Are the machines winning?

It would take an economist with the credentials of Erik Brynjolfsson, and his co-author Andrew McAfee, to get me to read another e-book (on the Kindle App for my iPad, a little better than having to read on an actual Kindle). I’m glad I did grit my teeth and download their new book

, which is a stimulating read.

Each recession, and the early stage of the subsequent recovery, seems to bring an understandable wave of concern about jobs. In 1992 the ‘jobless recovery’ led many to talk of ‘

‘. However, this new book is more than a predictable cyclical lament. Its concern is the effect of information and communication technologies, a General Purpose Technology in the jargon, on the long-term trend in employment and income distribution, and hence ultimately on political stability and economic growth.

Their hypothesis is the opposite of Tyler Cowen’s in his e-book

. Cowen argued that the days of rapid productivity growth driven by technology are over. Brynjolfsson and McAfee believe it is accelerating. We are in the steep upward part of the exponential curve of Moore’s law, they say, so the speed with which computers can do new tasks is jaw-dropping. One example is the driverless car, only a few years ago (in 2004) consigned to the distant future but last year already successfully piloted (forgive the pun) by Google.

“We don’t believe in the coming obsolescence of all human workers. In fact some human skills are more valuable than ever, even in an age of incredibly powerful and capable digital technologies. But other skills have become worthless, and people who hold the wrong ones now find that they have little to offer employers. They’re losing the race against the machine.” (Location 157)

One section explains why we should remain upbeat about productivity. Much digital output – such as Facebook or YouTube – is invisible to official productivity statistics because it is free. Quality and variety, customer service and timeliness, are hard-to-measure aspects of output and so understated. Nevertheless, US productivity growth in the decade to 2009 was the highest of any decade since the 1960s.

However, there has been no uplift – notoriously – in median incomes. Those with higher skills who can work with computers, those in ‘superstar’ or winner-take-all industries, and the owners of capital seeing a return on all that investment in computers, have done very well, however. The book sets out the depressing detail of how badly middle America has fared (the statistics in the book are all for the US).

All is not gloom, though. The authors point out though that many “low skill” jobs such as plumbing and nursing are so difficult that computers are not in sight of fulfilling them. Climbing stairs, empathy, jokes – there are plenty of things computers still can’t do. Yet the jobs market is being hollowed out along the (cognitive) skill scale, with those at either end doing far better than those in the middle whose skills have turned out to be easier to routinize for computers to take over.

The authors argue that the best, highest productivity, outcomes will depend on people and machines working in harmony – they cite an interesting example of a freestyle chess tournament where the teams who did best combined computers, good processes or rules, and humans – better than a computer alone, and better than a strong human player with a weaker machine process (Location 794). The book ends with a list of practical policy suggestions, including investing in education, patent reform, and a number of others that seem perfectly sensible albeit not obviously related to the technology arguments.

Missing for me was some further reflection on how the US and other western economies can undertake the redistribution of benefits that occurs when some sectors of the economy become rapidly much more productive than others. When this occurred in agriculture and then basic manufacturing, the majority benefited from greatly reduced prices for food and goods such as washing machines and cars. Education equipped many more workers for higher skill jobs. Institutions such as unions and labour laws, progressive taxation and public spending programmes ensured that most people saw rising living standards even if they were working in the relatively less productive service sectors.

The absence of such institutions now accounts for the rise in inequality. Brynjolfsson and McAfee highlight the need for institutions to catch up to the speed of technological innovation but I wish they had said more about this, especially given the richness of their other work on the organizational changes brought about by the introduction of ICTs. Still, it’s always good to end a book wishing for more rather than less, and I commend this short, pithy contribution to the debate about jobs and fairness.

[amazon_image id=”B005WTR4ZI” link=”true” target=”_blank” size=”medium” ]Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy[/amazon_image]

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