A World Without Work by Daniel Susskind

A World Without Work: Technology, Automation, and How We Should Respond
by Daniel Susskind
Metropolitan Books, 2020

The ‘task-based’ literature in economics emphasizes the difference in effect technological change has on routine versus non-routine tasks. If tasks are routine, and can be readily programmed, technology will tend to be substituted in for workers. Whereas workers performing more complex and non-routine tasks will tend to be complemented by technological improvement. In 2003 David Autor, Frank Levy, and Richard Murnane took this framework and studied how computerization changed skill demand, finding that:

As the price of computer capital fell precipitously in recent decades, these two mechanisms—substitution and complementarity—have raised relative demand for workers who hold a comparative advantage in nonroutine tasks, typically college-educated workers.

Seventeen years later, Daniel Susskind follows up in A World Without Work: Technology, Automation, and How We Should Respond:

When David Autor and his colleagues first developed the ALM hypothesis [described above] back in 2003, it was accompanied by a list of “non-routine” tasks. The authors were confident that these tasks could not be readily automated – yet today, the majority of them can be.

What economists in the ‘task-based’ tradition missed, according to Susskind, is “the pragmatist revolution,” where “Machines can now learn how to perform tasks themselves, driving their own rules from the bottom up.” Meaning there is no reason to think the current aggregate stock of human capabilities is the limit for machines. Now there are currently limits on the substitution effect, but with task encroachment, “machines will gradually, but relentlessly, advance further into the realm of tasks performed by human beings.”

A line-by-line critique of Susskind’s work is tempting, but we’ll restrict ourselves to showing how much he assumes to make this argument work.

For example, on “frictional technological unemployment,” he writes:

“frictions” in the labor market prevent workers from moving freely into whatever jobs might be available. . . Take men of working age in the Unites States, for instance. Since World War II, their participation in the labor market has collapsed: one in six are now out of work, more than double the rate of 1940. What happened to them? The most compelling answer is that these men fell into frictional technological unemployment. In the past, many of them would have found well-paid work in the manufacturing sector. . .Yet technological progress means that this sector no longer provides sufficient work for them all to do. . .

“The most compelling answer” to whom? This is entirely speculative and not in accord with the facts. First, the level of technology does not have any correlation with the unemployment rate or the labor force participation rate - which Susskind knows. Second, we could argue that as women have entered the labor-market the income of men is a less significant consideration, they may even no longer require a job to date, and are more likely to become stay-at-home parents (a trend that would be reinforced by changing mores). This is just as speculative, but the difference is it fits the data and our experience with innovation. His conclusion that “In the coming decade, this is likely to happen to other types of workers as well. . .they, too, will become trapped in particular corners of the labor market, unable to take up available work elsewhere” is only the extension of conjecture into the future.

Next, he writes about “structural technological unemployment” and the bugbear of inadequate labor demand:

will there always be sufficient demand for the work of human beings? I do not think so. . .until now, the substituting force that displaces workers has been weaker than the complementing force that raises demand for their work elsewhere. But it is likely that this balance between the forces will tip the other way in the future – and tip that way permanently.

Bolstering the point that there will be “merely more demand for machines,” he cites the UK agriculture and manufacturing sector, both of which increased real output over time but saw demand for labor fall. He recognizes that “these stories are only unfolding in particular parts of the economy,” but, again, still leaps outside everything we know, warning the stories “are not, as yet, universal phenomena.”

The point, of course, isn’t only that technology might increase demand for labor within industries (and in higher stages of production or closely related industries that might not be captured in the numbers), but that it boosts investment in industries where demand has increased because of the fall in prices in the expanded industry – and his neglect to discuss the fall in prices of final goods is inexcusable.

People earn incomes on the market for participating in production meant for consumption. Susskind’s argument is that there will no longer be a place for large portions of the population. But if there is not a place for these individuals, and they no longer earn a wage, they will not be consuming goods and services, defeating the rationale for investment in the first place. So, in Susskind’s world, producers would myopically produce goods for an ever-decreasing base of consumers, and the unemployed would have nowhere to go because technology would be better placed to produce everything. But this could only be true if there are no new industries in our horizon (not to mention the literal horizon and space), and that the decrease in prices and necessary labor from innovation do not translate into higher real wages, work in service, niche, or luxury industries, or the allowance for outright increased leisure time.

Daniel Susskind will never be refuted because he can always claim, as he does, that of course there might be “a burst of worker displacement here, a surge in demand for workers there” as we evade A World Without Work. So, we'll let Joseph Schumpeter’s searing comment on the Ricardian system be the final word: “It is an excellent theory that can never be refuted and lacks nothing save sense.”

—David Murphy holds a Masters of Finance from the University of Minnesota.