Robotopia: An Economic Analysis into Automation in the Workplace

Based on Adam Smith’s “The Wealth of Nations”

Gabby Chan
Jan 10, 2020 · 7 min read
Image for post
Image for post

Automation was first coined in the 1940s by the Ford Motor company after it introduced the new manufacturing model of using partially automatic assembly lines in the production of cars. Broadly speaking, the term represents the development and implementation of systems that can repeat actions without human interference or interaction.

By integrating operations machinery, regulatory control systems, and powered equipment to transport materials during the manufacturing process, automation was introduced into the workplace as a more efficient, safer and profitable method of production in factories, starting with manufacturing Ford cars. While the first generation of industrial robots was limited to simple motions managing homogenous materials, the application of computers into manufacturing, also known as cybernetics, has resulted in increased robotized production as these machines advance in their capability to carry out different tasks. Moreover, automation has moved beyond the scope of production and is seamlessly woven into our society in a multitude of ways, from online banking services to self driving cars.

Despite the time difference between the writing of The Wealth of Nations in the 1700s to now, Adam Smith’s analysis of the efficiency of specialized division of labour can be extrapolated to discover his support for the contemporary radical method of production using automation in the workplace. Some of his arguments would have been that automated production helps solve poverty, increases government spending especially on education to achieve equity, and creates more profit for the country.

1. Poverty

Image for post
Image for post
This process is illustrated in the graph below where the short-term and long-term effects of automation are compared to manual labour.

There were both positive and negative reactions over the years to the increasing presence of automation in the workplace and how it is changing the economy. On one hand, automation results in greater efficiency in production, which can be proven through Adam Smith’s theory of the division of labour. Industrial machines can consistently carry out repetitive tasks at a greater accuracy than even the most modest human error rate allow, and don’t suffer from “the time which is commonly lost in passing from one species of work to another” that human workers tend to experience (Smith, 1776, 10). Despite a greater upfront capital investment for companies and countries alike, automation is more efficient in the long run and produces more goods in less time, ultimately increasing the GDP and likely benefiting the whole country.

As James Ottoman summarizes in chapter 6 of The Essential Adam Smith, a surplus of products, created from automation in today’s world, can be priced lower and therefore sold to people, increasing the overall wealth of society (Otteson, 2018). Adam Smith even suggests that the division of labour is the solution to solving poverty, stating that “in consequence of the division of labour, which occasions, in a well- governed society, that universal opulence which extends itself to the lowest ranks of the people” (Smith, 1776, 13).

On the other hand, a worrying statistic arising from increased industrial production states that “50% of Canadian jobs will be disturbed by automation in the next 10 years.” It appears that automation would not only result in massive unemployment, but it would also put the poor at a greater disadvantage as the jobs in fields that would be replaced by industrial machines are currently filled by the percent of the population without access to higher education. Additionally, it is predicted that another 8–9% of jobs in our current time period will become obsolete by 2030, further narrowing the number of jobs against a growing world population. Without remedial action, the predicted increase in unemployment rate, especially for workers in poverty, could result in a significant economic downturn and a wider income gap between the wealthy and the non-wealthy.

Despite the possibility of unemployment and negative effects to the common people, it makes perfect economic sense for businesses and companies to invest in automation. One of the significant advantages that automation in the workplace offers is the guarantee of greater workmanship and consistency compared to the comparatively greater variability in human work. Not only does automation increase production rate and efficiency, it also promotes worker safety by carrying out tasks that could otherwise present risks to the people. While worker displacement due to automation is an issue, the solution should not be to limit the integration of automation, but rather to prepare the workers of tomorrow for a different future in terms of their career. Although the Canadian economy is projected to create 2.4 million new jobs by 2021, the workforce will need to be equipped with a revolutionized set of skills and required to constantly upgrade their skillset to meet the standards (Vomiero, 2018).

2. Education

Image for post
Image for post

In order to prepare workers for the future workplace, the government has a responsibility to redesign the education curriculum to fit with the modern times. Traditional schooling is rapidly becoming obselete and no longer satisfies the need for workers with digital literacy and self-directed professional development. Moreover, it is increasingly clear that, equipped with technology that allows for the acquisition of knowledge and distractions within hand’s reach, today’s youth are not receptive to the stand-and-deliver method of teaching in most classrooms.

While Smith rarely argued for government intervention in society outside of regulatory action, public education is one of the few public goods that the economist strongly advocated for the government to provide to the citizens. This is due to the two conditions of the necessity of any government action: that a private enterprise would not be able to provide the good at a reasonable profit, and that the action would benefit society as a whole. The reform and implementation of early education revamped to fit the modern times is a project that would have to be undertaken by the government due to its scope and lack of monetary return, as improving public education reaps major societal benefit. Moreover, since everyone benefits from a better educational foundation, it justifies government intervention in the provision of education.

3. Profit

In order for the government to fund these education reform programs, it needs a monetary justification to compensate for its actions. Apart from the aforementioned benefit of greater production levels due to automation, Smith also highlights the extra time and effort that can be allocated to “the increase of dexterity in every particular workman” (Smith, 1776, 10). Because machines can now carry out dull manual labour, it frees up human resources for more complex issues and topics to tackle. For example, between 75 million and 375 million people around the world may need to change occupational categories and acquire new skills by the year 2030.

While that may sound like a radical change, we can also infer the many types of occupations that will grow in the next few decades, from increased labor in healthcare in support for the aging population to the need for developing technology. Individuals who use machines as complementary services in their workplace will instead have more resources to further specialize in their work, which encourages the process of building personal expertise and drives innovation and new ways of thinking forward. With more time to self-discover personal strengths and interests, citizens of a country will engage in work that ultimately benefits the economy.

The study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society (Smith, 1776, 486).

After all, raising the standard of living is not just about having more money, just like how the wealth of a nation is not strictly measured by its monetary output. In fact, Adam Smith argues that “every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life”, stating that wealth should be defined as the level of satisfaction an individual or a whole country of citizens experience (Smith, 1776, 28).

Automation is not just limited to improving efficiency in the workplace and ensuring worker safety; its presence in almost every single part of our lives has arguably improved the quality of our lives. It produces more leisure time and saves people from unpleasant tasks, and technology will allow people to focus on more engaging work while reducing consumer costs. When there is greater satisfaction in the society as a whole, people are more motivated to work hard to reap greater benefits, which pushes the economy forward and results in overall rising prosperity. The federal government can then utilize more of its GDP to invest in infrastructure, improve health care systems and provide access to education for the poor, contributing to a recurring cycle of accumulative wealth.

Automation, whether within the workforce or in society as a whole, benefits the country and the wealth of the nation, measured by satisfaction as defined by Adam Smith. Through extrapolating from The Wealth of Nations, we can observe the greater efficiency of industrial production, the opportunity to upgrade education to better prepare citizens for a workplace of the future, and greater enjoyment of life in general that automation brings to the table.

References

Otteson, J. R. (2018). The Essential Adam Smith. The Fraser Institute.
Smith, A., & Cannan, E. (2019). The wealth of nations. Mineola, NY: Ixia Press.

The Startup

Medium's largest active publication, followed by +773K people. Follow to join our community.

Gabby Chan

Written by

Undergraduate Systems Design Engineering Student at the University of Waterloo. Passionate about human factors in technology and global impactul solutions.

The Startup

Medium's largest active publication, followed by +773K people. Follow to join our community.

Gabby Chan

Written by

Undergraduate Systems Design Engineering Student at the University of Waterloo. Passionate about human factors in technology and global impactul solutions.

The Startup

Medium's largest active publication, followed by +773K people. Follow to join our community.

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store