Technological advances, benefit to producers and unemployment for workers
We generally hear the narrative that all we have to do in this rapidly globalizing world is to get a good education, receive the right training to adapt to the current realities of the labor market where more and more jobs require more and more skills, and we will be able to forge successful careers.
For many Penn students, this could be the case. Companies in the financial sector are still willing to hire Wharton graduates in large part because of the reputation of the business school. Nurses and doctors generally find suitable employment in many hospitals in the country, and most ideally in the Hospital of the University of Pennsylvania. Engineers have very good job opportunities if they graduate from Penn.
But exceptions usually prove the rule. In this article, I will make it clear that technology has a depressing impact on future employment, and that, therefore, we must consider a dramatic shortening of working hours to avoid social crises of unemployment, inequality, poverty and social unrest.
The essential challenge, which most developed countries must face, is that the rapid technological advance will displace millions of workers from their current jobs without guarantees that many new jobs will be created. Companies have been investing in many labor-saving technologies, in many cases due to increased labor costs, in other cases, because machines are simply cheaper than human work.
And this point is crucial. Political commentators and economists tend to frame technology as an opportunity for new jobs. It is about celebrating Joseph Schumpeter’s vision of creative destruction. Yes, new technology can be a waste for some industries. Very few people want to continue being farmers in today’s society.
But technology will also allow people who are inherently creative to take on many new jobs, and we can explain the rise of the middle class and shared prosperity in terms of the many new jobs that emerged from the manufacturing industry and today in the service industry.
On the other hand, some economic theorists understood very well that the new machinery will not automatically generate an increase in employment. While it is possible to incorporate some workers into the highly skilled profession, there is no guarantee that the majority of low-skilled workers who lose their jobs will find suitable employment at comparable salary levels elsewhere.
David Ricardo argued that the objective of implementing technology is to reduce labor costs and jobs, which will generally benefit owners and shareholders, while “the replacement of human labor by machinery for human work” is often very detrimental to the interests of the class of workers. “Ricardo assumed that the general demand for products remains constant, or will increase less than the number of workers sent to unemployment.