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?
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 2 / 23
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.
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 3 / 23
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)
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Long term pa�erns
The wage productivity gap in the US Economy
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 5 / 23
Long term pa�erns
Real wage growth 1973-2012
Figure: Source: Economic Policy Institute
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 6 / 23
Long term pa�erns
Real wage growth 2007-2012
Figure: Source: Economic Policy Institute
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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
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 8 / 23
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
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 9 / 23
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
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 10 / 23
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
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Long term pa�erns
Declining labor force unionization rate
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 12 / 23
Long term pa�erns
Declining labor force unionization rate
Figure: The beneficial e�ects of unionization - Freeman, 1980, JOLE
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Long term pa�erns
Declining Business Dynamism
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 14 / 23
Long term pa�erns
Declining Job creation rate
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 15 / 23
Long term pa�erns
Jobless recovery
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 16 / 23
Long term pa�erns
Polarization
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 17 / 23
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
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 18 / 23
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
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 19 / 23
Technology and macroeconomic developments
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.
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Technology and macroeconomic developments
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.
G. Dosi (SSSUP) The end of the Fordism Madrid, 14 March 2017 21 / 23
Technology and macroeconomic developments
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
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Technology and macroeconomic developments
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
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