Will AI & ESG cause another paradigm shift vis-à-vis the market? - Josh Morganstein

By

Anderson lays out a compelling case in Chapter 1 that the Industrial Revolution is responsible for the paradigm shift vis-à-vis the market. Before the Industrial Revolution, capitalism was promoted as a force for a more egalitarian society. Self-employment was encouraged rather than slaving away for a master, being a serf to a lord, or an artisan, citizen, priest, or wife subject to the arbitrary and absolute authority of the guild, king, bishop, and husband, respectively. In Smith’s ideal world, everyone would be a master of himself (TMS) but nobody else (WN). Employer-employee dynamics were thought of as occurring in a small context—Anderson points out that Smith’s pin factory is a factory of only 10 employees. Rather than being justified using the rationalizations that Anderson (and Shaira in her blog post) summarized, Smith likely imagined that hierarchies (or a system of ranks) would arise as the result of ambition, merit, and trades bounded by justice. Nevertheless, “The Industrial Revolution,” as Anderson writes, “shattered the egalitarian ideal of universal self-government in the realm of production” (33). Documentation of factory conditions grossly exposed the harsh treatment of workers, economies of scale and mass production shattered the idea of self-employment that previous market enthusiasts were so attached to, and hierarchies set in place laid the groundwork for the control that employers exercise over their employees today, a phenomenon that Anderson expands upon in Chapter 2. Anderson uses the Industrial Revolution to explain how Smith and Marx could have such radically different views of the market. 

Today, I would argue, that society and the economy stand on the precipice of another great Industrial Revolution that should rival that which occurred at the end of the 18th century and throughout the 19th century. Hyper-globalization has created a world that is dominated by multinational corporations. Automation and robotics have already decimated many blue-collar jobs, and artificial intelligence is set to radically disrupt white-collar jobs. For those that doubt the impact of changes in the economy, I can point to just a short list of impacts to dissuade them of that notion: Trump’s election (mainly as the result of flipping dissatisfied working and middle-class voters in the Midwest), the rise of populism and illiberal democracy across Europe (in response to the loss of traditional jobs and xenophobia backlash to migration) and Latin America (in response to the impacts of globalization and free trade), and tension with China (although Taiwan is in the news right now, the main driver of tension over the past two decades has been caused by accusations of unfair trade practices—industrial subsidies, currency manipulation, dumping, etc. that have allegedly destroying American industries like manufacturing). These changes and impacts are just the cusp of what is to come. Artificial intelligence will radically alter how work is done, and will drive new technologies like self-driving vehicles. Jobs will become increasingly white-collar as robotics get more advanced. Following the logic of Anderson’s argument, as she eloquently articulated in the first chapter, it is hard to see how this change would not lead to yet another paradigm shift. Laissez-faire market enthusiasts, Marxists, and even Anderson (who accounts for private government), might struggle to adapt their theories to such profound economic changes.

Alongside artificial intelligence is the rise of ESG (Environmental, Social, and Governance) frameworks. The biggest companies, those that Smith could not predict and those that Anderson laments the power of, are increasingly becoming more activist, greener, and more socially conscious. Some would label these moves revolutionary—others would say that they are nothing more than a smokescreen to mask their exploitation of workers and contribution to inequality. Regardless, ESG making a pretty big impact in terms of capital flows—investors are increasingly paying attention to ESG in an important way.  Whether ESG will make the market friendlier, and perhaps more attuned to egalitarianism, remains to be seen. Nevertheless, as we continue to read more of Anderson’s book, I think it could be useful to consider how AI (and thus, likely the mass displacement of jobs) and ESG could impact the level of control employers have over their employees. I could see arguments made in both directions—but I will digress for now and await your reactions. 

Comments

  1. Umer LakhaniApril 19, 2023 at 2:41 PM

    Hi Josh, I think this is a great reading and extension of Anderson's exploration of workplace dynamics. I wanted to pull on this thread a little more by asking whether artificial intelligence could help to solve some of the issues that Anderson raises? Specifically, in chapter 7, she replies to Cowen by clarifying that she objects "not to limited government, but to private government - the subjection of workers to arbitrary, unaccountable government, in which they have no voice other than what their employers care to give them (which is often none at all) and are vulnerable to abuses of power." (205) However, if we look at many of the occupations that AI and automation are replacing, Anderson's objection here holds less weight.

    Anderson seems to be concerned workers' rights to hold their employer responsible for abuses of power, and to have some say in their job's activities. However, if we take the example of factory workers or truck drivers (two examples that she herself raises), then AI or automation can help to negate these issues. For instance, you raised the example of self-driving vehicles, which could replace truck drivers. Automated robotics could also eventually replace the factory workers that have to put up with inhumane working conditions, negating the need to provide for all of the facets that human workers deserve (according to Anderson). For example, there would be no concerns about workplace injury or being demeaned.

    This does raise two further concerns. One is the more obvious issue of the widespread unemployment and redundancy that AI and unemployment will lead to. The other more interesting one is the issue of AI rights. If AI and robots eventually reach a level of advancement whereby their behavior and speech is indistinguishable from that of a genius-level human (say they are able to pass the Turing test, or some more advanced equivalent that will inevitably be designed for AI), do we need to have a conversation about AI and robot's rights?

    ReplyDelete

Post a Comment

Popular posts from this blog

Why Cowen and Anderson are both wrong-George

By
In their dialogue, both Cowen and Anderson fail to address important elements of each other's arguments. Cowen's failure is primarily empirical. He dismisses the significance of labor market monopsony out of hand (109). Although economists disagree about the relevance of employer labor market power, Cowen does not sufficiently address the credible evidence of its role in suppressing compensation. This evidence has only grown in the years since Private Government  was published. One consideration as to the relevance of monopsony is the pay-productivity gap. Although libertarian economists chafe immensely at any implication that workers do not benefit from higher productivity, and the popular understanding of the pay-productivity gap is indeed exaggerated, even the most pro-market economists are forced to admit to a degree of "delinkage" between the growth of labor productivity and the compensation of nonsupervisory employees. Interestingly, there is less evidence of de...
Read more

Responding to Jemma and Aara: Another consideration that Rawls does not discuss--- Luis

By
  Hey Jemma and Aara,   Thank you for the thought-provoking blogs! I definitely felt that Okin made her argument less favorable by structuring her last part of Chapter 6 with a sense of constructing a ladder of what social standing has a greater impact on "one's thinking of justice." I agree with you and Aara in that Okin's critique of the unequal gender-based structure is strong and needed to achieve Rawls's basic structure of a well-ordered society. I also believe that stating that gender is the most prevalent identity that will form an individual's concept of "justice" undermines intersectionality. I wanted to add another layer that is not accounted for by Rawls, which Okin hints on.  After reading both blogs, I initially thought about our seminar where Kat and I argued for what Aara was discussing, a knowledge of the global racial empire, or in other terms, the history of racism and colonialism in the original position. I was sold on that argumen...
Read more

Evaluating Harris Whiteness as Property--- Luis Mendoza

By
      In "Whiteness as Property," Cheryl I. Harris builds her work on the image of her grandmother and her ability to use "passing" in her labor and daily life (1710). The main advantage of passing, as stated by Harris, is that it "[increases] the [possibilities] of controlling critical aspects of one's life rather than being the object of other's domination" (1713). At this moment, I want to focus on her functions of whiteness which comes after her discussion that whiteness is property through its theoretical descriptions. More specifically, I will digest one attribute of whiteness as property: "the rights to transfer or alienability" (1731).              One of Harris's points is that because theories surrounding property state that it must have the aspect of alienability, it makes whiteness as property more difficult to process. The issue is that "whiteness," as Harris states, "is incapable of being trans...
Read more