Technological Unemployment and the Resurgence of Political Economy

Abstract

The aim of this paper is to discuss the possible impact of the “third wave” of technological unemployment on economic theorizing. Twenty-first century technological progress, heavily impacting on employment, is a process that just started but whose main new feature is already well known. This feature concerns robots (and artificial intelligence) and their entry into the production process. Robots do not simply increase labor productivity in cooperation with humans but can substitute for human labor, producing commodities without human input possible and hence, possibly, giving rise to long-term mass unemployment which will require some form of public policy intervention. This scenario exhibits important implications for economic theorizing, since mainstream theory, rooted in the general equilibrium approach, faces difficulties in dealing with a reality where social classes and the class struggle (a few robot owners vs. many unemployed humans) regain a role, labor productivity becomes irrelevant and uncorrelated with the (subsistence) wage/subsidy that must be paid to the unemployed, the labor market does not clear, redistributive policies replace the optimal allocation of scarce means, and so on. This scenario returns economic theorization to the years of classical Political Economy, when the main focus of theoretical investigation was on social classes, the class struggle and redistribution of the surplus. In particular, Sraffa’s 1960 model might represent a good foundation for further theoretical development.