09 November 2016

The Wealth of Humans

Work and its Absence in the Twenty‑first Century

Ryan Avent
2016, Allen Lance, 288 pages,
ISBN 9780141981185

Reviewer: Andrew Sentance, Senior Economic Adviser, PwC and former MPC member

The impact of technological change on jobs, the economy and society has been a recurrent theme of concern and anxiety since the early days of the Industrial Revolution. Ryan Avent’s book looks at the latest manifestation of this issue – how the world of work will be shaped or reshaped by the new digital technologies now emerging.

There are two very powerful and interesting themes running through the book. The first is the potential for new technologies to displace jobs and undermine income-generation, while creating massive new pools of wealth for those who are at the forefront of the process of technological change. This process of redistribution of income and wealth raises important distributional issues for our society. Ryan Avent roots his analysis in a discussion of how the industrial revolution created big changes in the distribution of income in the 18th and 19th centuries in the UK.

The second theme of the book is that we have the power to determine whether the outcome of the potential disruption to work and social structures is benign or malevolent. Avent emphasises the role of ‘social capital’ as a very important stabilising influence – the way in which we pool our talents and capabilities for the mutual benefit of society. And we know that the eventual response to the turmoil of the industrial revolution was the Welfare State and redistributive tax and benefit systems.

But these new social and political structures took a long time to emerge after the industrial revolution started to reshape the society and the UK economy in the late 1700s. So could we face a similar long period of upheaval and turmoil before we find a way of grappling with the changes created by the new digital economy?

The book is ultimately rather ambivalent and silent on this big issue, which is disappointing. But maybe it is honest. If we look at the political turmoil created by Brexit and the 2016 US Presidential Election, it is clear that traditional political systems in well-established major economies are struggling to come to terms with the distributional consequences of big shifts in technology and changes in the global economy.

The other area of disappointment I have about this book is that it does not devote much emphasis to the rise of the big emerging market economies like China and India. What is termed ‘hyperglobalisation’ is discussed in one short chapter, but it is not properly integrated into the analysis.

Having said that, this is a stimulating and readable book – and it zeroes in on the key issue about the impact of technology and broader economic change on our society.  The big challenge is not that economic growth will be stopped in its tracks or that mass unemployment will be generated. It is how the gains and losses across society are distributed, and how we cope with these distributional shifts. The economics profession has not devoted enough effort and thought to these issues of income distribution, so Ryan Avent’s book is a very welcome wake-up call.