Bust of the Roman Emperor Vespasian. (Photo from en.wikipedia.org.)
Some people worry that advances in artificial intelligence (AI), particularly the development of chatbots will permanently reduce the number of jobs available in the United States. Technological change is often disruptive, eliminating jobs and sometimes whole industries, but it also creates new industries and new jobs. For example, the development of mass-produced, low-priced automobiles in the early 1900s wiped out many jobs dependent on horse-drawn transportation, including wagon building and blacksmithing. But automobiles created many new jobs not only on automobile assembly lines, but in related industries, including repair shops and gas stations.
Over the long run, total employment in the United States has increased steadily with population growth, indicating that technological change doesn’t decrease the total amount of jobs available. As we discuss in Microeconomics, Chapter 16 (also Economics, Chapter 16), fears that firms will permanently reduce their demand for labor as they increase their use of the capital that embodies technological breakthroughs, date back at least to the late 1700s in England, when textile workers known as Luddites—after their leader Ned Ludd—smashed machinery in an attempt to save their jobs. Since that time, the term Luddite has described people who oppose firms increasing their use of machinery and other capital because they fear the increases will result in permanent job losses.
Economists believe that these fears often stem from the lump-of-labor fallacy, which holds that there is only a fixed amount of work to be performed in the economy. So the more work that machines perform, the less work that will be available for people to perform. As we’ve noted, though, machines are substitutes for labor in some uses—such as when chatbot software replace employees who currently write technical manuals or computer code—they are also complements to labor in other jobs—such as advising firms on how best to use chatbots.
The lump-of-labor fallacy has a long history, probably because it seems like common sense to many people who see the existing jobs that a new technology destroys, without always being aware of the new jobs that the technology creates. There are historical examples of the lump-of-labor fallacy that predate even the original Luddites.
For instance, in his new book Pax: War and Peace in Rome’s Golden Age, the British historian Tom Holland (not to be confused with the actor of the same name, best known for portraying Spider-Man!), discusses an account by the ancient historian Suetonius of an event during the reign of Vespasian who was Roman emperor from 79 A.D. to 89 A.D. (p. 201):
“An engineer, so it was claimed, had invented a device that would enable columns to be transported to the summit of the [Roman] Capitol at minimal cost; but Vespasian, although intrigued by the invention, refused to employ it. His explanation was a telling one. ‘I have a duty to keep the masses fed.’”
Vespasian had fallen prey to the lump-of-labor fallacy by assuming that eliminating some of the jobs hauling construction materials would reduce the total number of jobs available in Rome. As a result, it would be harder for Roman workers to earn the income required to feed themselves.
Note that, as we discuss in Macroeconomics, Chapters 10 and 11 (also Economics, Chapter 20 and 21), over the long-run, in any economy technological change is the main source of rising incomes. Technological change increases the productivity of workers and the only way for the average worker to consume more output is for the average worker to produce more output. In other words, most economists agree that the main reason that the wages—and, therefore, the standard of living—of the average worker today are much higher than they were in the past is that workers today are much more productive because they have more and better capital to work with.
Although the Roman Empire controlled most of Southern and Western Europe, the Near East, and North Africa for more than 400 years, the living standard of the average citizen of the Empire was no higher at the end of the Empire than it had been at the beginning. Efforts by emperors such as Vespasian to stifle technological progress may be part of the reason why.
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