Category Archives: Main Page

Humans, robots and wages

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Jonathan Schlefer has an interesting HBR post about income inequality and the rewards to factors of production. He has a book out that looks interesting – [amazon_link id=”0674052269″ target=”_blank” ]Assumptions Economists Make[/amazon_link]. He discusses the question of the substitutability of capital and labour, and consequently rewards to labour, in the context of an automobile production line. The line of argument is that neoclassical economics wrongly assumes ease of substitutability, and that if labour gets too expensive, firms will bring in more robots. It doesn’t happen like this – apart from anything else, as he implies, there is a lot of tacit knowledge in workers’ heads and muscles that machines can’t replace. In the auto context see, for example, Ben Hamper’s brilliant book [amazon_link id=”0446394009″ target=”_blank” ]Rivethead: Tales from the Assembly Line[/amazon_link].

[amazon_image id=”0446394009″ link=”true” target=”_blank” size=”medium” ]Rivethead[/amazon_image]

However, Prof Schlefer overdoes his argument in one way. The cost of labour can increase enough to trigger a move to more capital-intensive methods. Just think of all those new machines in the supermarkets that make you do your own check-out: “There is an unexpected item in the bagging area.” It’s a lumpy switch rather than continuous adjustment.

On the other hand, I think he under-does the argument in other contexts. There are many organisations in modern economies where almost all activity depends heavily on tacit knowledge, and cannot be monitored easily. Creating a new computer system. Answering calls in a call centre. Many more are the product of team efforts, with individual contributions impossible to evaluate and monitor. Boris Groysberg’s book [amazon_link id=”0691154511″ target=”_blank” ]Chasing Stars: The Myth of Talent and the Portability of Performance[/amazon_link] demonstrates the importance of teams and institutional context, rather than individuals, in the finance sector.

Either way, Prof Schlefer is right to challenge the simplistic neoclassical labour market thinking that manifests itself in some public policy discussion (although, ironically, the good labour market economists have long since stopped thinking like the textbook mode the HBR blog post condemns).

[amazon_image id=”0674052269″ link=”true” target=”_blank” size=”medium” ]Assumptions Economists Make[/amazon_image]

A Great British success story

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One of the activities in which the UK has a comparative advantage is creating video games – maybe this shouldn’t be at all surprising in a country with an illustrious history of creativity of all types. A new book, [amazon_link id=”1845137043″ target=”_blank” ]Grand Thieves and Tomb Raiders: How British Video Games Conquered the World[/amazon_link] by Magnus Anderson and Rebecca Levene, describes its accidental growth.

Part of the story involves the deliberate policy of encouraging innovation in personal computers. The Sinclair ZX Spectrum and the BBC Micro play a key role in the development of today’s games industry. As the book notes, “These home-grown machines democratised access to computers and made simple programming skills commonplace – for a while Britain may have been the most computer literate country in the world.” So a key lesson there for the debate about teaching coding skills in schools now.

Just as interesting, though, is the grassroots nature of the early days of the industry. “In the early 1980s the British games market saw one of the most spontaneous, fragmented and lively proliferations of creativity in its history …. British gaming didn’t feel at all corporate: it was ad hoc, unstructured and rather parochial.” Professionalisation followed reasonably quickly, but my reading is that this unstructured and chaotic phase was vital.

This book is based mainly on interviews with key people in the industry. It’s a fascinating business history, that ends up with the Raspberry Pi, whose founders are hoping to repeat the burst of creativity Britain enjoyed in the 1980s. “There’s a fierce hope that the traits that first inspired the British games industry – passionate home coders, a market flourishing with ideas – are robust enough to take hold again.”

[amazon_image id=”1845137043″ link=”true” target=”_blank” size=”medium” ]Grand Thieves & Tomb Raiders: How British Videogames Conquered the World[/amazon_image]

Technology and the conquest of time

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Last night I stayed up late reading (not yet quite finishing) a marvellous book by Rebecca Solnit, [amazon_link id=”0747568413″ target=”_blank” ]Motion Studies: Time, Space and Eadweard Muybridge[/amazon_link]. I discovered her writing last year, when I wolfed down [amazon_link id=”1841957453″ target=”_blank” ]A Field Guide To Getting Lost [/amazon_link]and [amazon_link id=”1844675580″ target=”_blank” ]Wanderlust: A History of Walking[/amazon_link].

This 2003 book is a reflection on technology, nature and society. Muybridge took the famous series of photographs revealing motion to human eyes – as Solnit puts it: “With photography, they would come to see faster what had been hidden in time, and then to reconstruct those moments in time.” All technology really is about the conquest of time in one way or another.

Muybridge was first commissioned by Leland Stanford, one of the railroad magnates. The railroads are part of the story too, “the co-ordination of systems of technology with political and economic power.” Stanford’s reach over technology continues through the university his railroad-earned money enabled him to found. All fascinating – a reflective, poetic companion to another terrific book, Tom Standage’s [amazon_link id=”0753807033″ target=”_blank” ]The Victorian Internet[/amazon_link].

[amazon_image id=”0747568413″ link=”true” target=”_blank” size=”medium” ]Motion Studies: Time, Space and Eadweard Muybridge[/amazon_image]

The chemistry of entrepreneurship

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An intriguing volume has arrived in the post, [amazon_link id=”0691148872″ target=”_blank” ]The Emergence of Organizations and Markets [/amazon_link] edited by John F Padgett and Walter W Powell. It’s a tome, rather, a series of essays combining sociology and biochemistry to analyse a range of organisational innovations – partnerships in Renaissance Florence, the joint stock company in Calvinist Holland, Communism in the Societ Union, oligarchy in post-Soviet Russia. There’s also a section on entrepreneurship in modern capitalism. I’m not sure I’m going to sit down and read it, but will dip into the introductory chapter, The Problem of Emergence, and report back.

[amazon_image id=”0691148872″ link=”true” target=”_blank” size=”medium” ]The Emergence of Organizations and Markets[/amazon_image]

The other squeezed middle

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It’s been a busy week of dawn to dusk meetings, but I did manage to finish Jack Rakove’s [amazon_link id=”0099551861″ target=”_blank” ]Revolutionaries: Inventing An American Nation[/amazon_link] on election night (before going to sleep, secure in my eldest son’s confidence in Nate Silver). For a British reader like me, this bit of history is unfamiliar – I can’t imagine why, but it tends to be glossed over in the curriculum in our schools. However, even for American readers, the approach is probably quite fresh – not strictly chronological but thematic essays, each of which uses some key characters as the narrative driver. And for anybody, of course, it’s interesting to consider the dysfunctionality of modern American politics in the light of this foundational period.

Consider, for example, this passage:

“To be a political moderate during this final crisis [1776] meant something more than holding a middle ground between radicals like the Adamses and future turncoats like Joseph Galloway [who he?]. Moderation did not mean keeping an open mind about rival claims or seeking to balance clashing points of view. Nor were moderates the 18th century version of undecided voters, unsure of their own views or trimming their sails to any passing political breeze. Moderation is better considered as a political position in its own right …. the moderate political leaders … did possess a distinct set of attitudes.”

Surely this is just as true of today’s ‘disenfranchised’ middle? Of course, the 18th century moderates got squeezed out by events that fed extreme views. That’s the trouble with turbulent times.

I was also very struck by the sections on George Washington and the advantage he gained from thinking strategically – that is, more than one move ahead – especially when pitted against wishful thinking on the other side. As noted in my recent post, (Strategic) thinking is hard to do, this is a vanishingly rare skill, so obviously something that our human nature doesn’t equip us for. In contrast to wishful thinking – for a prize example of which, see Jon Stewart on the Fox News coverage on Tuesday night.

[amazon_image id=”0099551861″ link=”true” target=”_blank” size=”medium” ]Revolutionaries: Inventing an American Nation[/amazon_image]