Book review: The Technology Trap

I particularly enjoyed the first component, because until now I’ve read much less about the industrial revolution than I should have. That also means that I’m not qualified to evaluate the book’s accuracy. However, it had interesting discussions of:

• The technological prowess of the Romans, and why they were held back from industrialising both because of their slave-based economy, and also because of an implicit dismissal of the private economy.
• The development of some surprisingly important technologies during the Middle Ages, such as wind- and water-mills, better ways of accessing horsepower (via improved horseshoes, harnesses and ploughs), and town clocks.
• The fact that most of the key innovations of the early industrial revolution (steam engines excepted) would have been technologically possible a century or two earlier, but were blocked by the political power of guilds.
• The importance of the Glorious Revolution in shifting England’s political climate to favour industrialisation; and more generally, the role of competition between nation-states in spurring government permissiveness towards innovation.
• The mechanisation of the silk industry as a smaller-scale precursor to the mechanisation of cotton processing that would drive the early years of the industrial revolution.
• The prevalence of child labour in the first factories run by Arkwright and others; and more generally how miserable the first few decades of the industrial revolution were for the poor, who were crammed into unsanitary cities on reduced wages, with severe health consequences.
• The fact that it took many decades after Watt’s steam engine was patented in 1769 for railways to actually become widely significant.
• The role of arms manufacturers like Colt as precursors to Ford’s assembly lines.

In its latter role, however, the book seems a little incomplete. From around 1770 to 1840, productivity rose while worker incomes stagnated, with the increased wealth primarily going to industrialists - a period known as “Engels’ pause”. Frey argues that today, as the incomes of Western workers stagnate, we’ve reached an analogous situation. Engels’ pause gave rise to Luddite riots and the growth of the communist movement. Similarly, the modern working class will be tempted to campaign against automation - a “technology trap” which we will need to overcome to reach the level of technology which makes prosperity more widespread.

Certainly the thesis is initially plausible, but at the end of the book I was left with quite a few unanswered questions. Four particularly important ones:

1. Frey makes the distinction between replacing technologies and augmenting technologies. The former “render jobs and skills redundant”; automatic elevators are a good example. The latter “make people more productive in existing tasks or create entirely new jobs for them”; Frey’s examples are innovation in the steel industry and the invention of the typewriter. But there’s a pretty blurry line between these two categories. An augmenting technology becomes a replacing technology if “demand for a given product or service becomes saturated”, a criterion which has less to do with the sector itself than with the broader state of the economy. But if we’re considering the wider economy, then the lower costs provided by replacing technologies enable other sectors to produce more goods, making them augmenting after all. So while the call to “augment not replace” workers has become a rallying cry, I’m not sure that the distinction has much predictive power. Can we tell in advance which technologies will be augmenting vs replacing, or do we just have to wait until a few decades later and look at the job statistics?
2. Building on the last point: you could describe the first industrial revolution as starting off with replacing technologies (such as power looms) and moving on to augmenting technologies (such as the steam engine). And you could describe the second industrial revolution as being all about augmenting technologies (such as electricity and cars - although the latter could also be considered a replacing technology for horses). If Frey is right that the current wage stagnation has been driven by automation, then this matches the beginning of the first industrial revolution.* But are there good reasons to think that we’ll eventually transition to building augmenting technologies in the same way as they did? Reasoning from a small sample size is treacherous at the best of times, and in this case our n=2 sample showcases two different trajectories. We might be about to experience a third distinct trajectory: AI continuing to be a replacing technology to a greater and greater extent. I do think this is unlikely (as I argue here) but it’s an open possibility.
3. Frey discusses the experience of America’s blue-collar middle class - which, he argues, has lost jobs to a combination of globalisation and automation. But (assuming this is true) how much of the responsibility should each factor bear? If it’s almost all due to globalisation, then the chapter is a little misleading. I don’t have any particular reason to think that, but Frey doesn’t do the work of convincing me otherwise. (Although, since globalisation has been made much easier by information technology, should we count it as an effect of automation? It seems roughly analogous to how technologies invented early in the industrial revolution allowed adults’ jobs to be done by children.)
4. Frey worries that the technology trap will lead to workers suppressing technological growth. Yet there have been many changes to the factors which originally held back industrialisation. Guilds/unions are much reduced in power; international competitiveness is now a top priority; faster communication channels facilitate the spread of new ideas; and the intellectual plausibility of stifling innovation as a way to protect workers is much diminished, given how hugely we have benefited (in material terms) from the last few centuries of technological progress.
   On the other hand, everyone has the vote now, which wasn’t the case in the past. And many people are using those votes to send a strong message against current intellectual orthodoxy. And with the pace of change being much faster now than in the 1700s, perhaps the backlash it spurs will be concomitantly greater. Or maybe it will mean that the anti-technology camp has less time to coordinate resistance. It seems very unclear how these factors weigh against each other; Frey’s historical analogy can only take us so far.

Frey finishes with a set of prescriptions for how to close the gap between the winners and losers from automation, most of which are standard and sensible - e.g. cutting back on occupational licensing, encouraging relocation, investing in high-speed rail, and reforming housing markets. A more novel proposal is wage insurance, which compensates people when they are forced into lower-paying jobs. It seems like a good idea for individuals, but if implemented by the government as Frey suggests, I worry that it’ll become yet another piece of clutter in an already overcomplicated and inefficient welfare system.

I want to end this review with a theme of the book that I particularly liked: the rehabilitation of the Luddites. Frey emphasises that, despite having become a byword for ignorant destructiveness, the Luddites were actually campaigning against a major threat to their livelihoods and communities, and we should sympathise with them. The parallels with our modern era are obvious - and the more we can rise above pejorative descriptions of our political opponents, the better.


* There’s also the complication that incomes in the tech sector have been rising rapidly. Was there an analogous group of skilled workers who benefited from Engels’ pause? I suppose that the job of building the machines must have been a lucrative one, but I really don’t know.