New TNechnology - Old Economy

New Technologies - Old Economies

In this new lecture for 2012, Simon Moores examines the the subject of 'Digital Tension' a collision between new technologies and the old economy and with it, the future implications for the workforce.

Until recently, economists have believed that advancing technology, in the form of automation and innovation, increases productivity. This, in turn, causes prices to fall, demand to rise, more workers to be hired, and the economy to grow. Such thinking has been one of the tenets of economics since the early 1800s, when lace-makers in Nottingham, inspired by Ned Ludd, a legendary hero of the English proletariat smashed the mechanical knitting looms being introduced at the time for fear of losing their jobs.

But as the Economist Magazine reports, "If the Luddite Fallacy (as it has become known in development economics) were true, we would all be out of work by now; as a result of the compounding effects of productivity. "

The prevailing argument against the Luddite Fallacy rests on two assumptions: The first of these is that machines are tools used by workers to increase their productivity; the other is that the majority of workers are capable of becoming machine operators.

What happens when these assumptions cease to apply, when machines are intelligent enough to replace workers and when capital becomes labour. At that point, the Luddite Fallacy looks rather less fallacious.

This was the thesis of Jeremy Rifkin, a social critic, in his book, “The End of Work”, published in 1995. Though not the first to do so, Mr Rifkin argued prophetically that society was entering a new phase—one in which fewer and fewer workers would be needed to produce all the goods and services consumed. “In the years ahead,” he wrote, “more sophisticated software technologies are going to bring civilisation ever closer to a near-workerless world.” The process has clearly begun. And it is not just white-collar knowledge workers and middle managers who are now being automated out of existence.

Developing the arguments in a private paper on technology and productivity, 'The Red Queen Principle', first written for Microsoft in 2007, Simon, a Vice Chairman of The Conservative Technology Forum, explores the implications of a number of new and disruptive technologies on the workforce and re-visits the Luddite Fallacy, in the light of employment and productivity challenges now being experienced by increasingly fragile and technology-centric western economies