Confronting the prospect of unemployment and starvation, a mob of five thousand men and women made havoc across the Scotland’s Dunfermline region. During the August of 1842, the rioters hurled stones at factory owners, smashed the windows of their factories and set them on fire. They robbed the fields and shops for food[1]. Dunfermline is the town of Andrew Carnegie’s birth. Across Great Britain, the factory system could only absorb a fraction of the home-based workers they were replacing. Fifty-years later, Homestead, the Pennsylvanian town of Carnegie’s industry, would be rocked by a similar sized mob of men and women seeking to protect the factory pay and conditions of specialist workers.
In the book, The Third Pillar, economist, former director of the IMF, and author, Raghuran Rajan makes persuasive observations on the social impacts of new technologies. Specifically, he observes that that anti-market movements are propelled mostly by economic downturns. He comments that technological revolutions rarely occur suddenly; which is consistent with industry waves identified by Nikolai Kondratieff and Joseph Schumpeter. Professor Rajan also states: “It takes time for businesses to learn the practical uses of scientific discoveries, and embed them in new products and services” and two, that it takes time for consumers to adopt and adapt their usage of new products and services.[2]
Professor Peter Drucker, who was mentioned in a separate article, asserted in his book Innovation and Entrepreneurship, an adoption timeframe of 25-35 years for new technologies[3]. With the advent of mass computing and the internet is arguable that this timeframe has now halved. Within five years of the internet’s invention by Tim Berners-Lee, Amazon was founded. Within ten years, Google was founded out of a PhD project at Stanford University. Within fifteen years, Facebook was founded as a way for Harvard students to communicate. A slew of new applications such as Airbnb and Twitter, which had tumultuous restarts, as well as those acquired by Facebook like Instagram, Snapchat, and WhatsApp followed; all within 25 years.
Less obvious, though at around fifteen-year intervals, were the earlier advances in minicomputer technologies during the 1970s. The founding of Microsoft in 1975 to build complex operating systems for computers would not have been possible without advances in semiconductor technologies during the 1970s. Proving that new technologies do take time, the first computer is generally recognized to have been designed, and not built, by Charles Babbage around the mid 1800s. The first steam engine was invented at around the turn of the seventeenth Century for use in mines, however, James Watt’s engine for use in locomotives was three-quarters of a century away in the late 1700s. And not until 1827 that the Baltimore and Ohio Railroad was formed in America to transport passengers and freight.
Professor Rajan’s observations of the social consequences of technical change extends to stating the necessity for vast sections of the population to upgrade their skills, transfer to new industries, and even move geographically. Worker disenfranchisement is no less relevant today than it was at Dunfermline in 1842 and Homestead in 1892, and the consequences deserve acknowledgement. Notwithstanding the time lag between invention and adoption, broad sections of communities today have failed to adapt; mainly those workers whose jobs were deskilled in the mass production era and have now been exported or overtaken by robotics. This is an issue taken up particularly well by Oxford professor Paul Collier.
In The Future of Capitalism, Professor Collier identifies that less-well educated white males over fifty, across developed economies, are “drinking the dregs of despair” and less-educated youth are faring little better[4]. Whilst there has been much finger-pointing at falling union memberships over past decades, it is evident that there is a bigger issue at play. This issue was described by Joseph Schumpeter, in the 1940s, as “an impassable gulf” between the workers and the representation by intellectuals who “invaded labor politics.”[5]
For whatever reason, the resulting crisis of the working class is not a matter of enough good jobs: “It is” as Steven Brill explains in Tailspin, “about not enough people being unable to fill them [good jobs] because they [less-educated laborers] have been improperly trained.”[6] The reluctance of CEOs to commit profits to new technologies, at the expense of their bonuses discussed in a separate article, complemented by Schumpeter’s described “impassable gulf” has squeezed the less-educated working class. It also created the environment for the emergence of new technology behemoths and their well-educated founders.
[1] Burton J. Hendrick, The Life of Andrew Carnegie (London: William Heinemann Ltd, 1933), 330.
[2] 2. Raghuram Rajan, The Third Pillar: The Revival of Community in a Polarised World, (London: William Collins, 2019), 116-117.
[3] Peter F. Drucker, Innovation and Entrepreneurship: Practice and Principles. (Oxford: Elsevier Butterworth-Heinemann, 2006),
[4] Paul Collier, The Future of Capitalism: Facing the New Anxieties. (New York, NY: HarperCollins Publishers, 2020), 4.
[5] Joseph Schumpeter, Can Capitalism Survive?: Creative Destruction and the Future of the Global Economy, (New York: Harper Perennial, 2009), 176.
[6] Steven Brill, Tailspin: The People and Forces Behind America’s Fifty-year Fall–and those Fighting to Reverse it, (New York: Alfred A. Knopf, 2018), 167.