Swedish-German economist Carl Benedikt Frey rose to sudden prominence in 2013 when his study The Future of Work: How Vulnerable to Digitalisation, which he co-authored with Oxford professor Michael Osborne, made the alarming conclusion that 47 % of professions are in danger of disappearing due to automation. Then the tsunami of publicity turned Frey into something of a dark prophet, although he always preferred to stay in the background, be an optimist and just do his job, researching and discussing solutions.

In 2019, the now classic book “Technological Trap: Capital, Labor, Power in the Age of Automation” was published, which became the reason for our conversation.

The history of industry teaches us that episodes of rapid technological change are episodes of rapid socioeconomic and political change. As the great economist Joseph Schumacher showed, technology tends to destroy entire professions and industries. However, at the same time, it can create new prospects for employment and prosperity in other sectors of the economy.

In fact, the costs tend to be concentrated in certain professions, and the benefits are fragmented. So, if we want to understand why the Industrial Revolution happened around 1750 and not a few hundred years earlier, since technological knowledge has already existed since the 1500s, we need to understand the political economy of technological change. Before or even during the Industrial Revolution, manual workers saw their incomes threatened by machine factories and therefore began to resist new technologies vigorously and effectively.

In Europe, the upper classes took their side because they shared the idea that no innovation should destroy human life, and also because they feared social upheaval. At that time, fighting against machines was indeed very common. Not only in Europe, but also in China and the UK. The reason why the Industrial Revolution started in Britain and not in France also has to do with political economy.

At that time, a political and social revolution was unfolding in France, which led to such social upheaval that governments could not or were not inclined to support the pioneers of industry. On the other hand, in the UK, the government was determined not to let anything hurt the country’s competitiveness.

In many cases, the government even sent repressive forces against workers who rebelled against the machines. The army sent by Wellington in 1812 into the Peninsular War against Napoleon was smaller than the army sent against the Luddites, who were breaking cars for fear of losing their jobs.

In other words, the industrialization of that period was imposed on the population by force. What also helped Britain a lot was generous benefits for the less privileged. The backlash against the machines grew when the economy was in dire straits. When things are going well in the economy, you know that you have good prospects if you lose your job. If you lose your job to the machines and the economy goes down, you will most likely rebel against them because you know there will be no other options.

If you lose your job to the machines and the economy collapses, then you will most likely rebel against them.

The big difference is again found in political economy. In the first revolution, ordinary workers did not have the right to vote. They tried through petitions in parliament to be heard and block new cars. Today, in most developed countries, workers live much better.

However, we must remember that the unions and the communist manifesto are partly the result of the technological changes of the First Industrial Revolution. In the end, this whole process, of course, led to great prosperity. By the middle of the 20th century, factory workers had become the middle class, and as factory wages and working conditions increased, this middle class grew larger. But since then, we have seen a gradual decline in factory jobs due to automation and globalization. And with work, people lose their political voice. Technological change has weakened unions and weakened the voice of workers.

At the same time, they are not represented by traditional political parties either. In the 1950s and 1960s, higher income voters tended to vote for parties on the right, while lower income voters tended to vote for parties on the left. Since the 1970s, the right has continued to connect with higher income voters, but the left is now starting to connect more with higher educated voters and become more kinetic. This is an intellectual elite that cares about climate change, about discrimination, about things that concern us all, but are not necessarily the priorities of factory workers who want better pay, more vacations – the traditional demands of the working class. This opened the way in many countries for the cultivation of populist voices. Of course, this trend is not only related to automation, but to a certain extent.

People are starting to worry about automation again, and that fear has intensified since the pandemic.

In the past, we built the welfare state and education systems to help people adapt to the changes brought about by technology. However, over the past three decades, we have seen lower taxes on capital and higher taxes on labor. This means that today we are actually subsidizing capital-saving and labour-intensive technologies. This is what concerns our institutions and policies. In essence, we are subsidizing the development of technologies that replace people, instead of subsidizing technologies that create new jobs and new industries.

Another big problem is the concentration of a lot of political power in the hands of a few giant companies, which by their attitude hinder the creation of new jobs. If 50%, 20% or 10% of the population works on Facebook, is democracy possible? Obviously not.

I believe that reducing the cost of automation requires not one big policy decision, but a set of smaller policies. A universal income guarantee is a policy that could be adopted, but I don’t think it should be universal. We have a welfare state that does this relatively generously. I’m personally for a negative income tax. It is also important to stimulate the creation of new jobs. We need to support policies that help people adapt and create productive economies for all.