Employment And The Fourth Industrial Revolution

(Conflicting interests of capital and labour and their resolution)



By W. Synrem


Why do business people innovate? The simple answer is, for reaping the early bird maximum profit. People who arrive late on the scene usually reap lower benefits or just normal profits. Historically, when the first, second and third industrial revolutions started, entrepreneurs, industrialists, manufacturers and businessmen whose decisions are invariably driven by the profit motive, had always been in the vanguard of scientific and technological progress and they naturally reaped enormous profits by taking calculated risks to innovate. Labour on the other hand has always been somewhat apprehensive of adverse repercussions on employment due to mechanisation or the use of cost-saving and labour-displacing improved technology. In the past, this fear of labour had been proven wrong because the introduction of new technology necessitated the creation of new and better types of employment with new and different types of skill sets. As a result, it led to the introduction of new courses of study and the production of new curriculum, new textbooks and other new teaching-learning materials which were needed to prepare people for the new white-collared jobs that were newly created. Hence, the new process actually led to higher levels of overall welfare for almost everybody.  


          However, the fourth industrial revolution appears to be very different. The reason is that Artificial Intelligence (AI) will be capable of doing almost everything that humans do in better, cheaper and faster ways. AI is likely to render millions of people jobless. Now if people are jobless, they would not receive any income or salary, hence they would not be having any purchasing power and effective demand is bound to fall. As human beings, they will continue to have  innumerable wants but may not have the means to satisfy those wants. Hence, they would not be able to purchase anything except, of course, if the government provides them with some sort of social security or unemployment dole. Such amounts would, however, be sufficient to meet only basic needs but not the higher needs.


Producers may be able to turn out better and cheaper goods and services, but would they be able to sell out their entire produce/ output? If not, then what is the point of introducing new technology? Jean Baptiste Say’s law of market as a valid theory of full employment has been discarded long ago, but its inconceivability to those who would be studying economics ten to twenty years hence is obvious for the simple reason that AI can only produce but they cannot consume. They won’t, in fact, need to consume any of the things they would be producing. Even the universally acclaimed Keynesian theory with its concept of effective demand, etc. which still holds good today and on which the foregoing prognostication is based may need drastic revision in the context of the new social and economic realities of the coming decades. Hence, the study of economics as we have known it may change radically depending on the shape that the new economic order takes at both the national and the international levels.   


 The use of IBM Watson by a New York hospital five years ago to manage lung cancer treatment heralded the dawn of a new era in health care and management as improved versions of such AI are developed and put to increasing use. Recently, IBM also invented coffee drones which can predict who would need a cup of coffee in any particular location like a beach or a big restaurant and when. The drones are so sophisticated that they would also know whom to serve and whom not to serve depending on their medical records. These drones have already been tested and patented in the US and are ready to be launched commercially. Human waiters, waitresses and bartenders will soon be rendered jobless with the introduction of this new technology.


Some months ago I read a write-up on AI and its impact on the insurance industry in which it was said that the new technology would be good for both the service providers and consumers of their products. As things stand the contention cannot be gainsaid. But again the question that arises is: if millions of people will be rendered jobless with the introduction of AI, will the insurance business also not be affected? Jobless people can’t insure themselves. It is also learnt that online shopping giants like Amazon and Flipkart are already contemplating making use of AI to cope with the ever-increasing number of orders from customers for their different services. A crop harvesting robot has also been developed and is being improved further to reach a higher harvest success rate. The improved version is expected to be available within another four to five years.


          According to one website, there are about 15 jobs that are going to be adversely affected in the long run and these include construction, manufacturing and even agriculture inter alia. That is definitely not good news. But equally bad is the news in another website which quoted the Institute for the Future, a California-based Think Tank, as saying that around 85% of jobs that workers will be doing in 2030 have not yet been invented. Governments everywhere will, therefore, have to take upon themselves full responsibility for the re-training of their citizens and the creation of alternative employment avenues in line with the progress in science and technology.


          As already mentioned, we have now entered the 4th Industrial Revolution that will fundamentally alter the way we live, work etc. At the core of this revolution, is the advent of AI which is the most profound and mind-boggling disrupter in the history of our planet so far and which is likely to take over not only jobs but also almost everything else on the planet. According to the (Late) Prof. Stephen Hawking, AI could be either the best or the worst invention humanity has ever made. The potential benefits of creating AI are huge but AI could also be potentially dangerous. Apart from disruptions on employment which is most obvious because AI can out-perform humans and can also be made to work 24×7. The other dangers are powerful autonomous weapons getting out of control and new ways for the few to oppress the many. Man’s own inventiveness may thus result in his own undoing.

The use of AI is therefore the latest phase of mechanisation or robotisation (derived from the word robotics) on which the owners of the means of production will have to take most careful and judicious decisions because of the cataclysmic and catastrophic repercussions they can have on economic, political and social relations if they lead to widespread unemployment. Apart from Sophia, an AI which has been granted Saudi citizenship, we now have an AI politician named Sam, developed in New Zealand, who may be allowed by law to contest for elections as early as 2020. We also have an AI lawyer by the name of Ross developed in the UK. Hence millions of jobs are going to slip out of the hands of humans and there are already some predictions that this may happen within the coming 10 to 20 years. If that happens and if there is over-supply of different goods and services due to improved means of production corresponding to reduced effective demand due to lack of purchasing power and large scale loss of employment, the resultant economic, political and social consequences will be unimaginably devastating and chaotic.


Unless early preventive and regulatory measures are put in place to effectively discourage the indiscriminate use of AI, the crash could become inevitable.


Tesla CEO, Elon Musk, has issued repeated warnings about the perils of AI, calling for new regulations to keep the public safe. In the process, he even clashed with Facebook CEO, Mark Zuckerberg. When Zuckerberg called Musk’s AI doomsday rhetoric “pretty irresponsible”, Musk responded by calling Zuckerberg’s understanding of the issue “limited” and Elon Musk is probably right.


According to a top tech industry expert, at the moment, the United States, China and India are the top three countries leading the AI race. India’s determination to forge ahead and remain at the top can be gauged from the fact that on October 11, 2018, Prime Minister Modi spoke eloquently about India’s state of readiness and eagerness to embrace the new technology during an event to launch the Centre for the Fourth Industrial Revolution. But Russia is also in the race and according to Russian President Putin, AI is the future not only of Russia but of all of mankind and he believes that whoever becomes the leader in this sphere will become the ruler of the world.


Hence Elon Musk believes that for this very reason other countries will also try to catch up by any means possible and will obtain AI developed by companies even at gunpoint, if necessary. Such is the craze for AI. We can therefore imagine the dreadful consequences if terrorist organizations could also somehow manage to have the technology to develop and deploy AI for furthering their diabolically abominable causes. It is not, therefore, without reasons that Elon Musk is so concerned about AI getting into wrong hands and he is not just scare-mongering.

Hence we must have a clear understanding of all the issues involved and, according to Elon Musk, try to help develop AI in a way that’s good for everybody, both employers and employees. Since large scale displacement of labour is fatal for humanity or society at large, it makes sense that uncontrolled robotisation andindiscriminate use of AI should be effectively regulated, curbed and checked through various means at our disposal since full employment should continue to be a major desired goal of economic policy and the purchasing power of the people has to be maintained, even if it cannot be increased. Otherwise, AI is likely to take over everything in no time leaving us all completely helpless to do anything about it. Ultimately, of course, we can only hope that Government and business leaders take their decisions with great prudence and sagacity keeping in view the importance of preservation of the predominance of the human race vis-à-vis AI in the overall scheme of things, if it is thought that the human race is really worth preserving. As the threat from AI should be palpably clear to everybody by now, timely measures are required to be taken before the threat becomes irreversible and humans are made to fight a losing battle. Apart from unemployment dole, other not so disagreeable social means have to be thought of including some sort of redistributive taxation for enabling the unemployed and the underemployed to continue to have a decent existence. The importance of making smart choices and taking smart decisions before it is too late cannot, therefore, be overemphasised.


(The writer is a retired Additional Secretary level officer of the Govt. of India)

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