The end of the Fordism and the emergence of a IV...

The end of the Fordism and the emergence of a IVIndustrial Revolution

Pa�erns and policy challenges

G. Dosi

Scuola Superiore Sant’Anna

Madrid, 14 March 2017

G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 1 / 23

A Blade Runner scenario?

A blossoming debate on the e�ects of robotization upon bothemployment and inequality is now spurring among scholars in theeconomic discipline.

Should we expect an age of medieval techno-feudalism governed by aplutocracy which owns machines and robots, which will enjoy highstandard of living, together with the most part of the populationdeprived of the benefits of technology?


Is this time really di�erent?

The Industrial Revolution was no marriage party for the workingclasses: it was largely an era of degradation of social conditions and ittook decades for productivity growth to trickle down to the workingclasses.

Today there are worrying factors which hint that it might not be so innear future. And they have to do with both the impact of the newtechnologies and, even more so, with the ways the old socio-economicregime, call it “Fordist”, progressively exhausted its driving force.


Long term pa�erns

Some long term pa�erns

1 De-industrialization2 Stagnant wages and divergence between productivity growth and

wage growth3 Declining labour share and related4 Massive surge in corporate profits, especially financial ones5 Declining labour force participation6 Declining business dynamism and net job creation7 Soaring inequality8 Polarization and growing number of part-time jobs (gig-economy)


Long term pa�erns

The wage productivity gap in the US Economy


Long term pa�erns

Real wage growth 1973-2012

Figure: Source: Economic Policy Institute


Long term pa�erns

Real wage growth 2007-2012

Figure: Source: Economic Policy Institute


Long term pa�erns

Decline of manufacturing shares

myf.red/g/5awa

5

10

15

20

25

30

35

40

1970 1975 1980 1985 1990 1995 2000 2005 2010

fred.stlouisfed.org

PercentofEmploymentinManufacturinginGermany(DISCONTINUED)PercentofEmploymentinManufacturinginItaly(DISCONTINUED)PercentofEmploymentinManufacturingintheUnitedStates(DISCONTINUED)PercentofEmploymentinManufacturinginFrance(DISCONTINUED)PercentofEmploymentinManufacturingintheUnitedKingdom(DISCONTINUED)

Percen

t


Long term pa�erns

Decline of labour compensation shares

myf.red/g/5awX

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

fred.stlouisfed.org

ShareofLabourCompensationinGDPatCurrentNationalPricesforGermanyShareofLabourCompensationinGDPatCurrentNationalPricesforUnitedStatesShareofLabourCompensationinGDPatCurrentNationalPricesforItalyShareofLabourCompensationinGDPatCurrentNationalPricesforFranceShareofLabourCompensationinGDPatCurrentNationalPricesforChina

Percen

t


Long term pa�erns

Declining median income

myf.red/g/4NAK

48,000

49,000

50,000

51,000

52,000

53,000

54,000

55,000

56,000

57,000

58,000

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

fred.stlouisfed.orgSource:US.BureauoftheCensus

RealMedianHouseholdIncomeintheUnitedStates

2014CPI-U-RSAdjustedDollars


Long term pa�erns

Surge of profits

myf.red/g/4JQK

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

fred.stlouisfed.orgSource:US.BureauofEconomicAnalysis

CorporateProfitsAfterTax(withoutIVAandCCAdj)

BillionsofDollars


Long term pa�erns

Declining labor force unionization rate


Long term pa�erns

Declining labor force unionization rate

Figure: The beneficial e�ects of unionization - Freeman, 1980, JOLE


Long term pa�erns

Declining Business Dynamism


Long term pa�erns

Declining Job creation rate


Long term pa�erns

Jobless recovery


Long term pa�erns

Polarization


Long term pa�erns

Declining job participation rate

myf.red/g/4Kpd

58

59

60

61

62

63

64

65

66

67

68

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

fred.stlouisfed.orgSource:US.BureauofLaborStatistics

CivilianLaborForceParticipationRate

Percen

t


Technology and macroeconomic developments

Matching or mismatching between three subsystems

1 The system of technologies

2 The economic machine

3 The system of social relations and institutions



The main question

The emergence of a new techno-economic paradigm?

The massive introduction of robotized work certainly characterizes theindustrial sectors, with robotic arms able to substitute for repetitive androutinized activities.

But, artificial intelligence, algorithms and so�ware developments becomeincreasingly relevant also in the service sectors, which nowadays employsthe largest labour share.

As a direct consequence, robotization and AI do not represent a threat onlyfor blue-collars workers, but for the white-collars as well.



How can humans cope with machines?

Many emerging start-ups in the Silicon Valley or in the Boston Areaare explicitly meant at creating and developing technologies able toentirely substitute for human labour.

Sectors like medicine and health care are lacking the introduction ofrobots and machine learning algorithms whose massive usage can becomplementary to human activity rather than replacing it.

Potentially, there is ample room to go well beyond the use of robotsand artificial intelligence in already standardized and high productivesectors, like fast-food production and delivery, to less routinised oneslike medicine and health care.



What to do?

Be there also on the production side (see the German Program onIndustry 4.0)

Prevent de-industrialization

Major mission-oriented programs

Income and working hours redistributions



The bo�om line

We are at the cross road between a Blade Runner Scenario and Keynes’svision (Economic Possibilities for our Grandchildren, 1930)

Public policies will make the di�erence


The end of the Fordism and the emergence of a IV...

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