The old question of whether China would “get old before it becomes rich” is being superseded by an even more pressing calculation.
Will Asian workers become obsolete before they get worthwhile jobs?
Robotics, automation and artificial intelligence are making industrial manufacturing jobs redundant, and with them the classic road map of how a developing economy progresses from peasant agriculture to a self-sustaining, middle class state.
The conundrum is an immediate concern in India, which is beginning to embrace manufacturing in the way China did 20 years ago. In a recent interview with Hindustan newspaper, Sanjay Modi, managing director for Asia of Monster Salary Index, said that in India manufacturing contributes only about 16% to gross domestic product and employs about 13% of the labour force.
In contrast, recent Chinese state statistics show manufacturing and industry making up about 40% of gross domestic product (GDP) and 27% of employment.
Modi said that acquiring a dominant manufacturing sector is the mark of a mature economy.
The historic experience is that by providing well-paid employment, manufacturing industry boosts agriculture and leads to the development of a vibrant service sector.
However, advances in automation and robotics mean that “if India wants to fulfil its ambition of becoming a manufacturing powerhouse, there is an immediate need to marry human skills with automation.”
India needs to immediately reprogram its industrial development policies so as to marry employee skills with the gathering tide of automation. The issue is pressing, he said, because India has 10 million young people entering the workforce every year.
Dhanurjay Patil, former United States chief data scientist and author of a report for the White House on the impact of artificial intelligence, says the employment and social impact goes well beyond manufacturing jobs.
“We have to ask ourselves, as we get better automation overall, what is going to happen to the society. Bank tellers, e-discovery for lawyers and the role and jobs for other areas such as self-driving cars and other vehicles.
“Where is this going?” Patil said in an interview with The Hindu newspaper.
University of Pretoria political economy professor Lorenzo Fioramonti has studied and written extensively on the social and political implications of robotics, artificial intelligence and automation, especially in the developing world.
“Unless societies change their approach to growth and development, they will not only end up with a broken planet and conflict-ridden communities; they will also face massive unemployment,” Fioramonti wrote in an essay published in June.
Fioramonti points to his home continent, Africa, but what he says applies equally to Asia. “Africa is expected to achieve a record 2.8 billion people by 2060, becoming the largest continent in the world. Most of these people will be young and thirsty for work. There is no way the continent will create decent employment opportunities by adopting an industrial model that’s already eliminating jobs globally,” he wrote.
Fioramonti advocates what he called the “well-being economy,” which he defines as “shifting the focus from the quantity of the production-consumption cycle to the quality of the relations underpinning the economic system.”
“The well-being economy must embrace a customised approach to economic exchanges, in which it’s the quality of the human interaction to determine the value.
“The economy is nothing else than a system of social relations. If productivity undermines those relations, the economy itself crumbles, even when profits (at least for someone) may go up.”
Fioramonti is optimistic that “developing countries can now leapfrog to such a new trajectory.”
But a swift glance around the world raises serious questions about whether the political dispensations are in place that can manage such a sophisticated shift in economic construction and expectations. •
Jonathan Manthorpe (email@example.com) has been an international affairs columnist for four decades.