Tom Watson MP 15th February 2017 Blog Economy Share Tweet A humanoid robot works side by side with employees in the assembly line at a factory of Glory Ltd., a manufacturer of automatic change dispensers, in Kazo, north of Tokyo, Japan, July 1, 2015. REUTERS/Issei Kato This article is part of In our Interests: Building an Economy for All, a collection of essays outlining a co-operative vision for the post Brexit economy. Read the full pamphlet The world of work is likely to be transformed over the coming decades as automation and artificial intelligence cease to be abstract ideas and become everyday realities. The Labour party has to start thinking today about how these changes will impact the economy of tomorrow if we are to remain relevant in the new technological age and one way to make sense of the future is to study our past. We remember the Victorians as great inventors, explorers, builders and social entrepreneurs. But they were also dreamers. In 1890, the year the Forth Bridge was completed – a monument to modernity constructed entirely of steel – The Commonweal Journal began to serialise William Morris’s News from Nowhere, his vision of England as a rural idyll. In Morris’ agrarian utopia, local collectives have replaced “wage slavery” and the distinction between work and pleasure has effectively disappeared. Morris’ story was written as a direct response to a very different version of the future set out by American journalist Edward Bellamy in his 1888 book Looking Backward. Bellamy portrays a futuristic socialist paradise constructed around a centralised state that oversees every aspect of economic activity so that the terrible burden of work can be more equally shared. In his Boston in the year 2000, workers retire at 45 after 25 years of service in the national industrial army. Morris rejected state socialism and entrusted his revolution to of a very different army of craftsmen and women whose collective endeavours would do the state’s job for it. The brutality of work at the time when Morris and Bellamy were writing was impossible to escape. In February 1890, an underground explosion at Llanerch colliery in Wales killed 176 people. In America the previous month, the United Mine Workers was formed. Foremost amongst its eleven goals were a demand for an eight-hour day, wages commensurate with dangerous working conditions and an insistence that new technology be used whenever possible to minimise risks to its members. In the UK, the entire decade had been shaped by a severe depression which led to falling food prices and the collapse of the rural economy, driving tens of thousands of people into the country’s rapidly-expanding industrial towns and cities looking for work. The increased labour supply pushed wages down and poverty and unemployment were rife. It was a time of huge social upheaval and political change. Morris and other leading socialists, including George Bernard Shaw and Annie Besant, witnessed the Bloody Sunday riots at Trafalgar Square in 1887, in which unemployed workers from the East End, many of them of Irish descent, clashed violently with the police and troops. It is impossible to overstate the extent to which the industrial revolution transformed our country and our society. The wealth generated by new forms of commerce paid for civic buildings that still dominate many of our towns and cities today. It built art galleries, town halls, great public squares and statues. But it also created slums and terrible working conditions, poverty and disease. It would take Parliament or local politicians decades to fix the problems created by the rise of new industries, most obviously the explosion in the urban population. It took enlightened capitalism and municipal leadership, together with reforming zeal and political will, to make this new world inhabitable. There were many who resisted the arrival of modernity. At one point more British soldiers were being deployed to deal with the Luddites who smashed the new machinery than to fight Napoleon. Others sought to adapt by creating new institutions. The co-operative movement was formed by working people who could only afford even the most basic goods and services if they clubbed together to buy them. The Lancashire tradesmen who set up the Rochdale Society of Equitable Pioneers, did so as a direct response to the problem of mechanisation, which had reduced wages for many skilled workers. You don’t have to search too hard to find parallels between then and now. There are no riots against new machinery, but stagnating wages and living standards have arguably transformed the political landscape in the UK and the USA. The impact new technology is likely to have on the workplace in the coming decades could dramatically widen the growing gap between the richest and the poorest. At the very least, the widespread adoption of automation and artificial intelligence will shape our own era, just as mechanisation shaped the 19th century, with potentially profound consequences for our economy and our society. Technological change may upend many of our assumptions about the world of work in ways we can’t yet imagine. And – again, just as in the 19th century – there are political choices to be made about how we respond to that change. Any political party that doesn’t try to understand the scale of the changes to come, and think about those political choices, is failing its existing voters and missing an opportunity to speak directly to many more potential supporters. For Labour – a party created to give working people a voice in Parliament – failing to anticipate the consequences of these seismic technological shifts would constitute a form of professional negligence. Last year, I set up a Future of Work commission, which I co-chair, to identify some of the solutions to the public policy challenges posed by this new era of automation. I’m delighted that Claire McCarthy, the General Secretary of the Co-operative Party, has agreed to serve as a commissioner. The studies and statistics on the likely impact of technology are hair-raising. The Bank of America has said automated systems will be carrying out nearly half of all manufacturing jobs within a generation, saving an astonishing $9 trillion dollars in labour costs. Consultancy firm Deloitte says that 35% of UK jobs are at risk from automation. This is not just about driverless cars or robots on assembly lines. Sir Christopher Pissarides, Regius Professor of Economics at the London School of Economics, told the first meeting of our Commission in December that, although machines have replaced labour since the beginning of organised production, it is only now that they are threatening jobs in the service industry that were previously considered “safe”. Machines are not just replacing manual labour, they are starting to replace so-called “brain work”. A generation ago, many schools began to teach coding, but in a decade’s time there may be little point. In major financial centres including the City of London that task is now being carried out by computers using algorithms. When the world’s most sophisticated financial traders can be swept away by this technological tsunami, what hope can there for the humble high street accountant? The political ramifications of these changes shouldn’t have to be spelled out. The effects of globalisation and the aftershocks of the financial crash helped to sow the seeds of disillusionment and despair that drove alienated voters into the arms of populists like Donald Trump and Nigel Farage. But even if the most cautious estimates about the transformative effects of the new technological revolution are accurate, we could be at the start of an era that will make those economic shocks seem like small tremors. To put it bluntly, low paid workers who currently face competition from immigrant workers at home or cheap labour from overseas may soon wake up to discover their rivals are machines who don’t need to sleep or take holidays and will never demand better pay or conditions. Angus Deaton, the Scottish economist and Nobel prize winner, put it succinctly in a lengthy interview with the Financial Times at the end of last year when he said: “I don’t think that globalisation is anywhere near the threat that robots are”. Deaton believes that in the US low wages and the decline of industry, along with the weakening of union power, means secure jobs and a feeling of belonging have been replaced by a sense of hopelessness in many blue-collar communities. Donald Trump was able to benefit from that in a way that the Democrats who traditionally represented these parts of the country were unable to do. In the UK, as in the US, it is hard to deny that the connection between these communities and many of the politicians who represent them has been fraying for years. I’m no Luddite. It is worth noting that Deloitte and others believe the number of jobs lost through technological change will be outstripped by the number created. But we also need to acknowledge that, depending on the political choices we make, there may be human costs. In his own evidence to our Commission, Sir Christopher quoted William Baumol, now professor of economics at New York University, who said in 1967 that in the distant future people will only be employed in sectors that cannot be automated. Baumol said then that the only activity that could not be automated was the arts. The California computer scientists who created ALYSIA, a programme which takes lyrics and composes melodies to put them to, may disagree. The creative industries that depend on human inspiration are not immune from automation; the Press Association is already using artificial intelligence to write some sports reports. But in his evidence to the Commission, Sir Christopher said there are many other areas of economic activity that probably can’t be automated, including labour intensive services that wealthier societies like our own will demand more of, like health and caring services. It could be that our aging population will require us to dramatically reassess the contribution that carers, in particular, make to our society – and perhaps even pay them accordingly. Service sector jobs that aren’t automated could become more attractive and prestigious. The status of different occupations has changed over time. Coal miners who worked underground in unskilled jobs became the heroes that risked life and limb to power our country. Personal trainers are now regarded as highly skilled and well qualified professionals who can command good wages. Chefs can enjoy significant rewards because wealthy societies value what they do and pay the best performers handsomely. But in an automated economy where most of the financial benefits accrue to those who own or create new technology, rather than the people who use it, the risk is that inequality increases rapidly. Sir Christopher told us that low wages and uncertain and insecure unemployment are likely to replace unemployment as the main problem of the digital era. Uber is a good example of the way wealth can effectively be transferred from tens of thousands of small businesses and sole traders to the Silicon Valley entrepreneurs who own technology that can transform an entire industry at a stroke. The union movement has fought long and hard to secure employment rights for Uber drivers. But when the firm owns fleets of driverless cars, as it will surely do before too long, it will no longer have to negotiate over wages or working conditions. One possible consequence of automation is that low paid jobs disappear, while middle class jobs are hollowed out. That means we need to answer question about the skills the workforce of tomorrow will need, and the type of training we should invest in as a country. It could be that further education colleges have a far bigger role to play when a job for life is the exception rather than the rule. If so, we may need more teachers, and we will need to find a way to pay for them. Many of the institutions created by working people in the past to provide a passport out of poverty can be adapted to the automation age. The advent of peer-to-peer lending provides an opportunity for credit unions and micro-lenders to expand their businesses, for example, providing regulators allow them to. It is too easy to sound apocalyptic about this. Automation may one day bring John Maynard Keynes’ famous prediction that we will one day work 15 hours a week – which he made just a year after the Wall Street Crash of 1929 plunged the world into the last great depression – closer to fruition. Automation may prove to be the midwife that helps give birth to a new world. I hope the Future of Work commission will guide Labour’s thinking about how we respond to it. It’s unlikely to come up with all the answers, but it may help us decide which are the right questions to ask.