Robots coming over here, taking our jobs

…building our utopias.

Robots are replacing workers. That's the conclusion a number of economists and economics writers have come to after looking at the ever-declining share of income which goes to labour. We touched upon the trend briefly in September, when we covered research which argued that America's "jobless recovery" was due to an above-average amount of lost jobs being replaced with automation, not rehiring. But since then, it's gone global.

The FT's Izabella Kaminska was one of the first people (with one rather important exception) to properly communicate how game-changing the idea might be. Take this, from last August:

Could the jobless recovery be signalling that technology has lead to the sort of abundance and productivity that leaves NAIRU — the unemployment rate below which inflation rises — with no choice but to recalibrate higher, if returns on capital investment are to be protected?

The rationale being, if NAIRU was unnaturally low in the 1990s — meaning everyone could have a job without there being inflationary consequences since productivity was deflating unit labour costs — did the buck break on account of capital, not low interest rates or inflationary forces? That’s to say, productivity had become so great, that the economy could no longer afford to keep hiring workers without pushing unit labour costs to a point where goods and output would infringe on profitability directly?

During previous periods when jobs have been replaced by automation, there's been a temporary shift to unemployment, and then other, growing, sectors of the economy have taken up the labour. Mechanised threshing machines destroyed one type of labour at the same time as the rise of the factory created another type.

But that coping mechanism may not always work. Kevin Kelly writes for Wired:

It may be hard to believe, but before the end of this century, 70 percent of today’s occupations will likewise be replaced by automation. Yes, dear reader, even you will have your job taken away by machines. In other words, robot replacement is just a matter of time.

70 per cent of jobs going in a century would be an unprecedented structural shift. It might settle down eventually — with an entirely new class of un-automatable jobs — but there's just as much chance that it wouldn't. Once a robot can do 70 per cent of jobs — and "robot" here covers things like algorithms which can write news stories or perform basic paralegal work as well as simple physical labour — it's hard to conceive of a class of jobs which would be so innate to humans as to enable a large proportion of people to be employed in them yet still impossible to automate.

That may be the trend we're seeing now. Currently, robots are depressing the labour share of income by being expensive, ensuring that workers have to lower their wages for fear of being replaced by a machine. But eventually, even that won't work; and then the wages of the few jobs which aren't automated will also be depressed, as a large pool of people compete for them.

Noah Smith, in the Atlantic, has some suggestions on how to cope. Here's the first:

It should be easier for the common people to own their own capital - their own private army of robots. That will mean making "small business owner" a much more common occupation than it is today (some would argue that with the rise of freelancing, this is already happening). Small businesses should be very easy to start, and regulation should continue to favor them. It's a bit odd to think of small businesses as a tool of wealth redistribution, but strange times require strange measures.

What's stranger, though, is what happens when we take a step back and look at this problem critically. With fewer people working than ever before, we can still make enough for our quality of life to carry on unchanged. Over the next century, 70 per cent of people could stop working — or the same number of people could work 70 per cent fewer hours — and there would be no material difference. Consider Smith's "ultimate extreme example":

Imagine a robot that costs $5 to manufacture and can do everything you do, only better. You would be as obsolete as a horse.

That's not a nightmare. It's a utopia. To turn it into a nightmare, we need the addendum: "Imagine that robot is owned by an individual who reaps all the rewards from its existence." In other words, imagine the possibilities of a utopia conflicting with the ugly practicalities of capitalism.

There's a reason Kaminska was only one of the first to address this problem if we ignored an important exception. It has strong roots in Marxist theory. And if we do encounter this "problem" in reality, it may be that the best solution has its roots in a similar area.

A bomb disposal robot takes part in a police graduation ceremony in Tripoli. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.