Last Updated on January 8, 2021 by Editorial Team
Author(s): Egemen Ongun
Humans were always right at the center of the production and the science of economics that has been created through production. No one could ever bet that it could be some other way. Every notion of life has been building on the assumption that human — Labor — is the fixed input of the function, therefore all the other variables were exposed to change. As mankind progressed, humans ran out of ways to optimize variables and shaped new types of technology. So, what if this new way of optimizing production requires the deactivation of human?
During the eighteenth century, industrialization initiated a new era for the globe by reshaping the understanding of production. Establishing a more rapid way of producing goods and turning industries more profitable fields have led trade to be dragged into a wider area. Increase in efficiency and productivity combined with the easiness of transportation (railways, steam engine etc.) lead to economic growth. This era had many other unique consequences but overall it improved the life quality and gave our societies a fixed place in the production process.
Employing the most popular economic system so far — capitalism — the unanticipated rise of economic growth had some social costs because it was not properly managed by the regulators and states (mostly because of the “exclusive” institutions as Acemoglu & Robinson, (2012) argues in Why Nations Fail ) The effective way of producing goods and economic growth have caused “labor” term to be divided into “high-income” and “low-income” groups which then will be reasoning social conflicts, I’ll be calling this briefly income inequality among the society.
Until the end of the 90s, there was still no doubt that even the “low-income” group will find its place in the production function — no matter what the conditions possibly are — Companies and industries were funding studies and researches considering the fixed labor input and acting as a perfect status quo supporter
After all, at the beginning of the technological innovations and economic function adapted well and benefited from the innovation. Production became more efficient and new companies started to open up due to economic growth. So up until this point, everything seems reasonable and positive from the labor perspective.
However, two arguments have been discussed among economists and scientists. Will the increase in efficiency due to technological innovations continue to increase society’s wealth? or Will the technological innovations change the production function and cause unemployment within the labor?
So in other words, Are the robots going to take our jobs?
I will approach this issue from the 2 most popular arguments:
 Innovations and the rise of technology create new sectors and fields that people can work for, so a complementary effect on jobs
 Technology and AI (especially after the 2000s) are replacing the jobs and causing a displacement, substitution effect.
I’d like to share with you data that can help us to better examine these two effects so that we can simulate the future.
According to Acemoglu and Restrepo (2019), the change due to “reinstatement” and the change due to “displacement” were balancing each other and causing a total change within the ±5% range for the 1947–1987 period. However, the irrepressible innovations in technology and other factors caused the change in displacement to speed up and reverse the direction of Total change in favor of so-called “Robots”
Starting from 2003, the labor share of output exceeded the 5% lower limit and continued on decreasing dramatically.
In the near future, we will be seeing some exciting news about AI and new tech products that are making life easier for us. It is crystal clear that everyone will somehow enjoy these events. But unfortunately, the myth of “Robots will take our jobs” could potentially be true.
Technology and innovation have many other positive impacts on our lives but deactivating humans in the economy that “humans” create? Is it really something we can handle?
Clearly, there will be winners of this potential disaster in the long run, just like always. Monopolistic tech companies and many other self-employed people will have opportunities to even grow more during this era. What about “rank and file”? Are states enough to provide (or distribute) such wealth among the whole nation?
So even though Robots can not replace man (which I think we have enough evidence to prove that they will), Robots will at least have an absolute impact on human labor, therefore Human history.
Acemoglu, D., & Restrepo, P. (2019). Automation and New Tasks: How Technology Displaces and Reinstates Labor.
Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty.
Published via Towards AI