We need to retake control of the economy

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Figures announced this week show a rise in the level of unemployment, with young people being particularly hard hit. The government has responded in the way that all governments do, by talking about ‘helping more people into work’ (often a euphemism for cutting benefit payments) and inventing more, sometimes dubious, apprenticeships as a back door way of subsidising employers. The opposition has responded in the way that all oppositions do, by blaming government policies, especially those relating to wages, tax and regulation. The assumption underlying both of those positions – even if it drives them to propose different solutions – is that rising unemployment is a cyclical problem, which will be resolved if only we can get that magical growth they keep talking about.

It’s possible that they’re right; but it’s also possible that they’re wrong. What if, rather than growth and innovation solving the issue, that same growth and innovation, powered perhaps by AI, compounds it? There is a certain complacency surrounding that question. In a sense, it’s entirely natural – history shows us that the initial response to innovation and increased productivity is a loss of some jobs, which is usually followed by the appearance of new jobs, sometimes of a type and nature which nobody had foreseen. Maybe the same will be true of AI, and it’s overly pessimistic to believe that the job losses will be more permanent and generalised than we’ve seen in the past. It’s clear that the workers likely to be displaced by AI will include those in more technical and high-paid jobs than previous rounds of innovation, but the fact that the nature of any resultant replacement jobs is not currently clear doesn’t mean that there won’t be any. But the statement that ‘there always have been’ in the past can’t be taken as a certainty for the future either.

One junior minister in the UK government has already suggested that part of the response to the growth of AI might be the introduction of some sort of Universal Basic Income (UBI), although even he seems to be talking abut it as a temporary response, allowing people to retrain for the jobs of the future, whatever they may be. And there’s no doubt that any sort of UBI would be enormously expensive: even an income set at the less than adequate level of Universal Credit would be likely to carry a price tag of some £200 billion per annum. But what is the alternative that those objecting to the cost would propose in a situation where most work is done by automatons or AI? Are those people who have been displaced to be treated as disposable, and left without food or shelter as a result, whilst those lucky enough to still have work continue to live as normal (and those who own the machines and the software continue to accumulate wealth well beyond their capacity to spend it)?

It’s a scenario which raises questions about what an economy is for. Forget ‘invisible hands’ and market spirits – an economy is a social construct, and it’s up to the society in which it operates to determine how it works, who benefits from economic activity, and by how much. If an economy cannot supply at least the basic needs of all the people in that society, than it’s not performing its social function. From that perspective, tax is not some burden placed unfairly on those who own the capital or provide the labour, it is merely the mechanism by which the outputs of economic activity are used for the benefit of all. It is, in its very essence, a mechanism for redistribution. For the last four or five decades, we’ve increasingly lost sight of that and allowed the economy to be captured by a few, and corrupted to serve only their interests. If the resulting gross inequality hasn’t been enough to force a rethink, perhaps the impact of AI will be.