Does capitalism, with its accompanying technological disruptions, create more jobs than it destroys?
Conventional wisdom says unequivocally “yes.” Each new wave of innovation eventually brings new jobs in number and value far greater than those it displaces. Telegraph readers become telephone operators become call center representatives. No need to fret over, or more to the point – adapt around – changes to the workforce wrought by technology because new employment will magically replace the old. What has been always shall be.
Policy-makers and the public at large may be missing a massive transformation unfolding right beneath our feet because we are looking at the wrong data. Has capitalism always created an ever-expanding pool of jobs? Not exactly. Will it create enough new jobs in the future to support a social model based on mass employment? Almost certainly not.
Two logical flaws contribute to our myth of capitalist job creation. First, we conflate “jobs” with “work.” They are not the same thing. Capitalism invented the concept of a job while steadily and relentlessly eliminating work. Mass employment is itself an innovation developed by capitalism. As technical sophistication advances, the work we replace becomes more sophisticated. This process eventually eats into job creation, as even the most uniquely human of work processes becomes vulnerable to automation.
We have already entered an era of declining employment that has been overlooked for decades. The decline in new job creation is only cushioned today by our tolerance for low wages, fueling the growth of easily replaceable employment in low-skilled service jobs. The end of mass employment as a social force is already well-advanced. Though it poses a social challenge, it a promising development for cultures with the agility to adapt.
Capitalism, and the technical innovations it spawns, incrementally replaces returns on toil with returns on capital. In other words, capitalism delivers accelerating value by relentlessly eliminating work. In its early stages it created jobs where none existed before. Extend the process of eliminating work across a long enough time frame, and jobs begin to disappear as well.
Richard Arkwright’s water frame could simultaneously spin 128 threads. It could operate 24 hours a day, stopping only for intermittent repairs and resupply. By comparison, that work was previously performed as a cottage industry by skilled weavers who usually also engaged in other work. In the course of a full day working, a weaver might be able to accomplish six to eight hours of weaving, between cooking, cleaning, child care, farm labor, and so on. Workers were sometimes assembled into factories, but those factories were little more than a lot of people in the same place weaving by methods similar to cottagers. Cottagers performed work, but they did not have “jobs.”
A single day of operation by one of Arkwright’s early machines in the 1770’s could easily replace the work of a thousand cottagers. His first mill was five stories with several dozen machines. It employed about 200 workers, almost all of them children. It rendered the work of thousands of people redundant, but created 200 jobs where no formal employment had previously existed.
Downstream from the factories, new jobs would over time emerge in mercantile stores, distribution, machine assembly, factory management, business accounting, banking and other previously unheard of roles. Those new jobs would be far more lucrative and humane than the endless toil of farm or mine labor that had existed before. They would not, however, require anything approaching the amount of human work previously necessary. Conversion of endless subsistence labor to “employment” in a “job” would lead to a long term, though still temporary rise in the number of people engaged in formal employment as capitalism and innovation continued to replace human labor at a steadily accelerating pace.
As we eliminated work, we created entire new social institutions. With families freed from the endless drudgery of farm labor and cottaging, women started to become, for the first time in history, homemakers. As the elimination of work progressed, demand for (a social tolerance of) child labor declined. In the farm economy that dominated economic life in the 19th century, only a rare few women or children avoided dawn to dusk toil for subsistence. By 1920, only 21% of women were “gainfully employed.”
By the second half of the 19th century we began to imagine childhood as a promising development phase rather than just a period of dimmed human usefulness. In 1910 only 20% of American children were employed. That number dropped by more than half over the next decade. By the time the US finally outlawed child labor in 1938 it had already ceased to be economically relevant. We had eliminated so much work that children had been freed from labor. This pool of children no longer forced into mines or fields could develop themselves, preparing to perform higher value work later in life. The replacement of work created the nuclear family, childhood, mass education, retirement, and a knowledge economy.
Eliminating work gradually made the remaining jobs more and more lucrative. If we look closely, this process is evident in our employment and pay statistics. Our employment to population ratio peaked along with industrialization. As a moving average, that ratio remained flat for decades until it began a temporary rise in the late 1970’s. What happened then? At a social and political level we had, for the first time in our history, begun to allow women and minorities to participate in the workforce on more or less equal terms with white males.
Women had been sidelined from work starting in the 19th century. Along with Blacks, Hispanics and other minorities they had been marginalized in order to preserve the most lucrative of the emerging job opportunities for white men. By the 70’s both groups were gaining new access to the workforce.
For the next twenty-five years we saw a surge in the number of people participating in the workforce. It should come as no surprise that the entry of new workers into an already weakening jobs environment led to stalled wage growth.
By the late 90’s the moving average for employment to population plateaued. It has been declining ever since. Overall, liberalizing workforce participation and integrating the southern states into the national economy led to about a 9% temporary increase in the moving average for employment, which eventually settled back to about a two-percentage point increase, from which it has resumed its long term decline.
Statistical noise from the liberalization of the workforce in the late 20th century can be eliminated by examining workforce participation by the only group of people who had full access to the workforce– white males. The employment to population ratio for white males has been in decline for as long as we have measured it. In fact, it has dropped by almost a quarter over the past sixty years. The pace of the decline was fairly steady until the 90’s. Since then the rate of decline in employment to population for white males has doubled.
The numbers tell the tale. Capitalism is not creating new jobs. It hasn’t done so for a very long time. Capitalism is not an engine of job creation. Capitalism is an engine for generating returns to capital. Capitalism invented the concept of a “job” to solve a problem being experienced at a certain stage of industrial development. There is no reason to think that mass employment could not be innovated away as easily as the horse-drawn wagon. As automation and machine learning begin to cut into our demand for skilled human work, we can expect a new phase to emerge. The age of mass employment is coming to an end.
For generations we have cushioned the impact of technical innovation with social adaptations like the nuclear family, a 40-hour work-week, child labor laws, retirement, and the welfare state. As capitalism grows and its impact accelerates, our social evolution must keep pace. Our next step is probably some form of basic income, but more is needed.
A basic income would replace our economic dependence on mass employment, but it would do nothing to transform the social role of employment. Continuing to develop the power of innovation while easing its social impact will require us to rethink of the role of work and employment in our basic values.
A social order that gradually evolved around the concept of formal employment must evolve or be rendered irrelevant. Worse, it may become unstable. Those who want to slow or halt this process are missing the point. Eliminating work may eliminate jobs, but it does so by creating enormous new wealth. Halting that process may keep someone employed, but it also keeps all of us poorer. A vastly higher percentage of people were working far more hours in 1880 than are today. The replacement of that labor was a value to humanity. We want that process to continue.
Our challenge is not to stop people from losing jobs. Our challenge is to build a social framework that allows us to assign the rewards from innovation in a just manner without mass employment. Up to now we have granted nearly all of the value from new innovation to the people who perform the jobs in those field, or the people whose capital funded the effort. Value, not just in terms of income, but also in terms of status, respect, even health insurance, is distributed (mostly) via jobs. With far more value being created now by new, relatively jobless institutions, we need a new way to assign the value from that economy.
This is a matter than deserves far more thought and consideration. Needless to say, the Luddites railing against trade and innovation are contributing no more to this discussion than those who ignore the problem altogether.
How would you create value from your life if a job were no longer an option? Though it sounds revolutionary, our ancestors have been down a similar road. We already solved this problem when we set children loose from toil. We solved this problem when we allowed people to retire from jobs at an advanced age. Precedents are available to guide us.
Are we ready to replace “get a job” with “get a life?”
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[…] Beyond Jobs […]
Why the Dems have no chance winning the House! And they did it to themselves by allowing the Republicans to win in 2010! Why Dems do not vote is a mystery to me!!
Here is Florida we won a referendum banning gerrymandering. The Republicans, in control of everything, used it anyway. It took the Florida Supreme Court to reverse the Republicans!
The crux of that ‘genius’ insight can be found in the last sentence: >] “What we need to be talking about instead is how to reform a system that makes partisan mapmakers more powerful than a popular majority.”
Oh, is that all? All we have to do is reform the system designed to keep the partisan mapmakers in power who, as it so happens, are the only ones who can change the system. Oh, wait…
Look, I’ve been pounding this drum for months now, and I’d be the last one to say that Democrats retaking the House is anything but a sure thing this November. It’s an extremely heavy lift, even with Trump, but this is our only reasonable chance to do it, and here’s why:
Democrats need about a seven to eight point advantage nationally to retake the House. If you believe the polls, that’s about where they are right now. They need to hold those numbers or improve on them going into November. If they do, control of Congress is possible.
In other words, and with all respect, stop the negative reinforcing bullshit. It’s seriously annoying.
There is one other way to fight gerrymandering. File a class action (equivalent) suit that will be heard by a balanced SCOTUS, challenging gerrymandering as an illegal procedure. Suits would need to be filed in multiple states, red and blue in order to set up conflicting court opinions which would steer the issue to the SC. If one simply waits for demographics to make the changes, too much time will be lost and too much damage done. I understand that states have the authority now to draw voting districts, but I can envision a challenge to the manner in which that process is being conducted. Make it a uniform, nationwide process that benefits the people, not the parties.
I’d rather a Democratic Congress just pass a law requiring that all states appoint independent commissions, as California already does, to draw their congressional districts. As far as the Supreme Court goes right now, while I agree that it’s a necessity in the longer fight, the most they can do in the short term is to overturn a previous ruling allowing one to sue on gerrymandering, not just packing minority constituents into noodle-shaped districts and so on.
Good point, but why not go for both? Certainly, the states who petition for independent commissions and are denied and can document the problems with gerrymandering, form yet another legitimate avenue of appeal to SCOTUS.
I don’t care how it’s accomplished so long as it happens. And, I don’t want it to be partisan to the Democrats or the Republicans, but representative of the people within each state. THAT is democracy at work. Let’s stop playing games here that usurp the democratic process for partisan gain.
Back to Beyond Jobs … A potential problem with basic income is that many jobs may remain unfilled unless there is a way to motivate and educate the population to gain the skills needed.
They will only remain unfilled until the rewards for doing that job exceed the horribleness of the job
Why should the world’s worse jobs be those that have the lowest reward?
I can see a future where the guy who cleans the toilets gets paid more than the manager who can keep his hands clean
As the inimitable Archie Bunker (All in the Family sitcom fame) would say,
“Ain’t that a revoltin’ development”!
Oh goody, Gingrich is down, but not out. He states:
““I will be sort of the leader in how we rethink and how we reformulate the entire federal government,” Gingrich told The Mike Gallagher Show in an interview before Trump announced that Indiana Gov. Mike Pence would be his running mate. “And that’s what I want to do, that’s what I think I’d be good at.”
Something else to look forward to with a Trump presidency…….
Read more: http://www.politico.com/story/2016/07/ben-carson-newt-gingrich-trump-225625#ixzz4EVzkCWQe
Some guesses as to the positions filled in The Trump Cabinet:
Secretary of State: Newt Gingrich
Secretary of the Interior: Ben Carson
Secretary of Energy: Sarah Palin
Secretary of Homeland Security: Joe Arpaio
White House Press Secretary: Ann Coulter
What could go wrong?
You forgot the big guy, Chris Christie, the new Chief of Staff…..the “kingmaker”………
Like Rob said, lotsa action in the Trump admin.
Christie will be AG
Better guess than mine. Then that makes Gingrich Chief of Staff. No way Gingrich would work hard enough to be SOS.
Ah, I have a SOS replacement, Rudy Guiliani. He’s got all the answers…
Well this could be interesting. Apparently there’s a potential coup attempt in Turkey as we speak.
An interesting things about Turkish society is that it is (officially) very secular, and it’s Constitution precludes any attempt at introducing religion into gov’t. Also, a major function of the Turkish military is as the official guardian of secularism. I believe over the decades the military has unilaterally overthrown their own gov’t several times when they’ve deemed it to be crossing the line into religiosity. Perhaps that’s what’s going on now, I know the Erdogan gov’t gets a lot of flack for the appearance of attempting to swing the country towards official Islam doctrines.
Could be important for that whole part of the world.
Should also add, Turkey is a NATO country
military just announced they have control of the government.
Pres. Erdogan appears to be fighting the coup in Turkey. Interesting events unfolding live on television, tweets, any communication means available. Pres. Obama condemned the coup attempt. Note this article posted at 4:18 EDT.
Looks like the tide may be turning?
Whatever is going on, this is riveting TV. There was a scene where a pro erdogan mob was sllowly advancing on an army checkpoint, almost daring them to open fire. The soldiers were clearly agitated, firing rounds in the air. Eventually though there was a moment when it dawned on the mob that the soldiers wernt willing to open fire on their countryman, and the momentum changed immediately and the checkpoint was overrun.
I keep thinking, if just ONE of those privates (likely a 20-something kid) had opened fire, that could have changed the entire trajectory of Turkey, and thus the middle East. It still may get bad.
Syrias civil war has been globally disruptive enough. I can’t imagine what a Turkish civil war would mean.
Turkey is an indispensable ally for the U.S. This is going to roil global balance. Poor Obama, his last 6 months in office have really been a doozie. As he said in the town hall, he “volunteered” for the job, so no complaining. Indeed. But what it does vividly point out, is what the incoming POTUS will have to be ready to deal with in January. Can you imagine a Donald Trump as CIC? I shudder to think of how inept and ill suited his temperament is for the depth of reasoning required of American presidents in this era. Frightening, actually. Because he is so unlikely to listen to people who actually know what they are doing, or worse, figure out which advice is wrong.
I think the selection of Mike Pence for running mate will have a stabilizing effect on the Trump campaign.
It was the right pick for Trump…probably not the right pick if you like gay people, a woman’s right to choose, and in vitro fertilization.
All the data in the world indicates that the VP selection has almost no effect on election outcomes, but nothing about this year is holding to form, so who knows.
If anything, it gives Christian conservatives a fig leaf under which to hide their disdain for Trump and vote for him anyway.
Exactly, Homer. You got it covered……
Now, if you could just find a reason for the college educated white supporters, and for the strict constructionists, or ANY woman, I would really be impressed. Fig leafs – that I understand.
Contrary to early polling numbers only within the GOP, Trump’s numbers with White college graduates have dropped greatly with the general election polling.
As of today (which will likely change), Trump is in danger of losing the White college educated crowd, which would be a first for the GOP in a long, long time.
What is staying pretty stable for Trump are the older white college educated males. Otherwise, those with college degrees are not supporting him. This has been affirmed in polls that I believe are posted on this thread, but could obviously (hopefully) change. Blue collar whites I understand – the rest, no.
On “Morning Joe” the other day, Sen. Claire McCaskill (D-Missouri) predicted Trump’s choice would be Pence. Her reasoning was that Trump likes to surround himself with “attractive” people. Gingrich and Christie don’t fit that bill. Joe and Mika pooh-poohed her prediction, but Claire got the last laugh.
I meant Pence is a stabilizing influence on the campaign, as in “to make it less of a circus,” maybe add a bit of gravitas.
I just cannot take Mr. Trump seriously. Just the sight of him cracks me up. The hair, the look on his face, the things he says. He does not have a presidential bone in his body.
Tutt, it’s always surprising who can get elected. Chavez, in Venezuela, became president legally and he was a complete clown. The masses still liked him. And then there’s Putin … and
who can forget Toronto’s mayor, Rob Ford?
I don’t completely get it, but many people like flamboyance. They want someone who “tells it like it is” and they don’t seem to mind the associated flaws. Even Henry VIII was a popular king for most of his reign. He had some major “quirks.”
Reports are he tried to back out last night. What a shit show that would’ve been for Pence if he did.
Pulls out of his governor reelection and then gets the heave ho.
Damn, that really would be just like Trump, wouldn’t it? Screwing your people over.
Also the Internet snark brigade is having a good time with the new logo:
Why yes, there are animated versions already.
Who knows or who cares…….more Trump sensationalism? I don’t have the slightest interest who he selects. Pence is probably the best one of the group he was purportedly considering which does lend credence to the rumor that he was getting cold feet. Why would Trump make a decision that made sense?
If Trump somehow wins the presidency, we are in for lotsa shit shows….
I don’t know, tutta. Mike Pence is Indiana’s Dan Patrick. On the other hand, it is an olive branch to the conservative wing of the GOP, and if Trump is going to have *any* hope of winning, he’s going to have to get that part of the GOP crew on board.
I’m not a big fan of Pence but, goodness, comparing him to Dan Patrick is a low blow, Tracy.
Did you happen to watch Patrick question Pres. Obama at the Town Hall on Violence last night? I found his questioning condescending. Maybe I just don’t like the guy so was judging him harshly, but I did not see respect demonstrated for the President. More grandstanding, IMO.
A much older blog post by lifer.
My mistake, It was a blog entry by Thomas Paine. In case you don’t want to read it all-
“In advocating the case of the persons thus dispossessed(by landed property rights), it is a right, and not a charity, that I am pleading for. But it is that kind of right which, being neglected at first, could not be brought forward afterwards till heaven had opened the way by a revolution in the system of government. Let us then do honor to revolutions by justice, and give currency to their principles by blessings.
Having thus in a few words, opened the merits of the case, I shall now proceed to the plan I have to propose, which is,
To create a national fund, out of which there shall be paid to every person, when arrived at the age of twenty-one years, the sum of fifteen pounds sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property:
And also, the sum of ten pounds per annum, during life, to every person now living, of the age of fifty years, and to all others as they shall arrive at that age.”
You’ve confused Lifer with Thomas Paine?
Hey, both are pretty wonky. Natural mistake.
Knowing Lifer, I expect he will be flattered. Of course, we will simply wonder what Paine’s reaction would be (-;
Like I posted yesterday, this blog excels in humor.
Interestingly, Paine was more of a scion of the Continental flavor of the enlightenment, as opposed to the Scottish/Lockean school. Based on subsequent events, it’s pretty clear the Lockeans came a lot closer to getting it right.
The comparison was in humor, and I haven’t read much by Paine. but I will. The real comparison is between Paine’s article, “Agrarian Justice”, and modern thoughts on UBI.
Political and economic humor hard.
The case against occupation and for targeted intervention – a strategy that has the overwhelming support of the American public.
“The challenge is to pick these interventions carefully, find decent allies and make sure that U.S. efforts are carefully defined and constrained, doing enough to help local actors but being wary of the constant pressure for escalation. Above all they require keeping in mind that these are ongoing challenges not easily “solved.” The result is bound to disappoint both ardent interventionists and anti-interventionists, but it reflects the realities of being the world’s leading power.”
I swear that earlier this morning, the Zakaria article mentioned the unwillingness of congress to develop a comprehensive defense philosophy playing a role in the whac a mole approach.
Maybe I need more caffeine….
Maybe you were still in that state between sleep and wakefulness. Very surrealistic.
1mime, many forget that Judaism began as a martial religion, much like Islam. The destruction of the First Temple in 586 BCE by Babylon (leading world power of the time) and subsequent Diaspora, followed ~600 years later by the destruction of the Second Temple by Rome (leading world power of the time), did much to take the belligerence out of Judaism. One can’t help but wonder what it will take to mitigate the nastiness of radical Islam, whose adherents, let’s face it, wherever they go, just can’t seem to get along with anybody. Let’s hope it doesn’t involve turning Mecca into glow-in-the-dark glass.
I share your concern about radical Islam. Those who profess this ideology and jihad, are unfathomable to me. How could anyone kill innocent children and people in the name of “faith”? It seems that since time immortal, much that is ugly and hurtful has been done in the name of religion. What does that say about religion? It is easier to understand the horrible violence committed through insanity than through a conscious, “rational” choice based upon one’s religious beliefs.
Head up, Chris: Britain’s largest trade union has just endorsed the basic income.
Politics makes for strange bedfellows.
Annoyingly, Unite haven’t put it up on their own website yet.
If you’re a working class person you would probably want the basic income and NOT the negative income tax, which wouldn’t do you as much good. NIT is better for the poorest citizens, while Basic income is better for the working class and lower-middle class.
Could both options function at the same time targeting different populations?
To have both at full cost at the same time would be too expensive. You could take out some of the money that would go to the NIC and put it into the basic income instead though. For instance instead of $15,000 being the floor for NIC (since it’s 50% of $30,000) instead have $14,000 be the line (since it’s 50% of the difference between no income and the new ceiling of $28,000) and just also send everyone a check for a thousand dollars. From there I think that if wealth keeps growing we should put more and more into the basic income.