02/22/2013 11:55 am ET Updated Apr 24, 2013

Return of the Luddites: The Changing Nature of Work

"The economy, stupid," was the quote hanging at President Bill Clinton's Little Rock 1992 campaign headquarters. Although the quote has gone through many incarnations in the past decades, it really captured the zeitgeist for the president. Perhaps it has even captured every zeitgeist to ever have existed for every political candidate -- this for the simple reason that the economy is something that affects each and every one of us.

When the electorate decided to vote for President Clinton based on his stance on the economy, what were they really voting for? For any political candidate to connect with their electorate, they have to find the lowest common denominator, and in terms of the economy, this invariably means jobs. Even more specifically, this usually means a job creation plan (as most people make their livelihood as economic agents by supplying labour).

But what if the notion of a job creation plan is in itself misleading? What I mean by this is that it is easy to create jobs in the short-run (through public works projects, tax incentives, etc.), but to prepare individuals for the jobs of tomorrow is an entirely different question, especially since we are not quite sure of what types of jobs will be needed or available in the future. The state of flux in the nature of work can render many politicians rather ineffectual in their efforts to counteract the prospect of future unemployment. Although the short-run unemployment problem is constantly addressed, the long term change in the nature of work -- that is, the fact that certain jobs become obsolete due to the availability of technology -- is often forgotten, and even ignored.

To get the idea going of how the nature of work is changing, let's analyze this over the past few millennia. There have arguably been a few distinct forms of work in every major stage of humanity and each stage's work has been replaced by a technologically more advanced form in the next period. The progression of humanity from its hunter-gatherer state till the Industrial Revolution follows Schumpeter's creative destruction process as new innovations and better ideas thrived. Associated Press (AP) writer Bernard Condon gives a good run-through of this process. Whilst the Industrial Revolution has still provided menial labour a place in the economy, the current high-tech boom might prove to be less forgiving to low-skilled workers.

What epitomizes the high-tech nature of work today is that instead of replacing one another, jobs are "being obliterated by technology," as AP writers Paul Wiseman and Bernard Condon put it. In other words, low-end mechanical jobs can be emulated more cheaply by machines and hence, there is a reduction in the quantity of low-end jobs and a downward pressure on low-end wages. The argument that technology is destroying jobs is hardly new given that Luddites have been around for a good 200 years, and the counter-argument involving the lump of labour fallacy has existed for a good 100 years; but as with many arguments, this time it's different. Messrs. Wiseman and Condon's post provides a plethora of convincing evidence that the current shift in the nature of jobs is actually different from previous changes. Different in that previously, each successive technological stage created more new jobs than what it displaced, which might not be true any longer.

At the Open Forum Davos -- the more accessible side-conference of the whole World Economic Forum (WEF) happening in Davos, Switzerland -- one of the seven publicly accessible talks was about unemployment. Or perhaps more specifically, the discussion focussed mostly around the problem of matching people with the right jobs and that training programmes have to be in place in order to provide workers with the appropriate skills. Whilst the many frustrations that both the long-term unemployed and recently graduated face today were touched upon, the discussion on the changing nature of work was almost absent in its entirety.

One of the WEF attendees -- Dr. Erik Brynjolfson, professor at MIT's Sloan School of Management -- has provided some interesting insights on the temporal problems of unemployment through the many articles that he has written on the topic, in addition to co-authoring a book (with Dr. Andrew McAffee) titled "Race Against the Machine." While the relevant take-home message can be read as excerpts from their book on The Atlantic, for the purposes of this post, the following graph summarises the argument best. It depicts which stratum of society in the U.S. has been reaping the benefits of development during the past 50 years.