I’ve been pondering some more about how automation and AI are going to affect the world of work. One question that’s come to mind is: should we expect business owners to share the benefits of automation with their employees?
I’ll say right at the outset, I don’t have the answer, and this is in many ways a simplistic and naïve view of innovation. It’s not intended to be a scholarly article, more a sharing of concerns and something I invite other greater minds to both tear down and contribute to.
Buckminster Fuller’s vision of a world in which labour is no longer required is, it seems to me, predicated on the benefits of the labour-saving inventions being shared by the whole of society. Greater productivity means that overall we all have to work less to get the same output, and that should mean we all have more ‘leisure’ time (or at least time not involved in production of our physical needs & wants).
So let’s bring that down to the level of a single business. The owners calculate that an investment in automation will allow them to produce the same quantity of goods with fewer employees on the production line. By having fewer worker hours to pay for, they can recoup their investment in a certain period of time. For most businesses, that’s likely to be maybe a 3-5 year payback period, after which the automation adds profit straight to their bottom line.
That’s how it works with the current shareholder-led system, with all the gains accruing to the business owners. Great for business owners – less hassle from employees, and after the payback period, more profit. But it’s not so great for the workers who get laid off.
There is still a need for the same amount of production, but now we need fewer worker-hours to produce that. We have choices to make, at a societal level, about how we handle that situation in a way that is fair to everyone and doesn’t simply throw workers on the scrap-heap of things that have been superseded by technology.
The business still has an amount of revenue coming in, but fewer hours are needed to produce it. One option might be to still pay the workers the same salary, giving them time off to do other things. That would have the benefit of avoiding unemployment, and of enhancing workers’ lives. The downside is it could take away the business-owners’ incentive to invest in improved productivity in the first place.
Or we might say that as the employer now only needs to purchase a certain number of hours labour, those hours should be shared out equally between all the existing workers. The benefit is nobody is thrown on the scrap-heap, they all still get to be useful, and they all still get to earn. A downside is that all the workers’ incomes would fall, possibly to an unsustainable level, putting more of them into the benefits system.
In the current arrangement, the business-owner makes the investment, and the workers suffer the reduction in jobs. In the first option above, the business-owner carries the cost (putting in the automation) and the workers get all the benefit (shorter working hours). In the second, the workers take all the pain, having less in wages to share between them, and the business-owner gets all the extra profit.
Some might say that it’s right that the owners get all the profit – after all, they made the investment. And in classic capital-led economics, that would be correct. But the problem is, only the owners get to make that choice. The workers have the choice thrust upon them. Under current rules, the owners take the lion’s share of the gain and the workers take pretty much all of the pain. For a choice they didn’t make.
Maybe what we need is a way for the workers to have a say in how automation is applied, to share in the gain, and to choose to share in the pain. Maybe during the payback period they take a lower wage, investing in their own future by contributing to making the investment worthwhile for the owners. But that’s only ever going to work if it’s a choice they make themselves.
From there, we get into the unique and potentially vastly different situation of each worker. The young man at the beginning of his family life, with kids in school and a big mortgage, is going to be less able to take a drop in his income than the guy who’s approaching retirement and has paid off his home loan. And even that is a massive over-simplification.
I don’t know the answer. But I do know that the current ‘owner-takes-it-all’ approach to automation will create enormous problems for society as a whole, and for the ‘working classes’ (whatever that means these days) in particular. Failing to deal with it will almost inevitably lead to massive social unrest, as jobs become increasingly scarce. It is not an issue we can afford to ignore, and we cannot leave it to capital-funded* government to resolve it.
I’d love your views – share them below, or use this as a conversation-starter on social media. The more we talk about it, in an open an respectful manner, of course), the better the solution that emerges.
* That’s a whole other article, but make no mistake, governments are not funded by taxation of their citizens. Taxation only occurs because of commerce, and commerce is funded and controlled by capital.