Structural Unemployment
With growing fears about AI automation displacing jobs and leaving millions unemployed, it seems like it would be pertinent to look back, and see how technology and automation played a role in our past, using it as a starting point to try and predict the future. This blog post aims to go over and highlight the effects and consequences of the first two industrial revolutions throughout history, while upcoming posts will cover the expert opinions, as well as my own predictions of the future.
The First Industrial Revolution took place roughly from 1760 to around 1820 to 1840. It began in Great Britain, but continued and spread globally, to mainland Europe, The United States, and even to far flung areas such as Japan. Industrially, it introduced many new technologies, which drastically increased the supply and availability of materials that were vital to the economies of their respective nations.
Chief among these were textiles, advancements in which saw to drastic increases in worker productivity, upscaling of supply, drops in prices, and more. Possibly the period is most well known for the introduction of steam power, which became more efficient and widespread after 1800. Other notable advancements of the era include the pioneering of iron and steel production, such as the Puddling Process.
This had an effect on the labor of the time. An example of this was craft workers, many of whom lost their jobs to the more efficient cheaper machines created. The Luddite movement started around Nottingham with weavers who could no longer effectively compete with more efficient machines. This anger took to violence, when these workers, assembled in mobs, took to arson, rioting and destruction of factory machines and equipment. The British Government took steps to protect its industries, punishing the dissidents. On the other hand, there are arguments both for and against the idea that the Industrial Revolution helped and improved the lives of the average person. The average life expectancy of children increased dramatically, yet the real wages and living conditions of the average person did not increase at rates which one could describe as a ‘revolution’. All in all, it is obvious the First Industrial Revolution impacted the world, with many economic historians likening it to the domestication of plants and animals in importance. It remains to be seen however, whether it actually did anything for the average person, except make a portion of the labor force redundant.
The Second Industrial Revolution took place from the end of the 1800s to the early 1900s. It contributed to the widespread adoption of technologies such as the railroad, telegraph, water supply and sewage networks, and led to an hitherto unprecedented ease with which people, ideas, goods and services could be moved and exchanged, which culminated in a new swell in globalization.
Key technologies include Iron, which brought down the price of wrought iron, Steel, manufactured using the Bessemer Process, Rail, which became productive thanks to the cheap iron being produced, Electricity, Joseph Swan invented the first incandescent light bulb and subsequently supplied his invention to the Savoy Theater in London, which became the first public building to be entirely lit using electricity. Other industries include paper, maritime, telecommunications, and more. Overall, it is clear to see that these decades were very productive.
The impact on labor and society in general was massive. Economies experienced the fastest rates of economic growth and expansion in all of human history. Never before had so much been achieved in such a short span of time. This massive growth in productivity, transportation, labor, production, resulted in the lowering of prices of goods and services almost across the board. In America, the economy transitioned into a secondary sector economy, using raw materials to produce goods and services, and huge populations of people, especially fresh immigrants, began to work in these factories.
However it was not all positive. Rural Americans, largely displaced by more efficient agricultural technologies, had been suffering job losses as late as the 1920s. In the late 1800s, there was a lot of attention drawn to the issue of technological unemployment, most notably by Sismondi, Malthus, and Ricardo. They argued that innovation could and would lead to long term unemployment. Some, like Jean Baptiste-Say, author of Say’s law, replied with the assertion that “supply creates its own demand”, the idea that once a product becomes more popular than others, that product demands more laborers to satisfy the production, and that displaced workers would be pulled into these growing industries.
In conclusion, historically speaking anyway, I would wind up by saying that technological innovation, while pushing humanity as a whole forward, does not necessarily mean better living conditions for the humans taking part at that time. In the two examples explored, economic growth and squalid conditions were simultaneously both hallmarks of the Industrial Revolutions. It remains to be seen whether the 21st century, with its OSHA regulations and its ‘democratic socialism’ will allow such market outcomes to repeat themselves.
Nikhil is a Student Ambassador in the Inspirit AI Student Ambassadors program. Inspirit AI is a pre-collegiate enrichment program that exposes curious high school students globally to AI through live online classes. Learn more here
