Fully Automated Luxury Communism A Manifesto

Many contemporaries claimed the \$5 figure – unrivalled anywhere else – was simply a publicity stunt, while others said it betokened a unique perception on the behalf of the Ford Company: higher wages weren’t only needed to retain staf, but also to ensure the people making the cars could also aford to buy them.

It was to be that second interpretation which made more sense over time. Today it seems undeniable that Ford intuited how industries based on mass consumption, like the embryonic car industry, require ordinary people to enjoy leisure as much they endure work. That would explain why Ford also supported the eight-hour day and the five-day week, writing of the latter, in 1926, ‘It is high time to rid ourselves of the notion that leisure for workmen is either lost time or a class privilege.’

Those words drove at the heart of how twentieth-century capitalism came to view itself: functioning properly, the system allowed employees to buy the goods and services their work had created. This proved the basis for a compromise across classes built on rising productivity, profits for the wealthy and progressively improving living standards for everyone else.

For a long time things seemed to go to plan, with improvements in productivity feeding through to higher wages and an increasingly widespread abundance. As a result Reuther’s response appeared unduly pessimistic – the conclusion of someone with a political bias against the consequences of technological change. And yet today, as the Economist’s rhetorical challenge makes clear, it is one of the key questions shaping our future. Nobody, so far at least, has a definitive answer.

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Peak Horse

The First Disruption started around 10,000 BC as Homo sapiens, likely somewhere between the Mediterranean Sea and Persian Gulf, began building a world of agriculture, settlement and surplus. Rather than relying on the power of their own bodies, humans started to draw on domesticated animals, while increasingly complex forms of society permitted slavery, hierarchy and the emergence of early energy technologies. Beneath this promethean change, however, the critical disruptor was our new mastery over biological life, this arising from recent knowledge about how to breed for specific traits and reprogramme elements of the natural environment. In its own way, this was a revolution in information, although we wouldn’t know its underlying mechanisms until the mid-nineteenth century.

After the First Disruption physical work was increasingly performed by novel configurations of human labour, animals and the elements, and by the twelfth century the sight of the water and windmill was increasingly common across much of Europe. This was a world where motive force was overwhelmingly organic: oxen in the field, horses to travel, human motion for the spinning wheel, even a special breed of canine – the Turnspit dog – would turn meat while it roasted.

In a world absent of concentrated forms of energy, or significant mechanical power, change was slow, with political tumult or economic downturn often spelling technological reverse. Most Europeans would not drink water as clean as that found in Ancient Rome until the twentieth century, with no city achieving its scale and prominence until London in the early 1800s.

That was the case until the emergence of the Second Disruption, which presented itself not only as a new paradigm in labour and production, but also energy. Now fossil fuels – plentiful, powerful and reliable – would replace the brawn of human and beast, in a matter of decades transforming the world. Like any great transition, such change had its own victims and they extended far beyond the Turnspit dog. Furthermore, the line between crisis and opportunity was not always clear, and as features of the new world scraped against the certainties of the old, it was easy to confuse progress for decay.

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An outstanding example of this can be found in London in the final years of the nineteenth century. By 1894 the British capital, now the largest city on Earth, confronted a crisis of epic proportions. Having survived the threat of invasion for almost a millennium, be it the Spanish Armada or Napoleon’s Revolutionary Army, an unexpected foe now imperilled the city – horse shit. The ‘Horse Manure Crisis’, as it was termed by The Times that year, struck fear into the hearts of Londoners who soon expected their city to be so covered in faeces that its streets would resemble the canals of Venice.

Such a threat had been a long time in the making. Over the preceding century London’s population had quadrupled, and it had no rival in industry, social complexity or geographical spread, with New York only surpassing it on each measure by the early 1920s.

This success was what precipitated the 1894 crisis. London was at the leading edge of trends resulting from the Second Disruption, especially rapid population growth – as fewer infants and children died and life expectancy, after a generation, began to increase. This, combined with rapid urbanisation, began to create major infrastructural problems in housing, transport and sanitation.

But while the Second Disruption meant more people, more trade and more work, a vital piece of technology remained from the pre-steam era: the horse. Even as late as the 1890s – when some of London’s streets had electric lights – there were around 11,000 hansom cabs in the city, as well as several thousand horse-drawn buses, each employing twelve large animals. That meant a staggering 50,000 horses transporting people around the city every day, not to mention the many more horse-drawn carts and drays delivering goods. The sheer number of animals, in addition to their size, meant London’s streets were covered by at least 1.5 million pounds of horse manure every day.

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Which is why when The Times speculated in 1894 about the city a half century thereafter it concluded, ‘In fifty years, every street in London will be buried under nine feet of manure.’ Such a conclusion seemed reasonable – after all, cities of this kind had never existed before and they appeared to be unsustainable. Even an urban studies conference convened specifically to discuss the issue some four years later, failed to arrive at any solutions.

And yet we now know such predictions never came to pass. The technologies of the internal combustion engine and electricity, already in evidence as The Times penned its obituary for the world’s leading experiment in urban living, meant cars, buses and electric trams replaced the horse-drawn cart and carriage. By 1912, a seemingly insurmountable problem had been solved. In every major city horses were being replaced with motorised vehicles. What looked like a secular problem was merely a hangover of the First Disruption coming up against the birth pangs of the Second.

Peak Human

While the Second Disruption began to unfold in the last decades of the eighteenth century, the date of The Times prognostication – 1894 – makes clear just how long it took for many of its innovations to permeate across society.

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So while the motive power of animals, in this case horses, characterised the technology and energy model of another age, the most advanced economies wouldn’t reach ‘peak horse ’ until the early twentieth century. The United States, which by that time had become the world’s largest and most advanced economy, wouldn’t reach its apogee until 1915 when over 26 million horses lived and worked alongside humans. Within just a few decades, however, they would disappear from the world of work, substituted in a range of tasks by machines which were more reliable, didn’t get sick and, most importantly, led to far greater productivity. Paradoxical as it might seem, we employed animals like never before at the very moment they were becoming obsolete.

This was a theme returned to in 1983 by the Nobel Prize– winning economist Wassily Leontief. For Leontief, human labour in the twenty-first century would come to resemble horses at the turn of the twentieth. Now, as then, a key source of value-creation and wealth would become obsolete:

Computers and robots [will] replace humans in the exercise of mental functions in the same way as mechanical power replaced them in the performance of physical tasks. As time goes on, more and more complex mental functions will be performed by machines … this means that the role of humans as the most important factor of production is bound to diminish—in the same way that the role of horses in agricultural production was first diminished and then eliminated by the introduction of tractors.

If Leontief is right, then many of the problems we presently view as intractable may, within a few short decades, seem as outlandish to the next generation as London sinking in excrement does to us.

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The evidence appears to lend at least some weight to Leontief ’s conclusion, nowhere more so than in manufacturing. In 1970 there were around 1,000 industrial robots worldwide. By the beginning of 2016 that number had risen to 1.8 million and is expected to exceed 3 million by 2020. Since 2010 the global stock of industrial robots has increased by an annual average of more than 10 per cent. Compound growth means if that trend persists manufacturing won’t just stop creating jobs – as it already has done despite massively increased output – but their numbers will significantly decline.

The ever-greater employment of industrial robots correlates entirely with what can be observed in both manufacturing jobs and output. In the two decades following Leontief ’s prediction, information technology and robotics allowed the US steel industry to increase output from 75 to 125 million tonnes while the number of workers declined from 289,000 to 74,000. More broadly, the US lost 2 million manufacturing jobs over the period to automation – around 11 per cent of the sector.

Between 1997 and 2005 that trend only continued to accelerate with US manufacturing output increasing by another 60 per cent while almost 4 million more jobs in the sector disappeared. The explanation why is straightforward: a major rise in productivity allowed industry to produce more with less. By 2007 American manufacturers were using more than six times as much equipment, including computers and software, as they had done twenty years earlier – while doubling the amount of capital used per hour of employee work. Contrary to popular misconceptions in the US of millions of manufacturing jobs being lost to cheaper workers abroad, for the most part they have simply been automated – subject to ever improving eficiency.

Surprisingly, less developed economies fare even worse over the same period, with Brazil enduring a 20 per cent decline in industrial employment and Japan 16 per cent. Perhaps most impressive of all is China which, in the process of becoming the world’s leading manufacturer, lost 16 million industrial jobs. As one journal observed, ‘though it is of course easy to demonstrate that plenty of industrial production still takes place, and that this is not only in important exporter nations such as China, the share of workers actually employed in manufacture has now been declining for almost two decades at the global level.

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The extent of such change is most obvious in those countries which industrialised first, and today Britain and the United States have a smaller percentage of their workforce in manufacturing than they did in the early years of their respective industrial revolutions. Because this process of productivity gains leading to job losses in manufacturing is global, some forecasts predict that at the current rate of displacement, factory employment, which accounted for 163 million jobs in 2003, is likely to employ no more than a few million people by 2040.

Manufacturing work, while often more complex than many imagine, is repetitive and thus highly liable to automation. As we approach ‘peak human’ it is in this sector where – just as with horses in the opening decades of the twentieth century – the old world will transition to the new more quickly than many imagine.

A stunning representation of the changes automation can efect on productivity and jobs can be seen with the Dutch tech giant Philips, one of the world’s leading companies in the manufacture of lighting. While the business has more than a hundred facilities located across multiple continents, their Drachten plant in the Netherlands is home to some of the most sophisticated industrial technology on Earth. Here,

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128 robot arms do the same work as hundreds of employees in the company’s factory in Zhuhai, China. Philips claim that productivity is ten times higher in their Drachten plant, with the robotic arms so quick they are kept behind glass screens to ensure the safety of the few employees that remain.

Such hugely difering levels of productivity, combined with worker’s wages in China rising continuously for two decades, means automation is beginning to put pressure on those industries which relocated to the Global South after the 1970s. While many jobs in manufacturing remain there for now, lower levels of comparative development will count for little. Indeed it is estimated that China will be spending nearly \$60 billion a year on robotics by 2020.

In 2012 Terry Gou, CEO of Foxconn, compared his company’s 1 million employees to animals and complained that managing them ‘gives me a headache ’. That partly explains why, just three years later, a single Foxconn factory in Kunshan, China, substituted robots for sixty thousand employees. Ultimately, countries in the Global South are no more immune to the pressures of automation in industry and manufacturing than those of Europe and North America. And while countries like China and South Korea benefitted from the global relocation of production after the 1970s, the same will not hold true for today’s lower GDP countries like Bangladesh and Indonesia. This time, capital’s ‘fix’ is primarily technological rather than spatial. That has stark implications for how poorer countries might navigate development.

The End of Mass Agriculture

While it feels like manufacturing is in uncharted waters thanks to technological unemployment, we ’ve been here before. Indeed what the Third Disruption is presently doing to manufacturing mirrors what the Second Disruption did to the breakthrough technology of humanity: agriculture.

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Agriculture, as already outlined, was the innovation at the heart of the First Disruption, allowing surplus and ever more complex forms of cooperation to transform what it meant to be human. And while one can argue about distinct technological periods within even that – as Peter Drucker and Jeremy Rifkin do – even as recently as the nineteenth century, 60 per cent of the population in countries like Italy and France worked in agriculture. Whether it was the Roman Empire of the first century AD, Europe during Charlemagne or Eastern China under the Song Dynasty a millennium ago, the average person worked in farming, almost always cultivating land which wasn’t theirs.

Today things look rather diferent. Just 4 per cent of Italy’s labour market is in agriculture, while the figure is less than 3 per cent for France, 2 per cent in the UK and 1 per cent in the United States – a nation which leads the world in the production of milk, corn, chicken and beef.

In short, we feed more people more food than ever before with ever fewer people doing the work. While that might sound trivial, as recently as a century ago it would have struck most as entirely implausible.

Similarly, by the beginning of the twenty-first century it was readily apparent that industries central to the Second Disruption – such as iron and steel production, as well as the manufacture of consumer durables like cars and electronic goods – required ever fewer workers to produce ever more output. This trend, an efect of rising productivity, is now observable on a global scale. Even in China, by far the world’s largest exporter of goods, less than a quarter of the labour market works in industry.

The default presumption among economists, at least until recently, was that just as many people ’s work shifted from agriculture to industry something similar would unfold with services. Post-industrial service-based economies would replace those built on manufacturing. To some extent, this was borne out: even China’s service sector grew relative to manufacturing while it became the world’s leading industrial power. In countries like France, Britain and the United States services now comprise 80 per cent of both economic output and jobs.

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There is only one problem with the presumption that services, high- or low-skilled, will provide jobs where industry and agriculture no longer will. It turns out that any repetitive endeavour – whatever the industry – can be automated within the context of rising digitisation. Just as we reached ‘peak horse ’ a century ago, as one paradigm came up against another, within a generation we are set for peak human.

Rise of the Robots

In 1997 IBM’s Deep Blue defeated grandmaster Garry Kasparov over a series of chess matches, becoming the first computer to do so. While that was an iconic moment in the unfolding story of humans and machines, it paled in comparison to Watson, also built by IBM, when it later defeated Ken Jennings and Brad Rutter – two of the greatest Jeopardy! players in the history of the TV quiz show. Chess is a uniquely challenging game, but Jeopardy!, which demands real-time pattern recognition and creative thinking, more closely resembles the features associated with distinctively human intelligence.

Not long after, Ken Jennings neatly summed up what that defeat might mean for white-collar work – which values pattern recognition and creative thinking – over the coming decades.

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