The world is on the cusp of a digital revolution, argues , and it will be just as transformative as the industrial revolution. It will overturn long held traditions about work, income, and politics. Depending on how we respond, we could end up with a more equal, more fulfilling future, or we could resort to extreme politics, a fragmented society and a developing world left behind – again.
That’s the essential message of Ryan Avent’s thoughtful and original book, .
The digital revolution is well underway, but its real power to overturn the way the world works is only just revealing itself. “A remarkable new invention can’t transform society until society has learned how to use it effectively”, Avent explains. It took forty years for electricity to reach the household level, longer for cars to be widely adopted and reshape our geography. “The re-forging of society is not a rapid process.”
Digital technology has already revolutionised various industries and tasks, but a host of new applications are coming down the line that have got people worried. Self-driving cars are the most high profile, a development with very obvious consequences for millions of professional drivers and those who serve them. But automation is reaching into more and more areas of work, well beyond the factory floor and unskilled tasks where it began. Computers process legal cases, diagnose patients, write newspaper articles, and take the place of people in the workforce in the process.
Automation combines with globalisation to produce “an abundance of labour: a wealth of humans”, or to put it less kindly, a labour glut. That makes people less important in the economy, reducing their bargaining power and leading to depressed wages and deteriorating conditions. Many of the traditional strategies for getting people back into work, such as education, have run their course in developed countries. The received wisdom that people who lose their jobs to a robot can be absorbed back into work elsewhere in the economy may not hold.
All of this feeds inequality. When workers are replaced by machines, the rewards of that work go entirely to the owners of the machine, be it Google or Uber or whoever. The rewards of automation concentrate wealth in the hands of a few. There are all sorts of reasons why this is unhelpful, but the book is particularly good at explaining how this inequality undermines the whole global economy. Money earned by those on low incomes tends to get spent. Money earned by very rich people goes practically unnoticed, and ends up being hoarded instead. This “disconnect between what is earned in an economy and what is spent” leads to falling demand, economic slowdown, and stalling development in poorer countries. “Until markets, or governments, find better ways to spread the benefits of growth broadly, the world faces the risk of recurring, severe crises”.
If you still have a leftist detector and it’s pinging right now, bear in mind that Avent is a columnist and senior editor at The Economist. Inequality is now so entrenched and endemic that no political side can afford to ignore it.
The book is primarily concerned with explaining the digital revolution and how it is going astray. It doesn’t offer much by way of solutions. Shortage of housing in high productivity areas is one thing we can do (and certain readers will be pleased to note that Avent takes land seriously), and there is a qualified nod towards the basic income. From a more global perspective, the book has little hope to offer poorer countries – all the evidence suggests that poor countries will be passed by, and that many of the encouraging signs of growth in developing world are tailing off, Avent argues. Interestingly, he suggests that the best way to lift people out of poverty is immigration, giving individuals access to the social capital of advanced economies. But of course immigration is increasingly controversial, and many countries are turning the other way. It’s a depressing outlook in a book that the author acknowledges is “rather gloomy in parts.”
As such, The Wealth of Humans is best viewed as a warning – that change is coming, that it will be disruptive, and that a better world on the other side of that disruption is not a given. It could be an uglier, meaner world, one where societies put their energy into protecting what they have and excluding others rather than finding better ways to share.
That’s realistic rather than pessimistic, Avent insists, and I would agree. I think the digital revolution enables a fair and prosperous future, but won’t deliver it on its own. We’re going to need to shape it, and create a more inclusive economy that gives people a real stake – a major theme in the book I’m working on myself. Without robust political action, the benefits of the digital revolution will be captured by the richest, and the whole economy risks being derailed by extreme politics and protectionism. We’re also going to have to tap every available opportunity to use the digital revolution for sustainability. I noticed one passing mention to climate change, but otherwise the book doesn’t discuss it. That’s a shame, as it presents us with another massive and compelling reason why business as usual economics is taking us in the wrong direction.
The Wealth of Humans is engaging and readable, balanced and insightful, and with a clear-eyed refusal to offer easy answers. As the book concludes, “we are entering into a great historical unknown”.
- Pick up The Wealth of Humans, or