Abstract

Based on the understanding of the interaction between economic development and the development of science and technology, this writing presents a philosophical analysis on the following topics: 1) the scientific and technological contribution to periodic economic difficulties in the market economy; 2) the economic challenges we would face to when the new wave of industrial revolution through automation comes in the near future. Some critical questions are raised and discussed.

1.       Introduction

One of the fundamental concerns of economic studies is to help the society to be better prepared for potential economic uncertainties, no matter through simple demand and supply analyses, advanced mathematical modeling, statistical investigation, or various types of numerical simulations. Many factors have been viewed as important causes for different levels of economic uncertainties such as unforeseeable or uncontrollable natural disasters, political turmoil, war, as well as individual situations created by normal competitions or irrational fights between rivals during market competitions, and so on. Even though sometimes an adverse condition for some economic entities is caused by activities of other entities for their own sake, none of these conditions would be universally considered favorite. However, there is one universal goal of all economic entities in market economy which is intrinsically creating perpetual economic uncertainties for the whole market. That is the goal of reducing cost of human resources. On the other hand, an ultimate of goal of social economic growth is to increase the living standard of ordinary citizens in a society, which is also supposed to be the ultimate goal of economics scholars including people who simulate economic systems by numerical computations. This goal of increasing public living standard in general would no doubt increase per capita cost for employers who hire people for their businesses.

Therefore, it is not hard for us to see that the combination of the ultimate goal of economic growth of a society and the fundamental goal of reducing cost of every single business owner would end up with the temptation of reducing the size of employees unless the increase of the size of business would create the need of maintaining or even increasing the size of employees. While the temptation of lowering business cost through reducing the size of employees is very clear and certain, the need of increasing the size of employees is highly contingent. That is the catch. Even if the size of business increases the need of increasing the size of employees is not guaranteed, but the temptation of reducing cost would always exist. Consequently, any economic system would autonomously generating incessant economic uncertainties as a result of the conflict between the common goal of collective growth of economic welfare and the universal goal of cost reduction by stake holders in the system. This autonomous source of economic uncertainties from within economic development itself is worth special attention by professionals who intend to make economic predictions through analytic or numerical studies.

2.       Mutual influence between economic development and the development of science and technology

The development of science and technology has been a major driving force to the economic development in modern societies. One positive aspect of the scientific and technological impact upon social economy is that it would potentially create the need of human workforce to conduct new scientific researches, to develop, produce, transport and store, and then sell new industrial products, to provide various services, and to manage all relevant activities. This would no doubt help the economy of a society by boosting employment in general. One important reason for the needs of increasing human workforce would be the emergent needs of new products and services as the results of new scientific and technological breakthroughs, which would offer convenience in everyday life or improve the quality of human life or enhance human capacity to deal with natural or social challenges. Examples include internet services, personal tablets, smart phones and scientific way of growing crops or scientific way of healing and many many more.

However, one type of scientifically created industrial means, in the form of hardware or software, plays a very special role in economic processes, which is the type of means that helps either to increase productivity or facilitate and advance management tasks in workplaces[1],[2],[3]. The industrial applications of automation and information technology could provide typical examples of this type. Even though the production and application of products of this type would also create needs of human workforce, they are often designed with clear motives of replacing human operations with the work of machines and computers. As a matter of fact, because of the logical possibility of replacing human operations by machines as a result of the development of robotic technology and some forms of information technology, the purpose of using machines in workplace becomes very different from what people might have in mind a couple of centuries ago[2].

On the other hand, the local, regional, and global economic development would boost scientific and technological development, including original discoveries and inventions. This is not only because economic activities would bring up new practical needs that would demand and stimulate scientific and technological innovations, but also because economic development would help scientific and technological activities in the following two important aspects: 1) economic development would accumulate sufficient wealth to support advanced and systematic scientific and technological researches and innovations; 2) industrialized production and commercialized circulation would provide the material and human resources that are of critical importance for scientific and technological development.

Therefore, the economic development and the development of science and technology would together form a mutually dependent dynamic system (which we might call it as economic-scientific-technological system). Within this system the development of science and technology bears two economically conflicted mandates: 1) to improve life quality and working ability of a society, and 2) to reduce the use of human beings in the existing working units (and thus reduce employment) in the society. Obviously, if economic development could never create new jobs to compensate the reduction of jobs due to the development of science and technology, then the development of science and technology would keep ruining the economy by continuous removing jobs from the system and thus potentially reduce the societal buying power which would in turn hurt the business owners in the system.

Even if the system could adjust itself to create new jobs to make up the vacancies created due to the reduction of jobs by the development of science and technology, there would be a lag between the time when old jobs were lost and the time when new jobs are created. The main reason is because while the removal of jobs after the adoption of new technology might be inevitably driven by legitimate financial concerns, the creation of new jobs is quite contingent at a given moment. Therefore, the equilibrium between the reduction and creation of jobs due to the economic development and the development of science and technology is a dynamic equilibrium with periods of low job needs during which the needs of human resources are relatively low. The periods of low job needs would autonomously occur in individual businesses when the needs of human resources are reduced through the adoption of some new technology. If the occurrences of the low job needs are random across the system, then it might have minor impact upon the overall economy since when some businesses are reducing the size of human resources some other businesses might be increasing the size of human resources. However, if some common wave of technological development causes a wide-spread low job needs at the same period of time then the system might experience some more serious economic shock upon its job market (and thus the public buying power) due to the scientific and technological development.

This tells that in addition to some other factors that might cause periodical economic slowdown or even crises, the autonomous self-evolution in the system of economic development and scientific and technological development might also contribute to periodical economic difficulties. That might raise some concerns about what we can do about it or, more seriously, whether we can always pull ourselves out of the period of low job needs caused by the development of science and technology and then reach the dynamic equilibrium.

3.       A special competition

Because of the potential removal of jobs from market by the development of the fundamental driving force of modern economy---science and technology, one perpetual challenge to market influencers such as politicians, economists, social activists, as well as enterprises would be how to balance the loss of jobs resulting from the development of science and technology with the creation of jobs through the creation of social needs. Or more profoundly speaking, the challenge is how to balance between the material aspect of the evolution of civilization, represented by science and technology, and the humanity aspect of the evolution of civilization, symbolized by the general living quality of the public around the world.

There have been two types of idealistic thinking about how to balance these two aspects of human civilization, one is positive and one is negative. The negative one is to stop or manually delay the development of science and technology in order to maintain high level of demand of human workforce in the market; and the positive one is to make some artificial arrangement so that we might maintain high demand of human workforce while enjoy the advantage of technology. The following paragraph by Shaiken, the author of “The Human Impact of Automation”[1]is a typical example along this idealistic line:

The real choice is developing computer technology such that within the workplace, the technology utilizes the extraordinary talents human beings can contribute. And, outside of the workplace, utilizing technology in a way that shares the gains in productivity so that unemployment is not the consequence of technological change. In both areas, there has been remarkably little exploration of the unstated assumptions underlying the utilization of technology or the alternatives. To use computer technology in a human way - to realize its extraordinary potential to enrich jobs and provide increased productivity for the society - requires a careful, thorough exploration of the alternatives, and the placing of human beings at the central point of the equation rather than as an afterthought.

However, both of these types of idealistic thinking would not work, at least not work for capitalist free market economy. This is because they are against social laws of human civilizations, especially social laws in capitalist society. In fact, no matter capitalists, socialists, communists, or any other-ists have so far viewed science and technology as most important force driving the evolution of civilization. Therefore, any effort of systematically hindering or delaying the general development of science and technology for the sake of employment would not attract much support around the world and thus would not succeed. Similarly, any artificial restriction of application of newly developed technology in workplaces solely for the purpose of balancing the usefulness of technology and the employment needs would not work, at least would not work in capitalist economy since it is against the principle of free market.

Therefore, at least for capitalist market economy, creating jobs to compensate the loss of job due to the development of science and technology becomes a separate task that would not concern the people who work for the development of science and technology. Now we can see a competition between two relatively independent (but still mutually coupled to certain extent) tasks: scientific and technological development and job creation. This is a very special competition because it is basically driven by the development of science and technology and thus it is more like a relay than a competition. But it is a competition in the sense that the development of science and technology would not pause to wait for the creation of jobs to catch up.

We are now facing such two questions: 1) Are there any general patterns for the creation of new jobs when large amount of jobs are lost due to the development of science and technology? 2) Can we always pull ourselves out of the period of low job needs by creating new jobs to compensate the loss of jobs in time?

For the past few centuries, human beings have experienced many times of mass replacement of human operators by machines due to new technology revolutions. But each time the job market recovered shortly after new job positions were created because of the emergence of new social needs with greater market demand of products or services and thus it just appeared to be a transition from one social living style to another except for the disruptions by a few regional or global wars. A very common pattern during those transitions is that some new industrial products (software or hardware) were created which brought up new demand of human workforce in the new line of design, production, storage/supply, and sales/services. Within this pattern there are two basic factors: 1) new products or services are of values to the society therefore there would be market demand of them; 2) the production of the products and the provision of services need human workforce.  

Obviously, the second factor mentioned in the above paragraph, i.e. the emergence of new needs of human workforce due to the emergence of new market demand of products and services, is critical for the recovery of job market. However, the main difference between the upcoming new wave of the industrial revolution and any of the previous ones is that it aims at a radical (if not complete) replacement of human workforce by robots or general computer systems. This would make it a really meaningful question whether we can still pull ourselves out of the period of low job needs once the mass automation revolution comes in the near future from now.

If one day, as a result of highly advanced and extensive automation, all production and service jobs would be done by robots, and human beings would just enjoy life (or maybe enjoy fighting or killing each other), then the answer to the question of last paragraph would be simple: we would never pull ourselves out of the period of low job needs. This would obviously create a trouble to market economy if there are still about one hundred million people on this globe. This is because that based upon the rule of game of free market economy people earn their rights to consume through transactions. When a person gets food through a transaction, he pays money to the party that offers food; and then he needs to offer something he owns through some transaction to replenish his own supply of money. For most people the main thing they could offer for money is their own labor for white or blue collar jobs. Once the demand for human labor for white or blue collar jobs are eliminated by robots and general computer systems, then most people might lose their capability to purchase and thus to lose their right to consume, which would in turn to reduce the general buying power in the market.

Of course there would still be an extreme scenario which would validate the free market economy game even when no human labor for white or blue collar jobs is needed. In this scenario most people own some robot-operated companies that would provide goods and services to make money for them. But the chance for human civilization to directly enter such scenario after the automation revolution comes is not very high. This warrants that human beings might need some sophisticated philosophical thinking to solve their potential problems of social distribution of wealth before they could be ready to embrace the coming of new wave of automation revolution. So far in human history the capitalist system has been the most efficient economic system since some other trial systems have failed in the history. But it might become a question whether a simple capitalist system would continue to be efficient when the new industrial revolution through automation would come. If yes, then we might need to understand why before we accept the answer; if no, then we need to think about how we could help to improve.

4.       Closing words

The development of science and technology is not only the miracle producer for the economy in a very positive sense but also a most unpredictable intrinsic source of economic uncertainties, especially for free will and transaction based market economy. One of the biggest challenges economists and the ordinary public might need to prepare to embrace in the near future would be the coming era of highly automated industrial production by robots and much more efficient computerized services and management operations without the need of the presence of Homo sapiens. This would no doubt have a fundamental impact upon the existing economic theories.

As Shaiken noticed[1], “engineers, particularly in academia, who deal with control or automation issues relating to the workplace, have remarkably little contact with those directly affected by design decisions - that is, workers and first-line supervisors in production.” This social phenomenon is indeed very natural and would be staying the same in the future since it really should not be a concern of those engineers to preserve jobs of others in workplace. Rather, “automation does not assist, but replaces human operators” as pointed out by Srivastava the author of “AUTOMATION – Its Impact on our Lives”[3]. However, the issue of the replacement of human operators by automation has to be one of the major concerns of economists and market influencers around the world. Or more precisely it should be an undeniable responsibility of economists and market influencers around the world to understand the nature of the issue and search for solutions to deal with the issue. The brief discussion presented in this writing is intended to offer a contribution to such understandings and searches.