The Third Legged Stool
• • ☕️☕️ 11 min readToday, I am going to challenge your assumptions about the future of work. In particular, I am going to ask you to think about what might happen when human beings become the third leg of the economic stool, standing alongside capital and labour.
The Third Legged Stool
Let me start with a little history.
Before the Industrial Revolution, the traditional economic model in Britain (and elsewhere) involved a middle man; a broker or a rentier that stood between a product and its buyer. This was the model for selling the corn you grew and rearing the pigs you fattened on it. The middleman could never hope to own enough land or capital to be in a position to buy up the entire crop. Instead, he bought in tranches, perhaps hiring a miller to do the grinding, and also hired a team of transporters, to cart the grain to market in London. The transport cost was a significant share of the overall cost of transporting grain.
Although in theory, the miller could go direct to the producer and cut out the middleman, this was only likely to happen if the producers decided to go out of business. The miller couldn’t afford to undercut the middleman’s price, because he couldn’t carry the same volume of grain. But equally, the farmer couldn’t afford to be undercut by the miller, because he would lose out on his margin. Instead, they agreed a price, and the miller and farmer were happy. Both sides enjoyed the benefits of a stable relationship, with the miller expecting to have steady access to a reliable supply of grain, and the farmer expecting to have a market to sell to at a reliable price. The market was well matched, and the stable economy of eighteenth-century Britain was built on an uneasy coexistence of rents and wages, with plenty of surplus income to be siphoned off into the pockets of the middleman.
But then the Industrial Revolution came along, and it changed everything. The economies of scale and the steam-driven efficiency of factories and machines, meant that everything was cheaper to produce; steel, glass, cloth, shoes. Steam engines were small, simple and easy to build, and they could replace horses, oxen, and humans, and so a factory worker could do the work of ten men in a hundred years. Suddenly, the middleman stood on a precipice. When a cow or pig was produced in a factory, there was no longer any need to buy grain for the feed, because the feed was in the factory too. Horses, oxen and humans could not work next to each other in a factory, and so were effectively obsolete, as were the transport routes. Some middlemen still made money, but it was now a more precarious affair, and where there had been prosperity, there was now poverty. A poor, desperate and unemployed underclass emerged, and Britain went through a period of high unemployment, violent strikes, and demonstrations, as the population struggled to cope with the sudden change in how work was done.
For a time, at least, the only solution seemed to be to clamp down on those left unemployed by the changes, and to put a lot of people in prison. The hungry and the desperate looked around for other ways to make money, and they turned to the crime that today we call counterfeiting, and were branded as “counterfeiters” by the authorities, and as villains and lunatics by the press.
Now, I am not suggesting that the current crop of low-skilled workers are on the same precipice that the millers were on. The world has changed; people are no longer displaced by machines that can do their job in seconds. But the principle is the same. Machines can do many of the jobs that we would expect a low-skilled worker to do, and therefore when the cost of labor goes up, or the number of available workers goes down, it is likely to become harder to employ people at the lower end of the skill spectrum. In this sense, the rise of a third legged economic stool would not be entirely unprecedented.
Although we are some way from achieving anything like the speed or scale of economic and societal change caused by the industrial revolution, there are signs of change afoot. It is not hard to imagine a world in which most people are part of a data-based economy, and only those at the top of the skill spectrum are required to perform in the physical world. A world in which most of us are supplied with most of what we need, through “economic rather than social relationships”1. I am not suggesting that this is a sign of the end times, rather it is one way that some have predicted that society might change. In fact, there are some economists who have even suggested that it will be easier to manage the economy in the future, with less human involvement. If machines can take the strain of driving people around, making things, and keeping the economy running, then a lean economy might not need to hire a great number of people.
In fact, there is evidence that this is already starting to happen, with the rise of self-driving cars and buses. Self-driving cars are likely to change the idea of car ownership for the vast majority, making it easier for people to share them and reduce the number of cars on the road. And automated buses, using, you guessed it, self-driving cars, could easily replace our public transportation. So it’s possible that we could end up with a transport system that is owned and maintained by a relatively small number of companies, and which would save on costs if everyone shared the same vehicle, and each of those vehicles had as few people as possible in it. This in turn might start to reshape our ideas about the sort of city that we need.
These sorts of automated technologies will also have an impact on workforces across the board. Recent reports suggest that “a quarter of jobs are at risk of being replaced by technology over the next two decades”.2 And this is one side of the story. There is also an effect on the other side of the coin, where technology is removing the need for people to learn some basic skills. It used to be that children would learn how to sew, do basic housework, knit and cook, in order to survive. In the industrial era, they would learn how to repair a car, work a lathe, or run a printing press. All of these skills are vanishing, and there is now a trend towards using apps to teach basic domestic skills. It seems that the only skills that remain are skills that cannot yet be automated, and this is probably true for the foreseeable future. But what happens when you cannot live without a car, and your car doesn’t require human assistance? Even today, automated cars are starting to feature in jobs, particularly for drivers, and as automated driving technology develops, the need for human drivers may eventually evaporate. And the same goes for hotels, taxis, and small restaurants. Many people would argue that we would be much better off without those, and the same may apply to people delivering mail, fixing water pipes, or plowing fields. Indeed, there is a reason why so many people in rural villages use tractors rather than hand-held ploughs, and it is not for the benefit of human legs. It is because that is the only cost-effective way of doing things.
Perhaps you would rather live in a world in which you can look after yourself, and so all of the other services don’t need to be provided. Perhaps you would like to live in a world without the lowest end of the jobs spectrum. But it will be worth thinking about what you might be missing. Take clothes shopping. Clothes shopping is not fun. The process of finding the perfect outfit is not something that people normally enjoy. It requires walking around shops, and so can feel like a waste of time. It is certainly a pain in the backside. But we don’t just buy the clothes to keep warm and look presentable. We buy them because we enjoy wearing them, or perhaps they give us a sense of identity, or are a way of meeting people, or sometimes we buy them as an investment, hoping to wear them into the ground and pass them on. It’s no wonder that we choose clothes that make us feel good. But as we see people putting more effort into clothing themselves, we are also starting to see services growing up to meet this new demand. And in the future, as more people shop online, the need to get that shopping done might get people off their sofas and back out on the high street, with an assortment of clothes on their backs. Shopping will become a social pastime, rather than a chore. And this will be because more and more things can be automated. In a world in which machines do most of the work, we will also have the time to pursue our social needs and live a little better.
Maybe we’ll start to use more of the digital space for physical things as well. And this is more than just about ordering food or getting laundry, it might also apply to art and culture. Just as some people might feel the need to purchase an original hand-made outfit rather than a made-to-measure suit from the local chain shop, other people might decide that some things are worth a visit, or a listen, or a look. After all, when some things are easier to have delivered to your door, you might decide that it is not worth the hassle to travel to the shops. And this is a double-edged sword; it is entirely possible that people might start to travel less, in some circumstances, reducing their overall carbon footprint. The less time you spend in travel, the less fuel you need, and the less CO2 you release.
It is also important to think about the other side of this equation. How do we plan for the demise of low-skilled work? Even when people want to hold onto low-skilled work, we’ve often failed to do so. Earlier this year, the European Court of Justice decided that employers didn’t have to pay a driver who used a smart card to check in and out of a cab office.3 In the UK, just a few years ago, a judge decided that driving people around on behalf of Uber wasn’t actually work, since Uber is a smart phone app that directs you to the nearest available driver.4 Without the right legal and regulatory framework, it will be even harder to resist these kinds of advances, and the obvious problem is that for most people, even if you wanted to have a job where you drove yourself around in your own car picking up people who are waiting at the airport, or someone’s house, this might be illegal. It might be illegal to do it without a license.
These kind of questions are no longer academic. It is not a matter of if, but when, this starts to happen. That doesn’t mean we should give up and accept that there are just too many low-skilled jobs. In fact, it means we should step up our efforts to support people who want to work in this way. It means we have to invest in education, in training, and in giving people the tools to be more competitive in the job market. It might also mean providing a decent basic income to help people afford this sort of work. It means providing this sort of support to people who want to take the risks and try something new. Of course, it might be that some people will choose not to work in these new areas, and perhaps they should have the right to do so. But this does not mean that we shouldn’t think about how to support people in these kinds of situations. We’ve seen that automation does not always benefit the masses. And automation that takes out the lowest-skilled work might not benefit people in the short-term, even if it does over the long-term. It’s up to us to help people take part in this new world, so that we can keep everyone working, and not just a lucky few.
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