OK, so we appear to be coming out of a demand-led recession (or, as a few would have it, a supply-side recession)… provided there are no more ‘shocks’ (China? Ungovernable USA? More eurozone shenanigans?). However since UK business investment is currently down further to more than 8% less than last year, and since the UK trade deficit is stubbornly large despite severe sterling devaluation, and since we have a relatively (to other countries) severe productivity problem, I’m far from convinced our debt ratio will be much improved in the medium term. I’m also pretty convinced that ‘ordinary people’ will not see much benefit from the growth we do achieve in this ‘recovery’.
But I do also wonder if what happened and is now happening is not only a normal, albeit rarish kind of finance-triggered recession, exacerbated by misguided government austerity policies and their aftermath, but rather a ‘tipping point’ adjustment as an underlying IT/robotics technological revolution has finally reached escape velocity, while increasing globalisation also did the same? Maybe business doesn’t need to invest more?
What would that imply for the future?
There is some interesting research regarding the effect of computerisation on jobs in the UK and in the USA and other ‘developed economies’ too This doesn’t excuse appalling governmental mismanagement via austerity policies with doubtless appalling hysteresis effects on the part of the UK, the Eurozone and, to a lesser extent, the USA. But I wonder if the longer term problem isn’t one rather more equivalent to that of anthropogenic global warming – which hasn’t yet caused its major shock, (but surely will). In this case, the issue being that there are simply too many people who need jobs for the jobs that will be available – both middle and working class – in the short to medium term. I have no idea how long the employment disruptions of the first two industrial revolutions (say, steam/rail and electricity/internal combustion engine), actually lasted. But I have a nasty feeling feeling that this third industrial revolution’s disruption to people’s employment prospects in the developed economies and, later, worldwide, is going to last much longer and produce much more severe unrest and even revolutions, as large proportions of our populations simply become ‘unemployable’ and feral, while the uppermost tier of our societies – the global elite – live in gated communities which may cut their dependence on the people and infrastructure among and within which they reside.
It would, of course, be theoretically feasible to avoid such an outcome if the production potential and profits could be widely distributed so that ‘ordinary people’ did not need to work very much – their main function becoming simply to consume (l believe Kornbluth got there early, with his novella The Marching Morons in the 1951, if it wasn’t Keynes a couple of decades earlier). But without a nasty revolution it looks to me more like the coming dystopia of Elysium
EDIT: Noted for further thinking: http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2013/10/abundance-revolution.html (and multiple links…) Goodstuff!
EDIT again: An interesting 2012 paper on ‘robots’ replacing labour and being at least partially responsible for secular stagnation in advanced economies is here