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Automation: will robots take our jobs?

David Bush

February 27, 2018

Automation is coming. The punditocracy, academics and headline writers all agree: society will be upended by mass automation. Increasing the minimum wage will simply speed up the inevitable replacement of workers by robots and thus we need to seriously consider policies like Basic Income to tackle the fallout.

But what, if any, truth is there to this? Are all workers destined to be replaced by machines? Does raising the minimum wage simply result in increased job loss due to automation? There is a grain of truth in all of this anxiety over automation. But the technological determinism of those arguing that automation leads to mass unemployment, rests upon an inaccurate reading of how capitalism operates.

Capitalism and technology

Workers enter the labour market because they need food, shelter, clothing and other basic necessities. They do not have the ability to attain these things by any method other than selling their ability to work. Employers hire workers for their ability to work for a given wage in a given period of time. The value of what workers produce at work is more than the value they are paid by employers. This surplus value produced by workers is the ultimate source of profits.

The competitive nature of capitalism requires businesses to vie for market share to survive. Capitalists aim to increase their market share by cutting costs and maximizing their return on investment. Inside the workplace this means capitalists will try to squeeze more productive work from workers for less: controlling the knowledge of work skills, organizing the flow and pace of work, and increasing oversight. The continual introduction of technology into the workplace is one of the best methods to achieve these aims.

Machines and tools enable workers to increase their output by making certain job tasks easier. It also allows management a greater ability to ratchet up the pace and oversight of work. As Braverman notes, “machinery offers management the opportunity to do by wholly mechanical means that which it had previously attempted to do by organizational and disciplinary means.” It is important that we conceptually understand technology and labour saving devices as a form of labour discipline. Technology under capitalism is not merely just a bunch of cool stuff, like robots or computers. Technologies are things with a purpose in relation to labour. Management uses machines to dictate the pace of work and to deskill labour, separating the conception and execution of job tasks. The increased use of effective technology leads to increased output and a lowering of unit prices.

The history of capitalism is marked by a constant revolution in the nature and organization of work. A hundred and fifty years ago the Canadian economy was overwhelmingly agrarian. The concentration and consolidation of powerful corporations in the agricultural sector, and the implementation of labour-saving technology especially after World War Two, led to the slow and steady decline of the agricultural workforce. But this automation did not lead to mass unemployment nor the end of work. Instead it corresponded with the rise of industrial production and the reorganization of work life.

The norms and rhythms of agricultural and craft work with their high degree of independence and control over production were reorganized by capitalists and the newly forming managerial class required to manage sprawling new corporate empires. The competitive dynamism of capitalism has pushed firms to innovate to increase output. The introduction of the power loom, steam engine, the blast furnace, electrical power are in essence no different than firms employing driverless cars, machine learning, or high-end robotics.

Contradictions of automation

The mechanization in a given industry means the replacement of human labour. Individual businesses will employ fewer workers, have higher outputs and lower unit costs. So long as they have a technological edge, companies can increase their rate of profit even as they increase the amount of fixed capital costs relative to workers. This technology allows them to squeeze out more value from each worker in a given period of time.

But when a labour saving technology becomes generalized in a sector, and prices fall, the firm’s profit rate will depreciate (though its mass profit could remain high). The company will be saddled with more fixed costs relative to labour, with the capacity to have higher output levels. The reason for this is that all machines are fixed capital: the machine’s potential value to the firm is paid in advance. Highly capitalized firms are able to compete on a bigger level, but run the risk of having their capital investment superseded by competitors using a superior technology (imagine investing in a series of highly efficient pneumatic tubes just before the internet). There is also a risk that the market may experience an excess of a given product and the business owner will be faced with idle machinery that it cannot get rid off.

There are countervailing tendencies to all of this. As firms deskill labour and replace workers with machines this can create larger and larger pools of workers who are looking for work (in the context of globalized production chains, the vast pool of labour can extend beyond national borders). This puts downward pressure on the price of labour and encourages firms to hire cheap labour, and put off costly and risky investments in machines.

In addition, automation of work creates new avenues of employment (often highly skilled work). Workers are needed to build, design, program, transport, tend to and service machines. Automation itself births a new industry that requires workers. Human labour remains at the centre of mechanization, a point many frequently forget. Machines are the product of human labour and intelligence. When machines are introduced into a workplace, it is more accurate to conceptualize this as an outsourcing of labour than it is to see it only as a worker being replaced by a machine. Behind the vast layers of robots, machines, tools and code lies the human labour that created all of it.

Automation, even at its most advanced level, has not altered the basic premise of capitalist social relations. Humans are still the only input able to create new value. Robots, no matter how advanced, remain simply machines. Marx’s basic description of a machine in relation to human labour remains as relevant for a steam engine as it does for the most advanced computer: “The machine proper is therefore a mechanism that, after being set in motion, performs with its tools the same operations that were formerly done by the workman with similar tools. Whether the motive power is derived from man, or from some other machine, makes no difference in this respect. From the moment that the tool proper is taken from man, and fitted into a mechanism, a machine takes the place of a mere implement. The difference strikes one at once, even in those cases where man himself continues to be the prime mover.”

Capitalists can try to replace workers with machines, but this can’t replace the contradiction at the heart of capitalism: that labour produces all value. Once technology advances are generalized in an industry, the competitive advantage a firm has disappears. The firm is left with less human labour and more fixed costs, this tends to lower the rate of profit. As Michael Roberts explains: “Over time, a capital-bias or labour shedding means less new value is created (as labour is the only form of value) relative to the cost of invested capital. There is a tendency for profitability to fall as productivity rises. In turn, that leads eventually to a crisis in production that halts or even reverses the gain in production from the new technology. This is solely because investment and production depend on the profitability of capital in our modern mode of production.”

Automation in the service sector

Employers, right-wing commentators, and those in the tech sector having been beating the drum about how automation will sweep through all industries, especially the service sector. But currently, North America is experiencing record low rates of productivity growth. The period from 2005 – 2017 is by far and away the lowest it has been in the United States since 1947 (the first year of comparable data). In the manufacturing sector, which utilizes more advanced technology, the numbers are even lower. If we are in the middle of technological revolution that will completely overhaul the economy, why don’t the statistics don’t bear it out? The existence of technology cannot overcome the dynamics and contradictions of the capitalist accumulation cycle. 

Rather than reflecting economic reality, narratives about robots replacing workers are ideological arguments against higher wages: the right-wing argue against wage increases in the service sector by claiming that this will drive automation and displace large swaths of workers in the industry. Parts of the Left have latched onto this as well, saying it is the reason Basic Income (BI) is needed. But the reality of automation in the service sector is much different.

In banking, the ATM did reduce the number of tellers per branch from 21 to roughly 12, but that in turn reduced the cost of opening bank branches and as such branch expansion exploded. The advent of online banking is probably a more significant factor in potential job shifts in the banking sector than the ATM; online banking reduces the need for brick and mortar store fronts, but this also creates others jobs in web development, call centres, cyber security, etc. Likewise the advent of computer software for bookkeeping saw a drastic fall in the amount of bookkeepers in the United States. But it also created the conditions for the number of accountants, financial managers and management analysts to grow precipitously. 

In grocery stores, self-checkout machines have existed for well over 15 years have not seen wide-scale implementation. The machines remain relatively costly in relation to their performance. They still require human minders to assist people. They also create the need for more oversight to discourage shoplifting. In the vast majority of stores where they exist they are part of a mixed check-out system. Self-service machines for simple functions will see wider adoption, but where they have been implemented there is little evidence to suggest kiosks are leading to the doom and gloom scenario of mass unemployment. Many jobs in the service sector involve the performance of emotional labour (by making customers feeling happy, listened to, and valued) or intricate physical tasks. For these jobs, the risk of automation replacing human labour is extremely low.

In coffee shops, Starbucks thought their mobile ordering app would reduce costs and increase output. Instead, it has increased the need for staff, not lessened it. By adding smartphone orders to in-person orders, the Starbucks mobile app created bottlenecks that led to the hiring of more staff and the plans to open up more stores.

Nowhere is the automation argument more present than in the fast-food industry. Its highly taylorized job tasks and deskilled workforce make it the prime candidate for full automation with self-serve kiosks displacing thousands of workers. But here as well, the reality of this prediction is somewhat different. Automated kiosks in the industry remain quite expensive ($120,000 to $160,000 per McDonald’s franchise). Even if labour costs rise and the cost of the technology falls there is little evidence that kiosks will reduce total working hours. For many large fast-food chains a huge source of their business comes from drive-thru (McDonalds gets 70 percent of its business via drive-thru). The installation of expensive kiosks will not apply to the vast majority of patrons. Where kiosks have been implemented it simply shifts labour to the back end of the restaurant. Kiosks take orders faster, but that just puts more strain on the kitchen staff, and in the end necessitates shifting labour around to accommodate the new workload in the kitchen.

In a recent CBC article about the rise of automation due to Ontario’s $15 minimum wage, a McDonald’s franchisee noted: “Some McDonald’s restaurants have introduced self-serve kiosks as part a broad ranging strategy to create a ‘restaurant of the future,’ said Jason Trussel, who owns five McDonalds restaurants. He told CBC the machines are not going to replace human workers. In the past 18 months, his staffing levels have increased by 66 employees. Trussel introduced the kiosks about a year ago. The machines simply give people more options, which brings in more customers and requires more staff, he said.” Likewise in Alberta, after the minimum wage was raised and they brought in more self-serve kiosks, McDonalds went on a hiring spree.

Whose automation?

Automation will displace jobs and it will also create jobs. It is quite possible the rate of displacement could exceed the rate of job creation. However, if this does happen it will not only produce higher levels of unemployment (driving down labour costs), but it would also mean lower profits and growth, leading to economic turmoil. This in turn will slow the rate of investment, stall innovation, and the adoption of new technologies.

As Michael Roberts explains: “If the whole world of technology, consumer products and services could reproduce itself without living labour going to work and could do so through robots, then things and services would be produced, but the creation of value (in particular, profit or surplus value) would not. As Martin Ford puts it: the more machines begin to run themselves, the value that the average worker adds begins to decline.” So accumulation under capitalism would cease well before robots took over fully, because profitability would disappear under the weight of ‘capital-bias’.”

Capitalism will not produce a fully automated society. Instead workplaces will be automated when it is profitable to do so, not when it is socially useful or even possible. Marx noted long ago that there was a vast gulf between the potential and reality of machines under capitalism: “The economic paradox that the most powerful instrument for reducing labour-time suffers a dialectal inversion and becomes the most unfailing means for turning the whole lifetime of the worker and his family into labour-time at capital’s disposal for its own valorization.” Automation in the workplace will continue to increase. What is important to understand is that the pace, extent, and impact of its adoption will be shaped by the inherent contradictions within capitalism.

For workers the question becomes who does the automation narrative serve? At almost every instance it has been used as a cudgel to beat back workers demands for better wages and working conditions. As workers we should recognize that there are possible transformative technologies on the horizon that could re-shape the world of work. Automation and the advent of new technology are not inherently good or bad, but when automation is driven by profit and competition and not human need and environmental sustainability, workers will pay the price.

Workers will see none of the benefits of automation unless we are able to exert our collective power. This means rejecting both the false fears of the boss’s automation and utopian policy solutions from above like Basic Income, and demand more control and power in the workplace.

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