Need to re-visit technology choice – The Hindu BusinessLine – BusinessLine

Labour unions have always been at the forefront challenging the adoption of newer technologies on the grounds that they would lead to worker displacement. Take a simple example. As against one weaver working at a loom, the industrial revolution gave us power looms where one weaver could manage 10 looms. Employers fought the protests on grounds of productivity and sometimes even signed agreements with labour unions guaranteeing no worker displacement since the productivity gains more than compensated for the cost of carrying the labour.

Similar arguments at a macro level were provided by some economists who argued for and against the newer production technologies that were arriving at the shores of developing economies. Since many of the manufacturing plants are imported from the advanced economies, they come with a design that requires fewer workers. Certainly not appropriate for developing economies with surplus labor.

Apart from productivity, technologies that underlie machinery and plant design also address safety. For instance, workers close to chemicals, or heat generating activities are very susceptible to injuries and machineries that prevent these happening are to be welcomed.

This technological distinction was at the core of Gandhis attitude towards industrialisation. His Hind Swaraj makes his dislike for machinery very clear. He wanted the village to be self-sufficient, or at least self-reliant. One strain in his arguments was that large scale industrialisation was de-humanising. But the other strain was in the fine distinction he would make between machinery and technology that enhanced the human and supported the worker, versus the one that replaced or made the human irrelevant.

He got Maurice Frydman, the Polish engineer, to apply his skills to improve the charka, and praised the sewing machine. Gandhi would stress that the economy and technology should be focused on the human being and not on the product. JC Kumarappa, who built on Gandhis principles of satya and ahimsa stressed that an economic exchange should not be seen as a material but as a moral one. Thus, decentralisation and stress on local consumption become natural derivatives from this stream of thought.

Research published in 2020 by economists Daron Acemoglu and Pascual Restrepo would seem to partly support Gandhi. They examine the falling share of economic output that goes as wages to workers and the increasing expenditure on software and machinery. In their study of the effects of automation and introduction of robots in particular, they show that robots have negative effects on employment and wages.

Using US data, they show that one more robot per thousand workers reduces employment by 0.2 per cent and wages by 0.42 per cent. Thus, increasing wage inequality. In other studies, they have argued that technologies like self-checkout kiosks at stores, and automated customer service replace workers without increasing productivity.

In a developing country context, one wonders what the effect of the technology is? Recall that toll booths here require three people per lane one to direct the traffic, one to collect from the vehicle and hand it across the counter to the person in the booth! Is technology being adopted only because that is what is available, or for saving employment, or to raise productivity?

Developing societies, and labor surplus ones in particular, have already seen waves of technological activity since the industrial revolution. We have the data to study their effects on society, both in terms of employment and wages, as also income inequality, and humanity. The microprocessor revolution, hidden microscopically deep in the recesses of everything we use are not as apparent as large machines but with even more far-reaching effects.

We are on the cusp of the effects of artificial intelligence on our lives. Hence, the question of what technology is relevant is an important broad societal question.

At the micro level, business considerations must clearly drive the decision. At the macro level, society needs to debate about what technologies are relevant and how can government policies through subsidies and taxation nudge innovation and adoption in a societally appropriate manner.

The writer is an emeritus professor at Suffolk University, Boston

Published onJanuary 17, 2022

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Need to re-visit technology choice - The Hindu BusinessLine - BusinessLine