Posts Tagged ‘automation’

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Chico Harlan [ht: ja] describes the arrival of the first robots at Tenere Inc. in Dresser, Wisconsin:

The workers of the first shift had just finished their morning cigarettes and settled into place when one last car pulled into the factory parking lot, driving past an American flag and a “now hiring” sign. Out came two men, who opened up the trunk, and then out came four cardboard boxes labeled “fragile.”

“We’ve got the robots,” one of the men said.

They watched as a forklift hoisted the boxes into the air and followed the forklift into a building where a row of old mechanical presses shook the concrete floor. The forklift honked and carried the boxes past workers in steel-toed boots and earplugs. It rounded a bend and arrived at the other corner of the building, at the end of an assembly line.

The line was intended for 12 workers, but two were no-shows. One had just been jailed for drug possession and violating probation. Three other spots were empty because the company hadn’t found anybody to do the work. That left six people on the line jumping from spot to spot, snapping parts into place and building metal containers by hand, too busy to look up as the forklift now came to a stop beside them.

Tenere is just one of many factories and offices in which employers, in the United States and around the world, are installing robots and other forms of automation in order to boost their profits.

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They’re not doing it because there’s any kind of labor shortage. If there were, wages would be rising—and they’re not. Real weekly earnings for full-time workers (the blue line in the chart) increased only 2.3 percent on an annual basis in the most recent quarter. Sure, they complain about a shortage of skilled workers but employers clearly aren’t being compelled to raise wages to attract new workers. As a result, the wage share in the United States (the red line) continues to decline on a long-term basis, falling from 51.5 percent in 1970 to 43 percent last year (only slightly higher than it was, at 42.2 percent, in 2013).

No, they’re using robots in order to compete with other businesses in their industry, by boosting the productivity of their own workers to undercut their competition and capture additional surplus-value.

And they can do so because robots have become much more affordable:

No longer did machines require six-figure investments; they could be purchased for $30,000, or even leased at an hourly rate. As a result, a new generation of robots was winding up on the floors of small- and medium-size companies that had previously depended only on the workers who lived just beyond their doors. Companies now could pick between two versions of the American worker — humans and robots. And at Tenere Inc., where 132 jobs were unfilled on the week the robots arrived, the balance was beginning to shift.

So, where does that leave us?

The prevalent response has been to worry about mass unemployment. However, as I explained a month ago, I don’t think that’s the issue, at least at the macro level.

If workers are displaced from their jobs in one plant or sector, they can’t just remain unemployed. They have to find jobs elsewhere, often at lower wages than their earned before. That’s how capitalism works.

Much the same holds for workers who don’t lose their jobs but who, as new technologies are adopted by their employers, are deskilled and otherwise become appendages of the new machines. They can’t just quit. They remain on the job, even as their working conditions deteriorate and the value of their ability to work falls—and their employers’ profits rise.

No, the real problem is how the gains from the introduction of robots and other new technologies are being unevenly distributed.

And that’s an old problem, which was confronted by forces as diverse as the Luddites and the John L. Lewis-led United Mineworkers of America, none of which was opposed to the use of new, labor-saving technologies.

In fact, Lewis’s argument was that machinery should replace hand work in the mines, which would serve to both ease the burden of miners’ work increase their wages—all under the watchful eye of their union. And mine-owners who attempted to pay workers less, without technological improvements, should be driven out of business.

Mr. Lewis called upon the miners to accept machinery, since they could not turn back the clock, but to demand a fair share of the benefits of mechanization in the form of shorter hours and increased compensation. He said that machines must be made the workingman’s ally, and that nothing was to be gained by fighting them.

The fact is, right now workers are not getting “a fair share of the benefits of mechanization,” whether in the form of shorter hours or increased compensation.

And if employers are not willing to provide those benefits, workers themselves should be given a say in what kinds of robots and other new technologies will be introduced, what their working hours will be, and how much they will be compensated.

Only then will workers be able to confidently say, “we’ve got the robots.”

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198091_600  How the Press Leads "The Resistance"

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New technologies—automation, robotics, artificial intelligence—have created a specter of mass unemployment. But, as critical as I am of existing economic institutions, I don’t see that as the issue, at least at the macro level. The real problem is the distribution of the value that is produced with the assistance of the new technologies—in short, the specter of growing inequality.

David Autor and Anna Salomons (pdf) are the latest to attempt to answer the question about technology and employment in their contribution to the recent ECB Forum on Central Banking. Their empirical work leads to the conclusion that while “industry-level employment robustly falls as industry productivity rises. . .country-level employment generally grows as aggregate productivity rises.”

To me, their results make sense. But for a different reason.

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It is clear that, in many sectors—perhaps especially in manufacturing—the growth in output (the red line in the chart above) is due to the growth in labor productivity (the blue line) occasioned by the use of new technologies, which in turn has led to a decline in manufacturing employment (the green line).

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But for the U.S. economy as a whole, especially since the end of the Great Recession, the opposite is true: the growth in hours worked has played a much more important role in explaining the growth of output than has the growth in labor productivity.

The fact is, increases in labor productivity—which stem at least in part from labor-saving technologies—have not, at least in recent years, led to massive unemployment. (The losses in jobs that have occurred are much more a cyclical phenomenon, due to the crash of 2007-08 and the long, uneven recovery.)

But that’s not because, as Autor and Salomons (and mainstream economists generally) would have it, there are “positive spillovers” of technological change to the rest of the economy. It’s because, under capitalism, workers are forced to have the freedom to sell their ability to work to employers. There’s no other choice. If workers are displaced from their jobs in one plant or sector, they can’t just remain unemployed. They have to find jobs elsewhere, often at lower wages than their earned before. That’s how capitalism works.

Much the same holds for workers who don’t lose their jobs but who, as new technologies are adopted by their employers, are deskilled and otherwise become appendages of the new machines. They can’t just quit. They remain on the job, even as their working conditions deteriorate and the value of their ability to work falls—and their employers’ profits rise.

What happens, in other words, is the gains from the new technologies that are adopted are distributed unevenly.

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This is clear if we look at labor productivity for the economy as a whole (the blue line in the chart above) since the end of the Great Recession, which has increased by 7.5 percent. However, the wage share (the green line) has barely budged and is actually now lower than it was in 2009.

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The results are even more dramatic over a long time frame—over periods when labor productivity was growing relatively quickly (from 1947 through the 1970s, and from 1980 until the most recent crash) and when productivity has been growing much more slowly (since 2009).

During the initial period (until 1980), labor productivity (the blue line in the chart) almost doubled while income shares—to the bottom 90 percent (the red line) and the top 1 percent (the green line)—remained relatively constant.

After 1980, however—during periods of first rapid and then slow growth in productivity—the situation changed dramatically: the share of income going to the bottom 90 percent declined, while the share captured by the top 1 percent soared. Even as new technologies were adopted across the economy, the vast majority of people were forced to find work, at stagnant or declining wages, while their employers and corporate executives captured a larger and larger share of the new value that was being created.

Autor and Salomons think they’ve arrived at a conclusion—concerning the “relative neutrality of productivity growth for aggregate labor demand”—that is optimistic.

The conclusions of my analysis are much more disconcerting. The broad sharing of the fruits of technological change, from the end of World War II to the late 1970s, was relatively short-lived. Since then, the conditions within which new technologies have been adopted have created a mass of increasingly desperate workers, who have either been forced to labor in more automated workplaces or have been displaced and thus forced to find employment elsewhere. In both cases, their share of income has declined while the share captured by a tiny group at the top has continued to rise. That’s the “new normal” (from 1980 onward) which looks a lot like the “old normal” of capitalist growth (prior to the first Great Depression), interrupted by a relatively short period (during the three postwar decades) that is becoming increasingly recognized as the exception.

Even more, I can make the case that things would be much better if the adoption of new technologies did in fact displace a large number of labor hours. Then, the decreasing amount of labor that needed to be performed could be spread among all workers, thus lessening the need for everyone to work as many hours as they do today.

But that would require a radically different set of economic institutions, one in which people were not forced to have the freedom to sell their ability to work to someone else. However, that’s not a world Autor and Salomons—or mainstream economists generally—can ever imagine let alone work to create.

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Treasury Secretary Steve Mnuchin may not be worried. Nor, it seems, are other members of the economic and political elite. But the rest of us are—or we should be.

As regular readers of this blog know (cf. all these posts), the robots are here and they’re rapidly replacing workers, thus leading to less employment, downward pressure on wages, and even more inequality.

The latest evidence comes from the work of Daron Acemoglu and Pascual Restrepo, who argue, using a model in which robots compete against human labor in the production of different tasks, that in the United States robots have reduced both employment and wages during recent decades (from 1993 to 2007). That conclusion holds even accounting for the fact that some areas of the economy may grow (thus increasing employment for some workers) when the use of robots raises productivity and reduces costs in other industries.

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Even though U.S. employers have been introducing industrial robots at a pace that is less than in Europe, their use in American workplaces has in fact grown (between 1993 and 2007, the stock of robots in the United States increased fourfold, amounting to one new industrial robot for every thousand workers). And, once the direct and indirect effects are estimated, robots are responsible for up to 670,000 lost manufacturing jobs. And that number will rise, because industrial robots are expected to quadruple by 2025.

Actually, the effects have likely been even more dramatic, because Acemoglu and Restrepo take into account only three forces shaping the labor market: the displacement effect (because robots displace workers and reduce the demand for labor), the price-productivity effect (as automation lowers the costs of production in an industry, that industry expands), and the scale-productivity effect (the reduction of costs results in an expansion of total output).

What they’re missing is the effect on the value of labor power. As I explained last year, when productivity increases lower the prices of commodities workers consume, the value capitalists need to pay to get access to workers’ ability to work also goes down. As a result, even if workers’ real wages go up, the rate of exploitation can rise. Workers spend less of the day working for themselves and more for their employers. Capitalists, in other words, are able to extract more relative surplus-value.

And more surplus-value means more income for all those who share in the booty: CEOs, members of the 1 percent, and so on.

That’s why the increasing use of industrial robots, which under other circumstances we might actually celebrate, within existing economic institutions represents a disaster—not for their employers (who, like Mnuchin, are not particularly worried), but for all the workers who have been or are likely to be displaced and even those who manage to hang onto their jobs.

Workers are the ones who are going to continue to suffer from the “large and robust negative effects of robots”—unless and until they have a say in how robots and the resulting surplus are utilized.

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