It is not the automation that is the problem, it is our economic model in which increased productivity equals economic growth; it cannot handle quality of life and full occupation in jobs that cannot increase their productivity. There is plenty of work; it will be no problem to keep everybody active as both producers and consumers in the same economy if only we get rid of the wrong measuring sticks.

 

The robots are coming, they are taking our jobs, and the majority of us cannot support ourselves in the future market economy.

Regarding work and being active in the economy, it is not the robotization, digitization and automation that is the problem, it is our economic model. There will be plenty of ways for everybody to support themselves and their family if we guiderail the market economy through appropriate legislation. (Just for the record: there is no functioning “free” market that remains free for everybody in it; only regulated markets function as free markets, non-regulated markets end up as monopolies.)

The problem with the current economic model is that it evolved from and was created to encompass the industrialized economy and scarce resources. The future economy is not based on factories churning out physical goods; it is based on data exploited in various forms. Some of that will be physical goods produced in factories but these goods will be made by robots, not by hundreds or thousands of people who would spend their salary in other parts of the economy.

The problem with the current economic model, both the economic structure and the academic models we use to describe and handle it, is that it is a model in which increased productivity equals economic growth. An industrialized economy is a success as long as it can produce more with fewer resources, including time and effort. This makes a lot of sense in a situation where resources are scarce and the majority of people are poor and thus poorly fed and clothed, and where high child mortality, poor housing and lack of education define the overall standard of living.

Now the industrialized countries have reached a point where the industrialized economy has succeeded. The West has reached such high productivity that we cannot consume all that we can produce—and on top of that we add goods produced in areas with lower wages than our own. The only way we can keep consuming at the pace we produce and import, is by throwing away perfectly good clothes, shoes, electronics, furniture, and even entire kitchens and bathrooms.

It used to be that in order to consume, we had to go to work. Now, in the West, in order to get to go to work, we have to consume. And when we cannot keep up consumption with the money we earn, we must borrow money to keep buying.

Meanwhile, at the bottom of our own economies, people cannot make ends meet nor participate in the consumption. We not only have unemployed poor, we also have working poor. The latter simultaneously compete with wages in the Far East and face the consumer power and prices in the wealthier parts of their own country.

As we have succeeded in creating economies of plenty, partly due to extreme productivity per man-hour thanks to robots, partly because we import goods from low-wage areas, the old economic model gradually stops working and providing meaningful answers. The basic macro-economic assumptions about shortages on the supply-side and constant demand do not match reality in the West.

This is not a problem. Or at least it ought not be a problem. It ought to be wonderful: we do not have to work very much in order to consume what we need without needless waste.

The only problem is that we do not have macro-economic models that can handle this situation and guide policymaking, investments, and the design of the next market economy. We do not have macro-economic models based on a world of plenty and where money for consumption for the majority of the population comes from work where productivity cannot increase and hence cannot live up to the expectations of the industrial economy.

If we look at productivity in Denmark over the past 50 years, the sectors that have been able to increase productivity are raw materials, agriculture / fishing, industry, energy supply, and communication, and to some extent trade. Transportation has followed the economy as a whole; finance was not able to keep up until around 1991 when it started matching the rest of the economy, and in 2003 it surpassed the productivity of the economy as a whole.

The sectors that have not been able to increase their productivity on a scale matching the rest of the Danish economy are hotels & restaurants, travelling & cleaning, culture & leisure, building & construction, and “other services,” with travelling & cleaning suddenly making a productivity jump around 1991.

The worst performer on increased productivity is water & renovation, particularly since around 1991, which (unless there is a change in the categorization that influences both travelling & cleaning and water & renovation) can probably be explained by more advanced handling of drinking water and increased recycling of trash. It takes more labor to maintain water reserves than to just pump up water, and to recycle than to just dump waste.

Source: http://www.statistikbanken.dk/NP23
https://www.dst.dk/da/Statistik/dokumentation/statistikdokumentation/produktivitetsudviklingen

The Danish statistics regarding productivity do not include the sectors of education, public administration (incl. defense, police etc.) and health care & social work since these are public sectors and thus the methods used to calculate productivity for commercial goods and services do not apply.

Rather than seeing the inability of hotels & restaurants, travelling & cleaning, culture & leisure, building & construction, and “other services” plus, presumably, education, health care and public administration to increase their productivity as a problem, we should welcome the opportunity to employ more people and keep them active as both producers and consumers in the economy.

The statistics covering the past 50 years say nothing, of course, about changes in productivity in the future. But that is not the point.

The point is that we have to develop new measuring sticks for what is a healthy and flourishing economy.

At least four things should signify a healthy economy:

  • All healthy adults are both producers and consumers in the official economy / legal tender; this is what allows us to participate in the political power over the economy
  • By working no more than half of their waking hours five days per week, any healthy adult can
    • support themselves and a family
    • save up for pension
    • save up for vacation and unwelcome surprises
    • afford and take time off for further education
  • Workers experience satisfaction professionally, economically and preferably also emotionally and existentially:
    • does this work serve a purpose and
    • is it meaningful to the one performing it?
  • Economic security / safety net

The current macro-economic models do not measure according to the four points above. They cannot handle quality of life, do not promote full occupation in jobs that cannot increase their productivity, and economic safety nets are considered a political topic, not an innate quality of the economic model.

However, there is plenty of work in sectors where productivity cannot be increased; we can always create more beauty, higher quality, better care, more personalized help, less stressful encounters, deeper understanding, warmer welcomes, and finer details. It will be no problem to keep everybody active as both producers and consumers in the same economy if only we get rid of the wrong measuring sticks.

Conventional farming has increased its productivity tremendously over the past 50 years, partly due to machinery, partly due to new herbicides and pesticides. It is, however, ruining our drinking water and thus lowering productivity in the water sector. To the current macro-economic models, it would look horrible if we made farming organic and more labor intensive even though it would be better for our water and environment and provide low-skill jobs on farms.

We could all be thriving as teachers, nurses, musicians, hairdressers, organic farmers, artists, recycling stewards, police officers, designers, tailors, masons, architects, city planners, baristas, chefs, doctors, authors, philosophers, public administrators etc. and our local communities and countries could flourish. But without ways of increasing our productivity, the current macro-economic models couldn’t tell we were flourishing.

With a different way of measuring, however, we could all contribute to the economy as both producers and consumers and we could have work satisfaction and economic safety as well. We just need to figure out what that model looks like and what to measure that we do not measure today.