“Modern technology has become a total phenomenon for civilization, the defining force of a new social order in which efficiency is no longer an option but a necessity imposed on all human activity.”
— Jacques Ellul
Few organizations have ever run effectively for long periods of time under the leadership of one person. Consider the daily tasks that must be handled by the owner of a small, local restaurant — opening up, cleaning equipment, wiping down and setting tables, cooking and doing dishes plus inventory, payroll, and marketing. Many of these things could be done by a specialized worker for a small cost, allowing the owner to focus on their strengths. In economics, this is known as labor specialization. Companies specialize because it minimizes their opportunity cost, or the opportunity forgone by opting for one activity over another. The owner not specializing — and thus sacrificing time spent doing something they are comparatively better at — illustrates why businesses that specialize do better than those that don’t.
If the restaurant proprietor handles every aspect of the business on their own, they may save money in the short run, but they lose the opportunity to focus on their cooking because they’re inundated with small-business duties. And if they know little about those duties, the business will suffer; the time spent trying to salvage it is even more time they aren’t cooking, and the quality of the restaurant’s food will probably fall. With no intervention, this cycle will repeat until the business is no longer sustainable.
A successful restaurant, in contrast, is organized hierarchically with tasks distributed to people who are specialized to handle them. The owner is one of these specialists, but they don’t wield absolute power — nor do presidents or CEOs.
Specializing allows us to add tangible value and achieve a sense of purpose.
Specialization has been fundamental to the success of every major organization that has ever existed. It gives individuals roles and duties so they can really know their jobs, and it ensures others in the organization can also focus on their specific strengths. It’s why most companies have different departments for marketing, sales, human resources, engineering, and so on. Specializing allows us to add tangible value and achieve a sense of purpose in a way that spreading ourselves across many roles does not.
In this way, we accrue more responsibility until we have cultivated our skills enough to offer value in positions with more responsibility, like training or management. Given this structure, the best leaders are the ones who foster independence and new leadership rather than dependence and sheep. Corporations that specialize effectively treat specialization as something dynamic rather than static, and it contributes to their success.
But as humans, we are not like corporations or countries; to call us “profit-maximizing” is demeaning. We, in fact, are highly irrational. We don’t think in terms of opportunity cost and labor specialization; most often, we’re unsure why exactly we’re making decisions but still make them all the same. Classical economists have long argued that we behave in our own self-interest, but their theories rest on the premise that we understand what’s best for us at any given moment when most of the time, we have no idea. Even when we do, we often go against what we know to be right.
The economic ideas of opportunity cost and labor specialization have already demonstrated how even though value is subjective, our decisions ultimately still favor maximizing utilities — otherwise, we wouldn’t make those decisions. Every decision we make is actually in our own self-interest because, whether it is objectively more valuable or not, the choice we made is the choice we made. Where the discipline of economics falls short is in determining why we make the decisions we do.
Purpose doesn’t matter to corporations; the nature of operating in competitive markets means they have to prioritize profits or die. But purpose matters to people.
Classical economics, then, offers a blurred lens through which to examine why a sole proprietor of a restaurant might attempt to take on every duty in their business. In doing so, they are maximizing their (subjective) utility. They may not be maximizing profit, and the quality of the food and service may suffer, but to the sole proprietor, the business is operating exactly the way that they see fit. From the standpoint of classical economics, it is hard to justify any decision to operate in a manner that doesn’t maximize profit. Clearly, the restaurateur could increase profits substantially by investing in employees. Likewise, a stay-at-home parent could save time by hiring a nanny or a maid.
The modern era lets us increase the efficiency in our lives a hundredfold — yet in many cases, we refuse. Why? Why don’t people do what successful corporations do? As we come to understand ourselves better, it becomes clear just how preposterous it is to believe that the factors that shape successful economic policy can also reliably predict human behavior.
We resist increasing efficiency in our daily lives because, often, efficiency at an individual level threatens our sense of purpose. Purpose doesn’t matter to corporations; the nature of operating in competitive markets means they have to prioritize profits or die.
But purpose matters to people. If the ambitious sole proprietor hires workers to handle the tasks they used to do, they may end up with more time to cook and larger profits, but neither guarantees happiness — just wealth. People do find purpose in the seemingly mundane, the needlessly difficult, and even the outright backbreaking chores of life. Performing a task that could easily be outsourced isn’t evidence of insanity or irrationality. It’s a dual manifestation of humans’ desire to have a purpose and our subconscious fear that if we give it up, nothing would replace it.
In “I’ve Seen the Future. It Looks Like Appalachia,” writer Travis Lowe speaks candidly about what happened in West Virginia — where he grew up — when globalization and technological advancements made it clear that a once booming economy was coming to an end. Though some saw the “writing on the wall,” as Lowe puts it, and chose to leave, many people affected by the great migration of manufacturing jobs were forced to leave. To his credit, Lowe shows how the tide is beginning to turn in some places, but his point is ominous: Our progressive society views the devastation that occurred in Appalachia as a relic of a bygone era — as a region that couldn’t keep up and suffered the consequences — but the very people who see it that way are those who are now finding themselves at a high risk of undergoing the exact same thing.
It is abundantly clear, given research from firms like PwC and universities like Oxford, that current sources of purpose soon may not be. My past experiences in outbound sales roles making cold calls echo their findings. Given the type of clients I worked with and the relationship-based nature of selling ads to local businesses, my company — even now — still requires salespeople to do the job effectively.
It is not hard to imagine a world in which basic queries about the advertising program can be handled by sophisticated A.I.
But it is not hard to imagine that the product will evolve to resemble that of other companies with more robust self-serve offerings and eventually sell itself. Once that happens, my company may pare its sales team, shifting only some of us into account management roles to provide new value by offering solutions to problems with a self-serve platform.
Looking even further ahead, it is not hard to imagine a world in which basic queries about the advertising program can be handled by sophisticated A.I. In that eventuality, it will be little consolation to those no longer earning a salary for positions that, a decade earlier, were labeled as “at high risk for automation” by some consumer analytics firm with three unmemorable consonants for a name. On the contrary, it will be patronizing and cruel.
Right now, we have a choice between efficiency and purpose. But as automation moves beyond everyday tasks to offer corporations cheaper and cheaper alternatives to human labor, efficiency will not be an alternative to purpose — it will replace it. It’s already begun. And while new jobs will emerge, the people most likely to need them may not have the necessary skills. These skills, according to researcher David J. Deming and others, are social and cognitive — they are both hard to find and to automate. As Carl Frey and Michael Osborne put it in their paper, “The Future of Employment: How Susceptible Are Jobs to Computerisation”:
Our findings thus imply that as technology races ahead, low-skill workers will reallocate to tasks that are non-susceptible to computerization — i.e., tasks requiring creative and social intelligence. For workers to win the race, however, they will have to acquire creative and social skills.
Are creative and social skills presently being taught in schools and communities? Is “teaching” creativity even possible? The best a society may be able to do is train people for a fast-paced world where the ability to adapt is more important than having specialized knowledge, but doing this would exclude most everyone in the current workforce and it’s far from guaranteed to work.
What will become abundantly clear in the age of automation is that corporations don’t employ humans because they feel some divine obligation to do so; they employ humans when it is profitable. When a better alternative reveals itself, the “moral” corporations — the ones that stick with human labor — will be left behind.
Imagine that world, where — finally — every mundane task is eliminated or taken care of by some A.I. that runs off a server buried 17 stories deep in the Rockies or, perhaps more poetically, in Appalachia. In that world, what will humanity’s purpose become? Lowe, in his writing, argues that humans will find meaning elsewhere:
In the best of my community, I see neighbors looking out for neighbors. I see people finding dignity not just in their job but in being a good friend, growing a garden, or making art in their backyard. I see cooperation like I never thought was possible. I see government employees working together across borders of cities, counties and even states.
To say that we will find meaning through cooperation and community-mindedness is novel. Whether that is a solution to the structural problems faced by Appalachia is unclear, and it’s even less clear whether that would work in places like New York City or Chicago. I appreciate Lowe’s optimism, though I’m not confident that it’s entirely justified.
But his point is that addressing the A.I. “jobs apocalypse” requires reforming the economy so that it offers not just new sources of income but new sources of meaning and purpose. Appalachia seems to be ahead of the curve in identifying what those sources may be. Universal basic income is a necessary first step — admittedly, there are likely millions of people with entrepreneurial capacities that are stifled by a lack of a basic income to cover their basic needs and millions more living in objective poverty — but it won’t be the last one.
If there’s one well-documented effect of automation, it’s that it has actually driven up wages for small groups in many industries — usually those with higher amounts of human capital — while putting the majority of people in those same industries out of work. This consolidation of necessary human labor using fewer but better educated and more capable individuals while outsourcing or using A.I. for everything else has contributed to the well-documented decline of the middle class in the United States.
Robust, purposeful middle classes are usually the hallmarks of successful societies. They create a sense of community among a majority by organically spreading that key feeling of existential purpose. In a world in which so many of us measure our value by our work and wages, a disintegration of the middle class is significant because it will not only concentrate wealth among elites, but purpose as well. To truly understand this, imagine being asked in casual conversation “What do you do?” and having no answer.
Purpose isn’t easily discovered, and our global economy is woefully unprepared to address the truth that purpose is as important for a stable, functioning society as income.
If we assumed we were all perfectly rational individuals living in a perfectly rational world, we would always opt for efficiency and forfeit mundane tasks for more productive endeavors the moment they present themselves. We’d feel no apprehension about giving up our bi-weekly trips to the grocery store or the half-hour walks we take just to be able to say we did something active. We’d immediately be able to find things to do with our time that would fill us with a sense of purpose rooted not in banality but in challenging and necessary work.
But we do not operate this way. Through the sheer experience of living, we know how much friction there is between giving up one source of purpose and coming upon another. So, too, do we know just how awful it is to exist without purpose.
If our global economy is to fulfill the promise of increased welfare for humanity, it must effectively answer the question of how to enable people to find purpose in a world that seems hell-bent on eliminating it. This will not be simple: Purpose isn’t easily discovered, and our global economy is woefully unprepared to address the truth that purpose is as important for a stable, functioning society as income.
It is paramount for our future economy, then, to not treat decisions that aren’t “profit-maximizing” — like those of the ambitious sole proprietor, the single parent, or the 22-year-old working a job “at high risk for automation” — as irrational. Instead, we must realize they are symptoms of previous economies’ failures to give as much attention to providing citizens with purpose as they do to providing them with income.
mistaking correlation for causation since '94; IYI, probably | 🧓Chicago, IL | ✍️. @ zandercutt.com | GET IN TOUCH: zander [at] zandercutt [dot] com
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