The Internet of Things and the Future of Work

Technological change has significantly transformed the labour scenario as the result of the diffusion of innovative practices at the micro-level. The technological impact on the future of work was deeply analysed by Jeremy Rifkin. According to him, we are facing a new phase of history – Third Industrial Revolution – that is characterized by the steady and inevitable decline of jobs in the production and marketing of goods and services.

Today, the Third Industrial Revolution is a convergence of internet and renewable energy.  The internet technology and renewable energies are currently starting to merge in order to build a new infrastructure for a Third Industrial Revolution (TIR) that will change the distribution of economic power in the 21st century. Indeed, changes in power will provoke a fundamental reordering of human relationships – from hierarchical to lateral power – that will impact the way we conduct economic and social activities.

The intelligent TIR infrastructure—the Internet of Things—will virtually connect every aspect of economic and social life via sensors and software to the TIR platform. The connections will feed Big Data to every node—businesses, homes, vehicles, etc. — in real time.  In turn, the Big Data will be analysed with advanced analytics, transformed into predictive algorithms, and programmed into automated systems. Accordingly Rifkin, this process will improve efficiencies, increase productivity, and reduce the marginal cost of producing and delivering a full range of goods and services across the entire economy.

Many leading global IT companies are already working on the build-out of the Internet of Things infrastructure for a Third Industrial Revolution.  Among the initiatives, we can highlight GE’s “Industrial Internet”, Cisco’s “Internet of Things”, IBM’s “Smarter Planet” and Siemen’s “Sustainable Cities”. These initiatives aim to bring online an intelligent infrastructure that can connect the world economy in a global “neural network” designed to be open, distributive and collaborative.  As a result, this network will allow anyone, anywhere, and at any time, the opportunity to access the Big Data to create new apps for managing daily lives.

On behalf of this high-technology revolution, the number of people underemployed or without work will rise sharply since computers, robotics, telecommunications, and other cutting-edge technologies are replacing human beings in manufacturing, retail, and financial services, transportation, agriculture, and the government sector. In truth, in an increasingly automated world, workers are being polarized into two forces: on one side, an elite that controls and manages the high-tech global economy; and on the other side, a growing numbers of displaced workers who have few prospects for job opportunities that could fulfill human needs.

 

 

Further Readiing

Rifkin, Jeremy (2011) The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World. Palgrave Macmillan

 

 

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13 comments
  1. “the number of people underemployed or without work will rise sharply”

    This problem can be constructively addressed by changing also the NATURE OF MONEY.

    This is the short chapter on technological displacement from Money as Debt III – Evolution Beyond Money

    Technological Displacement
    People are always losing their jobs to machines. What can be done about that?
    This proposed system is based on 100% recycling of purchasing power.
    Gone is the overhanging debt at interest to banks.
    Gone are the loan payment schedules.
    Whoever holds the Issuer’s credit is the Issuer’s creditor
    Gone is any possibility of bankruptcy because there’s no bank to… rupt.

    If the Issuer wishes to sell x units the Issuer must spend enough credit into circulation for the customers to buy x units.
    If a machine replaces a person, it’s very clear the Issuers must still supply their customers with the purchasing power to buy their production. This is something Henry Ford realized long ago. He paid his workers three times the going wage.
    This enabled them to buy the cars they were building and thus expand the industry.

    But this essential principle of a successful economy has been forgotten in recent times. Cost-cutting for shareholder profit has savaged the purchasing power of wage-earning consumers. This has suppressed demand, bringing on even deeper cost-cutting, off shoring of jobs to cheap labour nations, expanding debts at all levels, defaults, bailouts and all the distress we are witnessing.

    In contrast, this proposed system would require distribution of the full purchasing power to the customers even if NO human employees were required. (end quote)

    There would be no other path to business success.

    Businesses could then spend their income to hire people to perform needed or desired activities that are not of a commercial nature. This could even become the new realm of competition… how much tech progress can be converted to environmental and social progress.

    The mechanics of the proposal are described in great detail at
    http://www.moneyasdebt.net

    The one economist to actually examine my proposed system with an open mind had this to say:

    “”…the obvious solution is not merely to foster the use of transferable product-specific vouchers as stores of value but to make them company-specific and include expiry dates on them. Businesses that issue them could then be confident about the level of sales they can achieve before the end of the expiry period. This is where we go, roughly speaking, if we follow the ingenious proposal of Paul Grignon, a Canadian film maker whose excellent animated documentary Money as Debt deserves to be screened to all students of economics.”

    ……

    “I find Grignon’s proposal especially well thought out. The time for this self-issued credit system to be implemented seems ripe both because of the failure of the existing bank-credit system and because we now have the technology to make it work.”

    read the full review here:
    http://paulgrignon.netfirms.com/MoneyasDebt/MAD2014/Peter_Earl_Real-World_Economics_Review_Blog.htm

  2. Maria Alejandra Madi said:

    Hi Paul,
    Thanks for your comment. I also agree that we need to apprehend the current labor challenges considering not only the technological displacement bu also the financialization of management practices.

    Maria

    • Maria Alejandra Madi said:

      H Hazel, thanks for your comment. While money is an end in itself, social behaviors turned out to be overwhelmed by the profit motive. Indeed, while speculative and short-term portfolio decisions predominate in business strategies, management practices support the profit motive that searches for growing efficiency instead of creating jobs and reducing inequalities. In this scenario, governments have faced increasing challenges to support an ethically defensible approach to working conditions.

      Maria

  3. “financialization of management practices”

    Very different thinking is required to operate in a world where money is CREATED by and for the process of production and distribution, and extinguished upon completion of its cycle rather than being a “quantity” made valuable by its own scarcity that can be acquired, withheld, lent or invested for perpetual dividends.

    An estimated 20% of world trade is already being conducted with credit payable only in the goods and services promised.
    It is currently unco-ordinated, unregulated and mostly business-to-business. The big change needed is to make these essentially crowdfunding credits available to the general public as SAVINGS. That corrects the root mathematical flaw in the current system – money that is created as a debt-of-itself on a schedule and then used as an indefinite store of value that can be re-lent.

    http://paulgrignon.netfirms.com/MoneyasDebt/Grignon_Recursive_Re-lending_Analysis.pdf

    http://www.moneyasdebt.net

  4. In addition to the above, in the auto-balancing system as proposed in detail at my website, profits can only be realized by spending them. If the Issuer doesn’t spend its profits as they come in, the profits will go to their customers instead.

    As a result of the above auto balancing, the proposed system deals with long term debt in a totally fair, constructive and counter-cyclical way immune to losses caused by default.

    http://paulgrignon.netfirms.com/MoneyasDebt/MAD2014/solution7mortgages.htm

  5. Maria Alejandra Madi said:

    Hi,

    Is your profit- speding scheme based on Michal Kalecki?

    Maria

    • No. Never heard of him and after looking him up definitely not.

      In my proposed system, if a credit Issuer doesn’t spend their profits their credits will automatically value over par giving the unspent profits to the purchasers of the production, not the Issuer nor its shareholders. The only way that profits can be accumulated as “money” is by the purchase of someone else’s production credits, which are still debts payable in goods or services only within a limited time.

      From Money as Debt III the short chapter on Profits precedes the one on technological displacement.

      How does one earn a profit?
      The same way one earns a profit now… by selling production for more than it costs to produce it.
      However, in this proposed new system, the Issuer of credit must maintain a perfect balance-of-trade for their credit to remain at par. Therefore, taking in more than was spent would just cause a shortage of their credit in the market.
      The shortage causes the value of that credit to rise, relative to the prices, which are expressed in the universal value unit.
      This sounds good but it isn’t.
      The Issuer’s credit is worth more than par when spent, seemingly of benefit to the Issuer.
      However, if an Issuer’s credit is over par when redeemed for goods or services, it will
      cost the Issuer even more in real goods and services to get it back.
      Why? Because everything is always priced in the universal unit.
      With over-par credit, the Issuer’s customers will spend less of that credit to buy the Issuer’s products than they would have at par. This leaves more of the Issuer’s credit in circulation, compensating for the shortage automatically.
      The result is that if the system has to self-correct, the Issuer does not get the potential profit. Instead it goes to the Issuer’s customers as an additional bonus.
      To make a profit, the Issuer must spend new credit as required to keep its credit at par. Therefore we can say that, in this system, Issuer profits could only be realized by spending them immediately. Perfect flow.
      Issuer profits can’t be piled up as money in the bank, seeking further gain.
      Profits must flow quickly back into the general economy where customers can earn that purchasing power again.
      An employee bonus of immediately redeemable credit would be a fair, popular and effective method of quickly sharing profits to avoid overvaluation. Charitable donations would be too. Or… hiring people to do socially useful non-commercial work such as environmental cleanup.

  6. Maria Alejandra Madi said:

    Great! Many economists are still thinking in terms of the Kaleckian model. Which are your theoretical references?

    Maria

    • I start with the ACTUAL rules of banking as explained in the publications of the Federal Reserve, The Bank of England, the Bank of Canada and the ECB.

      http://paulgrignon.netfirms.com/MoneyasDebt/Money_or_Credit.pdf
      http://paulgrignon.netfirms.com/MoneyasDebt/Where_does_Money_Come_From.pdf

      This system results in multiple principal debts of the same money which creates Perpetual Debt and the grow or collapse imperative. At one point on 2 successive days I was invited to submit academic papers for peer review, one to the WEA and the other to a science journal.

      Peer-reviewed paper published by the World Economics Association:
      Proposed new metric: the Perpetual Debt Level
      http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/WEA-PEEMconference2013-Grignon.pdf

      Abstract
      It is my contention that a critical metric in economics is missing. I call it the Perpetual Debt Level. This is the amount of bank credit money in circulation that is not available on time nor free of any other debt, to extinguish the debt to a bank that created it. This creates a borrow from Peter to pay Paul and vice versa Perpetual Debt situation in which the amount of the principal involved can never shrink, and the timing of its delivery can never slow down without causing mathematically inevitable defaults. Therefore, to avoid such defaults, it is, in practice, necessary to maintain growth of the money supply at all times. (1) I further claim that there is no escape from this destructive arithmetic problem within the concept of money as a quantity of a thing-in-itself, and especially within the current practice of money created as a debt-of-itself. The only remedy is radical, a total transformation of our concept of money.

      Papers invited by Hypothesis Journal vigorously blocked by over 150 economists:

      Money Hypothesis 1: why our current money system is unstable
      http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/Grignon_Hypothesis_Journal_Submission_Part1_2013%20-%20Grignon_Hypothesis_Journal_Submission_Part1_2013.pdf

      Money Hypothesis 2: a different concept of money
      http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/Grignon_Hypothesis_Journal_Submission_Part2_2013.pdf

      The main reason given for rejecting my analysis was that I quoted the actual rules of banking from the websites of 3 central banks as my references rather than quote previous papers by economists. The main objection to my proposed alternative is that “It would require change”. Seriously… economists rejected my analysis because it is based on documented facts “from the horse’s mouth” and rejected my proposal for change because it would require change. What can one do with people like that?

      The ROOT problem is money as a limited quantity made valuable by its own SCARCITY.
      Therefore the solution must be a different concept of money – money that is a promise of REAL ABUNDANCE.

      Therefore money must be a time-limited claim on actual production. E.C. Riegel advanced the same concept more than 60 years ago. You can download his book from here. http://paulgrignon.netfirms.com/MoneyasDebt/MAD2014/solutionECRiegel.htm

      The self-correcting “intelligent money” aspects of my design are entirely my own as we now have technological capabilities far beyond those available to Riegel.

    • Perhaps more to the point relative to the Kaleckian analysis, would be this huge difference. In the proposed Producer Credit system, money is created as a DIRECT investment in short term future production of goods and/or services. Or, to put it another way, production is crowdfunded directly by spending redeemable vouchers as money with the only debt involved being the timely delivery of satisfactory goods and/or services by the issuer.

      Thus, relative to the future of work, if product X can be created for zero cost and sold for $10, that $10 MUST be spent on something in order for it to be available to the customer to acquire. In this way the commercial value of technological progress can be converted to social value by paying people to do whatever needs to be done that isn’t commercially viable.

    • Maria Alejandra Madi said:

      Good remark. Thanks for your comment.

      Maria

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