The Technology Trap
Page 17
The short run, however, must be distinguished from the long run. During the closing decades of the Industrial Revolution in Britain, a new growth pattern emerged: as productivity growth accelerated with the adoption of steam, real wages began to rise in tandem. This happened largely in the absence of organized labor or any significant government intervention to boost wages. The reason is straightforward. During the classic years of industrialization, technology took the form of capital that substituted for skilled workers in existing tasks, as the mechanized factory displaced the domestic system. While new tasks also emerged in the early factories, they required a different breed of worker: spinning machines were designed to be tended by children who cost little to employ, had no bargaining power, and were relatively easy to control. Much like advanced robotics today, machine-tending children replaced middle-income workers. In contrast, in the later stages the arrival of more complex machines required more skilled workers in the factories, who found their skills augmented by technology. And ever-larger factories required more engineers and more skilled people in management and administration. Technical change turned from replacing to enabling, which served to increase the bargaining power of labor as workers’ skills became more valuable. It is hardly a coincidence that the arrival of the modern growth pattern marked the end of widespread resistance to machinery. Attitudes toward technological change, as we shall see, are shaped by whether people can expect to benefit from it.
PART III
THE GREAT LEVELING
The Luddites, who opposed technological change, proved very wrong, insofar as new, higher-paying opportunities for work opened up to replace the ones they lost. Henry Ford’s invention of the assembly line for producing automobiles in his Highland Park, Michigan, facility actually lowered the average skill levels required to build an automobile, breaking apart the complex operations of the earlier carriage craft industry into simple, repeatable steps that a person with a fifth-grade education could accomplish. This was the economic order that supported the rise of a broad middle class and the democratic politics that rested on it.
—FRANCIS FUKUYAMA, POLITICAL ORDER AND POLITICAL DECAY
Fears that technological advances will wipe out jobs aren’t new. During the Depression in the 1930s, Charles Beard and other leading American thinkers blamed engineers and scientists for creating the conditions for mass unemployment. In the early 1960s, fears of automation returned as businesses began heavily relying on computers for the first time and machine tools slowed job growth on the shop floor. Even Woody Allen, then a rising standup comedian, took note of the automation hysteria in a routine about how an automated elevator destroyed his father’s job.
—GREGG PASCAL ZACHARY, “DOES TECHNOLOGY CREATE JOBS, DESTROY JOBS, OR SOME OF BOTH?”
Could mechanization have progressed uninterrupted if people’s standard of living had continued to deteriorate and Engels’s pause had persisted? Running the counterfactual is of course impossible, but workers in the early nineteenth century clearly didn’t meekly accept market outcomes, and those who found their livelihoods threatened by machines did their utmost to resist them. Why Western countries in the twentieth century rarely saw Luddites opposing the introduction of machinery is a question to which historians have unfortunately paid little attention. The reason, however, is evidently not that the pace of change decelerated. On the contrary, with the introduction of steam power in the second half of the nineteenth century, mechanization accelerated. And following electrification and the arrival of the internal combustion engine—known as the Second Industrial Revolution—mechanization increased even further in the twentieth century.
While other European countries took different approaches to industrialization, what they have in common is that they industrialized later than Britain. They were able to play industrial catch-up by adopting technologies already invented in Britain, which allowed them to take different paths to industrialization. As discussed above, in France, the imminent threat from below during the revolutionary era meant that the government could not repress worker agitation against machinery, as the ruling elites did in Britain. Consequently, as Jeff Horn has argued, industrialization in France was not only delayed but was also fundamentally different, as it was characterized by greater state intervention—which mediated the different interests between labor and capital.1 And in Prussia, like in Britain, institutional reforms that removed guilds’ restrictions on trades were fundamental in facilitating industrialization.2 But unlike in Britain, in Prussia education played a much greater role in industrialization from the beginning. We saw in chapter 5 that education became important in Britain only in the later stages of industrialization when more skill-intensive technologies, like steam power, came into play. In Prussia, technologies already invented in Britain could simply be put to use with the necessary skills, so that education played a greater role in industrialization from the start.3
The focus here, however, is not on explaining divergent paths to industrialization. Catch-up growth will always be different from growth that stems from expanding the frontiers of technology into the unknown.4 With the Second Industrial Revolution, which began in the 1870s, the United States took over technological leadership from Britain—which means that to trace the frontiers of technology, we shall henceforth have to focus on the American experience. The key question is why resistance to machinery ended. To be sure, the rise of the welfare state made the experience of losing one’s job less harsh. But as late as 1930, welfare spending in America (including unemployment benefits, pensions, and health insurance and housing subsidies) accounted for a mere 0.56 percent of the gross domestic product.5 It took the Great Depression and World War II to spawn the rise of the welfare state. Of course, the relative absence of Luddite sentiment might also reflect the fact that workers joined labor unions to fight for better pay and working conditions. But unlike the craft guilds of the preindustrial era, which vehemently opposed the technologies they perceived to threaten their members’ skills, unionized workers didn’t focus their anger on machines. While the United States may have had the most violent labor history of the industrial world, after the 1870s, workers rarely if ever targeted machinery. Why? The reason, I shall argue in the following chapters, is that people began to see technology as working in their own interest. Though it is hard to prove that this caused the relative absence of Luddite sentiment throughout the twentieth century, that absence is even harder to explain in isolation from what actually happened to working people as a result of technological progress.
We know that new technology can destroy jobs, create entirely new ones, or radically transform the nature of jobs that on paper appear to be the same. As noted above, if technological change is of the replacing sort, productivity growth alone might not offset its negative impacts on employment and wages. Enabling technologies, in contrast, not only increase productivity but also reinstate labor in entirely new tasks, occupations, and industries more broadly. In a major study, the economists Michelle Alexopoulos and Jon Cohen found that America’s great inventions of the period 1909–49 were predominantly of the enabling sort. Some jobs were clearly destroyed as new ones appeared, but overall, new technologies boosted job opportunities enormously. Indeed, gigantic new industries emerged, producing automobiles, aircrafts, tractors, electrical machinery, telephones, household appliances, and so on, which created an abundance of new jobs. Vacancies rose and unemployment fell as the mysterious force of technology progressed.6 The technologies that Alexopoulos and Cohen examined were those of the Second Industrial Revolution. The authors demonstrate that the internal combustion engine and electricity did more to create jobs than other technologies. Labor-saving machinery had similar effects on productivity, but it did not boost employment by as much—which suggests that electricity and the internal combustion engine also placed workers in previously unimaginable jobs. Thus, economists have come to conclude that this was a period when technology was working in the interest of labor. As Daron Acemoglu an
d Pascual Restrepo write: “The importance of … new tasks is well illustrated by the technological and organizational changes during the Second Industrial Revolution, which [led to] the creation of new labor-intensive tasks. These tasks generated jobs for a new class of engineers, machinists, repairmen, conductors, back-office workers and managers involved with the introduction and operation of new technologies.”7
In a world where enabling technologies create an abundance of new and better-paying jobs, even replacing technologies are not too bad for labor. While the twentieth century was a period of unprecedented churn in the labor market, it was also one in which most workers could still expect to come out ahead. The ever-growing number of semiskilled jobs created in America’s factories provided abundant opportunity even for those who found themselves displaced. Men were able to leave the drudgery of working in the fields for more pleasant and better-paying factory jobs. Indeed, rather than being pushed out of the farms by replacing technologies, most people were pulled into the smokestack cities of the Second Industrial Revolution, which offered better pay and working conditions. At the same time, the mechanization of the household allowed women to leave unpaid housework behind for paid office jobs (chapter 6). Some farm laborers, railroad telegraphers, elevator operators, longshoremen, and so on surely lost out—especially during the 1930s, when the Great Depression meant that there were fewer alternative job options, prompting incidents of machinery angst. Yet even then, there was not any worker resistance to the introduction of machinery comparable to the sort we saw in the nineteenth century (chapter 7). For labor, the benefits of mechanization were simply too large. The continued expansion of manufacturing and rising educational attainment allowed the vast majority to switch into better-paying and less hazardous jobs, making ordinary Americans the prime beneficiaries of progress (chapter 8). True, labor-management relations is likely to have played a role in easing the transition, along with increasing workers’ wages and improving working conditions in general. True, the emergence of the welfare state made losing one’s job less harsh. The point is not to downplay the importance of social inventions. The point is that technology itself made everyone better off, to the point where members of Karl Marx’s proletariat became firmly middle class. Consequently, the rational response of labor was to allow mechanization to progress while minimizing the adjustment costs imposed on working people.
6
FROM MASS PRODUCTION TO MASS FLOURISHING
When Thomas Jefferson visited Britain in 1786, America was a young republic and a technological backwater. James Watt’s steam engine was the technological wonder of the time and proof of Britain’s relative technological progressiveness. It is “simple, great, and likely to have extensive consequences,” Jefferson remarked.1 Those consequences would eventually become apparent in America as well. During his travels across North America in 1831, Alexis de Tocqueville marveled that “no people in the world have made such rapid progress in trade and manufactures as the Americans.”2 The once-lagging United States was catching up in some sectors and would soon take the technological lead in others. By the time of the Paris Universal Exposition of 1867, American technological progressiveness was widely acknowledged: Americans received prizes and medals for a wide variety of new technologies, ranging from telegraphs, locomotives, and sewing machines to reaping and mowing machines. Over the next half century, annual patenting almost quadrupled, having expanded thirteenfold after the Crystal Palace Exhibition of 1851. Thus, in 1900, when Edward W. Byrn surveyed recent technological progress at the Patent Office, he observed:
a gigantic tidal wave of human ingenuity and resource, so stupendous in its magnitude, so complex in its diversity, so profound in its thought, so fruitful in its wealth, so beneficent in its results, that the mind is strained and embarrassed in its effort to expand to a full appreciation of it.… With the advent of the dynamo electricity has taken a new and very much larger place in the commercial activities of the world. It runs and warms our cars, it furnishes our light, it plates our metals, it runs our elevators, it electrocutes our criminals; and a thousand other things it performs for us with secrecy and dispatch in its silent and forceful way.3
Electricity and the internal combustion engine were the general purpose technologies of the century, not only affecting every aspect of industry but also transforming the lives of average citizens. One of the great coincidences in economic history is that Karl Benz’s successful trial of his gas engine on New Year’s Eve 1879 occurred just ten weeks after Thomas Edison’s invention of the electric light bulb.4 Thus, if the annus mirabilis of the Industrial Revolution was 1769, when Richard Arkwright and Watt both patented their defining inventions, 1879 can be seen as the symbolic beginning of the Second Industrial Revolution. The individual contributions of Edison and Benz should not be overstated, however. They were part of the tidal wave of innovation that transformed industry, culminating in the age of mass production. As the American businessman Edward Filene noted, mass production was to the Second Industrial Revolution what the factory system was to the first.5
Electrifying the Factory
Mass production will always be associated with the Ford Motor Company. The achievement of Henry Ford and his engineers was not just to develop a revolutionary new vehicle: they successfully harnessed electricity to devise an advanced system of production as well. Before the arrival of the Model T, “mass production” was not even part of our vocabulary. By 1928, when Ford opened its complex in River Rouge, Michigan, the term had become universal. Although it was first properly defined in an article published under Henry Ford’s name—but written by Ford’s spokesman, William J. Cameron—in the Encyclopaedia Britannica, it gained traction before the article appeared due to a Sunday feature in the New York Times in 1925 titled “Henry Ford Expounds Mass Production.” Ford’s ghostwritten article argued that mass production was an American invention. According to his own definition, which entailed the complete elimination of manual labor in the fitting of parts, he was right in thinking so.6 And like the factory system of the British Industrial Revolution, it was a technological event—it required a machine-tool industry capable of producing interchangeable parts and electric motors to drive the machines. The flood of new goods and gadgets demanded by ordinary Americans could not possibly have been produced in large numbers at sufficiently low cost without these two developments.
In some ways, mass production was an extension of the factory system with new and better technologies. As the historian David Hounshell has argued, the road to mass production began in antebellum America. Eli Whitney, Samuel Colt, Isaac Singer, and Cyrus McCormick are often viewed as the pioneers of the so-called American system of manufacturing, in which complex products are assembled from mass-produced individual and interchangeable parts. The superiority of this system was widely recognized during the 1851 Crystal Palace Exhibition in London. As one visitor observed, “Nearly all American machines did things that the world earnestly wished machines to do.… Most exciting was Samuel Colt’s repeat-action revolver, which was not only marvelously lethal but made from interchangeable parts, a method so distinctive that it became known as the American system.”7
Yet the concept of interchangeable parts was not an American invention, if it can be regarded an invention at all. Christopher Polhem, a Swedish engineer, produced a wooden clock using interchangeable parts in the 1720s. The achievement of American industry was to devise sufficiently accurate machine tools to allow uniform parts to be mass-produced. For parts to be interchangeable, they had to be identical. The ability to produce identical parts in large numbers only followed successive improvements in machine tools. Much of the machine technology that eventually found its way into Ford’s factories had its origins in the production of firearms, from which the machine-tool industry emerged.8 Colt’s dictum that “there is nothing that cannot be produced by machinery” outlined the principle that Ford later would turn into practice.9 Colt’s dictum rested on his faith in machine tools, a fait
h that was not widely shared at the time. In 1854, during the Crimean War, the British Parliament had formed a select committee to investigate ways of producing arms in the cheapest possible manner. To explore the question of whether small arms could be produced by machines, the America system provided a natural staring point. Joseph Whitworth, a machine-tool manufacturer from Manchester and one of the experts called upon to give evidence to the committee, visited manufacturing establishments in some fifteen American cities. Whitworth was clearly impressed with what he witnessed. In his report, he noted that “whenever it [machinery] can be introduced as a substitute for manual labour, it is universally and willingly resorted to.” Whitworth did not share Colt’s view that everything could be mechanized. Skilled hand labor would always be required, he argued before the committee. The key point of disagreement concerned the interchangeability of parts. Colt was of the view that machines were capable of churning out identical parts, requiring no manual labor to make them sufficiently uniform. In contrast, Whitworth maintained that sufficient uniformity would be impossible to achieve, so that hand labor would always be needed for fitting purposes.10