Capitalism is a process of creative destruction, as the Austrian economist Joseph Schumpeter famously put it. Lumbering, seemingly unassailable corporate giants eventually wither, elbowed aside by fresher, hungrier start-ups; modern technologies disrupt long-established industries; and, perhaps most terrifyingly of all, once-useful skills become redundant, replaced by new roles, jobs and opportunities.
It’s scary but it works. Change has been with us since the Industrial Revolution ended centuries of debilitating human stagnation. It is painful in the short term but rewarding for society over the long term, fuelling rising living standards.
That is why we shouldn’t worry that a super-computer has managed to fool experts into thinking that it was a 13-year-old boy, a milestone in the development of artificial intelligence. The story has prompted all of the usual misplaced angst from those who believe that machines will eventually take all of our jobs, including nice, well paid middle-class ones. But the evidence of the past 220 or so years shows that such fears, though perhaps understandable, are misplaced.
Most of the jobs that allowed our ancestors to earn a living no longer exist, replaced for the most part by machines of various kinds, but more people in the UK work than ever before. It is not just the volume of work that has gone up: today’s roles are cleaner, safer and pay hugely more.
The Luddites who protested against labour-saving textile machines in the early 19th century, smashing factories and attacking bosses, were right that their own positions were at risk but they failed to grasp that new, better and higher-paying sources of employment would take their place.
The slow, gradual rise of artificial intelligence will allow yet more tasks to be mechanised — but the change will merely be a case of more of the same, an incremental change that ought to be easily manageable. As long as the economy is sufficiently free and entrepreneurship continues to be rewarded, there is no reason why the total number of jobs, and also their quality, cannot continue to grow in tandem with the rise of increasingly intelligent machines and robots.
Still not convinced? I live in an old Victorian house, and so I dug up some old census records for 1891 and 1901 and looked up the jobs of those who used to live in my home, as well as the occupations of those in neighbouring properties. The change has been absolutely dramatic and provides us with a wonderful illustration of just how dramatically economies change over the centuries.
Charles Smith, who somehow managed to squeeze into my house with his wife, eight children, mother and servant in 1901 was a foreman constructional engineer. His 19-year-old son was a steel joint cutter. Neighbours included an experimental engineer, a mechanical draughtsman, various clerks, a wine and spirit agent and live-in servants.
None of the people on my road today work in any of these professions, most of which have vanished; in fact, nobody works in manufacturing at all any more. The only role that still exists in my neighbourhood is that of grocery assistant, held over a century ago by a 16-year old lad at number 129 down the road.
Today, my neighbours work in the city, in various business services, in media, health care, technology and many other areas. Imagine how miserable life would be today had the Luddites triumphed, and the economy of yesteryear had been frozen in time.
In fact, many of the trades listed across the UK in the 1891 census no longer exist. There are no more plankers, people who knead the body of a hat during the felting process. Ditto linkerboys, who earned a living carrying a torch to guide people through the streets at night. Nobody remembers what a necker was — they fed cardboard to the machines that assembled boxes — let alone a nedder, who made needles.
In one hundred years’ time, many of the jobs we fill today will have gone the same way. It is impossible to know exactly which will still be recognisable to our great-grandchildren, and those for which they will need to use a latter-day search engine to try to determine their meaning.
The speed of the transformation has been phenomenal. Imagine somebody from 1980 reading a jobs website today — not only would they have no idea what the Internet was, they would barely recognise the roles on offer.
Remarkably, however, it is not just in IT that the jobs would have been unrecognisable to past generations. A quick look at finance jobs suggests that even here many are relatively novel. Of the first five that came up, several wouldn’t have existed until recently, including a financial modelling assistant and an expatriate tax adviser. Those that did — such as roles for accountants or corporate tax managers — would have been completely different in all important details 20 years ago, let alone 50. The technological tools required, the knowledge of tax law and even the job titles would have left anybody from the pre-digital age entirely baffled. Other sectors, such as construction, haven’t changed as quickly, but there is no doubt that the labour market is evolving at breakneck speed.
This is something we should welcome, not fear. The faster the mechanisation process, the more likely we are to see productivity — the amount of output each worker generates — starting to grow again and, with it, wages. A greater use of artificial intelligence throughout the economy will benefit, not hurt, the overall workforce.
There are just two, crucial, caveats: it will be vital to help individuals displaced by the new technologies to find work in new areas. Better education and training will become even more vital.
The lump of labour fallacy is the oldest myth in economics. There is no fixed stock of jobs; in a dynamic economy, millions of new ones are created every year to replace the equally large numbers that are lost. The Luddites are as wrong today as they were two centuries ago.
© The Daily Telegraph