The Technology Trap, by Carl Benedikt Frey (Princeton University Press, 480 pp., $29.95)
The march of technological progress that brought American workers so far seems in recent decades to have left them behind, leaving technologists, economists, and politicians to ponder why this time might be different. Economic historian Carl Benedikt Frey answers that question with one of his own: different than what? In The Technology Trap, Frey argues that the detrimental effects of labor-replacing technologies near the turn of the twenty-first century have differed from the gains created by labor-enabling technologies in the twentieth, but mirror closely the labor replacement in the first Industrial Revolution at the start of the nineteenth, another era in which workers struggled.
“The extent to which labor-saving technologies will cause dislocation depends on whether they are enabling or replacing,” writes Frey. “Replacing technologies render jobs and skills redundant. Enabling technologies, in contrast, make people more productive in existing tasks or create entirely new jobs for them.”
This distinction makes little sense and proves unsustainable. Frey’s explanations lead him into repeated contradictions and bouts of circular reasoning. Between the lines, though, he supplies tantalizing evidence for an alternative theory that policymakers could find useful.
Contrary to Frey’s formulation, labor-enabling technology is by definition labor-replacing. Anything enabling a worker to generate more output results in “replacing” other workers who otherwise might generate comparable output. For example, if you and I were each making five widgets per day and a new technology “enables” me to make ten, it has effectively replaced you. Conversely, a technology that “replaces” us by making the ten widgets more efficiently will surely “enable” whatever workers are newly involved. Frey himself describes this process of replacing by enabling as the key to economic progress. “The wealth of humans,” he contends, “is best understood as the cumulative effect of technologies that allow us to produce more with fewer people.”
The framework’s weakness becomes obvious when applied. Frey describes the plow as an “enabling technology” and then, two sentences later, quotes a historian’s observation that it “substituted animal power for human energy and time.” Electrification is especially confounding; it “virtually eliminated the need for workers in some domains” but also “allowed workers to produce more and thus earn more.”
In the first, purportedly labor-replacing, Industrial Revolution, the “gig mill . . . allowed one man and two boys to do the work of eighteen men and six boys.” But the quintessential achievement of the second, purportedly labor-enabling, Industrial Revolution was the nearly identical effect of the assembly line: “The assembly of a Model T took around twelve man-hours in 1913. A year later the same car could be assembled in one and a half hours, while electrification allowed for similar time savings in the production of individual components.”
Frey’s distinction without a difference leaves him to run the analysis backward. If trends emerge that show workers struggling, he suggests, then the associated technology must be of the replacing type. The “compelling evidence that technological change in general has become more worker replacing in recent years” is that “real wages for non-college-educated men have fallen.” When trends indicate worker gains, technology must have shifted to become more enabling. “The rising tide of people’s wages gives additional weight to the view that the first three-quarters of the twentieth century was a time when much technological change was of the enabling sort.”
The Technology Trap’s saving grace is its voluminous supply of facts, dates, statistics, and anecdotes—enough for readers to draw their own conclusions. The topic of child labor deserves particular attention and, to his credit, Frey gives it plenty. “While new jobs were created in the factories,” he writes, “spinning machines were specifically designed for children, who could do the job for a fraction of the cost of adults and thus became a growing share of the workforce. They were the robots of the Industrial Revolution.” By the 1830s, children accounted for half of the textile workforce. “Many were pauper apprentices who worked in factories far from their families and friends. When they made up the bulk of the workforce, as they often did, they lacked the protection others were given by the mere presence of adult coworkers. They were often consigned to work without wages or rewards.”
What if the factory owners had no choice but to employ adults, who possessed greater bargaining power? Wouldn’t some of the gains have gone to those whose livelihoods had been disrupted? That’s what happened from the mid-nineteenth century onward, with the widespread adoption of steam power. “The subsequent arrival of machines of greater size, meant that more-skilled operatives were required: the complementarity between factory equipment and the human capital necessary to operate it grew stronger as machines became more complex.” It’s possible that technological breakthroughs made steam suddenly attractive. But equally possible, notes Frey, “the Factory Acts of the 1830s, which regulated working hours and improved the conditions of children in the factories, increased the cost of child labor and thus spurred the adoption of steam power.”
This question of who performs the work associated with new production methods proves central to the economic effect. “The machines that replaced artisans could not run on their own,” observes Frey. In the second Industrial Revolution, mass production “put labor on a virtuous cycle in which the explosive growth of manufacturing required an ever-growing number of operators whose skills were made more valuable by more capital being tied up in machines.”
The difference in this modern age, he suggests, is “obviously that children are no longer needed to operate the machines. Computer-controlled machines can run on their own.” But that’s not true. Indeed, he acknowledges that productivity growth has been slowing for years, meaning that firms are struggling to produce more with fewer workers. And to the extent that increasingly complex machines can replace workers, those left to operate them are supposed to benefit—at least, that was the historical lesson.
The first and second Industrial Revolutions seem to have differed less in the nature of technology and more in the degree to which businesses could replace the existing workforce with a cheaper and more pliant one. This left workers behind in one case, while raising them up in the other. Offshore factories and unskilled immigrants, not robots, are today’s analogy to the child labor of yore. Which workers the innovators can use affects greatly whether incumbent workers thrive. Fortunately, more so than the nature and rate of innovation, that is something that society and its policymakers can influence.