Technological unemployment

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Technological unemployment is the loss of jobs caused by technological change.^[1][2][3] It is a key type of structural unemployment. Technological change typically includes the introduction of labour-saving "mechanical-muscle" machines or more efficient "mechanical-mind" processes (automation), and humans' role in these processes are minimized.^[4] Just as horses were gradually made obsolete as transport by the automobile and as labourer by the tractor, humans' jobs have also been affected throughout modern history. Historical examples include artisan weavers reduced to poverty after the introduction of mechanized looms. Thousands of man-years of work was performed in a matter of hours by the bombe codebreaking machine during World War II. A contemporary example of technological unemployment is the displacement of retail cashiers by self-service tills and cashierless stores.

That technological change can cause short-term job losses is widely accepted. The view that it can lead to lasting increases in unemployment has long been controversial. Participants in the technological unemployment debates can be broadly divided into optimists and pessimists. Optimists agree that innovation may be disruptive to jobs in the short term, yet hold that various compensation effects ensure there is never a long-term negative impact on jobs, whereas pessimists contend that at least in some circumstances, new technologies can lead to a lasting decline in the total number of workers in employment. The phrase "technological unemployment" was popularised by John Maynard Keynes in the 1930s, who said it was "only a temporary phase of maladjustment".^[5] The issue of machines displacing human labour has been discussed since at least Aristotle's time.^[6][7]

Prior to the 18th century, both the elite and common people would generally take the pessimistic view on technological unemployment, at least in cases where the issue arose. Due to generally low unemployment in much of pre-modern history, the topic was rarely a prominent concern.^{[citation needed]} In the 18th century fears over the impact of machinery on jobs intensified with the growth of mass unemployment, especially in Great Britain which was then at the forefront of the Industrial Revolution. Yet some economic thinkers^[who?] began to argue against these fears, claiming that overall innovation would not have negative effects on jobs. These arguments were formalised in the early 19th century by the classical economists. During the second half of the 19th century, it stayed apparent that technological progress was benefiting all sections of society, including the working class. Concerns over the negative impact of innovation diminished. The term "Luddite fallacy" was coined to describe the thinking that innovation would have lasting harmful effects on employment.

The view that technology is unlikely to lead to long-term unemployment has been repeatedly challenged by a minority of economists.^[who?] In the early 1800s these included David Ricardo. There were dozens of economists^[who?] warning about technological unemployment during brief intensifications of the debate that spiked in the 1930s and 1960s. Especially in Europe, there were further warnings in the closing two decades of the twentieth century, as commentators^[who?] noted an enduring rise in unemployment suffered by many industrialised nations since the 1970s. Yet a clear majority of both professional economists and the interested general public held the optimistic view through most of the 20th century.

Advances in artificial intelligence (AI) have reignited debates about the possibility of mass unemployment, or even the end of employment altogether. Some experts such as Geoffrey Hinton believe that the development of artificial general intelligence and advanced robotics will eventually enable the automation of all intellectual and physical tasks, suggesting the need for a basic income for non-workers to subsist.^[8][9] Others like Daron Acemoglu argue that humans will remain necessary for certain tasks, or complementary to AI, disrupting the labor market without necessarily causing mass unemployment.^[10][11] World Bank's 2019 World Development Report argues that while automation displaces workers, technological innovation creates more new industries and jobs on balance.^[12]