Rise of the Robots

Martin Ford asks fundamental questions about the future of the economy and society in his book Rise of the Robots.

Author and entrepreneur Martin Ford believes artificial intelligence and robots are already replacing human workers and ultimately have the potential to cause massive disruption to the economy and society. Rise of the Robots is his contribution to a conversation that is getting louder and louder.

“The challenge with thinking about the impact of technology on commerce and society is that traditional economic analysis is always applied to the issue,” said Ford.

Initial panic is suppressed as new industries and jobs replace old. History supports this thesis but Ford made the case that this time round it is very different.

Horse power: failure to adapt

Ford uses the example of horse power as a metaphor for what is happening, explaining that there were 22 million horses in 1915 in US. This fell to three million in 1960 as they were replaced by mechanical power.

“The horse population declined because horses weren’t able to take on new jobs, whereas human beings have ultimately experienced tremendous progress in previous industrial and technological revolutions because they are infinitely adaptable,” says Ford.

He makes the case that history will not repeat itself this time around. His view is that today’s machines have the ability to learn and adapt, encroaching on human beings’ ability to adapt through the use of technology.

Ford claims that there are three areas of technology driving this change:

1. Exponential development of computing capacity since the 1950s – computing and software power has doubled more than 30 times.
2. Machines are developing cognitive behaviour – this is the most significant change and will impact routine, repetitive jobs, says Ford.
3. Information technology – now general purpose and applied to every area of life and industry.

This combination of changes make technology a utility, like electricity.

Creative disruption

Conventional wisdom dictates new jobs and industries replace old but in the developing age of automation and artificial intelligence there simply aren’t as many new jobs.

Ford cites General Motors and Google as evidence. In 2012 Google reported $14bn in earnings and employed 38,000 people. By comparison General Motors reported $11bn earnings in 1979 (allowing for inflation to 2012) and employed 840,000 people. Like-for-like Google’s earnings in 2012 are 20% higher than General Motors in 1979 with less than five per cent of the staff.

Wage slaves

Productivity and compensation tracked each other from 1948 to 1975. In 1975 the two became decoupled. The split is illustrated by the long term trend. Production has increased since 1948 by 243.3% and hourly compensation by only 113.1%.

This is leading to wage stagnation and fewer jobs. Education is typically the solution and the route to new areas of employment but Ford made the case that graduate income was also collapsing in real terms.

Impact on markets and public policy

Ford predicts that automation will take jobs out of the market and remove purchasing power from the economy. He uses the example of entrepreneurs with the wealth of 1,000 consumers to illustrate his point. An individual doesn’t need 1,000 cars, smartphones or dinners. Some form of fundamental redistribution of wealth is going to be required.

In the near term Ford says technology will remove dangerous and boring jobs from the economy. This can only be a good thing. But he also cautions about the impact of this. One suggestion was that in the decades ahead we may need think radically and even disconnect jobs to ensure a minimal income for everyone.

Ford says his book is intended to challenge conventional thinking and kickstart radical thinking. He’s achieved his goal.

Stephen Waddington attended a lecture by Martin Ford in September 2015.

This book is available at Amazon, Waterstones and Foyles.