Brainstorm: Automation anxiety and algorithmic unemployment

By Johan Steyn, 2 September 2021

Published by Brainstorm:

A father was serving an unfair prison sentence, thinking about his inevitable demise. Wondering if he might ever see his daughter again, he penned a moving last letter to her. “My sweet darling Alyonushka.” The father was an intellectual and a brilliant economist who fell out of favour with his government because of his views and writings. “Read good books. Be a clever and a good little girl. Listen to your mother and never disappoint her. I would also be happy if you managed not to forget about me, your papa, altogether.”

It was August 1938 and soon the Stalinist government executed Nikolay Kondratyev. A pre-Keynesian economist, and sidelined by many 20th century economic thinkers, he is best known today for the 50-60 year economic supercycles he identified in capitalist economies. To the dismay of the Soviet regime, he identified that the intermittent economic crises faced by the West did not lead to an inevitable implosion but cleared historical debris for new cycles of growth.

Kondratyev’s “long wave cycle theory” was later renamed “Kondratyev waves” or “K-waves” by his contemporary Joseph Schumpeter (known for his economic views on “creative destruction”). The first wave of innovation was water power and mechanisation, followed by steam engines and the rail industry. Electricity, later enabling the electronics era, culminated in digital networks and the Internet.

We are now in the 6th wave where our daily lives are impacted by digitisation, smart devices, hyper-automation, robotics and artificial intelligence (AI). Some call this the fourth industrial revolution but I prefer to call it the smart technology era.

We usually predict the future based on past events. However, with the rapid advance of smart technology, it is not easy to base our future on the past. Danish philosopher Søren Kierkegaard famously wrote that “Life can only be understood backwards, but it must be lived forwards.”

We are to “live forwards” in a world where the growing threat of nuclear war, the tangible effects of climate change and technological disruption will increasingly impact our daily lives and certainly that of our children. Perhaps the greatest impact on humanity will be that of automation. The world is increasingly being automated around us, impacting every kind of job we can think of, giving rise to the term automation anxiety.

As if that is not enough, we can only imagine what impact the Covid pandemic will have on the long term job security of millions of people. Over the last months, the majority of businesses were forced to digitise their operations. Many realised that their employees can work from home and in most cases the drive to automate both back- and front office processes have been accelerated.

The smart technology era will give rise to algorithmic unemployment where smart technology and automation will result in systematic inequality created by the changing nature of work itself. We often hear that becoming an “AI-powered” enterprise is what business leaders should aspire to. But have we considered the long term consequences?

Indications are that AI organisations will create a great algorithmic barrier between the leadership and the workers. The organisation will be run by a small group of leaders utilising smart technology that will autonomously manage low-paid workers on the periphery. Algorithmic work allocation, initiated by the elite few, will allocate tasks to the herd in an Orwellian nightmare where only some animals are more equal than others.

Digitally mediated work - the bread-and-butter of the gig economy - will create a coded ceiling where workers are doomed to perform their menial tasks forever. Career advancement will be a thing of the past. The result will be a hollowed-out middle class and the long term societal impact will be reversible.

What is in store for us over the next few years? Global audit and consulting firm PwC reckons that there will be three waves between now and the next decade: algorithmic, augmentation and autonomy. “During the first wave, we expect relatively low displacement of existing jobs, perhaps only around 3% by the early 2020s. By the mid-2030s, up to 30% of jobs could be automatable.”

One is left to wonder if Kondratyev’s theory will prove relevant in the future. Will the world economy and even democracy itself be able to survive in a world where everything is automated? A world where almost everyone could be without a job (the “useless class” according to Yuval Noah Harari), and our future may be that of dragnet surveillance, big data policing and technological police states?