Automation: Labor augmenting or substituting? Yes.

One of the biggest questions concerning automation/robots/artificial intelligence is whether it augments human labor or is a substitute. A recent “Open Letter on the Digital Economy” outlined a research agenda that called for “(i)dentifying business models in which technology is a complement to – not a substitute for – labor and creating a taxonomy of their common characteristics.”
But the issue is not an either/or. The classic case example is where the same technology augments parts of a job while substituting for others. In the past this has been the case for machines and physical labor. A backhoe allows one worker to dig a ditch faster than a person with a shovel, even if a worker with a shovel may be needed to finish up.
More recently, technology has been substituting and augmenting knowledge work. For example, Institutional Investor recently pointed out that “RIAs Shouldn’t Fear the Robots” [RIAs are Registered Investment Advisers.] So-called “robo” advisers can handle routine transactions like portfolio rebalancing, freeing humans for more high touch activities such as discussing changes to the client’s situation.
More interesting is when a technology in one phase of development might augment a job but substitute for it later on. This appears to be the case with autonomous vehicles. A New York Times story earlier this year on Volvo’s pilot assist technology explains how the technology currently works:

After a driver pressed a button on the steering wheel, sensors scanned the road and locked on to the vehicle a few car lengths ahead. A white icon lit up on the dashboard, and the wheel began moving on its own.
As the road curved, the Volvo steered itself through it, automatically adjusting the throttle and steering. The vehicle seamlessly kept on going, though after about five seconds, a subtle dashboard light asked the driver to keep a gentle touch on the wheel.
Not that it was needed — the Volvo could keep going hands-free for miles at speeds up to 30 miles per hour on a properly marked road. But for now Volvo has programmed the XC90 to start slowing down if a driver does not heed the warning light, making the vehicle a bridge between “lane keeping” and the truly hands-free technology set to hit the market soon.
“This is about making the tedious parts of people’s drives less stressful,” said Jim Nichols, a spokesman for Volvo. “We’re not talking about a driver simply checking out and not paying attention.”

Wired ran a similar story on “The World’s First Self-driving Semi-truck Hits the Road”:

The Freightliner Inspiration offers a rather limited version of autonomy: It will take control only on the highway, maintaining a safe distance from other vehicles and staying in its lane. It won’t pass slower vehicles on its own. If the truck encounters a situation it can’t confidently handle, like heavy snow that covers lane lines, it will alert the human that it’s time for him to take over, via beeps and icons in the dashboard. If the driver doesn’t respond within about five seconds, the truck will slow down gradually, then stop.

But, as today’s Wall Street Journal (“Truckers Gain an Automated Assist”) points out,

Manufacturers consider these systems a crucial primer for developing demand for automated vehicles . . .
Eventually, they could lead to trucks that drive themselves entirely.

That might not be the end of truck drivers, however. A Washington Post story on “How self-driving tractor-trailers may reinvent what it means to be a truck driver” points out an alternative:

. . . trucking companies could be expected to find ways to turn their cabs into mobile offices for drivers.

This is an example of a third possibility, what I call “transformative”. Some technologies will go beyond either eliminating the need for humans to undertake certain activities or helping them do those activities better. They will transform the activity completely. These are the truly disruptive technologies.
To illustrate what I mean, let’s take a non-human example: the horse. In a recent article, Erik Brynjolfsson and Andrew McAfee ask a provocative question: Will Humans Go the Way of Horses? Remember, however, that horses still exist in the economy. According to one study, there were 9.2 million horse in the United States in 2003. That is a sharp decline from the estimated 21.5 million in 1900. But it is not elimination. What happen was a transformation in the horses’ role from providing work energy to recreation. It anticipate that the same transformation will occur for human drivers. Driving a car will become recreation not transportation.
What does this mean for other types of human activity? I don’t know exactly. I do know that there will be technological substitution and displacement, technological augmentation of human activities, and technologies that will disrupt and transform human activities. We need to prepare our society from all three.

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