An Automated World? An interview with Jim Stanford

Green Agenda contributor Mark Riboldi recently sat down with Jim Stanford to talk about automation and what it means for the future of work.

Jim is an economist and the Director of the Centre for Future Work. He recently moved to Australia from Canada where he served for over 20 years as Economist and Director of Policy with Unifor, Canada’s largest private-sector trade union (formerly the Canadian Auto Workers).

Edited Transcript

Mark Riboldi: Generally, there are estimates that about 40 per cent of jobs currently being done in Australia might be able to be done by computers in about 10 to 15 years. Some of the predictions in the [United] States are about 80 per cent. I was wondering what kind of impact removing those 40 per cent of jobs might have on the economy?

Jim Stanford: There’s a process of technological change that’s happening. It’s not actually new. We’ve gone through different waves of technological change in the history of our economy. So I think there’s maybe a bit of over-dramatization of the nature of the process and how it’s affecting labour markets.

On the other hand, there’s no doubt that technology is changing quickly, and profit seeking employers are very adept at finding ways to have work done cheaper. If that’s cheaper done by a machine or a robot, then they will move, and they’ll move pretty quickly to do it. The question is, how does the overall employment system adjust and adapt to the process of using technology to supplement or replace human labour? Whether that’s mental labour or physical labour.

There’s all kinds of things that go on, that we can’t just assume that 40 per cent of jobs are going to disappear. It could be that 40 per cent of jobs are going to change dramatically because of the nature of technology that we use. But the system can not survive if 40 per cent of the jobs were suddenly eliminated. It couldn’t survive economically, and it couldn’t survive politically. So other things are going to happen. The question is, how is that adjustment going to occur? Who’s going to benefit? Who controls the process? How are the benefits of technology shared or not shared in society?

[There are] lots of different ways that employment patterns could adjust to technological change. One of them is all of the new jobs that are associated with the technology. That’s obvious when you look around. There’s people doing things that we never even dreamed that they would be doing 10 or 20 years ago, because the technology wasn’t there to allow it to happen. So there are going to be new jobs and new tasks, new occupations, new services, new products that arise, that we’re going to end up hiring people to do.

Another is the number of jobs associated with the technology itself. Think about this: everyone says, “Driverless cars and driverless trucks are going to replace drivers”, but there’s work involved in producing that technology, designing it, engineering it, maintaining it, and in operating it. Sometimes the work gets displaced from one particular function to another, but there’s still work involved.

Mark Riboldi: There fear about automation taking people’s jobs has been around since the first industrial revolution. Yet, jobs lost have generally been replaced by new kinds of jobs. Is there a limit to that? Automation and AI are moving into complex areas like food service or analytics, diagnostics, transportation. Is there a limit to new jobs that can be created?

Jim Stanford: I was careful to never say that new jobs will be created in equal numbers. I’m not at all namby pamby or benign about the risks and challenges that are occurring. I’m saying that we have to look out at the sorts of adjustments that can happen. I listed two: new work that we hadn’t thought of [and] the work associated with running the robots. But there’s other sources of new work that could and probably will play a role in the adjustment of the overall employment system.

If in fact a huge number of jobs were displaced and people didn’t have work, then you’re going to have a downward pressure on incomes and bargaining power and conditions for working people, and employers are going to take advantage of that to hire newly cheap labour to do various menial, stupid things. Walk out here on Pitt Street today at lunch in downtown Sydney, and you’ll see 5 to 10 people who are being paid to stand around holding signs, saying, “Buy your Uggs here. Get a massage there”. That’s about as menial, useless, and unproductive a job as you can imagine, hiring a living and breathing human being to hold a sign in the middle of a crowded sidewalk. In fact, you could argue it’s counterproductive socially because it interferes with traffic on the sidewalk. Yet, if wages are low enough and workers are desperate enough, the system will find all kinds of stupid, menial things to get people to do.

Then you see this in its extreme when you go to a developing country where there isn’t enough work, but people still have to find ways to support themselves. That could involve selling pencils from a blanket on the sidewalk.

There’s all kinds of things we could do with the people that are displaced by technology. Whether we will do it or not is a question of our social and political choices that we make.

A fourth category of adjustment could be a more proactive and deliberate and social response to the problem, which is, we don’t need so many people to drive trucks or operate routinizable keyboard functions, so we’ll put them to work doing other things that are useful. That could include public services and care services, and investing in our physical infrastructure, and low cost housing. There’s all kinds of things we could do with the people that are displaced by technology. Whether we will do it or not is a question of our social and political choices that we make.

Mark Riboldi: So what is the impetus for your profit driven corporations and governments – that seem to be committed to gutting the public sector – to keeping people in work, or keeping wages at a decent level?

Jim Stanford: The impetus will be totally political. It isn’t any kind of automatic economic reaction. That’s why I’m not saying this is a benign process. There are some on the free market spectrum of economics who say, “Labour markets always adjust, and they’ll find something else for you to do”. I don’t believe that for a minute. Labour markets are always in turmoil, and there’s always a cushion in labour markets of people who can’t find work.

In fact, if the cushion wasn’t there, in terms of a certain level of unemployment and underemployment, the system is managed in a way to recreate it. That’s what the so called natural rate of unemployment is, and that’s why central banks raise interest rates any time the economy gets too strong. Because they want an economy with a certain cushion of underutilised or unemployed workers, because it helps keep the whole system in line, and it keeps workers’ demands in check.

But they don’t want too much. The system couldn’t tolerate 40 per cent unemployment, because everyone knows that, economically and politically, there would be ruptures. Politically there would be ruptures because people wouldn’t tolerate it. How they reacted is an open question. They might all vote for Pauline Hanson, if you get that type of a scenario. But it clearly wouldn’t be sustainable politically, nor would it be sustainable economically.

Consumer spending is over half of GDP. That’s where a good chunk of the demand that fuels economic activity comes from. If people aren’t working, then they aren’t earning income, so all of these goods and services that are being produced by robots have no market. That’s another constraint on the system.

Mark Riboldi: In terms of people being consumers, and that being a primary function that we play in the economic system, is that where universal basic income becomes a thing for capitalists to implement in order for people to have enough money to spend?

Jim Stanford: There’s a lot of interest in a universal basic income.

Some people have cottoned on to it as a solution to all of these challenges in the labour market. It’s like they’re giving up on the future of work and saying, “You’re never going to get a good job, so we should get a universal basic income instead”. Now, I agree with the starting principle, that people should be entitled to a certain standard of living as a right of citizenship, or by virtue of being a member of our community. And we need to have income security programmes in effect, both to support them when they need it, but also to underpin the standards that are experienced throughout the labour market.

If you have a situation where you literally work or starve, where there’s no income security, then every worker is desperate because they know what happens if they lose their job. That provides an enormous power to employers. The more generous and universal is our income security programme, the stronger and more confident are all workers. Even workers who never use that income security programme.

So, that’s fine, but are we going to use universal basic income as a replacement for work? I don’t think so. Because who is going to pay for it? If in fact employers are able to use robots to replace 40 per cent of workers with machines that do it cheaper, and you don’t have those other adjustments that we talked about, like the growth of new jobs or the new work associated with running the machinery, or public sector and care and service jobs, if you don’t have that, then the profit share of income is going to be growing strongly. That’s why employers do this. So they’re going to have to pay for it. How are we going to convince employers, when we can’t convince them to pay workers to actually do something, to just give up a share of their profits to finance a universal basic income?

So I am in sympathy with the goal and the principle driving it, but it isn’t a magic bullet. There will be enormous political barriers to its implementation, and I think it’s a mistake to say that we’re going to give up on work and find another way to support ourselves. Because for the system as a whole, work in the general sense is the only thing that produces value. Humans can never be fully replaced by robots. Robots are tools that humans invented to make our work more efficient, and there’s work directly and indirectly embodied in machinery and equipment.

Work can never be replaced as a driving force of economic activity.

Mark Riboldi: In terms of that work as a thing that we do, Keynes thought in the 1930s that by now we’d be doing 15 hours a week rather than 40 hours a week. Since that time, productivity has tripled, but the amount of work that we do is about the same, or maybe even more. Generally, this has gone into profits and standard of living, rather than less time working or higher wages for workers. What kinds of things translate how productivity gains change to profits or wages or time off?

Jim Stanford: That’s a very interesting question, because there’s all kinds of ways that productivity growth can be manifested. Productivity in the generic sense is simply producing more with a given amount of work. Think of it as either value added per hour, or value added per year, of work.

Suppose you have technology that increases how much you produce. Then you’ve got choices to make. The immediate choice is, “Do I want to do less work in order to support the same material standard of living? Or do I want to have a higher material standard of living, because I can produce more with the same amount of work?”. That’s a fundamental choice.

In practise, human beings have generally said, “I want both”. If you look at the trends in both working hours and the trends in material consumption levels, working hours have declined in the long historical sense, and material consumption levels have grown in the long material sense. With our more productive labour, we are choosing both to have more consumption and more leisure time. I think that probably makes sense.

It wouldn’t be convincing for me to say that people don’t want anything more. It doesn’t mean that you want more big screen TVs cluttering up your house, or an even bigger McMansion in the outer suburbs. But it could mean that you want more restaurant meals. I notice people always like to eat in restaurants when they have more capacity to do so. It could mean you want more education in life. It could mean you want better health care in life. Those are all forms of material consumption that people generally want when it’s available to them.

Then, within both working time and material consumption, there’s an important distributional issue. If it is going to be more consumption, who gets it, and how is it shared? If it’s going to be less working time, who’s working less, and how is that going to be shared? This is where the social and political dimension making comes into play completely. That’s why in the last 30 years, under neo-liberalism, workers have gotten neither increased material consumption or reduced labour time. You’ve seen a flattening of average hours of work. The whole post-war trend towards a shorter work week, and you can trace that in Australia’s case to first a 48 hour week, then a 45 hour week, then a 40 hour week. Then adding in four weeks annual leave, and so on. All of that progress was done by the 1980s. There’s been no progress in reduction in average hours of work since then.

That’s why in the last 30 years, under neo-liberalism, workers have gotten neither increased material consumption or reduced labour time.

Why not? Not because people don’t appreciate time off anymore, but because they don’t have the political and economic power to demand and win it anymore, like they did in the post-war era. The same is true in most other countries. There’s a few places in Europe where they have continued to try to make progress on reducing average hours of work.

But ironically, despite that, you are seeing a reduction in working time in Australia. Not because the work week is getting shorter, or because we’re getting more leave, but because more people are unemployed or underemployed. Today in Australia, almost one in three workers works part time. A huge share of them want to work full time, but can’t find full time work. But the importance of part time and precarious work in new employment, again reflecting the realities of neo-liberalism, means that average hours of work per worker are actually falling. Not for good reasons, but for bad reasons. The burden of reduced working time is being shouldered unfairly by people who are unemployed or underemployed. They can’t get enough income to support themselves, and so that’s a way not to do it.

The same distributional dimension is true obviously in material consumption as well. If you decide as a society, “We’re going to keep some of our work even though we’re more productive, and we’re going to enjoy the fruits of that productivity in the form of a higher standard of living”, you have to have mechanisms in place to share that. Again, the nature of distributional processes has changed dramatically under neo-liberalism. Those gains in output that are being occurred are being concentrated at the top end. The top one per cent is capturing something close to half or more of all the new material consumption that is made possible because of growing productivity.

For workers, they’re neither getting reduced work time, not in a good way, and they’re not getting increased standard of living either. Real wage growth in Australia has pretty well stopped. There are choices to be made, but right now the choices are being made in ways that undermine the quality of life of working people. Both in terms of how much they work, and what they get for their work.

Mark Riboldi: Donald Trump’s been talking about kick-starting manufacturing in the US, which is not necessarily going to come to new jobs the way that he’s talking about it – he’s talking about doubling down on fossil fuels, renegotiating trade deals. And Malcolm Turnbull is talking about cutting corporate taxes. These are the kinds of political choices that are being made at the moment. Is there any scenario where these choices don’t just further increase the wealth divide and climate crisis?

Jim Stanford: That depends on politics again. The majority of people, whether that’s in America or Britain or Australia, are being hurt by the current direction of economic policy, and employment, and everything else. To change that direction will involve organising them so that they’ve got voice and power that they can wield.

So I don’t think there’s anything inevitable about it one-way or the other. It’s incumbent on those of us who want to see a better vision for work, and as I say, I think a vision of good work has to be central to any progressive vision for society. There isn’t going to be an economy without work. We have to ensure that the jobs are decent, that they’re well paid, that they’re secure, that they’re safe, that they’re meaningful, and that we have enough time off from work to enjoy the fruits of our labour. But work is the driving force of the economy.

I think that one way to mobilise people in a progressive fight, rather than leaving them for Pauline Hanson to pick up, is to come up with a convincing vision of a good jobs future.

Mark Riboldi: Whose role is that? Is that the role of progressive political parties? Is it the role of unions? What is the role of unions in the workplace and policy generation? Whose role is it to be doing this kind of stuff?

Jim Stanford: All of the above. Social advocates, anti-poverty advocates, and so on, as well as unions for sure. Now, in the Australian case, unions have been kind of marginalised by this unprecedented attack on unions and the legitimacy of unions, and the legitimacy of collective bargaining in general. That’s part of my goal with this Centre, is to contribute to stronger capacity by a means to engage in those debates. Political parties need to embrace it was well. It’s kind of a big picture battle of ideas that’s going on now.

That’s where I think actually the fatalism that some progressives express, that work is done for, therefore we need to find some other way to support ourselves, is quite misguided. Both its economics and its strategy. I believe that the majority of working people understand that their life depends on access and keeping a good job. If we think there’s some way to support them without having work at the centre of their life, then I think we’re going to lose them, would be my guess.

Mark Riboldi: I’m not sure if you’re familiar with Peter Frase: the editor of Jacobin Magazine in the States. He’s written a book called Four Futures, where he takes mass scale automation as a given, and then explores how that would play out in terms of the climate crisis and developing capitalist economy. He sets up a model of abundance and scarcity in terms of resources on one axis, and a quality and hierarchy in terms of wealth, in terms of how we distribute it.

From this he comes up with these four futures, assuming 100 per cent automation. Two of the futures are pretty grim, like exterminism or complete rentism, the others kind of require a transition to 100 per cent renewable energy, or a mass redistribution of wealth.

In terms of those social and political choices that we’re making now, what are the flashpoints that are coming in the coming years? We just had the ABCC introduced in Australia; as you’re saying, unionism is on the decrease. Where are the flashpoints in the coming years, to determine what kind of future we might have? Whether we’re going to win this fight of redistribution, and valuing of work?

Jim Stanford: The ABCC was not a flashpoint, that was a totally irrelevant ideological exercise and will have no meaningful impact on anything other than just a little bit more harassment of one particular union. It fits in with a general strategy by the right in Australia to make this holy war against unions a centrepiece of their political strategy. It’s lamentable how destructive the discussion over industrial relations and collective bargaining are in Australia, and it’s because the right uses unions as a proxy for attacking the opposition party. There’s no other advanced country, even America I’d say, where discussions of unions and collective bargaining are as equated with a partisan battle as they are in Australia.

But what would the flashpoints be? I think we’re already starting to see them. The promises that neo-liberalism made – that by creating a business friendly environment we would foster investment, growth, job creation, enhanced benefits that trickle down to everyone – those promises have been abundantly and repeatedly betrayed. It’s not getting better, it’s getting worse. And when the vast majority of people are pessimistic about their condition in life and their prospects, they are going to rebel. It might not be a pretty rebellion. We’ve seen with Brexit and Trump that unless working people are provided with a positive progressive alternative, and a realistic way of mobilising that, they’ll go somewhere else.

The fact that even in Australia, the so called “Lucky Country”, the so called place where a fair go for all is supposedly a national principle, the glaring contrast between that vision and the reality of an increasing majority of working people in Australia, is going to push them to think outside the box.

I think the time is right for progressives to come up with a comprehensive vision for how to put Australians back to work in productive, decent, secure jobs. If we can do that credibly – never mind arguing over whose fault it is that the AAA credit rating has disappeared or whatever else – if we can zero in on what really matters, which is giving Australian people the opportunity to work and produce and support themselves, and pay taxes so that we have public services, then I think the time is now to show that there’s another way of doing that.

Right now, I’m just looking, I’m working with the ACTU on a plan. We’ve been working on this for a few months, a plan that would show that you could get back to something like full employment in Australia, and do it credibly, and do it sustainably as well. We need more of that type of research, education, and organising to make that movement a reality.

Mark Riboldi: Following on from that – on those three things of research, education, and organising – we were talking before about that there’s a downward limit on where wages can go for people, to be able to eat and things like that. And there’s not that much of a limit on time as people might like to have. But are there limits to things like profits and consumption? It seems that we’re so heavily dependent on non-renewable resources or coal driven power that there’s a limit to consumption, but the way society is organised doesn’t seem to respect that. Is there a limit to profit as well, or wealth, that we need to talk to people about as well? It seems that profits keep on going up, and everyone things it’s a really good thing.

Jim Stanford: On consumption, I don’t think there is a limit to consumption.

Again, I’m not sure that limits to growth is the way to put this. I think the debate over growth or no growth has been enormously distracting for progressives. The goal is not growth. Our system isn’t managed to promote growth. In fact, neo-liberalism is premised on tightly controlling growth in order to recreate unemployment and desperation in the system. Growth is not the motive of our system. Profit and the power of business is the motive of our system.

We don’t want growth for the sake of growth. What we do want is the opportunity for people to work, to produce things that are useful. That can mean caring for children and early childhood education, and caring for elders with quality and dignity, and investing in clean sustainable cities with sustainable transit systems. That’s all useful work.

I never put the debate in terms of more growth or less growth. It’s always, “Can we use our capacity to work and our brains and our brawn, and utilise them to build better lives for ourselves?”. I’m not sure where the limits to consumption are. Certainly there are limits to our use of non-renewable resources, and limits to our capacity to pour pollution back into the environment. That’s obvious. But that doesn’t mean there’s limits to how much work we can do, or how high our standard of living can be.

Limits to profit, again I’m not sure what their limits are. Even the argument that we need wages in order to foster consumer demand isn’t always the case – as long as the capitalists are spending their profit on something. It could be their own enormous luxury consumption. You can keep an economy going, and there’s lots of examples of that in the world, where the vast majority are in poverty and the one per cent just spends like there’s no tomorrow. You can have a pretty vibrant economy. Not a good economy. But there isn’t an inherent limit to the economics of that. I think the real limit will come from politics. That is, from the refusal by the majority to put up with those conditions.

Mark Riboldi: Absolutely. What about in terms of the good signs that you’ve seen since you’ve been in Australia. What kinds of positive signs do you see? Where are the good signs that we’re not heading towards that dystopian future?

Jim Stanford: The cultural power of this idea of a “fair go for all” is very strong in Australia still, even though it bears almost no relationship to how Australian society actually works. The idea is embedded in the expectations of Australians, and I think that’s a positive sign. There’s also a lot of great experience in Australia with what you might call nation building strategies and priorities. You can learn lots of examples from Australian history, including recent history, about how we say, “Yeah, something does need to get done, and we’re going to mobilise the economic and human resources to make it happen, including in some unconventional ways”.

I’m impressed with some innovations, like the Clean Energy Finance Corporation, which is a vision of modern, sustainable, socialised investment, where you’re going to invest in big projects that are important, but you’re going to do it with a public role in the investment decision and the operation of the facility.

I’m also convinced that Australians are not suckers, and they aren’t going to put up with it. We’re already seeing that. We saw that in the last election. We see it in the rise of One Nation. I hope that we can see it in a more positive channel in the next little while, and there are some very good people out there, including in the union movement, trying to make that happen.

Mark Riboldi: It seems like technology in itself is not the problem: it’s who owns it, the way it’s used, and how the profits it generates are distributed. But I think some people think that, like the economy, we don’t see that we have control over technology. We don’t have control over the economy. Do we need to re-engage with technology and the economy on different grounds?

Jim Stanford: Yeah, because technology isn’t this exogenous force.

Technology is human knowledge that was created to serve a particular function. For that reason, technology is not neutral either. We operate within the context of a system that’s organised mostly around private profit and maximising it. That driving force shapes the nature of technology that’s developed. You can see that for sure with all these so called technical innovations, digital platforms and so on, associated with the so called gig economy. That wasn’t neutral technology that just kind of fell from the sky. Those were ideas that were developed by employers who wanted to find new ways of employing people and extracting the work that they do, while minimising their exposure to labour standards, normal compensation practises, and even government regulations like minimum wage laws. That technology is not neutral, and it isn’t exogenous, and it certainly isn’t inevitable.

So, on one level, technology is not the problem, I agree with that. But there’s a deeper level where the nature of the technology that’s being developed and certainly how it’s being applied can be a problem. It isn’t neutral, but it’s a social issue. It comes from the way that human beings are behaving, and how they’re treating other human beings in the course of that behaviour.

I’m not remotely saying technology is a benign force. In the hands of profit obsessed employers, technology can absolutely and dramatically undermine the quality of life of millions of people. Another example that you see with that is the use of surveillance technology, where there’s all kinds of applications for employers to keep track of their workers. Where they are at any given point in time, how hard they’re working. This is nefarious, because it means that employers can rely more on surveillance and discipline to motivate and manage their staff, rather than on positive incentives. If you like, they’re using the stick more than the carrot, because this cheap surveillance technology allows them to do that.

I don’t think that we can stop technology in the sense of putting those genies back in the bottle. I do think that we can monitor and understand and regulate and control technology, as part of our broader effort to say the economy is something that should be serving us, not the other way around.

Mark Riboldi: A pie in the sky question: If robots did replace all of the work that we do, is that the end of capitalism? Or do we have to describe that as something else?

Jim Stanford: I don’t think it can happen, because somebody has to invent, design, build, maintain, and operate the robots, and somebody has to buy the stuff that the robots produce. Is it the end of capitalism, or is it the triumph of capitalism? Capitalism is a system that is based ultimately on the private ownership of machinery and tools. That’s what capital is. Capital is not money in the bank. Money in the bank is just a digital entry. Capital is the actual machinery and tools and knowledge that we use to make our work more productive.

If we actually got to a world where they only needed capital and not labour at all, I don’t think that would be a pretty place unless we were in a situation where we can somehow seize control of it.

Mark Riboldi: Fantastic. Thanks Jim.

Jim Stanford: Thank you.