Bloomberg Businessweek - USA (2019-10-07)

◼ ECONOMICS Bloomberg Businessweek October 7, 2019

35

HULTON

ARCHIVE/GETTY

IMAGES;

DATA:

GOOGLE

NGRAMS

tracing a hump-shaped pattern, rising through time

for a while and then falling, much as is regularly

seen with infection diseases. The “technological

unemployment” curve peaked in 1933, the worst

year of the Great Depression.

It is curious that the narrative epidemic of tech-

nological unemployment began in 1928, a time of

prosperity before the Great Depression. How did

theepidemicstart?InMarch1928,U.S.Senator

RobertWagnerstatedhisbeliefthatunemploy-

mentwasmuchhigherthanrecognized,andhe

askedtheDepartmentofLabortodoa study.Later

thatmonththedepartmentdeliveredthestudythat

producedthefirstofficialunemploymentratespub-

lishedbytheU.S.government.Thestudyestimated

thattherewere1,874,030unemployedpeopleinthe

UnitedStatesand23,348,602wageearners,imply-

inganunemploymentrateof7.4%.Thishighesti-

matedunemploymentratecameata timeofgreat

prosperity,andit ledpeopletoquestionwhatwould

causesuchhighunemploymentamidstabundance.

A monthlater,theBaltimoreSunrananarticle

referringtothetheoriesofSumnerH.Slichter,who

inlaterdecadesbecamea prominentlaborecon-

omist.Inthearticle,readersaretoldthatSlichter

notedseveralcausesofunemploymentbutsaid

technologicalunemploymentwas“atpresentthe

mostserious.”Thereason:“Weareeliminatingjobs

throughlabor-savingmethodsfasterthanwearecre-

atingthem.”Thesewords,alongsidethenewoffi-

cialreportingofunemploymentstatistics,createda

contagionoftheideathata neweraoftechnological

unemploymenthadarrived.Theearlieragricultural

depression,withitsassociatedfearsoflabor-saving

machinery,begantolooklikea modelforanindus-

trialdepressiontofollow.

StuartChase,wholatercoinedthetermthe

“NewDeal,”publishedMenandMachinesinMay

1929,duringa periodofrapidlyrisingstockprices.

Thereal,inflation-corrected,U.S.stockmarket,as

measuredbytheS&PCompositeIndex,rosea final

20%inthefivemonthsafterthebook’spublication,

before the infamous October 1929 crash. But con-

cerns about rising unemployment were apparent

even during the boom period. According to Chase,

we were approaching the “zero hour of accelerat-

ing unemployment”:

Machinery saves labour in a given process; one man

replaces ten. A certain number of these men are needed

tobuildandservicea newmachine,butsomeofthem

arepermanentlydisplaced.... If purchasingpowerhas

reacheditslimitsofexpansionbecausemechanizationis

progressingatanunheardofrate,onlyunemploymentcan

result.Inotherwords,fromnowon,thebetterableweare

toproduce,theworseweshallbeoff.... Thisis theeconomy

ofthemadhouse.

Thisissignificant:Thenarrativeofout-of-

controlunemploymentwasalreadystartingtogo

viralbeforetherewasanysignofthestockmarket

crashof1929.

DuringtheweekbeforetheOctober28–29stock

marketcrash,a nationalbusinessshowwasrunning

inNewYorkina conventioncenter(sincedemol-

ished)adjacenttoGrandCentralStationthatmany

WallStreetpeoplepassedthroughtoandfrom

work.Theshowemphasizedimmenseprogressin

robottechnologyintheofficeworkplace.Afterthe

showmovedtoChicagoinNovember,thefollowing

descriptionappearedintheChicagoDailyTribune:

Exhibitsin thenationalbusinessshowyesterdayrevealed

thatthebusinessofficeofthefuturewillbea factoryin

whichmachineswillreplacethehumanelement,whenthe

robot—themechanicalman—willbetheprincipaloffice

worker....

Therewereaddressers,autographers,billers,calculators,

cancelers,binders,coinchangers,formprinters,

duplicators,envelopesealersandopeners,folders,labelers,

mailmeters,payrollmachines,tabulators,transcribers,and

othermechanicalmarvels....

A typewritingmachinepoundedoutlettersin fortydifferent

languages.A portablecomputingmachinewhichcouldbe

carriedbya travelingsalesmanwasonexhibit.

By 1930 thecrashitselfwasoftenattributedto

thesurplusofgoodsmadepossiblebynewtech-

nology.AccordingtotheWashingtonPost, “When

theclimaxwasreachedinthelastmonthsof 1929 a

periodofadversitywasinevitablebecausethepeo-

pledidnothaveenoughmoneytobuythesurplus

goodswhichtheyhadproduced.”

Fearofrobotswasnotstronginmostofthe

1920s,whenthewordrobotwascoined.Historian

Amy Sue Bix offers a theory to explain why this was

so: The kinds of innovations that received popular

acclaim in the 1920s didn’t obviously replace jobs.

If asked to describe new technology, people would

perhaps think first of the Model T Ford, whose

sales had burgeoned to 1.5 million cars a year by

the early part of the decade. Radio stations, which

first appeared around 1920, provided an exciting

0.00006%

0.00004

0.00002

0

1800 2008

TheGreatContagion

“Labor-savingmachinery” “Technologicalunemployment”

“It is curious

that the

narrative

epidemic of

technological

unemployment

began in

1928, a time of

prosperity”

Frequency of appearance in books as a share of all words