Could we be entering the ‘Player Piano’ world?

We are living in unprecedented times, one that has us wondering about what the world would be once this crisis is over. Everyone’s churning out their views about the next phase and one thing that holds common in all these theories is that there is no going back. One striking worldview was that of Kurt Vonnegut through his novel ‘Player piano’ which was published in 1952 in the post-war times, which could also help understand where we are heading. It was extremely far-sighted for the time that it was written in. In his dystopian world, people are no longer needed as all of the laborious tasks are done by machines and people with their simple use of reflexes are no longer needed. It talks about a third industrial revolution where machines have attained such sophistication that they devalue human thinking. How would we value the growth of a country if most of its people were no longer working? ‘Player Piano’ patronizingly calls citizens ‘slaves’ as before the war the machines were controlled by them but post it they are controlled by the machines, and anyone who cannot support himself /herself by doing a job better than a machine is employed either by the government in the Army, reconstruction and reclamation corps. The by-product of this entire process leads to an improved standard of living because machines reduce error rate significantly and reduce the cost required per task. But does this trade-off work in a balanced way?

In another one of Kurt Vonnegut’s novel which was written in 1965, built upon the idea that ‘Player Piano’ put forward. One of its characters, Mr Rosewater says,

“In time, almost all men and women will become worthless as producers of goods, food, services, and more machines, as sources of practical ideas in the areas of economics, engineering, and probably medicine, too. So—if we can’t find reasons and methods for treasuring human beings because they are human beings, then we might as well, as has so often been suggested, rub them out.”

This brings us back to the main question ” How would determine growth, productivity, innovation if humans didn’t have any use? “

According to the economist, Robert Gordon,  growth ended on October 16, 1973 and has never returned. The total factor productivity (TFP) which is growth in total factor productivity is what is left when we have accounted for everything we can measure. The TFP has grown only at a 1/3rd rate from 1920-1970. The economists and the policymakers believed that the industrial revolution with machines introduced everywhere would boost the TFP and it did, temporarily but since 2004, growth in the US and Europe has gone back to the bad times of 1973- 1994. This continuous innovation in the digital world has not produced enough ripples to expedite the growth rate, which seems quite counterintuitive because as most of us would think that maybe we were growing at a faster rate than we ever could. As Abhijit Banerjee and Esther Duflo mention in their book ‘Good Economics for hard times’, maybe GDP might not be the best method to calculate growth as we are not accounting for all the comfort and happiness the rise in technology has brought us.

In today’s world, we could hold on to any hope that we can get as these uncertain times would have been a lot harder to deal with if technology hadn’t developed. India doing fairly well in its battle with COVID owes it majorly to the digital administration through urban local bodies. The integrated command control centres that were set up to monitor traffic, crime etc are now being used to monitor people and are generating real-time data of the patients and their status. It is enabling functioning with limited people( is that a good or a bad thing?) This devaluation of reflexes and reducing inefficient human work comes time and again in the book ‘Player Paino’ and is something that has been around for a while. The upside to this that it will value innovation, design thinking, niche skill generation and effectively reduce redundancy in economies/societies. The pandemic with its social distancing has brought in a much-needed urgency to automize most of the tasks which would render a lot of unskilled labour jobless.

There are a lot of reports and surveys being conducted to understand the growth rate post the pandemic. As CRISIL research has stated recently that 4% of GDP will be completely wiped off unless India grows at 8.5% for three years. Robert Solow, an economist and a Nobel laureate had constituted the growth theory’ which would prove to be quite counterintuitive to the ideas of growth that we have perceived but could help in understanding how growth happens post-war and this crisis is no short of a contemporary war. He has published the paper in 1956, where post-war growth was at its peak as there was a lot of catching up to do ( a situation economies all over the world will encounter once the pandemic is over) , saying that the growth would eventually slow down once the resource utilization has been optimized.

Solow in his theory propounded that as GDP goes up, people save more and therefore there is more money to invest and more capital available per worker. This makes the capital less productive; as more capital means more investment can be done in using efficiently but the catch is that this efficient work doesn’t mean more people contributing in the process as every business can’t afford to hire new people( assuming migration remains unchanged and the skills required to handle new machinery are not immediately grasped). Eventually, the extra equipment bought will be run by fewer people as is also proposed in Kurt Vonnegut’s vision of a world with its fascination with AI. This process would inherently lead to each additional unit of capital contributing less to the economy, which leads to decreased returns on capital and eventually decreased savings. Growth will slowdown. The current situation in India which is labour intensive and not capital intensive has its hope through this theory which also states that capital-scarce economies grow faster because new investment is highly productive. This happens when the imbalance between labor and capital is corrected. Growth slows down after this imbalance is corrected. This is supported by what had happened in Europe after 1973 or what is happening in US post-1973. Interest rates have been decreasing in the west which indicates an abundance of capital just as the Growth theory suggests.

This pandemic has already exposed the cracks in the system. It has wiped out a lot of businesses and the ones that will survive will be considering acquisitions and mergers. During such times risk appetite is at its lowest which means that capital infusion in the economy by these investors also decreases. This inherently would mean that we would have abundant labour and scarce capital and as the CRISIL report points out 1.7 lakh crore of fiscal stimulus is inadequate and fiscal measures up to 3.5 lakhs would be required. At a time like this where several economies are handing out cash to its unemployed population so as to incentivise spending, the idea of universal basic income would not be that bad an idea. What happens to innovation when the demand would go down because spending would go down? Governance mechanisms would have to change to support growth and giving tax benefits to the rich which seems like a reflex move in such times is not as it turns, a growth booster. It’s an idea that so easily fits into our minds and one that has been fed repeatedly by the governments but doesn’t have enough evidence to deconstruct the causation. A recent study by the University of Chicago’s Booth school suggests that benefitting the top 10% since the war shows no significant growth in employment an income whereas tax cuts for bottom 90 % does. As giving tax cuts to the top players in a way fuels monopoly which decreases innovation and as it is makes lives harder for the bottom 90%. As Abhijeet Banerjee also states in his book, “Tax cuts for the wealthy do not produce economic growth”.

The driver for long growth in the Solow model is technological innovation and we are heading towards a fourth industrial revolution where technologies AI, Internet of things will merge with our lives in order to make it more efficient but also lead to a lot of redundancy in manual labour jobs. Automation has powerful displacement effect. The period that experiences intense technological progress is also a period of difficult living. Eventually, things turn around as it did before, but it’s not necessarily such a rebound might happen according to a lot of economists as the impact of the current wave of automation which started in 1990 has been negative. Even if people remain unemployed this creation of either highly skilled or extremely low skilled jobs create inequality in wages and working conditions. This draws light upon forming social policies which take care of not letting the current situation worsen where we might enter society which devalues human thought. This highlights the need for cross-disciplinary skills where we could be more efficient, innovative and grow at a faster rate if we integrated different models of thought. In a time where data collection, monitoring and analysing is being painted as the backdrop for our struggle with the pandemic, it could also draw light on how important a role data plays. It could not only play a role in combating deadly diseases but also be integral for designing efficient cities, formulating better policies and the possibilities are endless. Rest assured, we are in for a wild ride and the transition has just begun.

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