Creative destruction:

From Luddites and taxi drivers to the entire human species.

Aug 26, 2015 · 5 min read

Economic repercussions of innovation.

The year is 1811, on the eve of the Industrial Revolution, in the south of the region called Nottinghamshire in England, an elite group of craftsmen see their communities threatened by a combination of machines and new practices that had been imposed by the aggressive new class of manufacturers driving the Industrial Revolution. The factory system, with its vast mills and steam-powered looms had replaced them slowly but steadily with an efficient and highly lucrative model of production.

Their reaction? Riots and the organized destruction of the factory machinery they saw as responsible for the decline of their livelihood. This group of cotton weavers and spinners, who were later to be known in the archives of history as the Luddites , were convinced that by smashing the new factory machines they could ‘uninvent’ the technology that was taking away their jobs.

The year is now 2015, there are now multiple epicenters, all of them mega urbes, highly populated cities like Paris, Mexico City, or Rio de Janeiro, inhabited by middle class individuals whose means of transportation are essential to everyday life. Cabbies park their yellow taxis in chains, stretching miles along the city’s main thoroughfares and government offices to protest a mobile app service called Uber. After witnessing the lawmaker’s inability to undermine these on-demand-taxi-services, they decide to take their actions a little further.

Their reaction? Riots and the organized destruction of vehicles working with the service they see as responsible for the decline of their livelihood. Mobile computing, ubiquitous internet connectivity and “on demand” services are conquering the world as we know it.

History repeats itself, new protagonists and antagonists are introduced but the same human conditions prevail over time. Short sighted observers commonly claim that technological change is pain-free, but as disruptions and displacements occur, individuals do lose their jobs, particularly in those industries that resist macro change rather than proactively adapt to changing conditions. That is after all the nature of “creative destruction” a term coined by Joseph Schumpeter called by some the “father” of innovation economy, these stories being far from happy endings historically represent “the essential fact about capitalism”. The same scenario will likely repeat itself on and on, in multiple industries, until the human factor gets removed from the equation.

We’ve all heard the fears from tech tycoons to acclaimed theoretical physicists about the dangers that Artificial Intelligence might represent to the human species, inevitably journalists follow closely taking, these threats literally assuming a belligerent robo-future. Parallels to the science fiction world of James Cameron’s Terminator can be easily made, and when added to the research of companies along the lines of Boston Dynamics, that Skynet future rings slightly truer. I hold a moderately positive view on that flank of the topic though, I believe before an armed conflict against the machines arrives we’ll most likely face the ultimate economic dilema.

The year is now 2045, global warming is a problem now forgotten, artificial intelligence and robotic assistants have figured out a way to harness enough solar energy for running the entire world on it, robots have replaced all kinds of human labor, without making mistakes or the need of human supervision, the non-stop-24/7 workforce has also finally made feeding the global population possible. Under those circumstances, the large percentage of the human species hold several questions: which role do we play in this utopic (more like distopic) future? What do we do over the next few decades as robots become steadily more capable and stealthily take away all our jobs? In this distopic future, the “Uberites” are now part of the arcs of history: the last transportation upheaval started by Uber drivers, unionized and unhappy by the sudden replacement of their unskilled hands with automated vehicles. Air pilots and train conductors only blinked their eyes before they were included in the same chapter in history.

This is not a distant future, deep automation will touch all activities, from manual labor to knowledge work, the poorly portrayed dilema in Hollywood movies has been a topic at least for 50 years in science fiction books, but when I started looking for answers from mainstream economists, it turned out there wasn’t much to choose from.

What keeps me up at night is thinking about the motivations behind these breakthrough technologies. All of them, are largely sponsored by deep pockets in the search for cheaper and more reliable means of production. Over time, along with the enhancement of their capabilities, artificial intelligence will be taking more jobs than just the average cashier, taxi driver, parking lot attendant or travel agent. The first step is already here digital processes are creating new processes that enable companies to do more with fewer people, human jobs are becoming obsolete at a faster pace than their skills and organizations can catch up. And you know who’ll own all of this intelligence? The people with a ton of money of course, as this happens, capital will become even more polarized than it is now, the rich will become ultra-mega-rich and the poor will be at their total mercy. I can even picture an even creepier future, where people with no capital (most of us) become absolutely irrelevant to those with means because our “consumer power” has been taken away along with those jobs. In other words, we won’t have jobs to get money from → we’ll have no money to consume and therefore → we no longer play any active role in a modern capitalist society.

Luddites past and present are not anti-technology in the abstract — the real struggle is against the restructuring of social relations at their expense. What will happen when the larger percentage of the population become incumbents or luddites, when all these innovations will be created at the expense of everyone else who’s not part of the 1%? Will money still be relevant at that point? If people don’t have jobs, who’ll play the consumer role? Will the 1% be the only one with ‘time’ to live? I don’t know, I’m simply curious about that future. Someone should be making these questions cause James Cameron is not making a movie about the economic repercussions of innovation any time soon.

New technologies make existing skills and machines obsolete. It’ll be funny when we become the “machines” and our skills render obsolete.


  • Do you think this writing is too pessimistic? Would you like a shot of optimism? Click here to read the other view on the topic.*
  • This article was originally written in Spanish, and you can find that version here.

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