Technological Change and Jobs

My article on Newcomen and Watt raised the obvious question of whether the industrial revolution was necessarily a good thing. After all, it put people out of work, and we all know the horror stories from Dickens and others about the conditions in the factories. This is a fair question, and it deserves an answer.

I don’t want to minimize the abuses that took place in the factories, but factory workers were hardly the majority of people in Britain. Population in the countryside remained pretty constant, though improvements in agriculture meant that the same number of people could feed a larger population. Population was growing, and the surplus from the countryside moved to the cities to work in the new factories. There was also a growing middle class, without which the industrial revolution would have fizzled: someone had to have the money to buy the products! While some goods were exported (resulting in severe damage to local producers in India, incidentally), the first market was domestic.

The point is that contrary to the impression left by Dickens, many more people in Britain benefited from industrialization than lost out from it. There is no question that the rapid change in the economy and in technology created winners and losers, and many jobs were lost or displaced by the new machinery. Of course, other jobs were created in designing, building, and maintaining the machines, but those jobs required skills that most workers did not have. This was a painful transition for many, leading to the rise of various socialist movements and Marxism. But overall, it was a net gain for society.

The workers had friends beside the socialists, however. Wilberforce and others in the Clapham Circle took on the issue of working conditions in the factories and spearheaded legislation to make the factories more humane places to work. Over time, they and others like them (including particularly the early trade unionists, many of whom were also committed Christians) succeeded in reforming labor practices. The efforts of evangelicals helped prevent England from spiraling into the revolutionary movements that swept across Europe in the nineteenth century and promoted improved working conditions and social stability.

What Marx and others like him could not envision is that capitalism could reform itself to address the abuses of the factories and the interests of workers and the lower classes. In particular, they missed out on the power of Christianity as a motivation for social reform. By judging all religion by the state churches he knew, Marx did not understand that religion could produce major reforms in society, rather than just being a prop for an abusive status quo. On the other hand, having lived in England, he most likely had heard of Wilberforce, so he should have known better.

There’s an obvious modern parallel here: we are in the throes of economic and technological change every bit as big as the industrial revolution, with no clear ending in sight. Not long ago, a person could make a good living with a high school diploma at a factory; now, many jobs in the US expect at least a college degree, and some look for advanced degrees beyond that. There is no question that workers are being displaced by machines as well as by increasing international competition. The economics of this situation are a subject for another post, but in light of the experience of the industrial revolution, there are a few points that should be made.

The advent of new technologies has made life better for most people. If you have doubts about that, consider that ten years ago few people had internet access in their homes, wireless was nonexistent, smartphones were science fiction, GPS’s were rare, etc. The average college student today has technologies that the wealthiest couldn’t buy a decade ago. My Android phone probably has more computing power than the computers on the Apollo spacecraft that went to the moon. Just like the industrial revolution, the internet revolution and the associated technologies have made life better for most people in the developed world. It’s easy to forget that fact as we worry about unemployment and underemployment.

This brings up the issue of job displacement, which is as serious a problem today as it was in the industrial revolution. The fact is, new technologies that improve our lives also inevitably lead to changes in employment patterns, and this means there are winners and losers. So how do you deal with this if you are on the losing end of the changes?

Paradoxically, knowledge is less important these days than skills: employers don’t care what you know, they care what you can do. The jobs that will be hot in four years don’t even exist now. So if you are in school or have been displaced from your job, developing flexibility and a marketable skill set are the most important things you can do to prepare yourself for what’s coming. I’m a contrarian here, but I think liberal arts are worth pursuing because of the mental flexibility they foster. A math background helps, too.

I would also recommend starting your own business. Depending on a job in a changing employment situation is at best an iffy proposition. Owning your own business is the only way that you are in control of your income. The internet provides enormous opportunities to start a business with minimal cost that can be used to supplement existing income or even to replace a job. And it’s never been easier to do that. If there’s interest, I may return to this topic in a future post.