By Carl Benedikt Frey
From the Industrial Revolution to the age of artificial intelligence, The Technology Trap takes a sweeping look at the history of technological progress and how it has radically shifted the distribution of economic and political power among society’s members. As Carl Benedikt Frey shows, the Industrial Revolution created unprecedented wealth and prosperity over the long run, but the immediate consequences of mechanization were devastating for large swaths of the population. Middle-income jobs withered, wages stagnated, the labor share of income fell, profits surged, and economic inequality skyrocketed. These trends, Frey documents, broadly mirror those in our current age of automation, which began with the Computer Revolution.
Just as the Industrial Revolution eventually brought about extraordinary benefits for society, artificial intelligence systems have the potential to do the same. But Frey argues that this depends on how the short term is managed. In the nineteenth century, workers violently expressed their concerns over machines taking their jobs. The Luddite uprisings joined a long wave of machinery riots that swept across Europe and China. Today’s despairing middle class has not resorted to physical force, but their frustration has led to rising populism and the increasing fragmentation of society. As middle-class jobs continue to come under pressure, there’s no assurance that positive attitudes to technology will persist.
The Industrial Revolution was a defining moment in history, but few grasped its enormous consequences at the time. The Technology Trap demonstrates that in the midst of another technological revolution, the lessons of the past can help us to more effectively face the present.
Oren Cass on City Journal wrote:
"The central concern that runs through The Technology Trap is that, unless we are very careful, our latest technological revolution may well turn out to be a tumultuous rerun of the Industrial Revolution, with dire social and political consequences. 'The message of this book is that we have been here before,' writes Frey. [...] Frey’s analysis is worth taking seriously because the Oxford economic historian and economist has researched his subject deeply and has co-authored one of the most widely cited studies on automation. [...] Frey’s argument is that we downplay the human cost of the Industrial Revolution because of the very different, and far happier experience, of automation experienced in 20th-century America. In particular, he is critical of those economists who regard this later period of 'statistical abnormality' as somehow encapsulating immutable and universal laws about technological progress. The most significant difference between the two eras was that technology was primarily labour-enabling during the American century, whereas it had been mostly labour-replacing in earlier centuries. [...] Frey’s story is well argued and — at times — deeply alarming about the stability of western democracies given he predicts the further concentration of wealth in a few hands and in even fewer locations. His scrupulousness as a scholar, though, detracts from the book’s political punch as he refrains from spelling out the full implications of his argument. He raises many good questions but falls short in sketching out satisfactory answers. He dutifully runs through a checklist of policy proposals that could help smooth the technological transition, but none are wholly convincing."
Diane Coyle on Enlightenment Economics wrote:
"'The extent to which labor-saving technologies will cause dislocation depends on whether they are enabling or replacing,' writes Frey. 'Replacing technologies render jobs and skills redundant. Enabling technologies, in contrast, make people more productive in existing tasks or create entirely new jobs for them.' This distinction makes little sense and proves unsustainable. Frey’s explanations lead him into repeated contradictions and bouts of circular reasoning. Between the lines, though, he supplies tantalizing evidence for an alternative theory that policymakers could find useful. [...] Frey’s distinction without a difference leaves him to run the analysis backward. If trends emerge that show workers struggling, he suggests, then the associated technology must be of the replacing type. [...] The Technology Trap’s saving grace is its voluminous supply of facts, dates, statistics, and anecdotes—enough for readers to draw their own conclusions. [...] This question of who performs the work associated with new production methods proves central to the economic effect. [...] The first and second Industrial Revolutions seem to have differed less in the nature of technology and more in the degree to which businesses could replace the existing workforce with a cheaper and more pliant one. This left workers behind in one case, while raising them up in the other. Offshore factories and unskilled immigrants, not robots, are today’s analogy to the child labor of yore. Which workers the innovators can use affects greatly whether incumbent workers thrive. Fortunately, more so than the nature and rate of innovation, that is something that society and its policymakers can influence.
Liam Kennedy on LSE Review of Books wrote:
"Anybody interested in the economic impact of digital and AI, in particular on jobs, will want to read Carl Frey’s new book, The Technology Trap: Capital, Labor and Power in the Age of Automation. He is probably best known for his rather gloomy work with Michael Osborne (original pdf version here) highlighting the vulnerability of many jobs – almost half in the US – to automation in the next couple of decades. The book expands on the issues that will determine the actual outcomes, and is – as the title indicates – still quite pessimistic. [...] The key distinction Frey draws in between technologies which substitute for labour and those which complement it. [...] Although I am probably not as gloomy about future prospects for work and incomes, I really enjoyed reading the book, which covers a wide range of technological applications in addition to the well-known historical examples. It leaves open two questions. One is about the present conjuncture: what explains the combination of seemingly rapid technological change and adoption with – in at least some OECD economies – very low unemployment rates? [...] The broader question, or set of questions, is really about the interaction between technology and labour market and other economic institutions. [...] And beyond the response to technological change, what is it that determines the direction of technical change in the first place? The book treats the labour substitution or complementing as exogenous. [...] It seems to me this must be an institutional story too, but I don’t think it’s been told yet."
"Thankfully there are no new predictions about the extent of job losses and the book reads as a tour de force of the very latest research on automation and its consequences. Ultimately, the author’s premise is simple – whether workers lose their job to robots ultimately depends on ‘the societal distribution of political power’ (xiii). To demonstrate this, Frey takes the reader on a long sweep of industrial history in the UK and the US dating back to the onset of the Industrial Revolution. Frey’s argument rests on the distinction between labour-enabling technologies and labour-replacing technologies. [...] The key question, of which I am not sure the book offers a full explanation, is what accounts for this difference? Why are we now looking at a tendency towards labour-replacing technologies when we once had a proliferation of labour-enabling ones? [...] For a fuller explanation, we need to arguably travel beyond two outdated paradigms in which Frey’s work seems stuck. The first is what Isabelle Ferreras has called the ‘liberal economic theory of the firm’. This theory posits that free-market economics, and the institutions that uphold them, have propagated the idea that modern firms are organisations built to pursue a single goal – to generate return for capital investors. [...] Frey also seems to fall into the trap of believing that any job is better than no job at all. The predominant danger of automation and artificial intelligence is framed as people falling out of the labour market entirely and there is little mention of the rise of poor quality or insecure jobs. [...] Trapped in these paradigms, the final section of the book, which focuses on solutions for the age of automation, falls a little flat. Suggestions for relocation vouchers for people to move from areas of low job creation to more affluent areas seem like a sticking plaster over the gaping wound that is an economic system that ‘accumulates by dispossession’. Why, for instance, should someone have to move from Blackpool to Manchester or London? Should the focus not be on making all of our hometowns compatible with a decent quality of life in the first place? Frey’s point, however, about the importance of education should send alarm bells ringing in the UK. [...] While The Technology Trap may leave readers with more questions than answers, it is an excellent and unique reminder that the future of work will depend on policy choices made in the present. As perhaps the most comprehensive account of automation to date, it deserves to be read widely."
Table of Contents of The Technology Trap
Part I. The Great Stagnation
- A Brief History of Pre-Industrial Progress
- Preindustrial Prosperity
- Why Mechanization Failed
Part II. The Great Divergence
- The Factory Arrives
- The Industrial Revolution and Its Discontents
Part III. The Great Leveling
- From Mass Production to Mass Flourishing
- The Return of the Machinery Question
- The Triumph of the Middle Class
Part IV. The Great Reversal
- The Descent of the Middle Class
- Forging Ahead, Drifting Apart
- The Politics of Polarization
Part V. The Future
- Artificial Intelligence
- The Road to Riches
About Carl Benedikt Frey
Carl Benedikt Frey is the Oxford Martin Citi Fellow and codirector of the Oxford Martin Programme on Technology and Employment at the Oxford Martin School, University of Oxford. He is also a senior fellow at the Institute for New Economic Thinking at Oxford and in the Department of Economic History at Lund University. Twitter @carlbfrey