent of the global workforce, cannot manage to kickstart the growth of an ailing capitalist market economy.

The work in the service sector – whether in areas such as elderly care and childcare or in the liberal professions such as hairdressers, tattooists, drivers or various courier services – is simply difficult to reconcile with the capitalist imperative of constant productivity gains. In part, a large part of these tasks are in the nature of things technical seen very difficult to automate, and partly there is very little economic incentive to invest in any labor-saving technologies in a sector where the work is largely carried out by small self-employed persons or by cheap, unorganized labor.

The emerging "service sector" is failing to kick-start the growth of an ailing capitalist market economy.

Smith's conclusion is clear: there are no smart solutions to a structural problem that has to do with the contradictory dynamics of capitalism. The redundancy of wage labor, the creation of what Marx called a global "reserve army" and the increasing precarization, are linked to other, more profound, causes – which cannot be reduced to a question of new technological breakthroughs and the automation of production. Many of the so-called Big Tech companies make extensive use of existing technologies albeit for new purposes, and for companies like Uber, Lyft or Airbnb, the biggest "technological" innovation is probably that they effectively undermine the employment contract, Smith writes.

«Full automation»

In the book Automation and The Future of Work Aron Benanav also takes stock of the many prophecies about the automation of production since the crisis in 2008. The story of the robots coming is not new. Now the robots may no longer be called Frankenstein or R2D2, but Siri, Alexa, AlphaGo or Yaskawa Motoman MH24. They can imitate voices, speak the language of the world, book airline tickets, beat chess masters on the strip, and destroy any human resistance in the millennium-old Chinese strategy game go. Yes MH24 can even sword fight like a real Japanese samurai.

The question then is whether robots can also in the long run give older people a bath, cut a poodle dog, tattoo a belly skin or fold laundry. It's not unlikely. But it is, however not particularly likely that someone will invest the amount of capital required to make such services redundant, which are often extremely poorly paid or simply performed for free. The robots are coming, no doubt. But probably only where the price of their entrance ticket can be earned back home, with interest and compound interest.

Whether one sings of automation or fears it, Benanav writes, the utopia of a "full automation" depends on a simplified understanding of economic dynamics. It is simply wrong to assume that it is a rampant technological development that is to blame for rising global unemployment, "chronic underemployment" and deindustrialization. Just as, conversely, it is wrong to assume that automation will liberate labor and help us abolish capitalism. We are faced with a far more complex course in economic history. Benanav describes a vicious circle of global competition, falling prices, overcapacity, technological inertia (rather than innovation) and declining investment incentives as the cause of the protracted crisis of capitalism.

Benanav and Smith clearly do not agree on all the details of the analysis. However, both authors agree that capitalism is running out of steam. We can swipe just as crazy as we want, but ours smartphones will hardly be what boosts the world economy and resolves the crisis once the pandemic is ridden.

Dominique Routhier
Dominique Routhier
Routhier is a regular critic of Ny Tid.

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