From Technological Achievement To Technological Progress

• If you look at observable tangible outcomes of technological progress in terms of productivity growth, gross domestic per capita growth, wage growth, there has been limited progress in all of the Western countries over the last 30 years; this perhaps is a signal we are not prepared to fully embrace technology;
• Economists need to be more inquisitive about the link between technology and the labour markets; technology needs to be looked at from a displacement of jobs versus the creation of jobs lens. For example, the future is more likely to be ‘jobless’ or have weak job growth if technologies are not generating productivity growth
• It must not be assumed that technology will inevitably lead to positive outcomes and be a force for progress, there needs to consideration of economic levers that bring about a balance with wage and productivity growth, automation and cost-cutting has to be balanced with social costs;
• Instead of looking at technology for cost-cutting, we need to try and use it for product improvements; this will require more human input and a move away from excessive automation;
• We need to break three of three established narratives: that technology is inevitable, that technology is always good for society and that what technology wants, is exactly what Silicon Valley tells us;
• There are fears about the impact of automation in the developing world, where there will be negative impacts on social cohesion and issues for nascent democracies; these countries need to have a place at the table when the debate is being had over how technology can be implemented, but multinational organisations are not capable of giving them the platform they need.

How do we seize the opportunities and avoid the pitfalls of technology at both an individual level and at a social level?

The key question, according to Scott, is ‘how do we not ‘just make the technology work’ or ‘how do we work with the technology’, but ‘how do we make it work for us today?’. Technology, as it is applied currently, is not intelligent. It might be capable of doing a series of simple and medium complexity tasks based on patterns, but it does not have a holistic way of thinking and it does not draw analogies. Acemoglu compares the limited productivity growth over the last three decades with the technical progress of leading economies in much of the 20th century and poses this as a challenge as to whether we will be able to reach super-intelligent technology usage in the coming decades.

Displacement of workers from tasks because of technology advances in robotics does not necessarily spell doom and gloom according to Acemoglu because they will be able to take part in higher productivity activities. However, there needs to be social technology or social automation which means there are other tasks for workers, otherwise it will be a jobless growth which is a real threat to labour. Economists need to better understand the link between technology and the labour markets because the relationship is complex: some forces are disruptive, they destroy jobs as well as there being some self-correcting forces, but these cannot be relied upon to always operate and to operate to the degree that is necessary for both employment and high wage growth.

There is nothing sacredly deterministic about technology as a force for progress

Many of the jobs that have been created in the post-war west, such as programmers, designers and certain types of engineers, have gone hand in hand with automation that has taken tasks away from workers; this balance created an orderly process of productivity growth with wage growth. But the balance has fallen apart from the early nineties onward, as society started using technology more for automation, more for the benefit of capital and more as a subservient force to a group of entrepreneurs and visionaries who have their way of thinking about technology. Technology as a good was taken for granted, it was almost preordained because of this worship for technology, but in reality, we are worshipping their vision of technology. Accordingly, there needs to be a focus on good outcomes, including political mechanisms put in place to achieve them.

Ultimately, there will be a transformation in the labour market, according to Scott, which means even if people do not lose their jobs, how they perform their existing jobs will change significantly and require many other skills. Anxieties which accompany this transition are a much more general problem than simply unemployment. People are satisfied as worker citizens that feel included as participants in society, but those stable jobs with decent wage growth were the bulwark on which the post-war economy was built on have essentially fizzled out. Scott stresses that we have an opportunity right now to use machines to augment how people work so that technology takes most of the drudge work and people can be used for human activity. The combination of the two is important because through automation you can save humans from physical, back-breaking work for example, but Acemoglu argues that in a lot of instances we automate for automation sake, which is emphasising cost-cutting at all social costs.

There needs to be a shift to technology bringing product improvements rather than cost-cutting

Society needs to undergo a mentality change. Once people understand an issue then can put pressure on policymakers at different levels to take action, in a similar way to how the climate change argument is being conducted. Acemoglu thinks there needs to be a societal realisation about this issue, which in turn will lead to policies which support employees. The government needs to be in the driving seat when it comes to the direction of technology, because a lot of blue-sky technology is broad enough to span the business model of many existing companies, so there should be a consortium that brings these innovative efforts together. Furthermore, the business models of the successful technology companies that dominate the world currently need to change so that they don’t side-line human input and favour excessive automation.

There is no preordained route to the right outcome and it won’t be a steady process

Citing historical examples from the industrial revolution, Acemoglu accepts that the way forward is not going to be easy and nobody has all of the right answers; in a similar way to Luddites and Chartists, there needs to be a broader narrative that applies pressure which results in effective reform and education for the public. It also required big constitutional changes and changes to the political process, which will not be easy to implement in today’s environment, which is so polarized while monied politics is so powerful.

Protests are critical, according to Acemoglu, who looks at the response to the Global Financial Crisis through the emergence of the Occupy movement as well as the Tea Party, who on opposite sides of the spectrum but asking somewhat related questions. Ultimately, the Occupy movement did not institutionalise anything and became ineffective, whereas the Tea Party movement was probably a contributing factor to the rise of Donald Trump.

We have to be inclusive with the measures we look at, looking at different factors rather than trying to bunch them into GDP

There is a need to look at measures other than GDP, including wages, distribution and health as well as issues such as climate change. It would be counterproductive to weave them into GDP, which is useful because it is a well-grounded notion, rather than including value judgements which would make it meaningless.

If we keep on automating, we’re going in the direction of destroying the competitive advantage of about 2, 3 billion people who live in economies where capital is scarce

According to Acemoglu, the situation is bleak for developing countries. The negative effects of technology on social cohesion and democracy are going to be felt much worse in the developing world where democracies are still nascent. Moreover, automation will drive benefits for the global economy through even lower costs but there will be even fewer jobs available for people in lower-wage industries while technology migrates and destroys domestic employment. Accordingly, the developing world needs to be at the table to have a voice about how to deploy technology, which is linked to the impact on agricultural technology and climate change but to date, the developing world is being left out of this debate.

We don’t all have to be A+ programmers, but a level of tech-savviness is critical

People need to be able to use the tools that are widely available to collaborate and communicate to a basic level, but not everyone is going to be a programmer or even a sophisticated user of a programme, the reality is that 80% of the workforce is not going to be good programmers. Acemoglu thinks everybody at school should learn some basic programming so that we there is a base level of comfort with technology, but he also hopes that the future is not one in which all the smart people are programmers and then anybody who cannot become programmers has to stay at home to get unemployment benefits or universal basic income. From this technology, there will be a big shift in the jobs and the skills that are required, including the need for lifelong learning. Schools need to impart the skills of general adaptability so that people can deal with new technologies or skill challenges. Universities also need to think about the narrative for what high-quality education is about rather than following a narrow vision of technology through the values of companies such as Amazon, Google and Facebook.

While we may complain about digital technologies, we’re grateful to them right now because without them we would be a much worse situation

The COVID-19 pandemic has shown the value of technology and it is exacerbating the trends we were seeing before regarding automation and taking workers out of the workplace.

---

Andrew Scott’s conversation with Daron Acemoğlu is part of the Wheeler Institute’s public lecture series – designed to spark debate about and illustrate development challenges that can be addressed by business.

Andrew Scott is Professor of Economics and former Deputy Dean at London Business School and a Research Fellow at the Centre for Economic Policy Research. His research focuses on longevity, an ageing society, and fiscal policy and debt management and has been published widely in leading journals. His book with Lynda Gratton, The 100-Year Life, has been published in 15 languages, is an Amazon bestseller and was runner up in the FT/McKinsey Business Book of the Year Award 2016 and Japanese Business Book of the Year Award 2017. His new 2020 book, The New Long Life, considers how the challenges and opportunities of social and technological ingenuity might shape a new age of longer lives. He was Managing Editor for the Royal Economic Society’s Economic Journal and Non-Executive Director for the UK’s Financial Services Authority 2009-2013. He has been an advisor on policy to a range of governments and government departments. He is currently on the advisory board of the UK’s Office for Budget Responsibility, the Cabinet Office Honours Committee (Science and Technology), co-founder of The Longevity Forum, a member of the UK government’s Longevity Council and the WEF council on Japan and a consulting scholar at Stanford University’s Center on Longevity.

Daron Acemoğlu is Elizabeth and James Killian Professor of Economics in the Department of Economics at the Massachusetts Institute of Technology. His areas of research include political economy, economic development and growth, human capital theory, growth theory, innovation, search theory, network economics and learning. His recent research focuses on the political, economic and social causes of differences in economic development across societies; the factors affecting the institutional and political evolution of nations; and how technology impacts growth and distribution of resources and is itself determined by economic and social incentives. He is an elected fellow of the National Academy of Sciences (United States), the Science Academy (Turkey), the American Academy of Arts and Sciences, the Econometric Society, the European Economic Association, and the Society of Labor Economists. He has received numerous awards and fellowships, including the inaugural T. W. Shultz Prize from the University of Chicago in 2004, and the inaugural Sherwin Rosen Award for outstanding contribution to labor economics in 2004, Distinguished Science Award from the Turkish Sciences Association in 2006, the John von Neumann Award, Rajk College, Budapest in 2007. Read his recent publications, ‘Robots and Jobs: Evidence from US Labor Markets‘ and ‘The wrong kind of AI? Artificial intelligence and the future of labour demand.’