Special Article (August-2018)

 Special Articles

Article of the Month - Aug. 2018

Yasmin Soni

Designation : -   Research Scholar, School of Management and Labour Studies

Organization : -  Tata Institute of Social Sciences, Mumbai

01-Aug-2018

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Robots : a threat to jobs?

Threat or a machine accelerating the economy?
A Pepper named sales associate was hired in a Japanese company names SoftBank, replacing the entire staff and the hard part of this story was that all the peppers were robots. A study done by researchers at oxford, says that there is threat that more than half of the jobs in US will be fully automatized leaving the employees jobless in the coming 20 years. Automation could be a threat to India's growth - BBC.
We may have heard about some of the dire forecast about robot and employment. We cannot say with certainty whether any of these forecasts will come true. Artificial Intelligence means, as its founding father John McCarthy said, "It is a process in which we make machine act and behave in ways that would be considered intelligent if humans were so behaving."
For past few years, it has become a traditional comprehension that an illusionist advances in automation, robotics, and artificial intelligence is compelling the economy to head towards a jobless future. There is so much of hyped created around Robotics and joblessness that even tech leaders like Sam Altman and Elon Musk are busy contemplating how to build a social safety net for a world with less work. In all these puffery and mirage one thing that can be evidently observed is that, there isn't much evidence that its happening.
First let's analyse it from an economics point of view, we should not worry about technology that replaces human workers, because that replaced technology will ensure increased productivity in one industry and that will freeup resources and labourers for other industries, and since increased productivity means increased real wages, demands for goods and services will increase as well.
This can be very well explained by Say's law. Say's law of market is the promising nostrum to all the hype, illusion, and worries about jobless economy, robots, automation and the so-called robots over human threat. Production doesn't happen in isolation, all acts of production needs resources, ending the producer to demand for other goods. So, in other words if there is over production which means there is an excess supply, but it allows to demand goods. This law should vanish the fear of robots taking away all the jobs. In the market companies can survive only if they can earn profit and they will replace robots with humans only if such an arrangement is more productive and profitable.
There is a constant fear among the robophobic about the income inequality, they say that "all the wolfish capitalist will want to grab on the opportunity to increase their productivity through automation and will replace the robots with their employees. This will lead to an economy were most of the labour workforce would be unemployed.
This fear is unreasonable for following reasons :
  • First and the important point to be noted here is that the capitalist cannot make money without selling the products they have produced. To make money they need end users, the consumers to buy the product. Unfortunately, robots cannot consume those products, its for humans and how are they supposed to buy those products without incomes. Those greedy capitalists wouldn't dig their own pit.
  • Secondly, its completely illogical to think that their will be a cohort of labour unemployed with no jobs in market. Human wants are unlimited, and the resources to satisfy those wants are limited. Now, production of any goods requires labour and entrepreneurship, so the cohort that will be unemployed in one job will be reemployed in some other job requiring more of human touch.
The case of a robot fairy
Consider there is a land of three people Ram, Rahim and Joseph. The three of them produce genip and bananas.
Rahim produces genip and Joseph produces bananas. Ram wanted to consume both the products, but he was unable to produce anything because of lack of resources under him so, he worked out a middle way and made a deal with Rahim that he will assist him in collecting genip and in return he will get some genip and bananas as a wage. When the universe is favouring them and when it's a productive week, Rahim keep the extra genip and trade it with Joseph for some bananas. When they couldn't collect much genips in a week, then Ram still receives his wage and Rahim has to suffer.
On an average, in a week Ram and Rahim could collectively produce 25 quarts of genip. Ram gets 5 quarts of genip and 3 dozen bananas every week from Rahim in exchange of his labour.
Joseph produces the bananas on his own. On an average, in a week Joseph could produce 20 dozen bananas. Now Rahim and Joseph usually trade 10 quarts of genip for 9 dozen bananas. Now out of this 9 dozen, he gives 3 dozen to Ram and keep 6 dozen for himself because he likes to consume bananas.
In sum, and for an average week, Rahim and Ram produce 25 quarts of genip and Joseph produces 20 dozen bananas. Rahim ends up with 10 quarts of genip and 6 dozen bananas, Ram ends up with 5 quarts of genip and 3 dozen bananas, and Joseph ends up with 10 quarts of genip and 11 dozen bananas.
The Robot Fairy Visits
One night the island was blessed and a robot fairy visited the island and it gave Rahim a gift, that gift was Ram 1000, a robot that could easily replaces Ram from his job. With the help of Ram 1000, Rahim could produce 50 quarts of genip per week without the help of human Ram.
Now what can Ram do in such situations, well he can consider two options : 1) With the help of Ram 1000 the island have plenty of genips, what Ram can do is he can consider the option of going to Joseph and assist him in producing bananas under a similar arrangement he had with Rahim; or 2) Ram could consider producing some other good and trade it in market, there is no doubt that Rahim and Joseph would be eager to trade with him for a new product, he might consider heading to the beach and catching some crabs.
With the increased productivity Rahim has become rich in terms of Genip, but now as he is rich, his demands for new goods like crabs and bananas will increase as well. Which is turn increase the profitability in producing those goods that Rahim likes.
Option 1
If we consider that Ram choses option 1 and he goes to Joseph and assist him in producing bananas, then both genip and banana production total will increase. Assuming the genip production will be increased at a faster rate in comparison to bananas, the price of genip in terms of bananas will decrease. Which means that Joseph can purchase more genips than before.
Now let's assume that Ram adds 15 dozen bananas per week to Josephs production. Ram and Rahim could agree to trade 25 quarts of genip for 15 dozen bananas. So, Rahim could end up with 25 quarts of genip and 15 dozen bananas. Joseph could end up with 25 quarts of genip and 20 dozen bananas. Out of which Ram's marginal productivity would warrant him something like 10 quarts of genip and 8 dozen bananas or 8 quarts of genip and 10 dozen bananas or some combination between those.
Option 2
Now let's assume that Ram choose option 2 and if Joseph rejected to work with Ram and that too made Ram choose option 2, and let's assume that he decided to catch crabs. Option 2 has more uncertainty than option 1, but ram anticipates that the extra food will be worth it.
It would be completely rational to assume that Ram can produce 5 crabs per week. Rahim who is having an abundance of genip can pays Ram 20 quarts of genip for 1 crab. Joseph, who is keen to have a change in the diet would trade 10 dozen of bananas for 2 crabs. Rahim and Joseph will also trade some genip and bananas.
In the end, Ram gets 25 quarts of genip, 10 dozen of bananas and 2 crabs per week. Rahim would end up the week getting 15 quarts of genip, 5 dozen bananas and 1 crab. Joseph would get 10 quarts of genip, 5 dozen bananas and 2 crabs. Everyone is satisfied with their new diet.
What we can conclude from this scenario is that new technology has forced ram to search for new ways of sustenance. This new job was the second-best option for the period before robots, otherwise Ram would have chosen this profession before. The islands economy was dramatically changed, increased productivity of Rahim translated into better opportunities and deals for others. We made an unrealistic assumption that there is a robot fairy. Robots get their existence by human labour, natural resources, and capital resources. Thus, whole economy including the human ram gets benefited by the new robot.
These scenario highlights three important points
Production should precede consumption. For Rahim to consume berries and fish, had to produce coconuts. For Joseph to consume coconut and fish, had to produce berries. And same way ram produced fish so that he could also consume coconut and fish.
Isolation will never be an option for Ram. By the law of association there will always be a way for Ram to participate in the division of labour and get benefits as a result, even being replaced by the robots.
Job will never run out because human wants will never run out. New technologies will pave the way for brand new product to emerge and flourish the economy.
Robots are no threats to jobs
If we see the history, we could observe that such automation had happened in agriculture also, it was a labour - intensive industry, but because of mechanisation the output has been significantly higher. Artificial intelligence is nothing but another type of capital good (machine) that is going to make the life of humans more comfortable because it increases human labour productivity. It is a form of technology that is part of the fourth industrial technological revolution, and is nothing very different from the three technological revolutions that preceded it. Thomas Davenport and Julia Kirby, the authors of Only Humans Need Apply, have argued that these AI technologies are not only going to complement the labour, as previous technologies have done, but they will also substitute and replace them because they can do exactly the same type of work that the human workers are doing. But we should not overly worry about this fact because by doing so they will only free up more labour force to work on fulfilling other endless wants of the people. A world without work is impossible simply because of the fact that human wants are unlimited as Milton Friedman famously observed, you could reach a point where you pay a personal psychiatrist to follow you around. Yes, during a period their will be dislocation of jobs, some workers will lose their jobs, but they will soon settle down in a new one. The Indian workers will be required to learn new set of skills that will be in demand in the new artificial intelligence economy.
Geoff Colvin in his book, Human are Underrated, has argued that with the advent of the automation age, consumers and employers will be demanding more of human skills from the employees. Somewhere we all are social animals and ultimately, we prefer to interact with humans. Davenport and Kirby suggested to augment instead of automate. The meaning of augmentation is that instead of simply replacing a human worker with machine, it is better to augment the productivity of that worker by allowing him to work with an automation technology i.e., labourers working in partnership with the machines.
So, robots or artificial intelligence is no threat to jobs, on the contrary it will boost the economy. But before that we have a long way to go, looking at the infrastructure and the investment in automation in developing countries like India, we still need to keep some patience before we can free up our valuable human resource from some mundane work and use them for better task. Hence, the problem that we're facing isn't that the robots are coming. It's that they aren't.