An new era of innovation — so why are most getting poorer?
by Robert Maharajh
Digital technologies should add over $1.3 trillion to annual global output by 2020, according to a recent study by Accenture and Oxford Economics. Few now dispute that they are the steam engine of our times, a transforming technology that should lead to a new industrial revolution. All of which begs the question of why this economic benefit is not feeding through to the majority of people — and we’re not just talking here about the 4.3 billion or so who still lack access.
The numbers show clearly that even in developed countries, the trend is headed in the wrong direction. Median income in the United States has actually fallen since 1999 — at a time when growth and productivity have been on impressive upward trajectories. In other words, someone is reaping the benefits, but most are getting poorer.
It’s clear that inequality is growing, but why? Economist Saskia Sassen puts forward the idea that since the 1980s we have seen a fundamental shift in the nature of economic logics. Her book, Expulsions (2014), argues that while the postwar period was characterised (in most developed economies) by a Keynesian ideal of inclusive prosperity in which all — or at least most — could share, this has been gradually replaced by an ethos that privileges corporate profit growth above all other interests.
So the period that spans the emergence of digital technologies — and the complex knowledge systems they have helped to develop — has seen them often located within the imperatives of this new organising logic: what Sassen calls the ‘predatory dynamics’ of advanced capitalism. The result, she writes in this blog series, is ‘escalated systemic capacities for massive capture at the top… and a significant rise in the expulsion of people from reasonable life options even in rich countries.’
MIT economists Erik Brynjolfsson and Andrew McAfee, authors of The Second Machine Age (2014) also see a stark rise in inequality, one which they attribute primarily to ‘exponential, digital, and combinatorial change in the technology that undergirds our economic system.’ The main ‘winners’, in their analysis, are those who have accumulated the right capital assets, either ‘nonhuman’: equipment, structures, intellectual property or financial assets, or human capital: training, education, experience and skills. (To this they add a third group of ‘superstars’ — those with special talents or luck.)
‘In each group,’ they write, ‘digital technologies tend to increase the economic payoff to winners, while others become less essential, and hence less rewarded.’ This explains why, despite overall growth, the majority of people are worse off than before, and why wages of unskilled workers in the United States and other developed countries have trended downward so noticeably.
In this environment of sharp separation, and with a growing threat of technology leading to job obsolescence in many sectors, particularly in the developing world, education is a key differentiator. After the recession of the 1970s, and as digital technologies began their growth, there began to be a growing spread of incomes, Brynjolfsson and McAfee note. ‘By the early 1980s, those with college degrees started to see their wages growing again… Meanwhile, workers without college degrees were confronted with a much less attractive labour market. Their wages stagnated or, if they were high school dropouts, actually fell. It’s no coincidence that the personal computer revolution started in the early 1980s.’
In a global economy increasingly governed by technological change, they stress the importance, not just of education, but of specific forms of education that will help people to stay ahead of encroaching technological change, citing the work of researcher Sugata Mitra. Mitra conducted ‘hole in the wall’ experiments in Delhi, in which Indian slum children who had little education and knew hardly anything about English or the internet were given access to computers embedded in walls. Left to themselves, the children quickly figured out how to use computers and access the internet — rapidly picking up new skills and types of knowledge.
Brynjolfsson and McAfee conclude: ‘Mitra’s work shows that children, even poor and uneducated ones, can learn to read discerningly. The children in his studies form teams, use technology to search broadly for relevant information, discuss what they’re learning with one another, and eventually come up with new (to them) ideas that very often turn out to be correct… So the “self-organising learning environments” Mitra observed seem to be teaching children the skills that will give them advantages over digital labour.’
In a future where the only near-certainty is that digital technologies will continue to proliferate, it seems education is the most realistic way to prevent inequality from expanding even further.
Robert Maharajh is the commissioning editor of the Not Evenly Distributed blog project. He is a writer and journalist based in London, United Kingdom.
