Keynes’s essay
In 1930, the eminent economist John Maynard Keynes wrote a fascinating tract called Economic Possibilities For Our Grandchildren. In this essay, Keynes was looking ahead to what life would look like a hundred years hence—to our own era, basically. He displayed a strongly optimistic view on the nature of technological progress, expecting the standard of living to be between four and eight times higher. This would allow what Keynes called the economic problem to be solved. In other words, we would move from scarcity to abundance, where all would have their needs met and poverty would be eliminated. In possibly his most utopian prediction, he thought that people would opt for much more leisure, and only need to work fifteen hours a week.
In many respects, what Keynes predicted has come to pass. The pace of technological change over the past century had allowed for a dramatic rise in living standards. At the aggregate level, we can say that the economic problem has been solved in the sense that we have enough resources to provide for the material wellbeing of all people. Of course, whether we choose to deploy these resources to these ends is another story. Certainly in the United States, there has been a collective decision not to use economic resources in line with basic social justice.
But where Keynes really got it wrong was in his prediction about work and leisure. It’s true, most countries have opted for more leisure time as they grew richer. That’s more true in Europe than in the United States, though. The average number of hours worked per worker in the United States is still about 1750 a year. That’s a lot lower than in the nineteenth century, for example. But in Northern Europe, it is under 1500 hours a year. Yet nowhere are people working fifteen-hour weeks.
Why is that? There are many possible reasons, but the one that makes the most sense to me pertains to the relationship between human work and human wellbeing. I’m referring to the notion that work provides dignity, respect, meaning, and identity. It is part of who we are. To forsake work for too much leisure would go against our deepest natures.
This is certainly the view of Catholic social teaching. As Pope John Paul II puts it, “Work is a good thing for man-a good thing for his humanity-because through work man not only transforms nature, adapting it to his own needs, but he also achieves fulfilment as a human being and indeed, in a sense, becomes "more a human being.” Or in the words of Pope Francis, “Work is a necessity, part of the meaning of life on this earth, a path to growth, human development and personal fulfilment.”
Technology Leaves the Working Class Behind
If work is indeed so central to human flourishing, then employment and decent wages must be prioritized by society. Unfortunately, the pattern of technological progress in recent decades has led to many people being excluded from its benefits. In the United States, these tend to be people with high-school diplomas rather than college degrees (I don’t want to use the terms “high-skilled” and “low-skilled” as this can be demeaning—working-class people are by no means lacking in skills).
The issue is that manufacturing, which used to be the locus of decent working-class jobs, has been transformed by technology. To state the problem simply, machines have largely replaced workers on the assembly line. As production processes become more automated, more reliant on robots, opportunities for working people have diminished.
Putting this in terms of the economics: there is less demand for labor of workers with high-school diplomas, so their wages and employment falls. But technology also allows for a higher demand for labor of workers with college degrees—the people who are not replaced by machines, but rather work alongside them. Their wages and prospects rise. And the returns to capital—profits—rise with an improvement in technology.
This is indeed the pattern we have seen in recent decades—a higher “skills premium” (as the earnings gap between those with college degrees and those with high school diplomas grows larger), stagnating real wages of the working class, falling employment in manufacturing, and soaring profits.
Below is a chart showing the real weekly earnings of men and women with different levels of educational attainment from 1963-2012. We can see clearly that workers with high school degrees or less are doing worse and worse while college graduates are doing better and better—exactly what economic theory says would happen after this kind of technological change.
Source: Braun (2016).
What happens to these disenfranchised workers? It’s not that they just dropped out of the labor force, although many have. There has indeed been lots of job creation in United States over this period, but typically in the services sector, which offers lower wages and fewer protections.
I’m arguing that technology explains a lot of these negative trends in wages and jobs. But other factors play a role too. Globalization is a factor, especially since outsourcing allows corporations to set up shop in locations with lower wages and fewer labor protections. The decline in unionization also has a role to play. Back in 1960, close to a third of workers in the United States were covered by collective bargaining agreements; today, that number is less than 8 percent for the private sector. It’s little wonder that the wage share of national income has fallen precipitously, while the capital share has risen.
What does this mean for the future?
The “future of work” is the topic of a lively debate. It centers on the impact of future technological progress on work and wages, including from advanced robotics and artificial intelligence. Will the future be better or worse than the past?
The evidence so far is not encouraging. In my book Cathonomics, I discussed the work of economist Carl Frey in this regard. Frey argues that some technologies are labor-replacing and some are labor-enabling. The former make jobs and skills redundant, as machines do the work. This has been the case over the past few decades. It was also the case during the early industrial revolution as craft workers lost their jobs to factory machines—prompting a backlash from the “Luddites.” Yet Frey argues that the technological change in the earlier part of the twentieth century—centered on electricity and the internal combustion engine—was actually labor-enabling as it led to rising prosperity, plentiful jobs, and—when combined with social democratic institutions—low inequality.
But Frey is ultimately a pessimist. He argues that we are in the midst of another labor-replacing era, and this is only going to get worse. He shows that the number of robots in the United States rose by 50 percent between 2008 and 2016, with each of them displacing 3.3 jobs. Along with his colleague Michael Osborne, Frey argues that as technology progresses, more classes of workers will be at risk of replacement—and simply having a college degree will no longer act as a certificate of safety. Overall, they argue that almost half of U.S. jobs are vulnerable to displacement by technology in the years ahead, and once again, the people with the least education are on the front lines.
If unchecked, these trends are likely to provoke a backlash. In the Trump movement, I believe they already have. In a sense, we are facing a perfect storm—labor-replacing technology going hand-in-glove with neoliberal policies that reward the wealthy and make inequality even worse.
What can we do about it? It certainly calls for a robust policy response. But seeking a return to the heyday of manufacturing jobs is just wishful thinking, I’m afraid. That ship has sailed—the machines are just too good.
This is not to say there is no scope for industrial policy. There is, especially when the government seeks to stimulate technologies that support rather than hinder decent jobs. As Anthony Atkinson has noted, technology is not always destiny. The government can encourage innovation that increases the employability of workers, including by how it finances the research and sets the rules by which the rewards of technological progress are distributed. I think the energy transition is an example of a technology that is more labor-enabling than labor-replacing—and in this light, the subsidies and tax incentives in the Inflation Reduction Act bode well for jobs.
But we need to think about other policies to protect workers. One clear area, resonant with Catholic social teaching, is to strengthen unions and collective bargaining—including in growing areas like the services sector that has proven hard to unionize. We should also push for more profit-sharing and greater workplace democracy—having workers represented on executive boards and on firm-level work councils—which would allow these workers to secure their fair share.
But if technology leads more workers to become disjointed from the labor market, we might need to think of more radical solutions. Harking back to Franklin Roosevelt’s New Deal, Anthony Atkinson proposes guaranteed public employment at a fair wage. This is an idea worth considering. It could give a welcome boost the ever-expanding care economy, build vital infrastructure, and support the Herculean task of decarbonization.
Speaking of radical solutions, many have proposed the universal basic income as a concrete way of softening the blow of uneven technological advance. Even Pope Francis has endorsed the universal basic income in his book, Let Us Dream. Its main advantage is that it offers people income security in the face of job insecurity. It gives them the freedom to walk away from lousy jobs, and—and doing so—is likely to bid up wages. It allows people to engage in rewarding leisure or support the common good in areas that are underpaid but socially meaningful.
Yet I remain an agnostic on the universal basic income. If we are serious about the dignity of work, a starting point would be to make work pay. Franklin Roosevelt always insisted on the priority of providing jobs rather than cash—which is why he supported public employment opportunities.
More fundamentally, setting the benefit at a level that supports human dignity and the common good would probably prove too much for the political system to bear—and it would cause other vital social programs to be starved of funding. Just consider some hypothetical numbers. Imagine a universal basic income of $10,000 a year for 260 million adults in the United States. This would cost $2.6 trillion, at a time when the total federal government budget is about $7 trillion. Clearly, much vital spending would need to be pared back to make this work.
Given this, I think we can support a flourishing future for all through the basic nuts and bolts of the social democratic state—providing universal social benefits as a right of citizenship in tandem with strong unions and workplace democracy.
The dystopian and utopian futures
When we look at how technology affects the future of work, we face a stark choice between a dystopian future and a utopian future.
The dystopian future would be one of falling wages and employment, especially for the working class but also increasingly for the middle class. Profits would soar, as those who own the machines, the smart systems, and the technology platforms would see huge gains. We would see a huge spike in inequality and a collapse in intergenerational mobility (goodbye, American Dream). This would create dangerous fallout for social cohesion and political instability. Democracy itself could be in peril.
The utopian future is very different. Here, the amazing gains in income and wealth from technological advances would be shared fairly among the population at large. There would be rising output per person for all people—whether from their own earnings, or from the provision of goods, services, and transfers by the government. We would witness a rise in leisure time, as more and more people engage in the non-pecuniary aspects of human flourishing.
What will the actual outcome be? That depends less on technology and economics and more on politics and social choice. Once again, technology is not destiny. The dystopian future is really a libertarian future, in which the government refuses to intervene in markets to correct their deficiencies. The utopian future, on the other hand, is the fruit of a communitarian mission to ensure the benefits of technological advance accrue to everyone.
Back in 1930, Keynes pictured a utopian future. He was partly right and partly wrong. Looking ahead, we have it within our power to build this kind of future. But it will mean jettisoning the libertarianism and neoliberalism to build a smarter, stronger, and safer system of social democracy.
Is it not the case that work is a punishment for Original Sin in Genesis 3?