Erik Brynjolfsson and Andrew McAfee in Foreign Affairs:
On one side of the debate are those who believe that new technologies are likely to replace workers. Karl Marx, writing during the age of steam, described the automation of the proletariat as a necessary feature of capitalism. In 1930, after electrification and the internal combustion engine had taken off, John Maynard Keynes predicted that such innovations would lead to an increase in material prosperity but also to widespread “technological unemployment.” At the dawn of the computer era, in 1964, a group of scientists and social theorists sent an open letter to U.S. President Lyndon Johnson warning that cybernation “results in a system of almost unlimited productive capacity, which requires progressively less human labor.” Recently, we and others have argued that as digital technologies race ahead, they have the potential to leave many workers behind.
On the other side are those who say that workers will be just fine. They have history on their side: real wages and the number of jobs have increased relatively steadily throughout the industrialized world since the middle of the nineteenth century, even as technology advanced like never before. A 1987 National Academy of Sciences report explained why:
By reducing the costs of production and thereby lowering the price of a particular good in a competitive market, technological change frequently leads to increases in output demand: greater output demand results in increased production, which requires more labor.
This view has gained enough traction in mainstream economics that the contrary belief—that technological progress might reduce human employment—has been dismissed as the “lump of labor fallacy.” It’s a fallacy, the argument goes, because there is no static “lump of labor,” since the amount of work available to be done can increase without bound.
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. The animals were vital not only on farms but also in the country’s rapidly growing urban centers, where they carried goods and people on hackney carriages and horse-drawn omnibuses.
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