Amazon has recently introduced Amazon Go, a shop where the customer enters, chooses a product from the shelves, charges the price on a magnetic card and swipes it on the way out, transferring the charge to the customer’s bank account. No queues, no cashiers, fast and easy, and the first shop in Seattle has been a roaring success.
Putting products back on the shelves will soon be fully automated, with robots doing the work previously done by humans. Floor cleaning is already done by a robot, and the aim is to have a fully automated shop, where no human can make mistakes, fall ill, go on strike, take holidays or bring their personal problems to work.
The US petrol industry calculates that the staff required at each well will be reduced from 20 to five within three years. Also within three years it is expected that small hotels will have a fully automated reception – guests arrive, swipe their credit card and a machine supplies the room. We are already accustomed to automated telephone for bookings and reservations, and we ourselves now do tasks at an airport which were previously done by clerks, such as checking in. Contrary to what many think, self-drive vehicles are just around the corner, and car makers think they will be on the market by 2021.
In the United States, according to the ABI Research company, the number of industrial robots will jump nearly 300 percent in less than a decade. The National Economic Research Bureau has reported that for every industrial robot introduced into the workforce, six jobs are eliminated.
The United Nations Conference on Trade and Development (UNCTAD) has released a “policy brief” indicating what this robotic revolution would mean in Africa, Asia and Latin America. “If robots are considered a form of capital that is a close substitute for low-skilled jobs, then their growing use reduces the share of human labour in production costs. Adverse effects for developing countries may be significant.” In May 2016, the World Bank’s Digital Dividend Report, calculated that replacing low-skilled workers with robots in developing countries would affect two-thirds of jobs.
China is destined to become the biggest user of robots. China is aiming to become the global leader in high-tech. To take just one example, Foxconn, the world's largest contract electronics manufacturer, reduced its workforce last year from 110,000 to 50,000 in Kunshan, thanks to the introduction of robots. The time of cheap imitations is gone, with China now registering more patents than the United States.
Economists call this wave of automation the Fourth Industrial Revolution. The first started, at the end of the 18th century, with the introduction of machines to do handicraft work, such as in textiles. Its impact become visible in 1811, when the followers of a fictional Ned Ludd started to destroy textile equipment because it left thousands of weavers jobless.
The second industrial revolution occurred in the middle of the same century, when science was applied to production, introducing engines and other inventions, creating the real Industrial Revolution. That meant rural populations migrating to towns to work in the factories. The third revolution in the middle of the last century is considered to be the introduction of the Internet, which once again changed forms of production. Gone were the jobs of secretaries in companies, lino typist in newspapers, accounting, documentation, libraries, archives and other hundreds of professions made obsolete by the ‘net’.
We see the Fourth Industrial Revolution in our daily life. But it is like climate change – we all know it exists, it is before our eyes. We have all the data showing an increase in hurricanes, disappearing glaciers, extreme weather conditions, hotter summers than have been recorded since we began measuring temperatures. Yet, the outcome of the 2015 Paris Climate Change Conference means that the world is now geared to producing an increase of three degrees centigrade, while scientists unanimously agree that exceeding 1.5 degrees centigrade would be extremely dangerous.
We even have a president of the United States who withdrew from a non-binding Paris Agreement declaring that climate change is a “Chinese hoax”. Then his appointment of Scott Pruitt – a person who says that global warming is “positive” – as Director of the Environmental Protection Agency (EPA).is like putting Dracula in charge of a blood bank.
The political approach to automation is similar. The 2016 World Economic Forum in Davos was dedicated to the Fourth Industrial Revolution. The founder and director of the Forum, economist Klaus Schwab, even went to to the effort of writing a book on the subject for the meeting: it is a book in which he expresses his concern.
Previous industrial revolutions had liberated humankind from animal power, made mass production possible and brought digital capabilities to billions of people. This Fourth Industrial Revolution is, however, fundamentally different. It is characterised by a range of new technologies that are fusing the physical, digital and biological worlds, affecting all disciplines, economies and industries, and even challenging ideas about what it means to be human.
We need to take a concerted global approach in the world, to make the positive override the negative impacts. The theme was practically ignored at Davos 2016, because politicians now only discuss themes in the short term: what has to be dealt with during their period in office. At Davos in 2016, Schwab called for leaders and citizens to “together shape a future that works for all by putting people first, empowering them and constantly reminding ourselves that all of these new technologies are first and foremost tools made by people for people.” Clearly, that goes against the tide of nationalism, the new vision for the United States, India, Japan, China, Philippines, Hungary, Poland, Great Britain, Turkey and so on.
Well, like it or not, the Fourth Industrial Revolution is here. Today automation already accounts already for 17 percent of production and services. It will account for 40 percent within 15 years, according to World Bank projections. But we should also take into account the surprising seeds of development of artificial intelligence (AI) – also known as machine intelligence (MI) – which is intelligence demonstrated by machines, in contrast to the natural intelligence (NI) displayed by humans and other animals.
We already have robots which can be reprogrammed and their functions changed. Without going into the vitally important relationship between AI and societies, it is important to note the most vibrant debate today concerns how our economy is mutating into an economy of algorithms and data and how this is impacting on politics.
Austrian economist and thinker Karl Polany saw this coming when he made a simple observation: capitalism, without controls and regulations, does not create a market economy but a market society where whatever is necessary for survival has a price, and that is submitted to the laws of the market. In that kind of society, the state has no alternative but to sustain the system with laws, courts and police to protect private property and to secure good functioning of the market.
The explosion of social injustice, privatisation of common goods and fiscal support for the richest are all consequences of Polany’s analysis. Add to this monopolisation of data by a few giant companies, like Facebook or Amazon, and their impact in the social, cultural and economic sphere, and you can see where we are going. We have become data ourselves, and we are on the market.
The Fourth Industrial Revolution will further reduce the centrality of the human being, who has already been replaced by the market ever since the fall of the Berlin Wall… All this opens up another crucial issue. Labour was once considered an important cost factor in production, and it was the extent to which workers had rights to the resulting benefits that sparked the creation of trade unions, the modern Left and the adoption of universal values such as social justice, transparency and participation, which were the basis of modern international relations.
The relationship between machines and distribution of the benefits of production has inspired several thinkers, philosophers and economists over the last centuries. It was generally assumed that a time would come in which machines would eventually do all production and humankind would be free of work, maintained from the profits generated by machines. This was, of course, more a dream than a political theory. Yet today, all managers of artificial intelligence and robotic production argue that the superior productivity of robots will reduce costs, thereby enabling greater consumption of goods and services, and this will generate new jobs, easily absorbing those displaced by machines.
The data we have do not show that at all. According to the Economic Report of the President of the United States, there is an 83 percent chance that those who earn 20 dollars an hour could have their job replaced by robots. This proportion rises to 31 percent for those who earn 40 dollars per hour. Given that the new economy is an intelligence economy based on technical knowledge, people have a future if they are able to adapt to that kind of society, and the new generations are much more attuned to this. But what will a taxi driver who has had no technical education do to recycle himself?
The statistics show that today, when people lose their jobs at a certain age, any new job they may find will almost always be for a lower remuneration. So robotisation will affect the lower middle class above all, and a new generational divide will be created. Over the years, a number of economists and influential people have expressed the idea of a universal basic income (UBI), arguing that there is a need to cushion society from tensions, instability and unemployment by giving all citizens a fixed income in order that they would be able to have a dignified life. In addition, by spending their UBI, they would generate wealth and increase demand, which would therefore stimulate growth and make for a just and stable society.
Martin Luther King was an early proponent, like neoliberal economist Milton Friedman. Now the billionaires of Silicon Valley like Elon Musk and Mark Zuckerberg, venture capitalist Mark Andreessen and Democratic Party senator Bernie Sanders have all expressed support for the UBI idea. Meanwhile, Andrew Yang, an American entrepreneur and founder of Venture for America, is a 2020 Democratic presidential candidate running on a UBI platform. Yang notes that in the 2016 presidential elections, Donald Trump did particularly well in Michigan, Ohio, Pennsylvania and Wisconsin, states which have lost four million jobs because of automation: “The higher the concentration of robots, the higher the number of disgruntled people who vote for Trump.”
Yang plans to cover the two trillion dollars that UBI would cost (half of the US budget) with a new VAT tax and taxation on the companies who profit from automation. Of course, in the United States the idea that people who do not work should receive public money is the closest thing to communism, and UBI faces formidable cultural obstacles. But Yang says that otherwise in a few years there will be “riots in the streets: just think of the one million truck drivers, who are 94 percent male with an average high school education, suddenly all jobless.”
The above leads to a few considerations and a concrete proposal.
The first consideration is that Trump and all the other politicians who want to restore a past glorious future totally ignore this debate (unfortunately, it is not part of any political debate). Calling for restoring jobs in mines and fossil fuels, for example, fails to recognise that technological developments have already led to the loss of many jobs, and will continue to do so. So, the rallying of disgruntled people, as was the case in Britain with Brexit, is a consequence of the poverty of the political debate, where traditional political parties (especially on the Left), instead of explaining clearly the world in which we now are, and the one in which we are heading, are trying to piggyback on the feelings of the victims of neoliberal globalisation, often taking up the banners of nationalists.
The second political consideration is that migration has become a major theme in elections. Trump was elected on a strong anti-immigrant platform, which continues in his administration. Governments in Hungary, Austria, Poland, Czech Republic and Slovakia are based on refusal of immigrants. All over Europe, from the Nordic countries to France, Netherlands and Germany, anti-immigrant feelings are conditioning governments. In order to take votes away from the xenophobic Matteo Salvini (leader of the right-wing Lega Nord) in the Italian elections (scheduled for March 2018), the old fox Silvio Berlusconi (former Italian prime minister) has promised that he will expel 600.000 immigrants if he wins the election.
The fear is that immigrants are stealing jobs and resources from citizens in the countries in which they live. However, statistics from the European Union tell us otherwise. The number of non-EU citizens living in Europe (some for a long time) is now 35 million, of whom about eight million are Africans, and seven million Arabs out of a total of 400 million. Those figures also include illegal immigrants. All statistics show that more than 97 percent of immigrants are totally integrated, that they pay on average more taxes than locals (of course, they worry about their future) and to date those who do not have a job are about 2.3 million people who are still awaiting a decision on their juridical status.
There is not a single study claiming that immigrants have taken the jobs of Europeans in any significant way. It was the same story with the entry of woman into the labour market. An increasing proportion of women have joined the labour force over the last 30 years, but these increases have not coincided with falling employment rates for men. A study on Brexit demonstrated that immigrants had helped to increase GDP, and that the increase in productivity meant a global increase in employment. But we have reached a point where nobody listens any longer to facts, unless they are convenient…
And now the concrete proposal. It is clear that the real threat to employment for the large majority of citizens comes from robotisation, not immigration. No employed person has been fired to be replaced by an immigrant, unless we talk of non-qualified jobs that Europeans do not want in any case. Truck drivers, taxi drivers, bus drivers and school drivers, to take some examples, do not fear for their jobs because of immigration. Within a very few years, their jobs will become obsolete in any case, and there will be no plans or preparations for that. When the problem explodes, politics might start looking at it. Perhaps the more responsible thing to do – rather than stoking fear with populism and xenophobia – is that we start to come to terms with the real problem that our society is facing: automation.
And here is a simple proposal: somebody who takes a robot is making money because of its superior productivity, and he is firing somebody. After having paid the robot during usually a couple of years, he might be imagined to have a 100 percent benefit from the firing of a human being. Well, he will not have 100 percent but 60 percent because he will continue to pay the social costs of the human being fired: pension, taxes and health insurance.
That is not as costly as UBI, it is easy to organise and administer, and it will be a way to realise in part the old utopian dream that machines will work for humankind. Can a political debate be started?