NEW TECHNOLOGIES AND SOLUTIONS TO THE ARTIFICIAL DEADLOCKS OF THE WORLD AND EUROPEAN ECONOMY
By Maria Negreponti Delivanis
Ι. Technical progress in the post-industrial stage
Α. Characteristics of the post-industrial stage of development
β) Distribution inequalities
γ) The quintessence of technical progress in the post-industrial stage
Β. The new robotic or digital stage
ΙΙ. Dealing with the problems of the post-industrial stage
Modernisation, Development and Innovation of Economic Systems. Problems, Strategies, Structural Changes
Moscow Russian Federation
30-31 October 2014
In my opinion, the main and contemporary question raised in the present
Moscow conference is whether innovations and / or new technologies will be able to give a satisfactory solution to the
sharp, long-lasting and worsening
problems of the world economy, the EU
economy, and specifically , our host. Also, whether the adverse effects of new technologies can be addressed and in what manner. Especially in the case of Russia , which belongs to the emerging economies, an additional question is whether
innovation taking place within its borders will be important enough to accelerate its progress and to reduce the gap with the developed world
Almost all of the world economies are facing difficulties as a result of the crisis of 2007 which is ongoing, as well as due to the instability caused by changes occurring in the capitalist system, as it moves to a later stage of its development. The EU, on one hand, appears heavily burdened due to the fanaticism with which it has adopted the neoliberal policies. On the other hand, a number of emerging economies, led by
, manage to achieve high growth rates despite
the problems faced by the world and particularly the
European economy. It is reasonable however to assume that the emerging and
developing economies would achieve incomparably better results if the advanced
economies, especially the EU, were not stuck in a long period of stagnation and underemployment equilibrium. China
Regarding the creation of new technologies, the U.S. are still the leaders, followed by China, Germany, Great Britain, Japan, Russia, India and France. The stagnation prevailing in the global economy, which already carries the risk of deflation, is a serious obstacle that hinders the faster growth of emerging and less developed economies and regions of the globe. The powerful weapon available to emerging economies is none other than their economic backwardness which may be turned into an engine of growth, provided already known technologies are effectively implemented. This is how numerous economies have developed in the past, managing to reduce or even eliminate the initial development gap with the most advanced ones. This model is based on one hand in the theory of economic maturity of the advanced economies and, on the other hand, on the ability of developing countries to accelerate their development rates by using already known innovations. Based on the theory of economic maturity, the advanced economies are subject to lower growth rates beyond a certain critical threshold of development. In contrast, new entrants to development and already known innovations may, under certain circumstances, achieve high growth rates and being on a faster track in relation to mature economies, may come level with them or even outrace them, based on the per capita income indicator. There is a multitude of features, announcing the entrance of a particular economy to maturity. However, an irrefutable sign of maturity is considered the existence of high and long-term unemployment, which marks the impossibility for any further enlargement of the importance of traditional industry, thus initiating the phase of de-industrialization. The advent of this stage of development of capitalism is a consequence of the reduction of demand for traditional industrial products, due to their relative saturation and the increase of the percentage of idle production plants, which excludes the further application of technical progress. This "maturity" of advanced economies enables those economies whose stage of development presents a development gap compared with mature economies to take advantage of the already known technology and rapidly reduce this development lag. Among the conditions, under which economic backwardness can be converted into an engine of growth, is the existence of excess agricultural employment and self-employment, the increase of the marginal capital returns ratio etc. At this point we should definitely mention the exceptional consequences which usually result from the transfer of surplus labor from agriculture to the secondary sector of production. By this, I mean a particular form of innovation, in the sense that it provides a better and more productive use of that portion of the rural population, which was essentially underemployed before this transfer. According to relevant estimations, this transfer increases productivity per employee by 45-70%. It has been supported that the fast growth rates of the small Asian tigers, during the past decades, was not the result of revolutionary innovations, but simply of mobilizing key factors of production. Technical progress increases the productivity of both basic factors of production, namely labor and capital, either to the same extent, in the case of neutral technical progress, or to a greater degree for labor, in the case of labor-saving methods, or to a greater degree for capital, in the case of capital saving methods. In any case, however, it results in a reduction of the quantity of production factors necessary for the production of one unit of output. This is known as “intensive development". It is generally accepted that, thanks to technical progress, and provided the latter has significant effects in terms of productivity, the economies in question may transition from recession to recovery, as well as from underdevelopment to development.
Although there is a direct relationship between new technologies and the volume of employment, the direction of this relationship is not always clear, nor one-way. Labor unions have a general propensity against its adoption due to the fear that this will cause unemployment. This fear generally proves justified over time, at least for the short period following the implementation of technical progress. However, the views expressed on this point differ from the classical era, which suggested that technical progress is always progressive, in the sense that it creates more jobs than those abolished, contrary to K.Marx who claimed that it is always regressive, ie the number of jobs eliminated is greater than the number of new jobs created. The relevant previsions by K.Marx proved absolutely true, even in the relatively recent period 1970-1980, where robotism caused a significant level of "technological unemployment", due to the substitution of labor by capital in the industrial sector. Moreover, in the current period the rapid development and expansion of the use of robots, seem to corroborate K.Marx’s view, given that according to a number of serious forecasts, 47% of employment in
be replaced either by robots or by computers,
over the next two decades. Also, according
to economist Larry Summers, in ten years, 1 out of America 7 in will
be unemployed. Jeremy Rifkin also ranks among the modern pessimists as to the impact of new technologies on employment, expressing his fear that they may result in unemployment,
mainly due to the expansion of robotism, while reminding us, at the same time, that unemployment goes hand by hand with a rise in poverty. Although predictions
at this point are uncertain, it seems however
that the contribution of globalization to employment is negative. Indeed, whereas before the prevalence of globalization, the implementation of new technologies resulted in short-term unemployment, which was
however absorbed in the long term, during recent decades, unemployment seems
to have become permanent and cumulative. America
Based on what was already argued above about late comer economies and regions to economic development, the importance of new technologies is crucial, as long as their application is the starting point of their rapid development. One should also emphasize that, although the adoption of technological progress is in principle desirable, its form and characteristics are crucial in terms of the allocation of increased productivity between the two production factors and its impact on employment. This distribution, with reference-even if not absolutely rigorous-to the productivity of the two key factors of production, was quite feasible in the advanced economies of the past, where the dominant activity was traditional industry, or in other words, during the stage that precedes the post-industrial stage of development, which made its appearance in the ’70s. These economies were generally characterized by the prevalence of incorporated technical progress, the implementation of which was not possible without the previous implementation of fixed capital investment. This form of technical progress ensured constant returns despite the reduction of marginal capital returns. At this point, we should note that the general acceptance of the assumption concerning the stability of the shares of labor and capital in the GDP of advanced economies, according to the famous Cobb-Douglas production function, greatly contributed to the solution of the prickly problem of distribution. This function, as we know, consistently attributes one third to capital and two thirds to labor. This traditional calculation of labor and capital productivity - quite satisfactory, although heavily criticized, which simultaneously determines the distribution of output between them, gave way to a real chaos, with the advent of the postindustrial stage of development, also known as intangible, or information stage. These new conditions caused by the advent of the post-industrial stage of development, and their impact on modern global economies, both advanced and emerging, will form the content of the first paragraph of this paper, while the second will focus on proposing solutions to address them.
I. Technical progress in the post-industrial stage
The structural features of the postindustrial development stage, which we are currently witnessing, make obsolete almost the totality of knowledge, beliefs and assumptions acquired up to the ‘70s. In fact, an important part of the classic content of Political Economy, as taught then and is still largely taught in the universities of the world, is no longer able to interpret the new reality, and offer solutions to thorny problems. We therefore need new interpretive tools, which are unfortunately not available at present. We should also note that the contribution of technical progress, to creating total disorganization within this new stage of development, seems to be catalytic.
The difficulties begin with the prevalence of unincorporated technical progress within the production pr2ocess of the postindustrial stage, contrary to built-in technical progress, which prevailed in the previous industrial stage and mainly contributed to increase capital productivity. This is the kind of technical progress, the implementation of which does not require previous fixed capital investment, but rather appears in the form of improved human knowledge. In contrast to built-in technical progress, which mainly increases the productivity of capital, unincorporated technical progress ensures increased productivity of both key factors of production, but not necessarily at the same rate. This means that unincorporated technical progress implies a simultaneous decrease of the Capital/Output and Labor/Output ratios. The decrease of these two ratios is self-evident, taking in the first case account of industrialization, in the second case account of increasing unemployment worldwide. De-industrialization is further confirmed by the drop of investment in EU GDP. The very important difference between these two forms of technical progress, which is indeed at the root of the difficulties of the new development stage, is the fact that unincorporated technical progress creates qualitative and no longer quantitative productivity growth, which is very hard to measure. We shall now proceed to analyze the main characteristics and consequences of the postindustrial development phase and the expected impact of the emerging robotic or digital stage.
A. The characteristics of the post-industrial stage of development, in conjunction with the new technology, globalization, extreme neoliberalism and a network of perverse state interventions
In this new postindustrial stage of development, there is every reason to believe that, in time, the law of the jungle becomes all the more prevalent, mainly in two crucial, key sectors of the economy: the labor market and the mode of income distribution. This is because the post-industrial economic stage was accompanied by the post-social, which seems to have relinquished all the basic values of life that made societies human, since approximately 300 years. The sole objective of this stage is profit and money. The globalized economy, along with unbridled liberalism, has essentially deleted the moral aspect of human nature, leading to the collapse of society and corruption. One can only hope that such a society cannot survive for long. Τhe problem is however how to overthrow it. The banner of the post-social stage is competitiveness, which, unlike competition, is clearly aggressive in content, towards everyone and everything, given the fact that it is implemented by the increasing share of exports of an economy in international trade, which is necessarily removed from another or other economies. Therefore, it is not a model that can be applied if all countries pursue this form of competitiveness. Moreover, this scheme is totally unsuitable for an economic union like the EU, because it eliminates the foundations on which it ought to be based, namely cohesion, solidarity, cooperation, high-growth, full employment and reducing inequalities between members.
Let us now look into more detail at the individual characteristics of the postindustrial stage:
Let us now look into more detail at the individual characteristics of the postindustrial stage:
Unemployment is constantly rising worldwide. 2013 witnessed an addition of 4 million unemployed, raising the total number to 199.8 million. It is evident that the European economy is operating within a frame of mature capitalism, as analyzed by Marx and Keynes, in the sense that it is suffering from insufficient effective demand and deflationary trends that feed a constantly rising level of unemployment. Unemployment within the EU, is up to 25.7 million, corresponding to 10.5% of the labor force in March 2014. The search for the dominant causes of this deterioration, combined with new forms of technical progress uncovers culprits who engage in conscious choices and denies the existence of deadlocks, although these are constantly mentioned by the EU officials.
The new technology of the postindustrial development stage mainly decreases the amount of labor required to produce one unit of output. This applies mainly to unskilled labor, which contrary to skilled labor is unable to form a substitute for capital. Although, a sufficient time lapse is necessary before we may draw conclusions as to the form of dominant technical progress being applied, all indications seem to suggest that the technology of the postindustrial stage is labor saving and concerns unskilled labor, which thus faces a serious risk of unemployment. At the same time, however, this new developmental stage witnesses an abundance of capital, indicated among other factors by the low interest rates prevailing in recent decades in the global market, which discourages one to interpret the existence of very low wages solely on the relative abundance of labor compared to capital. At this point, I must hasten to argue that even if the new liberal theory of laissez-faire, laissez-passer was faithfully applied in the workplace, the latter’s position would be infinitely better compared to that reserved now, both in terms of the unemployment rate, as well as in terms of income distribution. This is because there is evidence to believe that there were conscious choices leading to interventions which caused an artificial scarcity of capital and an overabundance of labor in relation to capital, resulting in undesirable consequences not only socially, but also in terms of stability and proper functioning of economies. These dangerous choices of global and European macroeconomic policy seem to complement each other and are recycled over time in numerous vicious circles.
The first perverse choice refers to the principles of globalization which were introduced in full conscience with the fateful distinction between capital and labor. This gave the first between the two key production factors full freedom in its quest for maximum profit, while riveting the second one, i.e. labor, to its place of origin. The tragic consequences of this distinction were then completed thanks to the EU's refusal to adopt an immigration law, as well as to the tolerance, and in several cases the encouragement of uncontrolled illegal immigration, which acts as a permanent lever for the reduction of wages and not only, as well as to the constant shrinking of labor rights. This distinction originally set the foundations for peaking unemployment and inequalities of distribution. The justification for the above interventions, put forward in a rather vague manner, is the need to achieve the greatest possible competitiveness by means of an unlimited reduction of labor costs, which inevitably entails the impoverishment of wage-earners. This objective to intensify competitiveness is pursued by adopting a restrictive policy-or austerity- as a permanent and no longer transitional policy as its nature should advocate. The fallacy of this austerity policy, when applied on a permanent basis, is that it perceives labor only as an element of the cost of production, while ignoring that it simultaneously represents a source of demand for products. The deadly combination of globalization, neoliberalism, a macroeconomic policy which seeks to exclude inflation, but does not deal with the risk of deflation and ongoing interventions in favor of capital and against labor, especially as the tax burden is concerned, resulted in an absolute deadlock. The global economy, especially the European economy, is unable to overcome the second severe economic crisis of 2007-just as I predicted in 2010- many of the symptoms of which are still ongoing in 2014, spearheaded by the non-existent or very weak growth rates.
The existence of both high and persistent unemployment leads to a lower GDP than what could potentially be achieved, coexists with a significant amount of poverty and encourages crime. In particular, regarding the propensity for innovation, this is discouraged by the existence of high unemployment and low wages, as long as high profits – or rather speculation- may still be secured in its absence. The reduction of the labor cost has reached its limit and is already reviving the wage level of the classical era, which simply aims to ensure the survival of workers and their families. Naturally, at the same time, these conditions generally reduce the propensity to invest, as a result of low effective demand. In many of my writings I have supported that this is in fact a deliberate maintenance of high unemployment, at least in the case of the EU, which aims to achieve an increasingly unequal income distribution. It is, indeed, unrealistic to argue that economic science has no means or combinations of means for combating unemployment. From this perspective, however, high unemployment and a rising inequality of distribution, is one and only problem, or more correctly unemployment is nothing more than a “pseudo-problem”. These options, in the post-industrial stage witnessed by humanity are inevitably extended to the preferences of those deciding about the fate of mankind. There is, in principle, a clear preference for economic stability-even when it threatens to evolve into stagnation-over rapid growth, so that capital mobility may be as safe as possible. Let us note that the preference for this policy, which ultimately proves unable to absorb unemployment, is not particularly dangerous in the case of already advanced or mature economies, but shifts vertically against the possibility of emerging and developing economies to exploit their significant growth potential.
b)Unequal Income distribution
In the post-industrial stage, the remuneration of the two basic factors of production based on their productivity is no longer possible, as long as the latter is qualitative and very hard or even impossible to estimate. Their output is mainly services whose costs of production and supply, as well as their value, is not directly linked to the profits of the business, nor to the level of investment which created it. From this perspective it can be argued that the post-industrial stage involves intense speculative characteristics, resulting from the reversal of the stable relations between labor and capital according to the Cobb-Douglas function. Permanent and rising unemployment, coupled with the decline of material production to the benefit of immaterial production, has resulted in an impossibility to estimate the contribution of labor and capital to output, not only in the case of simple production functions but also when taking technical progress into account.The result of this weakness is unfortunately well known and is the uncontrollable invasion of the laws of the jungle, where the strong oppress and devour the weakest. In particular, in the field of income distribution, the jungle is expressed by the crowding-out of wages by profits, at a rate nearing paroxysm, so much so that the annual meeting at Davos, which took place in the beginning of 2014, considered this evolution so dangerous that it decided to designate it as the first topic for discussion. I am referring to the constant, uncontrolled and unjustified increase in the share of profits-capital-inevitably achieved at the expense of wages in the global and European GDP, as well as that of individual economies. More specifically and according to IMF estimations, the share of wages in the G7 economies fell by 5.8 percentage points during the period 1983-2006, namely by 8.8 points in the EU member states. Moreover, in 51 of the 73 countries of the world, for which statistics were available, the wage share has declined steadily over the last 20 years. And to add recent findings on the evolution of functional distribution, validating the above. Accordingly, the share of labor was, on average, 64.3% over the period 1947-2000, and two decades before the current one dropped to 57.8%. The above results are consistent with the fact that the productivity of workers is not projected into wages. According to estimates for the period 1999-2007, labor productivity on the global level increased by 30%, while real wages by only 18%. The fact that productivity is not taken into account as a measure for determining the shares of labor and capital, is also evident in the abysmal differences prevailing among wages. In 1989, the difference between the highest salary earned by the managers of large companies, and the average wage of workers in the same company was 45 times, while in 1999 it reached 475 times respectively. The uncontrolled growth of the wages earned by the Golden Boys continues after the collapse of the new economy, in 2001, given the fact that a 27% rise was recorded in their earnings for 2005, not related to the price of the shares of specific companies or their performance. It is obvious that these high earnings cannot possibly be justified by differences in worker productivity. On the contrary, they result from a jumble of speculation, corruption, lobbying, exploitation, the weakening of labor unions and the alleged neutrality of the state, which, however, consistently favors capital over labor. The inequalities in the functional distribution of income are supplemented by the indeed inconceivably high inequalities in personal income distribution recently uncovered thanks to the monumental work of Thomas Picketty. The general interpretation of these unprecedented inequalities is the finding that the rate of capital returns in recent decades, and especially after the ‘70s, was higher than the corresponding rate of GDP growth. Let me add that the peaking of disparities after 1970 and the prevalence of neoliberalism is largely due to the reduction of progressive taxation.
Let me mention indicatively some aspects of modern and absolutely extreme distribution inequalities, in contemporary economies: Starting with the totally utopian situation where an absolutely equal distribution of global GDP would prevail -which is certainly impossible-every citizen of the world would acquire for 2011 an income equal to $ 10.000. But reality is quite different, since out of 7 billion people representing the world population, 1.2 billion survive in abject poverty, allocated $
1.25 a day, while 1% of the
richest inhabitants of Earth controls 45% of global wealth, and 50% of the
poorest people in the world must share 1% of global wealth.
A parallel aspect of the unbelievable inequalities mentioned above, may be expressed in the fact that the 400 richest Americans are wealthier than the poorest, amounting to 150 million. The 15% poorest population segment, equal to approximately 46 million, live in households earning less than $
22,050 a year.
It is estimated that after the crisis, the GDP share controlled by the global oligarchy will further increase. This unchecked increasing wealth of the oligarchs of the world, which is naturally reflected in the bankruptcy or impoverishment of large socio-economic groups, mainly results from the financial sector, which was threatened with destruction and was acquired by taxpayers.
This very dangerous situation, however, both socially and economically, is unfortunately, the result not only of the indifference and unwillingness of world leaders to take timely action to avert it, but also, I believe, of a conscious decision to bring things to this extreme point. There is actually no other way to explain the guilty tolerance of modern governments towards tax evasion, which would have been eliminated a long time ago if there was a real desire to do so. Let me indicatively mention that the high-sky earnings of the Golden Boys in the U.S are taxed at just 15% for the most part. The same refers to the indifference of modern governments-especially European ones- towards long-term unemployment, which is the main factor leading to the worsening income distribution.
The coup de grace, which allowed and encouraged the seizure of the increasing productivity of labor by capital, is the decline and gradual abolition of full employment, which gave way to new and exploitation prone forms of employment, such as rented workers, "time zero" workers, i.e. workers who are required to be constantly available to the employer and laid off with no formalities, at the discretion of employers, impoverished workers due to their very low wages and various other devices, which flourish in an environment of high unemployment. The innovations of the postindustrial stage of development flourish in such an environment, leading to uncertain consequences and are certainly not in a position to ensure full employment.
c) The quintessence of technical progress in the postindustrial stage
"Improved knowledge", which is the form of innovation in the postindustrial stage, results in the reduction of the necessary quantity of labor and capital in the modern production process, and represents the culmination of human labor: mental labor. It is therefore absurd and unfair that its application leads to a reduction in the share of labor in GDP and that the overall increased productivity increases the share of capital. Apart, however, from the social form of this injustice, there is the purely economic aspect, which strangles all decisive for development and progress trends of the economy: The propensity to consume, the propensity to save, the propensity to invest, as well as the propensity for innovation. In a globalized economy, production, under the influence of the extreme inequalities prevailing in it, is greater than the ability for consumption, leading to reduced demand for commodities. This low effective demand fails to supply productive investment, while saving is abundant and obviously higher than investment. Profits, however, are not directed to the uses predicted in capitalism, i.e. towards productive investment, as well as speculative activities or even hoarding. The real economy is crowded out, giving way to the extreme growth of the virtual economy, while the communication between them has been interrupted long ago. Suffice it to say that between the years 1992-2007 an increase in the size of the stock market has been registered by 150 times.
Stock market titles became the yardstick for everything, and the transformation of economies into casinos is almost regarded as a normal development no longer troubling. The permanent state of underemployment equilibrium of modern economie is considered almost normal, provided stock market indicators are rising, while the problems of rising unemployment and the huge inequalities in income distribution are degraded. Under these extreme conditions, how is it possible not to raise the question as to what exactly is pursued through the frantic race to conquer competitiveness and who are the beneficiaries? It is clear that this competitiveness is flatly directed against labor, sucking away from it both the level of employment as well as its remuneration. Let me remind that wage earners represent over 80% of the active population in advanced economies..
Β. The new robotic or digital stage
Within the postindustrial stage a newer one is emerging already, representing its evolution, which as can be predicted, accentuates still further the economic chaos prevailing in modern economies. At this more specific stage, the importance of both basic production factors, labor and capital, subsides and a third factor of production, if one may say so, makes its appearance. This is automation, which represents the latest form of innovation and promises high future profits. It is no longer predicted that these profits will benefit capital in its classic form, or labor. Instead, a small group, realizing a series of innovations and creating new products, new services and new business models is now emerging and imposing itself as the beneficiary of these significant profits. The model thus defined for the future is the well known Pareto curve, in which a small number of players earns a disproportionately large part of the profits. This third production factor, namely innovative ideas, is less affluent than both labor and traditional capital which it gradually replaces, somehow justifying its high share in total productivity. Robots have already started to replace workers, with the consequence that emerging economies are losing their privileges resulting from low labor costs, and that the phenomenon of business relocation which has recently alarmed the advanced economies is thus discouraged. It is in fact estimated that
million manufacturing jobs since 1996, or 25% of the total, despite increasing
its industrial product by 70%. The first and greatest, therefore,
threat of robotism will probably be aimed against emerging and developing
economies which are thus deprived of their main, so far, advantage of cheap
Changes of catalytic importance are also predicted in the wider field of education, where the new digital technology is already increasingly replacing traditional teaching, within the university premises by online teaching. The contribution of this form of instruction is accelerated due to two main reasons. The first one is associated with the decline of the welfare state, even in the field of education, under the pressure of an increasingly tougher implementation of neoliberal prescriptions. The universities of the world are forced to rely increasingly on student tuition fees, thus turning studies into an extremely costly prospect, as state subsidies are being reduced. The second reason is related to the new digital / robotic technical progress which dramatically reduces the cost of studies, provides almost unlimited economies of scale, and makes education accessible to everyone. This new technologic era is normally expected to have long term re-distributional consequences on extreme distribution disparities. It will also increase unemployment however, this time in the educational field, as it is in fact estimated that in 15 years from now 50% of American universities will have gone bankrupt.
However, capital still remains the big winner in this new model of recent developments, despite losing its traditional form. The reason is that even robots and computers substituting for labor, are capital-robotic and digital capital. Insofar as it is possible to predict the future, a small oligarchic group of innovators will not even begin to face the problem of sharing their profits with unskilled labor and traditional capital which will be surviving with extreme difficulty with an income below average, while the bearers of new ideas will be those almost exclusively rewarded. Unskilled labor is essentially useless in this phase of capitalist development and the usefulness of traditional/physical capital is also greatly undermined. A few years ago there were references to a Society of two thirds and the healthy reaction was that it should be avoided at all cost. The society, however, now expected to prevail risks being one of one tenth, certainly representing hell for many.
ΙΙ. Dealing with the problems of the post-industrial stage
The need for a strong reaction of humanity, which should not in no way endorse the economy and the society imposed by robotism, is a matter of life or death. It is imperative to find immediate solutions so that the new technology evolves into a blessing and not a curse for future generations.
Although the problem here examined is a complex and very difficult one, the solution would be easy in theory, if the political will was present. If individualism, the lack of solidarity, the elimination of core values and corruption, which are the consequences of the growing insecurity characterizing modern economies, had not fully prevailed, eliminating the natural hierarchy of specific problems, a solution would have been found. This is because unemployment is a consequence of the absurd mode of distribution, and the latter is fueled by unemployment. These two core problems of mature capitalism are one and only problem, and the solution to one could lead to successful treatment for the second.
Referring to unemployment, we have totally, overlooked the fact that there is a successful precedent for dealing with it. Undoubtedly, in the modern economic environment, such a proposal seems highly utopian, especially given the reasonable, I believe, assumption that deliberate preservation of unemployment aims at a seamless continuation of the destructive redistribution of income from labor to capital. In the postindustrial stage of development there is unemployment because with fewer working hours is possible to obtain the same level of output and the view that labor requirements will further decrease in the future as the demand for new products and services will probably double every two years according to Moore’s law, seems well founded. Meanwhile, robotism / automation will be replacing thousands of workers. For example, in
it is expected that 150,000
workers will lose their jobs because of the adoption of automatic cashiers in
And, yet, the problem is not entirely new. Mutatis mutandis, a similar problem emerged and was successfully treated after World War II, due to the massive influx of women into the labor market. The problem of unemployment was dealt with then in the only rational way which should be adopted in modern times. That is, by drastically reducing the official working week by 35%, at the time,, compared to the corresponding pre-war number of working hours.
It is clear that the major changes in the field of labor between the end of the 20th and the beginning of the 21st century require greater rather than lesser government intervention, so that unemployment is no longer used as the vehicle to achieve an ever more unequal distribution, and that the equation of the labor market to an ever more savage jungle is curbed. Adam Smith’s theory on the division of labor is no longer applicable in the postindustrial economy, and even less in the robotic era, given that output is a service and incorporates high technology and long-term education, but cannot be distinguished into internal or external. Even the reference to the classical theory as a whole, especially the part referring to the three traditional factors of production, is no longer relevant in the postindustrial economy as labor, capital and technical progress are intertwined in the final product which is, in itself, a combination of material goods and services. The fact that knowledge was the means, and not one of the means, is the hallmark of the postindustrial, as well as the robotics/digital economy. Moreover, the fact that output, in the postindustrial economy, is produced by three sectors of production, is of only marginal importance, because it is imperative to add a fourth one, the quaternary sector. Furthermore, it is difficult if not impossible to maintain the old hierarchy between employer and employee, capital and labor, in the status of labor prevailing in the post-industrial stage. Precisely because this new type of labor incorporates technical progress, in the form of education and training, without which capital can no longer be possibly profitable. The nature of investment is also different compared to what was considered the norm some time ago, because a significant part of it is no longer invested in fixed capital assets, but in the quality of the labor force, in whose education it is invested. It is thus expected that labor will be increasingly related to success in life and that employees will endeavor to satisfy through their labor efforts their inner self, in the first place, and their employer in the second. The problem is obviously not to exclude large masses from the education process, which could lead to a dualism in the workplace: the educated / skilled workers and the unskilled. Immigration, of course, facilitates and accelerates this dualism.
To avoid turning the 21st century into hell, we should proceed to an immediate understanding and realisation that improved human knowledge is inherited from the past and belongs to the whole of mankind. This is why it is inconceivable that it is monopolized by capital / or small group of innovators under the sole excuse of a lack of laws and rules on income distribution, in this new development stage, now witnessed by humanity. It is therefore imperative to attempt to achieve full employment through the drastic reduction of working hours, as in the postwar economy. Actually, while the average working week was approximately 70-80 hours in 1840, after World War II and until today, the latter has been reduced to around 40 or even fewer hours. There was full employment in both cases while the major postwar reduction of working hours did not prevent the achievement of very rapid growth rates in the advanced economies of that period, and thanks to them the emergence of the 30 glorious years.
A similar bold decision would be absolutely imperative today, in order to avoid the worst. This initiative should be taken globally, to avoid jeopardizing the few economies adopting it by reducing their competitiveness. The working hours should be reduced to the point of restoring the shares of labor and capital in GDP according to the Cobb-Douglas function, which is a sine-qua-non condition for maintaining a relative macroeconomic balance and ensuring adequate effective demand for new products / services, in the aim of encouraging the realization and adoption of innovations.
It is inconceivable to refuse the application of innovations and new technologies provided they lead to progress, stipulating the achievement of a higher point of macroeconomic equilibrium. Because, however, there is dramatic evidence of mass unemployment as a consequence of innovations in the past, there is an urgent need to adopt effective measures in the aim of minimizing the adverse effects of new technologies. Besides the evident need to adapt new technologies to the specific circumstances of individual economies, with an emphasis on the emerging ones, one should also note the great difficulty or impossibility to apply new technologies in an environment of austerity, or, even worse, deflation. This is because new technologies are a vehicle for accelerated growth, which requires adequate liquidity, and not only, as well as an improved / fairer income distribution, in order to ensure sufficient demand for the products and services produced through these new forms of technical progress. The, undated, EU austerity, not only is not suitable for the adoption of new technologies, it also further incites individual economies, particularly emerging ones, to choose their independence and freedom of choice tailored to their specific needs of macroeconomic policy, over adhering to an economic union.
The above analysis leads to the conclusion that new technology is more important for emerging economies, which include Russia, because it can contribute to a faster rate of development, thus closing the development gap separating them from more advanced economies.
economic profile seems to be suitable for the exploitation of new
technologies which should be combined with the transfer of labor from
agriculture-where the share of its rural population is almost double the Russia EU average- to the secondary
sector, with direct and probably spectacular effects on productivity.
The adoption of new technologies, moreover, should be done at a moderate pace. The adoption of some form of protective measures, so that the economy is able to exploit the new technologies gradually, and not be crushed by them, is considered as a sine-qua-non choice of their economic policy.
State intervention in the economy will also be of major importance in this difficult stage of development, with the goal of reducing inequalities caused by technical progress. In addition to the drastic reduction of working hours, which is considered as the most important measure to prevent the adverse effects of new technologies, the state should engage in large-scale investments to ensure high quality education for all. It is well known that
has a long and highly successful tradition in the field of traditional
education, which is probably already combined with its digital form. Furthermore,
instead of shrinking the welfare state, which is what is currently happening in
Russia Europe, the state should ensure adequate
hospitals for free medical care, set limits on privatisation, particularly concerning
utilities, and proceed to an intensification of structural changes, mainly in
the area of employment, to ensure an
improved and more efficient use of all employees. The climaxing of distribution
inequalities, functional, and personal is a powerful factor discouraging the
adoption of new technologies.
and other emerging economies should avoid the mistake of "freesing"
wages, which is-as noted above-a destructive policy, especially for emerging
economies requiring rapid growth and to
a lesser degree for the advanced and mature economies. Russia
The tolerance of high levels of unemployment, in modern economies, combined with the practical refusal to adopt the only appropriate action to deal with it -that is, the drastic reduction of working hours-is an irrefutable testimony that, in spite of the revolutionary advances in the technological field, humanity has unfortunately not improved simultaneously the ethics of existence. The flip side of unemployment is the refusal to award the effects of increased productivity achieved thanks to new technologies to the whole of humanity, to which they rightfully belongs. Mutatis mutandis, the laws of the jungle still apply in the financial kingdom of the economies of the 21st century.
· Allais, A., (1999), Speech given in Unesco on April 10
· Alternatives Economiques “Chômage : les solutions au banc d’essai” no333, , mars 2014
· Artus, P.,/M.P. Virard (2008), Globalisation, le pire est à venir, La Découverte, Paris
· Commission Européenne
· Bianco, A., and L. Lavelle (2000), « The CEO Trapp », Business Week, 11/12
· Brynjolfsson.,E., A. McAfee and M. Spence (2014), “
New World Order, Labor, Capital and Ideas in the Power Law Economy”, Foreign Affairs, July/August
· Dash, E., (2006), “Pay of US chief executive of 27%” , International Herald Tribune,11/4
, E,F (1967), Why Growth Rates Differ, Brooking
· Dewey, D., (1965), Modern Capital Theory, New York
· Drucker, P.F., (1994), “Productivity –Key to the Future “, Dialogue, 3
· European Economy, ISSN 0379-0991, No 10, Nov.1981
· Finkelstein, J., (1992), “Capitalism and technology” Dialogue 4
· Fleck.J. Glacer and S.Sprague (2011), US Bureau of Labor Statistics. Monthly Labor Statistics
· Grant, J., (2000), “Climate control for the New Economy” Financial Times, 6.3
· Jorion,, P., (2014) Pour comprendre ces temps qui sont les nôtres, éd. Odile Jacob
· Hansen, Α., (1938), Full Recovery or Stagnation,
· Kaldor, N., (1978), Growth in Different Stage,
· Kaldor, N., (1975), “Economic Growth and the Verdroon Law, a Comment on Mr Rowthorn Article”, Economic Journal, Dec
· Maddison, A., (1980), Growth and Structural Change in the Advanced Economies, in Western Economies in Transition, ed by I. Levenson and J.W. Wheeler, Hudson Institute
· Manière de voir, no 102, “Le crack du libéralisme » de.2008-janvier 2009
· Negreponti-Delivanis, M., (1974), “Réflexions sur le rendement du progrès technique », Mélanges en l’Honneur du Professeur Emile James
· Negreponti-Delivanis, M., (1990),
life-buoy: its less developed regions, ed. Paratiritis, (also in greek)
· Negreponti-Delivanis , M., (1995), Unemployment: A false problem ; Sakkoulas Editions,
(in greek) Thessaloniki
· Picketty, Th ., (2014) Le capital au XXIe siècle, Seuil
· Rifkin, J., (1995), La fin du travail
· Rostow, W.W., (1960) The Stages of Economic Growth: A Non-Communist Manifesto (
Press Rowthorn Article, Economic
Journal, Dec. 1975 Cambridge University
· Sauvy, A., (1952), “Théorie générale de la population », Population No 1, janvier-mars
· Smith, A., (1976), The Wealth of Nations, Chapter 9
· Solow, R.M., (1960), “Investment and Technical Progress in Mathematical Methods in the Social Sciences”, K.J.Arrow ed., Stanford
· Solow, R.M., (1987). “Unemployment:Getting the Question Right” in the Rise of Unemployment, ed by Charles Bean, Richard Layard and Stephen Nickel, Basil Blackwell
· The Economist, 08.05.1999
· «Τhe digital degree”, The Economist-Briefing :The future of universities, 28.06.2014,
, A., (2013), La fin des sociétés,Paris, Seuil Touraine
 The unemployment rates in the EC and EU later on, are as follows: 1960-69: 2.1, 1970-79: 3.8, 1982: 8.5, 2013: 12. Source: European Economy, ISSN 0379-0991, No 10, Nov.1981 and Eurostat
 Α. Hansen (1938), Full Recovery or Stagnation,
 Which was the engine of growth of capitalist development and started shrinking after 1973
 W.W. Rostow (1960) The Stages of Economic Growth: A Non-Communist Manifesto (Cambridge: Cambridge University Press), W.W. Kaldor (1978), Growth in Different Stages, p. 65, N. Kaldor (1975), Economic Growth and the Verdroon Law, a Comment on Mr Rowthorn Article, Economic Journal, Dec. 1975, pp.894-
895, A. Maddison (1980), Growth and
Structural Change in the Advanced
Economies, in Western Economies in Transition, ed by I. Levenson and J.W.
Wheeler, Hudson Institute, p.56.
 M. Negreponti-Delivanis (1990),
its less developed regions, ed. Paratiritis, pp.306
 There are many and unambiguous historical examples of acceleration of the development process:
which was the first to develop,
necessitated 184 years (1783 to 1960). In 1960, he Great
France, Sweden, Germany,
Canada and enjoy a higher per capita
income, although they started developing later. Australia
USA remained in the $1000-1750 income bracket
for 80 years, while
for just 5 years. Japan
had the lowest income per capita, while Astralia had the highest. In 1950 Austalia
no longer had the highest income, the Japan USA
had the lowest. In 1976 Japan Japan
has already largely closed its gap with the , etc. USA
 A. Maddison (1980), Economic Growth and Structural Change in the Advanced countries in Transition, ed. I. Levenson and J. W . Weeler , Hudson Institute , pp. 41-64
(1967), Why Growth Rates Differ, Brooking
Institute pp. 377ss, R.M. Solow (1987).
“Unemployment:Getting the Question Right” in the Rise of Unemployment, ed by
Charles Bean, Richard Layard and Stephen Nickel, Basil Blackwell, pp. 23-34
 Explaning workers’ reactions against its applications
 A. Sauvy (1952), “Théorie générale de la population », Population No 1, Janviers-Mars
 Paul Jorion, Pour comprendre ces temps qui sont les nôtres, éd. Odile Jacob
 A view expressed in a recent speech of his
 La Fin du Travail (1995)
 R.M.Solow (1960), “Investment and Technical Progress in Mathematical Methods in the Social Sciences, K.J.Arrow ed., Stanford, pp 89-104
 According to the estimation method of the Cobb-Douglas function
 R.M. Solow, op.cit.
D. Dewey (1965), Modern Capital Theory,
. p. 141 New
 M. Negreponti-Delivanis (1974), “Réflexions sur le rendement du progrès technique », Mélanges en l’Honneur du Professeur Emile James, pp. 293-302.
 21.5% in 2000 and 17.2% in 2013
Α. Touraine (2013), La fin des sociétés,Paris, Seuil
Μ. Allais (1999), Speech given in Unesco on April 10th
According to the annual Labor Report published by the ILO.
 According to Eurostat estimatest
 Let it be noted that low labor costs are by no means synonymous to competitiveness. Alternatives Economiques, no 337, juillet-août 1944,p.10 ss
 M.Negreponti-Delivanis (2010), The lethal crisis (in greek and in english in electronic edition),
 M. Negreponti-Delivanis (1995), Unemployment: A pseudoproblem? Sakkoulas (in Greek)
 J. Grant (2000), “Climate control for the New Economy” Financial Times, 6.3
 March 2008
 European Commission
 S. Fleck.J. Glacer and S.Sprague (2011), US Bureau of Labor Statistics. Monthly Labor Statistics
 P.Artus/M.P. Virard (2008), Globalisation, le pire est à venir, La Découverte, Paris, p. 33
 The Economist, 08.05.1999
 A. Bianco and L. Lavelle (2000), « The CEO Trapp », Business Week, 11/12
 E. Dash (2006), “”Pay of US chief executive of 27% , International Herald Tribune,11/4
 Le capital au XXIe siècle (2014), Seuil
 «Des salariés corvéables à merci”, (2013), Alternatives Economiques, no 327, septembre. Note: Buckingham Palace recently hired 350 such workers according to The Guardian
 J. Finkelstein (1992), “Capitalism and technology” Dialogue 4, p.17
 Manière de voir, no 102, “Le crack du libéralisme » de.2008-janvier 2009
 Fourth if land is taken into account
 E. Brynjolfsson, A. McAfee and M. Spence (2014), “
Order, Labor, Capital and Ideas in the Power Law Economy”, Foreign Affairs, July/August, pp. 44-53
 Ibidem, p. 46
 «Τhe digital degree”, The Economist-Briefing :The future of universities, 28.06.2014
 Predicted by Clayton Christensen,
 This was suggested as early as 1995, by M. Negreponti-Delivani (1995) ,op.cit, as well as 1993 by the founder of Danone, Antoine Riboud, and now by Alternatives Economiques “Chômage : les solutions au banc d’essai” no333, march 2014. Also, many economists argue that the only way to deal with unemployment is the reduction of working hours, among others Jean-Marie Harribey, Jean Gadrey and Michel Husson
’s Law. Economist Gordon Earle Moore correctly
predicted that in a globalized environment, the demand for transistors doubles
every two years Moore
 A. Smith (1976), The Wealth of Nations, Chapter 9
 Internal division refers to internal specialization and only applies to the secondary sector of production. It is defined as specialization in the production of a part of the production process. External division refers to the production of a product or service and is applicable to the primary and tertiary sectors
-  P.F. Drucker (1994), “Productivity –Key to the Future “, Dialogue, 3, pp25 ff