Technology Trap


I recently added a fascinating book titled Technology Trap to my Book Library. Author Carl Benedikt Frey has done some important work in partnership with Michael A. Osborne evaluating the impact of automation on the Future of Work. In this new work of applied history, Frey draws on past revolutions to look at possible corollaries. It was Winston Churchill that said: The further Backward you Look, the Further Forward you can See. That quote has stuck with me, prompting my Looking back to see Ahead. Here is the book abstract:


ABSTRACT

From the Industrial Revolution to the age of artificial intelligence, The Technology Trap takes a sweeping look at the history of technological progress and how it has radically shifted the distribution of economic and political power among society’s members. As Carl Benedikt Frey reveals, the Industrial Revolution created unprecedented wealth and prosperity over the long run, but the immediate consequences of mechanization were devastating for large swaths of the population. Middle-income jobs withered, wages stagnated, the labor share of income fell, profits surged, and economic inequality skyrocketed. These trends, Frey documents, broadly mirror those in our current age of automation, which began with the Computer Revolution.


I find the corollary compelling. Frey takes us on a journey from pre-industrial times to current day. Innovation flourished in pre-industrial times – but labor-replacing technology was blocked by the ruling class in an effort to avoid societal unrest. It took a competitive trade environment to shift that prevailing view of technology.

Technology Trap
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As the factory system replaced the domestic system in Britain, technology increasingly became labor-replacing. In the early days of the Industrial Revolution, the working class suffered. This period is referred to as Engels’ Pause: the period of constant wages in the midst of rising output per worker. Estimates of British GDP, output per worker rose by 46% between 1780 and 1840. Over the same period, the real wage index rose by only 12%.

Child labor rose during this period, as labor-replacing technology was simple enough to be used by children. After the Steam engine became economically viable in 1850, complexity rose and adults with a new set of skills were required: this ended Engels’ Pause and led to the advancement of our human development. This advancement continued through the Second Industrial Revolution, gaining considerable momentum on the strength of the great inventions (Electricity, Internal Combustion Engine, and Telephone). In this period, technology augmented labor versus replacing it.

As we advanced into the computer revolution (also referred to as the Third Revolution), technology increasingly became labor replacing. As we look ahead, this next wave of automation – based on current trajectories – looks to be labor-replacing as well. The book explores the corollaries between this historical view and our emerging future. Are we in another period of Engels’ Pause? Will Governments block technology to avoid societal unrest? Will this lead to competitive disadvantage in trade that shifts their position – mirroring what happened in the early days of the First Revolution? It is not a stretch to consider that the great divergence – the period after the Industrial Revolution, when the West grew much wealthier than the rest of the world – could reverse itself as China marches toward innovation leadership and a position of dominant world power.

I highly recommend this provocative look at our historical journey and its potential foreshadowing of what’s to come.

 

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