Schumpeter, the Luddites, and the Post-COVID Workforce

By Avik Chanda

This is not a commercial.

But if you happen to find yourself in Abu Dhabi at this moment, and are planning to take a flight back home to Delhi, you might be advised to try Etihad Airways, especially in these pandemic times. To check in via their ‘Fit to Fly’ application, just stand in front of the monitor, remove your mask, and the system will scan your health particulars within seconds. The application will then quiz you on your activities over the past fortnight, to each of which you reply with a simple ‘yes’ or ‘no’. An algorithm at the back-end analyses the information, issues an all-clear, prints out your boarding pass, and you drop your bags off at the counter. You’ve not met a single person among the airlines staff, let alone be within contamination distance. From the moment you entered the airport, your experience thus far has been as risk-free as possible. The application has replaced check-in executives, most of whom may never be coming back – but it’s a relatively small price to pay, for saving lives.

And as your journey becomes a montage, from the white-heat glare of an Arabian sun outside the window, through a somewhat claustrophobic, masked-on slumber, to the thick drapes of nimbus covering the sky at your destination, imagine that the same risk-free application that checked you in, has been implemented in all airports and airlines across India. This thought-experiment has just added to the toll of the estimated 2.9 million jobs already affected in the immediate term, across Indian aviation and allied sectors, as a direct result of the ongoing pandemic.

While it’s hoped that a significant number are expected to regain employment, in the wake of a vaccine, herd immunity and economic recovery, those employees that are displaced by superior, robust, cost-effective technology, will have no cause to be recalled to their counters. And once you reach home and begin to adjust into your self-quarantine regime, consider that if you’re working in real estate, retail, hospitality, travel, tourism or for that matter, even information technology, the odds are in one in six you may not have a job to go back to.

The effect of innovation and improvement in industrial processes on employment and jobs is both well-researched and documented. Conceived in the intellectual shadow of Marxian constructs, the Austrian-born economist, Joseph Schumpeter, writing in 1942, introduced and developed the concept of ‘the gale of creative destruction’, in his book, Capitalism, Socialism and Democracy. According to him, creative destruction was an integral part of the way that capitalism functioned in the modern world. A fait accompli, it was “the process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one”. Over the subsequent decades, theoretical models of growth, as well as empirical studies evidence and models have very largely converged to the conclusion that the process of creative destruction is an inevitable concomitant of economic growth and fluctuations.

In his book, Schumpeter argued that the unending cycle of creative-destructive forces in a capitalist system would eventually lead to its demise. History, to date, has however not borne out his prognosis, and in fact his term, creative destruction, has been enthusiastically adopted by generations of business gurus and industry magnates, to justify downsizing in the workplace, in favour of efficiency and innovation.

As a concept, its intellectual successor, ‘disruption’, has carried the argument to its logical and inalienable conclusion. The march of ground-breaking, innovation cannot be arrested. The giddy rate of technological advancement witnessed in a remarkably short span seems to support this view, hurtling an essentially analogous world into one where machines, algorithms and automated processes vie with, and increasingly, surpass their human counterparts at a range of tasks. The ramifications on employment are massive for labour-intensive economies such as India, where an estimated 30 to 40% of the current workforce cannot be readily re-skilled.

Alarm bells about the effects of automation started to ring early in 2017, when a report by the consulting firm McKinsey & Company, was made public. The report indicated that 600,000 people working in Information Technology (IT) services firms across the country might lose their jobs over the coming three years. This amounted to 200,000 jobs lost on average, per year – to automation. McKinsey urged IT service providers to explore new models of man-and-machine working in conjunction, and re-skilling employees with emerging technologies. Corroborating this view, a report by US-based research firm HFS Research, stated that around 700,000 ‘low skilled’ professionals in IT and Business Process Outsourcing (BPO) industries in India could lose their jobs to automation and artificial intelligence, by 2022. For those reading between the lines, it’s apparent that while the initial brunt of automation would be borne by IT and BPO, sooner or later, other sectors would also be affected. As with most things in economics, there’s a tradeoff – the benefits in costs and efficiency of jobless growth, powered by technology that replaces labour, versus the social and moral responsibility of mass-scale retrenchment.

The COVID-19 pandemic has thrown all projections out with dishwater, and disrupted the prevalent ecosystem irrevocably, in two significant ways. First, faced with the outlook of forced social distancing sustained over an indefinite period of time, industries would scramble to replace current methods of running the business with means that are capital and technology intensive, at the exclusion of labour. Second, and even more telling, the whole moral argument of retrenchment has been turned on its head. Employers are safer when not in contagious distance within each other, even if it means there are significantly fewer of them left on the rolls. And customers would understandably like to shop in an environment where the prospect of any tactile interaction with salespersons is minimal to zero. The same organisations that would have held back on cutting jobs for its debilitating effect on lives may now be compelled to introduce technologically advanced processes of production, storage, distribution and sales, to reduce manpower across the board, from the workshops to warehouses and retail outlets.

The 2018 World Economic Forum report on the Future of Work indicates that two distinct streams of skills and attributes are coming into greater demand, as technological innovation, powered by artificial intelligence and automation, deepens across industries. First, there are those skills that involve a high degree of mathematical and technical ability, catering to the niche requirements of the AI industry. Such jobs will be limited in number, compared to programmers and testers in the previous scenario. Also, the ability of professionals to upskill themselves suitably to the required level will be limited. At the same time, there’s a growing need for a range of skills along the human dimension, including creativity, imagination, innovation, design thinking, and increasingly – empathy. Expertise in these attributes greatly increases the chances of sustained work for individuals, even in a largely automated workplace.

The ongoing pandemic has only increased the urgency of reskilling the existing workforce along the emergent technologies and also more evolved behavioural attributes and competencies. At some point in the future, the world may well gravitate to a new equilibrium where goods and services are more readily available and general living standards are higher than before. But the road will be rocky and painful. In the meantime, the sweep of the resultant unemployment will be as endemic as the virus that has caused it, from migrant wage labourers who represent the poorest section of society, to college-educated, middle-class professionals aspiring to become corporate managers and startup entrepreneurs. When savings run dry and children can’t be fed, the collective bewilderment of the dispossessed often turns to rancour.

From the earliest days when it began centred around the textile mills in Nottingham, the Luddite movement has come to epitomise all form of concerted protest against technological advancements and machinery that threaten to rob workers of their livelihoods. The movement came into being as a series of protests by traditional textile weavers, who feared, not without cause, that the newly introduced machines in the mills would replace them. The protests swiftly degenerated into arson and destruction of property, as groups of armed men stormed factories and destroyed the looms and machinery at hand. The Luddite rebellion ended in 1816, but the legacy of their revolt has sustained as a symbol of opposition to hyper-industrialisation and automation, that leave masses of people unemployed. If the dispossessed of the present times turn into Luddites, how are their protests likely to be met?

The answer, entailing the exact same method deployed to quell the original revolt, is to be found in Eric Hobsbawm’s 1952 essay, The Machine Breakers. By means of the state. At the height of the Luddite movement, 12,000 soldiers of the British Army were deployed against the so-called ‘machine-breakers’, a considerably greater number than what the intrepid Duke of Wellington had managed to muster in 1808, to give battle to Napoleon’s forces in the Iberian Peninsula. Fast forward to the grunting shuffle and press of 1st November 2019, when 80,000 police officers in France were deployed under “Act 9”, to counter the swell of the nation-wide Giles Jaunes protesters. And now, finally, imagine for a moment that all the 21st century Luddites across the world, displaced by the vagaries of the pandemic, and the automated, smarter-than-thou technologies that have emerged as a response to it, have come out onto the streets, in protest.

What will it take this time?


Avik Chanda is a bestselling author, columnist, business advisor, entrepreneur and educator. His book, From Command To Empathy: Using EQ in the Age of Disruption (HarperCollins, 2017), was selected for Amazon India’s Best Reads, under the category, ‘Business, Strategy and Management’ . His latest book, Dara Shukoh: The Man Who Would Be King(HarperCollins, 2019), garnered rave reviews from academics, authors, the national press, and general readers. It was in the Top 10 Non-Fiction Bestsellers List, for 10 consecutive weeks, post its publication, and has recently been released as an audiobook, by Audible.



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