“The Value of Any Technology is Unlocked Incrementally”

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DeathtoStock_Wired7The overriding economic argument regarding the impact of technology on the workforce tends toward job elimination and wage decreases. Walter Frick, in his synopsis of James Bessen’s soon-to-be-released book, Learning by Doing, shares a different perspective:

. . . Bessen returns to Marx’s 19th-century weavers to prove that as humans work with technologies over the long term, they improve them and boost their own fortunes in the process. So, yes, when the power loom was invented, in 1785, it shifted weaving from farms to factories, instantly increasing productivity yet leaving workers’ wages flat for decades, as Marx noted. But he failed to predict what happened next: From 1860 to 1890, weavers’ pay more than doubled.

That’s because the value of any technology is unlocked incrementally, Bessen argues, perhaps over a generation, through on-the-job learning. Weavers working with early power looms produced two and a half times as much cloth per hour as their predecessors who used hand looms; 80 years later, they produced 50 times as much. It’s therefore the adopters and adapters of a technology – not its inventors – who create much of its value.

Still, wages don’t rise until the skills needed to operate a technology are standardized and able to be easily taught to workers. Once power looms matured and factories became more uniform, weavers could credibly threaten to take their skills elsewhere – and command more money as a result. Bessen offers several recommendations to speed up skills training in modern times: increased investment in community colleges, vocational education, and retraining programs for displaced workers, along with company-sponsored training and development programs that help workers learn new skills and gain experience with new technologies.

Frick cites Joseph Stiglitz and Bruce Greenwald’s book, Creating a Learning Society, in response to the question, “wouldn’t companies have ample incentive to invest in training themselves?” with their viewpoint of, “not necessarily.” And continues

And so policy makers do have an important role to play: not only in funding research but also in creating compelling incentives for socially useful innovation and discouraging the spread of harmful technologies.

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