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Automation alert

How technological change impacts inequality, wage divergence, and job polarisation, and what democratic states operating in a free-market environment must grapple with as digitalisation catalyses labour substitution, the erosion of the middle class, and greater income inequality, is the challenge for policy establishments the world over not wedded to dogma.

Statesman News Service | Kolkata |

Accelerating digital technology and the consequent automation of the means of production and delivery of services puts some jobs at greater risk than others.

Globally, there are questions about who is most likely to lose jobs due to automation. This is as true of the world’s most developed nation, the USA, as it is for large, labour-intensive developing economies including India and China, and for countries at the bottom rung of the automation ladder given the interconnectedness of the world economy.

The Covid-19 pandemic has served to hasten automation of many tasks across industries but research on automation has thus far been focussed mainly on the presence of digitalisation, automation potential estimates, the relationship between technological change and macroeconomic conditions, and tech’s impact on inequality and wage divergence.

A new study from the London School of Economics’ Julian Jacobs, which looks at the attitudes of the individuals most vulnerable to new technological shifts, provides, however, a humanising window into how these shifts, which are vital to capitalism’s advancement, play out in the beliefs, characteristics, and fears of the individuals most likely to experience disruption due to automation.

The data of the study is from America but there is certainly a case to expostulate its findings worldwide while factoring in analytical modifications contingent on local conditions. The broad ~ and extremely worrying ~ conclusions of the study are ominous as they detail how technological change may correspond with despair, radicalisation, and democratic erosion.

The study shows that the Americans whose occupations have the highest automation potential tend to have a dark and cynical view of politics, the economy, the media, and humanity. They comprise a traditional working class that is politically left-leaning on economic issues and slightly right-leaning on socio-cultural ones. These often economically-vulnerable Americans are deeply pessimistic about the state of the world and politics; they also have a tendency to vote against their economic interests and become more authoritarian in their outlook.

The relationship between economic upheaval and radicalisation, polarisation, and revolution is one that has hitherto been understood through a Marxist paradigm. But that is largely outdated and comes with an a priori bias.

How technological change impacts inequality, wage divergence, and job polarisation, and what democratic states operating in a free-market environment must grapple with as digitalisation catalyses labour substitution, the erosion of the middle class, and greater income inequality, is the challenge for policy establishments the world over not wedded to dogma.

It is now increasingly clear that technological advancement can stifle real wage growth for many workers while simultaneously increasing returns to capital by making labour more productive. It tends to benefit the owners of productive capital and workers whose skills are complemented by the new technology.

Further, the study iterates, when productivity rises faster than wages, inequality increases almost by definition since new GDP gains accrue primarily amongst capital owners. Technological change can additionally lead to a hollowing out of middle-wage work, in turn producing a smaller middle class. To achieve a golden mean won’t be easy.