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Krugman discovers the Robot Revolution!

9 December 2012

Summary:  One of the great challenges of the 21st century will be managing the next wave of automation. This rise in productivity can make us richer, create feudal-like inequality, or spark massive social conflict. The result depends on our decisions. The first step, as always is problem recognition. Today we took another small step forward.

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An increase in the productivity of labour means nothing more than that the same capital creates the same value with less labour, or that less labour creates the same product with more capital.
— Karl Marx, Notebook IV of A Contribution to the Critique of Political Economy (1857/58)

Slowly more people become aware of the coming Robot Revolution, the next wave of automation. Now it’s Paul Krugman’s turn: “Rise of the Robots“, New York Times, 8 December 2012:

On the other hand, it’s not good news for workers! This is an old concern in economics; it’s “capital-biased technological change”, which tends to shift the distribution of income away from workers to the owners of capital.

Twenty years ago, when I was writing about globalization and inequality, capital bias didn’t look like a big issue; the major changes in income distribution had been among workers (when you include hedge fund managers and CEOs among the workers), rather than between labor and capital. So the academic literature focused almost exclusively on “skill bias”, supposedly explaining the rising college premium.

But the college premium hasn’t risen for a while. What has happened, on the other hand, is a notable shift in income away from labor:

Krugman, NYT, 8 Dec 2012

Krugman, NYT, 8 Dec 2012

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If this is the wave of the future, it makes nonsense of just about all the conventional wisdom on reducing inequality. Better education won’t do much to reduce inequality if the big rewards simply go to those with the most assets. Creating an “opportunity society”, or whatever it is the likes of Paul Ryan etc. are selling this week, won’t do much if the most important asset you can have in life is …  assets inherited from your parents. And so on.

I think our eyes have been averted from the capital/labor dimension of inequality, for several reasons. It didn’t seem crucial back in the 1990s, and not enough people (me included!) have looked up to notice that things have changed. It has echoes of old-fashioned Marxism — which shouldn’t be a reason to ignore facts, but too often is. And it has really uncomfortable implications.

But I think we’d better start paying attention to those implications.

Update:  Follow-up Krugman article

More analysis of the Robot Revolution: “Technology or Monopoly Power?“, Paul Krugman, New York Times, 9 December 2012

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Krugman, NYT, 9 December 2012

Krugman, NYT, 9 December 2012

About the Robot Revolution

Marx described it. His vision was muddled. He was wrong about the results of industrialization, as most societies found ways to distribute their fruits without civil war.  But now the same challenge returns as the flow of national income shifts from workers to those who own the means of production.  Krugman’s graph above shows one side of the coin; here is the other: Corporate Profits as a fraction of GDP:

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What can we do?

“Choice. The problem is choice.”
— Neo, The Matrix Reloaded

This is a large challenge, only one of those facing us in the 21st century.  Changes in the family structure and society’s demographics.  Climate.  Depletion of resources. Loss of hegemony as the world evolves to a multi-polar system. Today complacency is our enemy, encouraging us to waste our most valuable resources: time.

Marx describes the challenge of the robot revolution, and points to the solution.  We can organize our society to meet this challenge, as we have re-imagined society so many times before to meet past challenges.

“Therefore, mankind always sets itself only such tasks as it can solve; since, looking at the matter more closely, we will always find that the task itself arises only when the material conditions necessary for its solution already exist or are at least in the process of formation.”
–- Preface to A Contribution to the Critique of Political Economy by Karl Marx (1859)

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(4) Other posts about the coming Robot Revolution

  1. The coming big increase in structural unemployment,
    7 August 2010
  2. The coming Robotic Nation, 28 August 2010
  3. The coming of the robots, reshaping our society in ways difficult to foresee, 22 September 2010
  4. Economists grapple with the first stage of the robot revolution, 23 September 2012
  5. The Robot Revolution arrives & the world changes, 20 Apr ’12
  6. The coming big inequality. Was Marx just early?, 27 November 2012
  7. In Friday’s job report you’ll see early signs of the robot revolution!,  5 December 2012
  8. Krugman discovers the Robot Revolution!, 9 December 2012

 

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20 Comments leave one →
  1. WTF permalink
    9 December 2012 1:56 am

    The Uncanny Valley, Masahiro Mori, blog of The Institute of Electrical and Electronics Engineers, 12 June 2012 — excerpt:

    Editor’s note: More than 40 years ago, Masahiro Mori, then a robotics professor at the Tokyo Institute of Technology, wrote an essay on how he envisioned people’s reactions to robots that looked and acted almost human. In particular, he hypothesized that a person’s response to a humanlike robot would abruptly shift from empathy to revulsion as it approached, but failed to attain, a lifelike appearance. This descent into eeriness is known as the uncanny valley. The essay appeared in an obscure Japanese journal called Energy in 1970, and in subsequent years it received almost no attention. More recently, however, the concept of the uncanny valley has rapidly attracted interest in robotics and other scientific circles as well as in popular culture.

    Like

  2. 10 December 2012 2:33 am

    More analysis of the Robot Revolution: “Technology or Monopoly Power?“, Paul Krugman, New York Times, 9 December 2012

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    Krugman, NYT, 9 December 2012

    Krugman, NYT, 9 December 2012

    Like

  3. 10 December 2012 4:01 am

    Interesting discussion. It does seem that robotic automation is a natural continuation of what was started with the Industrial Revolution. Prices of robots are now such that they threaten labor even in the low-cost areas of the world. Foxconn is publicly moving to robotics. Check out the low-cost robots available from companies like Rethink and Robai.

    Like

  4. Thomas More permalink
    10 December 2012 4:49 am

    If we broaden the definition of “robots” to include “databases + algorithms,” the transformation grows even more drastic. For example, genetic algorithms can now generate more efficient designs for car bodies or radio antennas than humans. Deep learning algorithms are making significant strides toward finding new useful drug molecules given a list of molecular structures. Algorithms can now take raw facts and produce readable new stories from them.

    These activities all used to require highly educated humans.

    Like

    • 10 December 2012 2:34 pm

      More,

      That’s an interesting observation! Do these algorithms result in employment of fewer engineers, or just leverage their work?

      Like

    • Duncan Kinder permalink
      10 December 2012 9:48 pm

      Re: automated journalism

      The linked article, in part, states:

      “”This can work for anything that is basic and formulaic,” says Ken Doctor, an analyst with the media research firm Outsell.”

      It seems to me that it would work better for dog bites man than man bites dog.

      Like

    • Duncan Kinder permalink
      10 December 2012 9:58 pm

      A further note:

      Much of what lawyers do can and IMHO should be automated.

      Eg. Drafting wills, title searches, filing corporate documents.

      Like

  5. 10 December 2012 5:07 am

    “Therefore, mankind always sets itself only such tasks as it can solve; since, looking at the matter more closely, we will always find that the task itself arises only when the material conditions necessary for its solution already exist or are at least in the process of formation.”
    –- Preface to A Contribution to the Critique of Political Economy by Karl Marx (1859)

    Some actual real life Examples, plz, Mr. Marx!

    See it is always about choice, as Neo opines But who is doing the choosing? Who has the power to impose his choices?

    Some Americans will one day awake and discover they have relinquished their choosing quite willingly to some Authority and they will be mad as heck (As usual) and then demand (Again!) that the Authority provide the goods. Too late, in many regards. Probably be sane Blogs around for quite sometime. But many more deaf ears, too.

    Breton

    Like

    • 10 December 2012 2:32 pm

      “Some actual real life Examples, plz, Mr. Marx!”

      The BIG answer to your question concerns the very wave of industrialization that Marx was describing. His confidence was rewarded that the West would find a solution to the distopian inequality (ie, massive poverty of the working classes) he saw in the late 19th century. And so we did, creating the peaceful and prosperous societies of today in the developed nations. It was not the specific solution he expected, but he was broadly right about one of the great questions of his generation.

      And we can do the same with the equivalent challenge of our time.

      Like

  6. 10 December 2012 1:47 pm

    Here is another view of Krugman’s myopia: ” Krugman Ponders the Fallen State of US Labor“, Yves Smith, Naked Capitalism, 10 December 2012

    The Wool pulled over the sheep’s own eyes is almost magical in it’s execution. Unless you are involved in PE or enter the world of Financialization, you can notice the lessing light and maybe smell the muskiness of the wool but you really can’t see it. Really, one wonders who the “Robots” are, here.

    Breton

    Like

    • 10 December 2012 2:29 pm

      Breton,

      I don’t see Smith’s article as about Krugman’s “myopia”. She agrees wtih Krugman, and explores other possible answers to the questions he poses.

      Like

  7. 10 December 2012 5:25 pm

    I know.
    You are correct.

    It is my view ….his myopia, that is.

    I do not think it is a news flash that technology is stripping off jobs nor that Financial people will steal everything that is not tied down (Regulated!)

    You don’t spend a lot of time teaching your kids to share, to be decent good people — constantly beating it into their little brains..
    You don’t really expect the money changers to be mostly fair.
    Nor is it reasonable to think that job replacing and productivity enhancing developments will increase Jobs !?

    Breton

    Like

    • Frans Bouman permalink
      24 May 2013 3:45 am

      Job replacing and productivity enhancing developments for more than a century did increase jobs. That’s dying now and will soon be dead.

      We now see robots, both software only and software/hardware, actually accomplishing what was feared in the past – permanently replacing workers without creating new jobs. Combine the robots with the additive manufacturing revolution that is just getting underway (i.e. 3D printing) and we can see the writing on the wall. Add to that the time a few years hence when computers will be as intelligent as people in every sense and still at the low end of their growth in intelligence and we see something coming, but what it is we cannot imagine.

      In the short term we need to acknowledge that capitalism is not up to the job in dealing with this new world we have created and must quickly evolve a replacement for it.

      State ownership of the means of production isn’t the answer as at some point not very far distant the need for states will disappear and, in any event, the means of production are likely to own themselves and be completely autonomous in less than a century.

      Where will we fit on an Earth where our robots are far more intelligent than we are and they are the means of production of everything?

      Like

    • 24 May 2013 4:53 am

      All good questions. Developing answers to these might be among the top challenges for the next few generations.

      Like

  8. Duncan Kinder permalink
    10 December 2012 10:03 pm

    A final observation:

    Our guru for the coming robot revolution is P.G. Wodehouse.

    Essentially humanity shall increasingly play the role of Bertie; while robots shall play Jeeves.

    Like

    • 11 December 2012 2:13 am

      An alternative view is what I used to, jokingly, refer to as the “winpocalypse” – that being the day when the number of Windows operating systems installed is greater than the human population of the planet: every man, woman, and child is a Windows system administrator.

      Computers do some things well, but they are surprisingly costly and poor at others. To take one example: consider “cloud computing.” The cloud computing trend represents a business-level rejection of the absurd cost (consistently under-estimated) of Windows system administration. Computers were supposed to make certain business processes oh, so inexpensive, but instead what we got was colossal amounts of time absorbed by employees goofing off on the web, huge maintenance bills for operating systems, and a constant turn-over of hardware platforms. Yet most of these expensive corporate desktops are marginally better than typewriters at many times the cost. The “bring your own device” trend is another attempt by businesses to deflect the cost of system administration – this time onto their employees – and is going to result in massive blow-back costs in terms of critical data leakage and incident response.(*)

      (* I am happy about this; I make a decent part of my annual income consulting to corporations regarding their disastrous data leaks. As Tom Lehrer says, “specialize in diseases of the rich and stupid.”)

      Like

  9. 11 December 2012 2:15 am

    PS – the “stone throwing department” of The Pentagon’s “glass house” division will be doing its best to make sure that those robots are extra un-reliable, using cyberweapons like Stuxnet.

    Like

  10. Atlantic: "Why Workers Are Losing the War Against Machines" permalink
    11 December 2012 4:09 pm

    From the archives, a good intro to the subject: “Why Workers Are Losing the War Against Machines”, Erik Brynjolfsson and Andrew McAfee, The Atlantic, 26 October 2011

    Erik Brynjolfsson is the chair of the MIT Sloan Management Review, where Andrew McAfee is a principal research scientist. They are the co-authors of the new book Race Against the Machine.

    This is a three-part excerpt from Erik Brynjolfsson and Andrew McAfee’s Race Against the Machines:

    Part 1
    Part 2
    Part 3

    Like

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