We're missing the point about the robotization of America's workforce

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BY DAVID F. RUCCIO | APRIL 6, 2017

Treasury Secretary Steve Mnuchin may not be worried. Nor, it seems, are other members of the economic and political elite. But the rest of us are—or we should be.

The robots are here and they’re rapidly replacing workers, thus leading to less employment, downward pressure on wages, and even more inequality.

The latest evidence comes from the work of Daron Acemoglu and Pascual Restrepo, who argue, using a model in which robots compete against human labor in the production of different tasks, that in the United States robots have reduced both employment and wages during recent decades (from 1993 to 2007). That conclusion holds even accounting for the fact that some areas of the economy may grow (thus increasing employment for some workers) when the use of robots raises productivity and reduces costs in other industries.

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Even though U.S. employers have been introducing industrial robots at a pace that is less than in Europe, their use in American workplaces has in fact grown (between 1993 and 2007, the stock of robots in the United States increased fourfold, amounting to one new industrial robot for every thousand workers). And, once the direct and indirect effects are estimated, robots are responsible for up to 670,000 lost manufacturing jobs. And that number will rise, because industrial robots are expected to quadruple by 2025.

Actually, the effects have likely been even more dramatic, because Acemoglu and Restrepo take into account only three forces shaping the labor market: the displacement effect (because robots displace workers and reduce the demand for labor), the price-productivity effect (as automation lowers the costs of production in an industry, that industry expands), and the scale-productivity effect (the reduction of costs results in an expansion of total output).

What they’re missing is the effect on the value of labor power. As I explained last year, when productivity increases lower the prices of commodities workers consume, the value capitalists need to pay to get access to workers’ ability to work also goes down. As a result, even if workers’ real wages go up, the rate of exploitation can rise. Workers spend less of the day working for themselves and more for their employers. Capitalists, in other words, are able to extract more relative surplus-value.

And more surplus-value means more income for all those who share in the booty: CEOs, members of the 1 percent, and so on.

That’s why the increasing use of industrial robots, which under other circumstances we might actually celebrate, within existing economic institutions represents a disaster—not for their employers (who, like Mnuchin, are not particularly worried), but for all the workers who have been or are likely to be displaced and even those who manage to hang onto their jobs.

Workers are the ones who are going to continue to suffer from the “large and robust negative effects of robots”—unless and until they have a say in how robots and the resulting surplus are utilized.


David F. Ruccio is Professor of Economics at University of Notre Dame, and author of over 80 journal articles and book chapters. His most recent books include 'Postmodern Moments in Modern Economics' (Princeton University Press), 'Economic Representations: Academic and Everyday' (Routledge), and 'Development and Globalization: A Marxian Class Analysis' (Rout­ledge). Read his blog and follow him on Twitter: @Dfruccio


Showing 7 comments

  • commented 2017-04-13 16:31:35 -0400
    William Pelligrini,
    — I mean you have a dedicated and reliable workforce, why go outside for services your people could learn to do?

    Even the service industry is losing positions or will long-term. When was the last time you ever heard of a TV repair man? I used to do onsite repair and maintenance of super-computers are very expensive locations … which is a job that is basically gone now. Everything is modular, designed to be popped out and popped back in, or just replaced. The cost of jobs, and thus the cost of keeping people alive and occupied in just an economic sense is too high. So, the question is, do we as a society realize that we are either going to have to support people to live for free at some point, make work for them or just let them die?

    I’m thinking that making work would be great, but there are an awfully lot of people who either cannot do reliable work, or are not suited to work, or be around other people.

    Then there is the cost and problems with managing so many people. How many people are suited personally for management. How many people are corrupt, or corruptable. Why don’t companies want to hire people … a lot of them rip off the company or are a liability.

    We need higher quality people that can find their own meanings and purposes in life … but we have been so busy knocking people over to have the square pegs fit into the round holes of industrial work that we have neglected the humanity of people.

    Imagine putting millions of people to work repairing the environment, or growing sustainable healthy food near the location that it will be eaten using permaculture or natural farming methods. Or how many people could be useful in journalism, or documenting and verifying that people who do have jobs or political office are acting in a legal way. Or troubleshooters in our political systems. People say so often than the government doesn’t work … well, apply business process improvement methods to find out what is wrong and fix it.

    So much to do, but not anything the fraction of the 1% at the top really want to see done, they want to hold on to the way things are.
  • commented 2017-04-13 15:49:04 -0400
    Ah interesting answers to questions I have long thought people should have been asking for ages now. Of course, I have my own opinions or as I like to call them thought out answers to both questions. First the cost issue.
    In actuality it does cost the “Manufacturer” Less to produce a product with low cost labor in say India or China. BUT by the time the product gets to the U.S. Market, which takes `4 to 6 weeks as it travels via Ships, Planes, Trains and Motor vehicles the price is raised by these rather expensive transportation costs. BUT the manufacturer will sell the product to a third party for a profit, and that 3rd party sells it to a 4th party at the ship loading port who sells it to another party at the import point. Any two or three of these intermediaries are probably owned by the original manufacturer’s company. And the cost is increased by 10% or more at each transaction point. Thus by the time it gets to the store the product actually cost more than if it had been made in a plant in Omaha.
    As for the second question, I have my opinion and it has been more than a bit influenced by Prof. R.Wolff. I find that Ms. Catherine Granicz answer is the one that makes the best sense. She did miss one other possibility. Robots are like cars or any mechanical device run by computers. They need maintenance on a regular basis. Also the software needs to be looked after as those things have this nasty habit of getting their code corrupted and thus not working real well. A workers coop could decide to send some of its people to schools so that they could perform the routine mechanical maintenance and break down repair, and to handle the IT difficulties. I mean you have a dedicated and reliable workforce, why go outside for services your people could learn to do?
    To all who replied my thanks. Great discussion and great points. Loved it.
  • commented 2017-04-13 14:34:54 -0400
    William Pellegrini: to answer your second question about how could a worker’s cooperative offset the use of robotics, may I offer the following…
    The worker’s would democratically decide whether they want to introduce robot technology into their workplace, to begin with. It would not be forced on them, like in a capitalist workplace. Secondly, if they decided to automate certain jobs, they may decide to collectively work less hours for the same rate of pay since robots are more productive; as opposed to laying-off people, like capitalists do. Worker cooperatives are intrinsically community-minded and holistic when it comes to decision-making, as opposed to the annihilistic, profit dominated tunnel vision we see from capitalist enterprises. I hope that makes sense…
  • commented 2017-04-12 01:02:45 -0400
    W. Pelligrini
    >> why is it that prices on goods continue to rise when the cost of producing them fall?

    What a great question. I wonder if it can be that the goal of undercutting people/workers is so important to the system that they are installing robots even though they do not decrease the cost of production, but they do shrink the economic universe.

    It’s like I happen to be reading about the Viet Nam war, and one of the strategies of the corrupt South Vietnamese government was to have the Americans try to defoliate the entire country in order to remove the sustenance to the rebels and make people more dependent and hence more controllable by the government. I can only wonder if this is why we have so much of the top level capitalist corporations pushing forward to aggravate climate change.

    Your second point makes me think of something that I’ve never seen mentioned by the Left or Right, except obliquely by the right in their furor to outlaw abortion, and that is population control. If the people of the world want to share in the means of production, don’t they accept, or realize that there must be some limits on that. Climate change will never be stopped if the human population continues to grow and grow. I’ve always felt that there must be some bargain, where people must limit their numbers in exchange for say the UBI.Universal Basic Income. If not that specifically, then something else.

    But would those people necessarily be workers, and would non-workers want jobs just for the sake or taking robots out of production?
  • commented 2017-04-08 14:48:52 -0400
    “prices on goods continue to rise” due to continuously printing of new money.
    “what would a Workers Cooperative do to offset the use of robotics?”
    There is no need to offset the use of robotics. Robots are good. Bad is capitalism.
    Capitalism’s allocation of wealth is bad. In a cooperative, employees will establish democratically the budgets (investments, wages) as they feel fit. The productivity gains will be split accordingly.
  • commented 2017-04-08 14:42:01 -0400
    Absolutely agree with the article. In capitalism, any technological progress will bring more wealth to rich people, no relief for poor guys. On long term, monopoly on technology will hinder any significant progress and capitalism destruction. And finally revolution. Revolution won’t come amid capitalism crimes, but because of braking the technological progress.
  • commented 2017-04-07 07:29:24 -0400
    This aritcle raises two questions. First, why is it that prices on goods continue to rise when the cost of producing them fall?
    Second, what would a Workers Cooperative do to offset the use of robotics?
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