Tag Archives: labour market

Robots among us

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I ended up with mixed reactions to Waiting for Robots: The Hired Hands of Automation by Antonio Caselli.

The powerful point it makes is the complete dependence of AI and digital technologies generally on ongoing human input. Many years ago, my husband – then a technology reporter for the BBC – was digging out the facts about a hyped dot com company called Spinvox. Its business was said not be automated voice transcription, but it turned out the work was mainly done by humans, not computers (although the story turned scratchy –  the linked post responds to the company’s points). Waiting for Robots gives many examples of apps that similarly involve cheap human labour rather than digital magic – I was surprised by this. Less surprising – and indeed covered in other books such as Madhumiat Murgia’s recent Code Dependent – is the use of humans in content moderation (remember when big social media companies used to do that?), data labelling and other services from Mechanical Turk to reinforcement learning with human feedback for LLMs.

The book also claims much more as ‘labour’ and this is where I disagree. Of course big tech benefits from my digital exhaust and from content I post online such as cute dog photos. But this seems to me categorically different from often (badly) paid employment relationships. Although the stickiness of network effects or habit might keep me on a certain service, although the companies might set the defaults so they hoover up my activity data, the power dynamics are different. I can switch, for instance from X to BlueSky, or from Amazon to my local bookstore. So I’m not a fan of portraying these types of data-provision as more ‘digital labour’.

Having said that, the book makes a compelling case that robots and humans are interdependent and will remain so. Generative AI will continue to need human-produced material (‘data’) and intervention to avert model collapse. Humans are also going to have to pay for digital services so will need to have money to pay with. Focusing on the economic dynamics involved is crucial, as it is clear that the market/platform/ecosystem structures are currently tilted towards the (owners of) robots and away from humans. So, for all that I’m not persuaded by the classification of different types of ‘digital labour’ here (and find the anti-capitalist perspective on tackling the challenges unpragmatic apart from anything else), there is a lot of food for thought in Waiting for Robots.

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Spreading the thriving

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Jan Eeckhout’s The Profit Paradox: how thriving firms threaten the future of work is a very good read. It’s a game of two halves (yes, someone in my household is permanently watching the football at the moment).

The first half (in fact parts 1 and 2) is a nice synopsis of the reasons the economy (mainly the US but others are covered) tend towards a) concentration across many markets and hence b) diverging fortunes of companies and their employees, and the places where people live. This covers the features of digital technology, superstar phenomena, agglomeration economies – these are familiar to anyone who has been keeping up with the literature, but I applaud how well the book is written. Hooray for an economist who can write so engagingly. This section documents the evidence on concentration and mark-ups, the growing divergence between companies in terms of productivity and profits, and the corresponding decline in the labour share as outsourcing of routine occupations (call centres, cleaners, admin) has progressed. Eeckhout argues that there is assortative matching such that pay and conditions are polarising between people with high value jobs in frontier firms and people with low value added jobs in their contractors.

The book’s focus is on the implications of market power for people as workers, rather than as consumers – although it also notes the excess pricing power too. In sum, it reduces wages, both directly through monopsony power in individual labour markets and also because of the the macroeconomic consequences: with so many people in contingent work with low pay, aggregate demand is inadequate. (Some) firms are doing well but the economy isn’t. And this is the heart of Eeckhout’s argument: “The effect of the tide of market power is lowering wages across the economy.” I find this link persuasive. While there are many economists looking at the elements of this story, the way they are combined here is enlightening.

The second half turns to the much harder question of what to do, starting with an affirmation that for all the disruption the new technologies are a good thing (this chunk reminded me a bit of my own Paradoxes of Prosperity, which first came out in September 2001 and not surprisingly was hardly noticed).

The recommendations boil down to: enforce labour standards; mandate more data openness; and beef up anti-trust policies. In particular (under the last heading) stop big tech making more acquisitions, regulate them rather than break them up (so as not to lose beneficial network economies), and assess market impacts in the round rather than firm by firm. (Tricky to implement but I do remember that in my days on the Competition Commission, as it then was, we often had to include a section of the report on ‘Features of the market’ – problems in concentrated markets do often spread beyond an individual transaction).

I’d agree with all these suggestions in the book but they add up to a meta-suggestion: find the political will to change the institutional architecture so that it delivers fairer outcomes. The technological tides won’t retreat but the effects depend on what institutions confront them. Is Lina Khan’s appointment in the US a sign of lasting change?

 

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Baumol meets Marx

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I read Jason Smith’s Smart Machines and Service Work: Automation in an Age of Stagnation because there was a positive discussion of it on Twitter. I’d describe it as a mash-up of Baumol (‘cost disease’) and Marx (‘exploitation’).

The first part of the book is a rant about technology and why today’s tech will not increase productivity. It channels Robert Gordon and criticises economists like Erik Brynjolfsson (or before him Paul David) for arguing there are delays between innovation and the productivity effects they produce.

I have the same problem with this as with Gordon’s magnum opus: it might turn out to be correct that today’s techs have no productivity impact, but focusing only on digital entertainment and communication devices is completely unpersuasive. Vaccines, hello? The wave of biomedical innovation like the development of mRNA vaccines has rested on the plunging cost of gene sequencing, enabled by computation applied to massive amounts of data. Lab benches, test tubes, and also computers. The transition to green energy supply will require large-scale computation to manage storage, networks and grids. Additive manufacturing has many potential applications including printing organs and tissues. These applications are genuinely slow to emerge: large additional investments in equipment are needed, the organisational and ethical hurdles are high, other discoveries might be required to make them economically viable. We’re lucky so much of the prior mRNA research had been done before 2020.

Anyway, the book halfway through then turns to the growth of the service sector, the automation of routine tasks, and the debate about the potential impact on jobs. It looks back, too, at the well-known decline in middle-income jobs and growth of the contingent workforce. Having introduced Baumol’s familiar ‘cost disease’, it then turns to a Marxist analysis. Having never learned Marxist economics I found this quite interesting but heavy going, as it has its own jargon. Still, it is surely right to consider the impact of automation in the context of power struggles, or class conflict.

The book has some sections where it pauses to ask what is actually meant by ‘productivity’, a question of evergreen interest to me. It touches here on the issue of time use and time saving in services, and on activities crossing the production boundary, making it hard to measure ‘true’ productivity. As it points out, many previously household (uncounted) activities became marketed during the 20th century (‘commoditised’), and are often low-pay and precarious. However, the book then veers back to the more abstract class struggle.

All in all, I found the book quite interesting for its novel (to me) perspective, and it is well written. But much of the (non-Marxist) economic literature it draws on will be familiar to many people enticed by the subject matter. What it adds to the technology debate is, quite rightly, the issues of power and deregulation of the labour market,  beyond discussions of gig platforms. But it didn’t tell me anything new about the productivity puzzle.

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Humans in the machine

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There’s some very interesting insight into the human workforce making the digital platforms work in Ghost Work: How to Stop Silicon Valley from Building a New Global Underclass by Mary Gray and Siddarth Suri. The book as a whole doesn’t quite cohere, though, nor deliver on the promise of the subtitle. The bulk of the book draws on interviews and surveys of people who work via platforms like Amazon’s famous Mechanical Turk, but also the internal Microsoft equivalent, UHRS, and a smaller social enterprise version, Amara.

This is all extremely interesting, about how people work – in the US and Bangalore – their tactics for making money, dealing with stress, how many hours they have to work and when, how much or little agency they have, and so on. Not least, it reminds or informs readers that a lot of AI is based on the labelling done by humans to create training data sets. However, not all the ghost work described is of this kind and some, indeed, has little to do with Silicon Valley except that a digital platform mediates the employer and the seeker of work. As the authors note, this latter type is a continuation of the history of automation, the role of new pools of cheap labour in industrial capitalism, and the division of labour markets into privileged insiders and contingent – badly paid, insecure – outsiders. The new global underclass is just one step up from the old global underclass; at least they have a smartphone or computer and internet access.81uywR4bPoL._AC_UY218_ML3_The survey results confirm that some of the digital ghost workers value the flexibility they get reasonably highly – although with quite a high variance in the distribution. Not surprisingly, those with least pressing need for income most value the flexibility. Some of the women workers in India also valued the connection to the labour market when they were unable to work outside of their home because of childcare or family expectations. Similarly, with the Amara platform, “Workers can make ghost work a navigable path out of challenging circumstances, meeting a basic need for autonomy and independence that is necessary for pursuing other interests, bigger than money.”

The book’s recommendations boil down to recommending that platforms should introduce double bottom line accounting – in other words, find a social conscience alongside their desire for profit. Without a discussion of their (lack of) incentives to do so, this is a bit thin. Still, the book is well worth reading for fascinating anthropological insights from the field work, and for the reminder about the humans in the machine.

 

The Technology Trap

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Anybody interested in the economic impact of digital and AI, in particular on jobs, will want to read Carl Frey’s new book, The Technology Trap: Capital, Labor and Power in the Age of Automation. He is probably best known for his rather gloomy work with Michael Osborne (original pdf version here) highlighting the vulnerability of many jobs – almost half in the US – to automation in the next couple of decades. The book expands on the issues that will determine the actual outcomes, and is – as the title indicates – still quite pessimistic.

The structure of the book is historical, with sections on pre-industrial technologies, the Industrial Revolution (which saw widening inequalities), the mass production era (which reduced inequalities and created an affluent middle class), the recent polarization in the era of globalisation and digital, and future prospects. The key distinction Frey draws in between technologies which substitute for labour and those which complement it. Whereas the 19th century and the present seem to involve the replacement of people with machines, the 20th century innovations needed increasingly skilled labour to work with them.

Although I am probably not as gloomy about future prospects for work and incomes, I really enjoyed reading the book, which covers a wide range of technological applications in addition to the well-known historical examples. It leaves open two questions. One is about the present conjuncture: what explains the combination of seemingly rapid technological change and adoption with – in at least some OECD economies – very low unemployment rates? The answer might just be ‘long and variable lags’ but the question surely needs addressing.

The broader question, or set of questions, is really about the interaction between technology and labour market and other economic institutions. Although automation is likely to have the same general effects everywhere, the outcomes for workers will be refracted through very different national job markets, education systems, tax systems and so on. How much can any individual country lean successfully against the wind? Frey is not (unlike Robert Gordon) US-centric but does not get into these issues.

And beyond the response to technological change, what is it that determines the direction of technical change in the first place? The book treats the labour substitution or complementing as exogenous. But why were electric unit drives in auto plants and internal combustion engines created as complementary and yet automation in today’s car industry seems like it will substitute for labour? It seems to me this must be an institutional story too, but I don’t think it’s been told yet.

51VabazLy7L._SX327_BO1,204,203,200_[easyazon_link identifier=”069117279X” locale=”UK” tag=”enlighteconom-21″]The Technology Trap[/easyazon_link]