The end of unemployment

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We should start this presentation accepting something said a long time ago. Predictions are difficult, especially about the future. Having this in mind we should look the current trends in the job market and which are the possible outcomes of these trends.

In a much publisized book, the president of Foundation on Economic Trends Jeremy Rifkin, paints a very dark picture about the future of work. Technology, he says, makes human labor obsolete. The more automated a society is, the less work humans will have. Robots already build cars -- so long blue collars workers -- and computers in the near future will do many of the tasks done today, by white-collar workers. In short, he says, history will repeat itself in the factory floors. Blue collar workers show the way for middle class management and many «symbolic analysts» -- a term coined by professor and ex US Secretary of Labor Robert B. Reich to describe all workers who create, manage, and edit information: writers, journalists, public servants, translators etc. For example the manufacturing sector is going to be workless. It employed 33% of the active population in the 50s and in ten years will employ, 12%. In banking things aren't different: 30 to 40% of jobs in corporate banking is going to be lost in the next seven years, due to new information technologies.

Rifkin looks carefully to many sectors of the promising information economy, and what he sees is quite different from what the technotopians (people who believe that technology will lead to a better, more just, and free society) see. He observes that the process of «creative destruction» (another beautiful term coined by the economist Schumpeter, to show the process of economy to destroy certain industries or sectors in purpose to create new ones) in the area of jobs is more destructive than creative. He sees that, although technology creates new areas of expertise and new jobs, the balance, as time goes on, is unequal. More work positions are destroyed, than created. In the United States alone two million jobs are lost every year to automation. He says, that this is true even for sectors which experience great rates of growth, such as information technologies.

Labor statistics at the present show a quite different landscape: US experiences one of the lowest unemployment rates in decades. Especially in the computer and software sector numbers show an exactly opposite trend. According to US labor and Statistics department there was 60% increase in the demand of workers in the computer and software sector in the last four years. This increase is due to some factors which could be temporal. Internet, the millennium bug, and the introduction of Euro created a lot of jobs which at present are highly paid.

But, the point is that the Rifkin's rationale if we see it in the light of today's work practices is right. Whenever is possible, businessmen, or businesswomen will substitute human labor with computers or robots, because in the long run, they cost less. You know the argument: machines don't take sick leaves, don't gossip around the office etc. «For the first time in human history», he writes in his book, «human labor is being systematically eliminated in the economic process».

«We are in the early stages of a long term shift from the "mass labor" to highly skilled "elite labor" accompanied by increasing automation in the production of goods and the delivery of services. Workless factories and virtual companies loom in the horizon. While unemployment is relatively low, it can be expected to climb steadily and inexorably over the next four decades as the global economy makes the transition to the information age.»

High unemployment rates in an economy means a restless society. People who do not find work in the official economy will search for opportunities in the dark areas of the economic process, whether this is drugs, prostitution, crimes against property etc. The future according to Rifkin is a terrifing place.

As we said before, predictions are difficult especially about the future. Rifkin is right if we project the trends today in society, if we take a ruler and draw a straight line in the years ahead. «A near workless economy is within sight.» he says. But is it the economy of our future?

A first objection is that society and economy are chaotic systems. They do work not in the man-made linear way. We can not make safe predictions based in the current trends. Society functions with constant revolutions. One of the revolutions that take place today, is the transition to the information economy. In this economy the core element is something that is not tangible as capital is -- we can not measure it like we used to measure work hours. Actually information is a factor in our economy, we do not know how to deal with. All we know is that it has economic value. We don't know how to measure this value, and we can not speak about productivity in terms of information. All we know from traditional economics, do not apply to information.

When you move to an economy where the key factor of production is so different from what we know today, a lot of weird things happen. It is not the purpose of this presentation to examine every aspect of this revolution, but certainly things will change in the job market.

One small scale revolution we see in our new information economy is the independent contractor - worker. There are a lot of people in the high technology sector who offer their work as independent workers. They have a contract with a company, take a project, finish it and get paid. They do not have any obligations to the company which hires them for a short period, and for a project at a time, and also the company does not have any obligations to them.

Let's project this different scheme in the future. What we are actually talking is a new information market. Workers/contractors will buy information in the form of continuous education and they will sell in the form of projects to companies. They might get paid once for the particular project or they can participate in the returns. In a sense we will be contacting business with our personal capital which is our mind.

In an information economy, also, talented people can get together start a project, sell it and then participate in the earnings. Their company will not be for ever, but as long the project goes on. For example they can create a piece of software, put it in a server and every time someone buys a copy, dividends will be sent automatically to all participants bank accounts.

This is not new form of work. Sperms exist in our world. If we want to see them we should look in the existing information economy: for example in the market of books and music. Today, writers and musicians are workers/contractors. They work on a particular project, they create some value, and they participate in the returns in the form of rights. Their market is not pure informational, (their work is stuck with materials, paper or optical discs) but the core of their business is selling and buying information.

So I think we should be talking about a jobless economy, but not about a workless economy. We are experiencing the end of employment but also the end of unemployment. Employment and unemployment are irrelevant terms in the future of work.

Of course this economic landscape has a lot of traps. In this information economy where we will be living from selling and buying information our product should be well protected. That means strict laws for protection of intellectual property. But this creates a whole new area of problems. People should have at least the initial amount of information to participate in the new economy. If all the information are in the market there will be a lot of people (the so called have-nots) who will be excluded from this market. This will be not only unethical, or problematic (what are you going do with these people who are excluded from the economic process? Send them in exile or kill them?), but it will be irrational in the terms of the system which will be created. Human minds will be the industries of the future. They can produce value, so you can't have the luxury of leaving people out of this process. Society in general has to find a way so everyone will participate in this process.

This is where politics come in. Society -- I don't know if it will be in a form national state, or in the form of smaller communities, or international states -- will have to buy information in the form of education so the younger members will have the initial capital to participate in this new economy. Governments will not continue to bribe companies (in form of subsidies) in purpose to create and maintain jobs, but will be forced to subsidize the creation of our initial capital which is education.

So, allow me to be more optimistic about our collective future. We hold the key element to the future production. This is our mind. The future economy needs every one of us, not in the manner our present economy needs us -- to spend a few hours every day, for eleven months every year, for 35 years, in a particular place, in a particular company, in an office or cubicle. The future economy will not need us in the form of employment. It will need our work which will be marketed in a different manner from what we experience today. Our future society will be jobless, but not workless.

Speech to the Convention of European Students, Athens December 12, 1998 (Eισήγηση στο Συνέδριο των Eυρωπαίων φοιτητών Aθήνα - Kέντρο Συνεδρίων Kτηματικής Tράπεζας 18.12.1998)