Where Do We Go From Here?

The Shape of Automation

by Herbert Simon
Harper & Row, 111 pp., $3.95

The Guaranteed Income: Next Step in Economic Evolution?

edited by Robert Theobald
Doubleday, 233 pp., $4.95

The problem of technological unemployment will, I suspect, haunt us for the rest of our lives. I do not mean that at every moment it is going to be the paramount economic problem—as it is not, for example, at present when we are threatened with war-induced inflation. But, I believe that a persistent cloud of technological displacement will nonetheless hover over the future of capitalism, and proposals to remedy it will accordingly provide us with fare for our reformist appetites for a long time to come.

Both books under review are immediately concerned with this prospect, although from widely divergent points of view. Professor Simon’s short but carefully argued collection of essays contends that I am quite wrong, and that automation holds out no unduly severe challenge for capitalism—indeed, quite the reverse. Robert Theobald’s book, on the other hand, assumes that the cybernetic trend of technology already augurs the most drastic change in social organization, and therefore requires a remedy appropriate to what might otherwise be a disaster. To make things utterly confusing, I think that both books are wrong—for reasons that I hope to make clear to non-economists as well as to economists.

Professor Simon describes himself in a phrase that has become something of a catchword with the (many) economists of his persuasion: He calls himself a “technological radical and an economic conservative.” By this he means that he is prepared to grant that the computers can perform a sweeping variety of human tasks; but at the same time, he is not prepared to admit that the new technology, for all its virtuosity, constitutes an essentially different economic challenge from that posed by pre-computer machines, or that this challenge, past, present, or future, will prove essentially disruptive to our economic system.

It is difficult for me to judge the validity of Professor Simon’s technological radicalism, although what he writes about the nature of managerial decision-making and the possibility of duplicating it technically strikes me as original and important. But I have no such diffidence about his economic conservatism, which I believe to be not only incompatible with his technological radicalism, but based on much too narrow a description of the automation problem itself.

PROFESSOR Simon’s equanimity about the future rests on two rather technical but highly important arguments. One of them is a demonstration that under certain carefully specified conditions, any technological change that saves either labor or capital in the productive process redounds to the benefit of labor in the distribution of national income. The other, which I will discuss later, relies on the Law of Comparative Advantage to assure us that no matter how many workers may be thrown out of work in one industry or field, there will always be some other field where their labor power can be profitably used.

This is not the place to enter into a dispute with Professor Simon about his first contention—that technological progress always raises the rate of wages for …

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Letters

Automation May 26, 1966

Automation May 26, 1966

Automation May 26, 1966