Must-Read: Erik Brynjolfsson and Andrew McAfee: Labor in the Second Machine Age

Erik Brynjolfsson and Andrew McAfee: Labor in the Second Machine Age: “In 1983, the Nobel Prize–winning economist Wassily Leontief brought the debate into sharp relief…

…through a clever comparison of humans and horses. For many decades, horse labor appeared impervious to technological change. Even as the telegraph supplanted the Pony Express and railroads replaced the stagecoach and the Conestoga wagon, the U.S. equine population grew seemingly without end, increasing sixfold between 1840 and 1900 to more than 21 million horses and mules…. But then, with the introduction and spread of the internal combustion engine, the trend rapidly reversed. As engines found their way into automobiles in the city and tractors in the countryside, horses became largely irrelevant. By 1960, the United States counted just three million horses…. Once the right technology came along, most horses were doomed as labor. Is a similar tipping point possible for human labor?…

For Leontief, the answer was yes…. But… Leontief missed a number of important differences…. We humans are a deeply social species, and the desire for human connection carries over to our economic lives… human interaction is central to the economic transaction, not incidental to it…. Recent technological progress, while moving surprisingly fast, is still not on track to allow robots and artificial intelligence to do everything better than humans can within the next few years…. A quote attributed to a 1965 NASA report: “Man is the lowest-cost, 150-pound, nonlinear, all-purpose computer system which can be mass-produced by unskilled labor.”…

The story doesn’t end there, however. Having valuable labor to offer is not the only way to remain economically important; having capital to invest or spend also ensures continued relevance. A critical difference between people and horses is that humans can own capital, whereas horses cannot…. The challenge here is that capital ownership appears to have always been highly uneven and has become increasingly skewed recently…. People, unlike horses, can choose to prevent themselves from becoming economically irrelevant…. It’s not unreasonable to expect people to vote for policies that will help them avoid the economic fate of the horse…

November 12, 2015

AUTHORS:

Brad DeLong
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