After work

London Essays – Issue 7: Work

After work

Geraldine Bedell interviews Ryan Avent, whose new book, The Wealth of Humans: Work and its Absence in the Twenty-First Century, argues that massive technological change requires a corresponding shift in the way we think about work and remuneration.

Geraldine Bedell: The Wealth of Humans is essentially an argument for the redistribution of profits and savings from the 1 per cent to those whose wages are flatlining, or who are increasingly being made redundant by technology. What might be the mechanism for that? And can it be enacted peacefully?

Ryan Avent: At the moment people are thinking about the specific means: tax, a universal basic income… I think that’s actually getting a bit ahead of ourselves. Two other big things have to happen first. One is a change of mindset in society about what an appropriate level of redistribution is, who deserves it, and what the government’s role ought to be – just as, following the Industrial Revolution, there had to be an evolution in the way people saw government before you could get the massive welfare states that we saw in the 20th century.

The second is the political mobilisation to get these things passed. Again, there’s a parallel with the 19th century, where you couldn’t get big changes until you had trade unions, an extension in the franchise, and the rise of labour parties – really big institutional reforms. The process of building those sorts of institutions is going to take a long time and I suspect will tend to come in response to crisis, unfortunately.

GB: You anticipate a world with many fewer jobs. You also cite evidence that people who are currently workless tend to sleep more, play a lot of computer games, and suffer from drug and alcohol addiction and high rates of suicide. Do you think human society can function without work and the kinds of challenge and sense of identity that come with it?

RA: I think it is possible. It is within our capacity as human beings to build societies where even without cues from the market, people spend their time in useful ways and are satisfied. But, again, it requires a big change in the way society thinks about work. We do have institutions that encourage non-market work – not least families – and you can imagine social cues developing to encourage volunteering or self-enrichment through taking courses.

The problem at the moment is that the people who are stuck without jobs have grown up at a time when there was a very different set of priorities about what it meant to contribute to society and be a valuable individual – and in the span of a generation it’s hard to rewrite those things, to imagine how individuals brought up with those cues could feel satisfied without work.

GB: But you can foresee an era in which human beings might be engaged in artistic production and care work, in tending our gardens and our minds?

RA: If you imagine someone 200 years ago looking at the way we spend our time now – the amount of time we all spend sitting inside, huddled over screens – then it might look quite unpleasant to them: they might think it’s no way to live. Of course, we find quite a lot of satisfaction in it – so it could be that in the future, engagement in certain kinds of video games is seen as quite a good way to spend time, particularly if those games are very social or mentally stimulating.

One interesting thing to think about – as societies age and as life expectancy increases – is how retirees with decades of healthy life outside of work are exploring what to do with their time. You find more and more people doing adult education after they retire, developing new skill sets, maybe starting their own business – not something that could support them, but something that they can do while collecting a pension. In a way, looking to how pensioners are spending their time could be a guide to what a future world with much less work would look like.

GB: Cities have done pretty well so far out of globalisation and the digital revolution. To what extent can London afford to be complacent?

RA: Cities have done well for a few reasons. One is that knowledge-oriented work tends to be located in places like London or the Bay Area – you need coding to run all the machinery that’s going to automate driving and warehouses, and put other people out of work.

I also think that the more complex the world becomes, the greater the importance of social capital. It’s within cities that you develop groups of people who can figure out how to make technology and everything else work – sometimes within companies, sometimes across companies – and that’s why cities have thrived.

That creates a whole set of problems: the more people want to crowd into these places, the harder it is to afford a home there, especially when the rich people don’t want to allow a lot of building – so you get very segregated societies in which the people who are being displaced from jobs in one part of the country can’t easily move to the places that are generating a lot of wealth. That contributes to the sense of almost class conflict that is driving a lot of the political difficulties we’ve seen.

We also need to be aware that increasingly, technology is able to replace work done by professionals. We have a lot of algorithmic trading now. It could be that more and more of the work that’s done in big banks can be automated – and then suddenly, the value of a place like London looks a lot different. But I suspect it could be the political ructions occurring as a result of technological transformations that end up dealing a blow to cities before the automation of professions does. In other words, Brexit is more of an imminent threat to London.

GB: You talk in the book about a failure to invest the wealth of cities back into their infrastructure. Do you see city authorities as failing in their responsibilities?

RA: Yes, it is certainly within the ability of San Francisco or London to permit much more housing and to invest in the sorts of infrastructure that would limit the congestion costs associated with that. But I don’t think it’s just the cities; it’s a broader societal failure. Part of it stems from this industrial-economy-era idea of a scarcity that isn’t there, that we have too little capital to invest, so if we devote too much to infrastructure then we won’t have as much left over for other important private sector things – and I don’t think that’s right.

Investing in new infrastructure would crowd in a lot of new economic activity and private investment, and there would be more of a surplus to go around. New technologies need physical infrastructure to thrive – new broadband, roadways, housing for skilled workers – but one of the constraints on rich economies is the fact that so much income is flowing to the very rich who tend to save and not spend. That leads us to this world where economies tend to bump along in near-slump conditions the whole time and no one feels that good about anything.

GB: Are certain types of jobs going to be protected at least for the medium term? If you were a parent advising your child, would you urge them to think about education, healthcare, government?

RA: I am a parent, though my children are some way from making university decisions – but I do think about this. They’ll want the capacity to teach themselves, to learn new skills and be flexible – so they might develop particular engineering skills that become obsolete, but they’ll also have learned other things along the way that will allow them to adapt. I think there are going to be opportunities for highly skilled and intelligent people over the next few decades to try to figure out how to make all these new technologies work in society.

There’s a whole artisanal class of jobs where the fact that the work done by a person is crucial – from theatre to artisanal brewing. I don’t think it’s going to provide mass employment, but it’s there. The big question is the care occupations – and there’s this sense that these are going to be the things that save us, that everyone is going to be a nurse or a teacher. Certainly those sectors have provided the lion’s share of new employment growth over recent decades and for a variety of reasons are going to be relatively insulated over the next few decades – but I think it’s easy to overstate how good a thing that is.

If you’re a 40-year-old male who doesn’t have a college education and you were hoping to work in a factory, but the factory job goes, it’s quite a lot to ask that you retrain to work in a care occupation – particularly since you may have grown up with one idea about what it means to be a male breadwinner, and that didn’t include changing someone’s bedpan. The other issue is that education and healthcare are very expensive – if not for private individuals then for the government – partly because they’re so labour intensive. And if you could have a computer do a lot of the basic diagnostic work, helping more people afford better healthcare, then I think that’s a good thing. But that means cutting jobs, so there’s a tradeoff. I think for the next 10 or 20 years, probably the employment side will win out but, after that, I’m not sure that it would be a good thing more broadly if those sectors continued to absorb more and more people.

GB: You make the point in the book that unions in Sweden and Germany have had some success in managing the transition to the digital economy. How important do you see unions being in all this? And do British unions need to change?

RA: I think something along the lines of the labour movement is going to have to happen to make the digital revolution work for most people. The fundamental problem we’ve got is that there’s an abundance of labour, and that new technology is only going to become better at replacing existing workers, increasing that glut, which means firms have a lot of different ways to displace labour whenever it tries to bargain for higher wages and more of a share from the gains from growth.

In Germany, part of the process has been to say “We’re not just going to bargain for more of a share of the gains from growth, we’re also going to share work”. And you can imagine that kind of thing working across the whole of society, where people work shorter weeks and get paid more per hour or are given a share of the profits. But getting there is very tricky. You can see hints of it in movements around things like Uber, but I almost wonder if it’s too little too late – because it’s now so easy to use technology to frustrate these moments and displace workers as they’re beginning to organise.

I wonder if it’s going to happen outside of a particular industry context. Essentially, over the last 30 years, we’ve switched to this mode of thinking where it’s all about the individual boosting their own bargaining power by developing particular skills and networks. And we’re realising that’s not going to cut it now and we have to go back to a model of solidarity – but the old labour union model is not, I think going to work, outside of places where you have big encompassing unions, like the Nordics.

GB: Should we look to governments to help distribute the social capital? I am not sure how the UK government is able to give me a share of the profits of the social capital I am creating for US-based companies every time I go online.

RA: All day long, when we interact with an app or a website, we are providing our data to people – and for a company like Google, this is an incredibly valuable resource. They can use this data to train up their artificial intelligence operations and it’s a competitive advantage – and you could argue that really that’s a public resource that perhaps we should be getting some sort of property right over it. Or we could tax Google more. Some of these new digital tech companies look a little bit like natural monopolies. Much as, in the industrial era, government had to step in and heavily regulate these monopolies, to turn them into utilities or even to nationalise them, so I think governments will play an important role this time – but it’s kind of hard to anticipate what it’s going to look like.

There’s low-hanging economic fruit in cities, in the sense that a lot of the benefits that are generated end up being capitalised in land prices and house prices. When the city comes up with new ideas and generates wealth, a lot of it is social wealth, but it shows up in house prices. So if you were lucky enough to buy a home in central London in 1980, you’ve been a massive recipient of that social wealth. If the government could be better at tapping that, either through taxing land or building more homes, bringing down the cost of housing and redistributing that wealth, that would be a good way to do it – but there’s obviously a lot of resistance to that.

And before any of these big revolutionary changes can happen there has to be a change of mindset away from the conventional wisdom that it’s hard-working entrepreneurs who generate this value and if we don’t let them earn their billions and keep all of their billions, society will be worse off. We need to rethink that model because a lot of the wealth that’s being built up is a consequence of social institutions, and the social knowledge and public goods created to support them.

GB: To what extent do you think that politicians have recognised the scale of the impending crisis? You quote Mitt Romney, when he was a presidential candidate, famously disparaging the 47 per cent of Americans who pay no taxes.

RA: Mitt Romney’s comment is interesting because it does seem like the conversation has changed a lot over the last four years, even over the last year. There has been a recognition that a substantial proportion of the population of rich countries has been left behind, that they’re angry enough about that to vote for all sorts of things, some of which are not very good, and that’s woken up the establishment to the fact that they’d better do something about it. And having had the fear of God put into them, people are starting to wonder what’s the right approach here? Trade has been the focus so far – but you’re starting to see an acknowledgement that repatriating factories and trade barriers aren’t going to bring the jobs back – that, really, technology is the long-run issue here.

Politicians are still more likely to say it’s the fault of trade or immigrants than technology – and that might not change for a while, because trade and immigrants are much more convenient villains: people like their technology and also no one really knows what the right answer is to fix it. It’s a less politically comfortable position.

Over the last 50 years we haven’t seen the sort of massive structural change in our politics that we seem to need now, so we’ve forgotten that it’s even possible, which affects how people view the years ahead: they assume big changes can’t really happen, but I don’t think that’s right.

GB: How optimistic are you about Universal Basic Income?

RA: I think that’s the logical endpoint of the changes we’re going to see, that we end up in a world where that’s a key part of the welfare state. The existing social safety net assumes that if you’re a healthy adult, you’re going to try to work; UBI is a different bargain, which is that you’re a member of society and therefore you deserve some help, no matter what. I think it requires much more of a crisis of work in society to get to the point where people are OK with that, particularly in terms of funding it, because you’re going to end up with a situation where 30–40 per cent of the population are paying quite a lot in tax to support everyone else who’s not really working, and that’s a very difficult thing to have without a change of mindset.

GB: To what extent do you see the owners of capital – I’m thinking about the tech giants – recognising that there is a problem? Do you detect a growing sense of social responsibility, or is it all buying plots in New Zealand to sit out the revolution?

RA: It’s a mixed bag. You have a lot of interest in UBI from people in Silicon Valley, although it’s often naïve – an assumption that UBI is a quick fix and if they just slap it on society they can go back to doing their disruption and everyone will be OK with that – without their really thinking about all the different roles that work plays in society and how it’s going to be much more difficult to keep people happy in a world with less work.

And then I think they tend to be really optimistic about the ability of technology to solve the problems that it creates, an assumption that this is all overblown and eventually the new apps or whatever are going to create lots of new jobs and everyone will be happy: the gig economy will save us all. History suggests that technology doesn’t solve its own problems, that it needs a lot of help from society.

GB: Are you optimistic or pessimistic about the post-work world?

RA: I am long-run optimistic. The changes that we’re seeing in technology should allow us eventually to have a world in which no one has to face hunger, where people can live longer, more fulfilled lives, where they can spend their time doing things they want to do. I think technology will make our lives much better over the long run. But we’ve got to reform our institutions and change the way society thinks to get from point A to point B; that’s a really difficult process and there are a lot of pitfalls along the way.

If you were to pick a person at random in 1850, should that person have been optimistic about industrial technology? And over the long run, the answer is, yes, very much so. But were they going to benefit directly over their lifespan, or were their children or grandchildren going to benefit directly? No, it’s not clear that they would. So I think we’ll get there eventually, but it’s going to be a nerve-wracking process.

GB: It took a lot of violence to work out the tensions created by the industrial revolution. Can we possibly avoid that?

RA: As a result of the politics of the last 50–70 years we tend to assume that institutions are powerful enough to defend themselves; that peace is something we can expect; that the worst doesn’t happen any more. We are going to be reminded of the amount of social activity it takes to keep things from falling apart. I guess I’m hopeful that the history is there and all we need is a nudge – in 1910, people didn’t know that society might occasionally accidentally almost destroy itself with these crazy new technologies. So hopefully we will have learned some lessons and they are just sitting there waiting to be nudged into action. If there’s a reason to be optimistic, it’s that.