ONE REASON FOR HIGH UNEMPLOYMENT, OR LUDDITES CORRECT: NEW TECHNOLOGY KILLS JOBS

The Regency Era (1811-1820) in England is celebrated here and in the UK as a glittering period in British history, perhaps mostly as a consequence of Jane Austen's popular fiction and the BBC's elaborate, sumptuous TV productions. But in reality, beneath the ordered upperclass surface depicted in fiction was a more turbulent and complex world. Early in that period Britain was struggling with the madness of King George III (the British tyrant of our American Revolutionary War era). After he had slipped into the final stages of dementia, his dissolute, self-indulgent, extravagant son (later George IV) took over to become regent. George ushered in a period of grandiosity and of excess in style and substance. Like our own time, then, there existed a great disparity between rich and poor. The nation had been for many years enmeshed in constant warfare: with the French, the Americans, the Irish Rebellion, and the Napoleonic wars. As in our own time, at the war's end social and economic malaise infected the country. As well, like in our own post-war period, it was a time of technological advancement and social unrest associated with rapid industrial expansion. For example, a new loom invented in France in 1800, the Jacquard loom, was introduced in the first decade of that century which could mechanically reproduce patterns in lace and silk without the need of highly trained weavers. A few years later in 1804 gas lights were invented and first used. About the same time, the first steam locomotive was built. In 1809 Humphry Davy invented the first electric-arc light. And by 1810 an advanced mechanical printing press was developed by Koenig in Germany that would enormously speed up the publication of books. The introduction of these technologies into the economy caused labor disruptions, changes in employment-opportunity, as well as spikes of unemployment. In all these cases, as it is today, the goal for the manufacturer was to increase the amount of product produced and to reduce production costs, almost always these efforts were effected by reducing the amount of costly (and sometimes troublesome) human labor in the process. Nothing has changed, today we have the many of the same problems.

It was in Nottingham, England in this period (1811) of change and unrest, almost exactly two hundred years ago, that the owners of several thriving textile mills of that region, manufacturers of expensive lace and stockings, introduced a form of the new Jacquard loom as a means to increase productivity, reduce cost-- and enlarge their profits. This new loom could be operated easily by cheap, unskilled labor. The mill owners summarily fired the male skilled weavers they had employed and hired mostly children and unskilled women in their place, paying these new employees only a small fraction of the wages the men had earned. The impact on the economy of the local communities was disastrous. The disgruntled, unemployed mill workers joined together to stage protest marches, demonstrate and write and distribute pamphlets which encouraged others to join them. Dissatisfaction and unrest grew apace with the numbers of unemployed. In desperation, some turned to violence to protest their plight and that of their families made destitute by the new machines.


All across the British midlands the unemplyed lace workers formed gangs of homeless, angry groups, much like our 2011 "Occupy Wall Street" Movement. These early "occupy" demonstrators, known as Luddites, after a probable mythical leader-- Ned Ludd (possibly the shortened appellation of Edward Ludlam) a real person who had become notorious after having destroyed a stocking frame loom in a fit of rage earlier in this period. The Luddites directed their ire, not at the mills or the owners who had fired them, but instead, they focused their rage against the new technology--the new looms-- which they saw as the primary culprit, which had altered the circumstances of employment and eliminated their jobs. The Luddites gave speeches and wrote pamphlets calling for reprisals against the looms, encouraging workers to rise up and smash their looms. These publications were often signed by "King Ludd". They made raids on mills where they attacked and destroyed the new mechanical looms which they concluded had cost them their livelihood. In response the mill owners called upon the British government to put down the violence and unrest, which the governemnt did with dispatch and harsh determination. The police and army eventually rounded up hundreds of the Luddites. Many of these were tried and duly executed for crimes, while others were transported to Australia and other distant colonies of the Empire. The problem did not end, and the discontent did not abate. As the introduction of the new looms spread, unemployment grew in number and many continued out of work. In time other working-class movements of discontent erupted as the century continued-- eventually giving rise to the more successful British labor movement.

Luddites were seen in their day as "anti progressives". Their statements and pamphlets made clear that they were opposed to any new technologies that would reduce the need for labor and put people out of work. They claimed technology would eventually put all workers in the poor house, adding that technology would make the poor poorer and the rich richer.

The prevailing perception today is that the Luddites fears were unfounded. In fact most modern economists refer to the episode of unrest as an example of an economic misperception known as the "Luddite fallacy". Modern theory indicates that new technologies, rather than encouraging unemployment--stimulate growth. Labor saving technologies should increase production of goods, causing the prices of those goods to fall and demand for them to increase. Increased demand should encourage investment in new enterprises and increase employment.


But is that really the case? In modern times we have many examples of new technologies making jobs obsolete each in turn altering the labor market. In the last several decades we have seen the impact of the electronic revolution in the workplace and the explosion of the internet as a tool of business. Both of these phenomena have radically transformed the workplace. Many jobs were lost. I can recall in my own experience, radical changes in the workplace, in an office where a long row of secretaries once worked, the desks are now gone and the room is bare...perhaps the space is now converted to storage for paper stock. The work of that row of individuals has been taken over by sometimes more savvy, foolproof, smaller, and cheaper laptop and tablet computers. But where have the secretaries gone? Who employs them now? Many of them have retired, have joined the ranks of the unemployed, or are working at lower paying jobs.

Economists theorize that during the early years of the industrial revolution, the fears expressed by the Luddites..that new machines were going to make their labor obsolete and drive them to the poor house were indeed a fallacy. They concluded that since machines could compete effectively with human labor their insertion into the labor equation debased the value of human work. Luddites envisioned that technology would eventually devalue human labor--making the poor poorer (that was all the poor had to bargain with--their labor) and the rich richer. And the the progress of technology over the last two hundred years can be cited to support that thesis that these fears of technology and machines were unfounded and fallacious. Economists would have (were they around) assuaged their fears..explaining that as technologies developed and jobs were lost, new jobs would be created in other developing fields. Their theory might be explained this way--In the case of the stocking mills--the new technology would increase production of stockings which would cause the price of stockings to fall. More and cheaper product would permit more people the ability to afford to buy stockings. New outlets would open which sold these products. These new enterprises would need more employees. One might even envision that the existing lace and stocking mills making more product and greater profits would expand production. Expansion would entail hiring more help, perhaps to construct new space and set up new looms, and such activities would require labor and new jobs, etc, etc. In other words, in the early years of the industrial revolution and on into modern times technology created new jobs in the same or new industries at a faster rate than old jobs were being made obsolete. That was the theory....and it proved to be valid for a long time perhaps two hundred years. But two centuries of innovation and job losses have squeezed human labor into a smaller and smaller space. Can we continue this process ad infinitum?



Is it necessary to state that over the last two hundred years, technology and machines have grown more and more sophisticated? Most of the former hand-made products or goods produced by operators using machines are now made by totally by machine. The retreat of human labor into areas where machines could not (it seemed) intrude has finally ended. With only few exceptions, in the workplace today machines can do almost anything humans can do. Almost all the heavy lifting, back-breaking-labor-saving and rote work, and repetitive tasks that humans once did are now commonly completed by machines. Then too, technological advancement has proceeded over the last two-hundred yeas at an exponential rate, while the appearance of new job opportunities arise more slowly, described better as a linear rate. Thus, today jobs are being made obsolete faster than new jobs arise to replace old ones. Now rather than just eliminating heavy labor, or rote and repetitive tasks, new machines are smart. The can learn and in a sense think-not quite as well as humans--but on many tasks--they exceed human endeavor-and for one important reason, in certain tasks they make fewer mistakes.

In recent times, economic theorists note that while technology grows at an exponential rate, consumer demand--perhaps confined by population increases- grows more in a linear fashion. Thus at some point new technology will not produce the fall in prices and increased demand which tends to encourage further investment and growth of employment. We appear to have reached that point where the Luddite were right--machines are replacing humans in jobs so rapidly that they may make paupers of us all (and soon too those who cringe in the intellectual woodwork). Alas it seems clear today that the rich who own the technology and the machines will continue to amass wealth.



So the Luddites of 200 years ago, might have had it right. New technology --the machines--are taking over, pauperizing our working classes and concentrating wealth in the hands of the corporatists and oligarchs.




Get the picture?




RJK