In 1800, 90% of Americans worked on the farm. A century later, in 1900, 41% worked in agriculture, and another hundred years later, it was down to 2%. The numbers have differed across the industrialized nations but the trend has been the same.
What made the difference? It was the rise of the machines. Over two centuries, farming shifted from small plots and hand or animal labor to immense holdings made feasible by increasingly automated machinery. The result was an abundance of food at historically low prices.
From 2000 to 2007, the US economy saw a boom – the fastest growth in gross domestic product and labor productivity since the go-go decade of the 1960s. Yet employment growth was weak. The prime working age population, 25-54, saw only three-tenths of one percent monthly growth in jobs. That was the slowest of any expansionary cycle since the end of World War II. Average household income, meanwhile, actually shrank slightly – the first time on record during an economic expansion.
What made the difference? According to two MIT researchers, it was the rise of intelligence. In a new book, Race Against the Machines, Erik Brynjolfsson and Andrew McAfee suggest that information and communications technologies (ICT) are now making business more efficient faster than labor markets can keep up.
Advances in agriculture took centuries to reshape employment on the farm. Industrial automation took decades to advance from low-skilled labor to skilled workers operating robots. Even ICT took some time to get going. When the mainframe computer in the “glass house” represented the state of the art, it had little impact. But when there is a computer on every desk and almost every home, mobile computers (aka phones) in every hand, and the Internet and intranets to tie them all together, the potential for change skyrockets.
E-commerce reduces demand for retail staff. Streaming video wipes out video rental. Kiosks in airports and hotels replace clerks. Voice recognition and speech systems replace customer support staff, and the enterprise resource planning systems in major organizations shove aside administrative staff by the hundreds of thousands.
These kinds of adjustments are a natural and normal part of economic life. But now they are happening so fast. Suddenly, it seems, we are all dancing to the tune of Moore’s Law, which forecast that the power of a silicon chip would double every 18 months.
And it is not just in the US or other industrialized nations. Bynjolfsson and McAfee point out that the low wages paid to factory workers in China have not protected them from the rise of the machines. “Terry Gou, the founder and chairman of the electronics manufacturer Foxconn, announced this year a plan to purchase 1 million robots over the next three years to replace much of his workforce,” they report in a recent article in The Atlantic.
Coping with this brave new world takes a new approach, if we are not to temporarily beggar a significant share of the world’s workers. Bynjolfsson and McAfee argue that the same technologies now making business far more productive should be used to update and improve the educational system.
Absolutely. But that is only one example of a trend we have seen in Intelligent Communities around the world. It is an example of how government, institutions and businesses must engage in highly creative collaboration to keep businesses competitive while ensuring a living wage for employees and a high quality of life for citizens.
That is a challenging goal. It takes strong leaders who are not afraid to collaborate. It takes leaders who truly understand the words of Benjamin Franklin, before setting his signature to the Declaration of Independence: “Gentlemen,” he said, “if we do not now all hang together, we will all hang…separately.”