Will Innovations Create the 4-Hour Work Week? And Do We Really Want It?

Copyright (c) 2010 Cynthia Kocialski

The start-up community is about innovation and technology, much of which accelerates the process of creative deconstruction - a phrase coined by Joseph Schumpeter whereby "a market economy will incessantly revitalize itself from within by scrapping old and failing businesses and then reallocating resources to newer, more productive ones". But where is this process leading us in today's world?

Innovation Creates Economic Wealth

One way for national economies to thrive is based upon technology, inventions, and innovation. This is one way to create the wealth of nations. Hence, we stress the importance of STEM (Science, Technology, Engineering and Mathematics) in our educational system. The abundance of natural resources, such as oil or gas, within our borders is a matter of luck. National economies based on natural resources often struggle because they are afflicted with Dutch disease - a condition where the demand for the natural resource dominates the country's monetary policy and makes their other products less competitive in the market.

Innovation Increases Productivity

Venture capitalism has shown that where there is profit, there is progress, and the greater the potential profit, the swifter and deeper the progress. Automation is both the result of progress driven by profit and the necessity of innovations driven by the shortage of labor. We want to produce more at lower costs, usually with machines or technology replacing people

The machinery invented during the Industrial Revolution dramatically increased the availability of goods through machinery, production, and transportation - and consequently lessened the need for the labor provided by human beings. This has had profound implications on the society. As we continue to improve efficiencies in production with the Computer Age, the Internet Age, and unknown future technologies, the need for human beings in production declines as automation increases. Consider that after World War II, the United States with six percent of the world's population produced over 50 percent of the goods. Today, social media is about connecting people more efficiently than before. Smart utility meters will eliminate the meter reader from our neighborhoods with usage read over computer networks. We, as human beings, are capable of producing far more with much less human interaction.

Population As A Counterweight

Medical and health sciences have given us the ability to increase the average life span of individuals. People are living longer. Centenarians are becoming common. Yet there are still mandatory retirement ages. Does it really make sense to retire at 55 or 65 years old when people will live 100 years or more? And if you consider that people don't enter the workforce until 20 years old or so, are we really expected to be non-productive for the majority of our lives? We have created a society where people must work to earn a living so that they can provide themselves with the basic necessities of life. The irony is that as the population is increasing, the need for the population to engage in production is decreasing.

The Effect of Globalization

Globalization has given us a greater flexibility on where production of both tangible and intangible goods can be done. When China rejoined the world economy, the cost of its labor market and goods was far below the level of industrial nations. Entire factories were shut down in Europe, disassembled piece by piece, transported and rebuilt in China. Communication and networking technologies have allowed call centers, customer support and people-oriented functional organizations to be located anywhere in the world. Intangible products where the output is the result of human intelligence such as engineering designs and software programming can be located across the globe. Medical tourism can deliver many healthcare services to people far away from their homes and outside their countries. Production moves to where labor costs are the cheapest.

The northeastern US declined when manufacturing moved to the southeast, large companies flocked to take advantage of the highly educated workforce in Eastern Europe when the Soviet Union collapsed, more recently work moved out of industrialized nations into China and India. What's next? Is Africa the next potential source of cheap labor in the future? And even if it is, as we automate more and more, do we need the large workforces available in places like Africa? Does the availability of cheap labor give nations less of a competitive advantage in the future? Consider if all the jobs for the US and Europe were moved to China and India, there would still be an oversupply of labor in these countries. And in areas where there are large populations, the cost of employing low cost labor is more profitable than purchasing and utilizing capital equipment. The Depth of Human Knowledge

Will creative deconstruction really work in the future? Can we realistically redirect the workforce a.k.a. the "human" resource? Consider 200 years ago, the amount of training a scientist received was quite little by today's standards. To be a scientist now, one must receive a Ph.D and often requires post doctorate studies in order to be employable in their field - one is often in the early 30's before they start practicing their chosen field. If their job function is eliminated via creative deconstruction, can they be "retrained" for another 10 years?

The Quagmire

Has this left us, the human beings of the world in a quagmire? What happens if we take everything to its maximum effect? Medical science strives to eliminate disease and keep people in peak condition for their entire lives. So what if everyone reaches more than 100 years old and capable of being highly productive for most of those years? As Moore's Law states, productivity doubles every couple of years. Innovation and inventions will continue to produce goods with less labor. The global population doubles every 60 years. We have become far better at improving manufacturing efficiencies and productivity gains. The necessity of labor is dwindling rapidly with every generation of more productive technology. The issue is not so much over population, but under employment and weak economies. How do you employ a large number of people when it takes fewer people to produce everything? Will the 4 hour work week become a standard?

As an industry, venture capitalism had matured over the previous decades. Many VCs have said why solve the small problems when it costs as much to solve the big ones. Look at the huge funding going into clean and green technologies so we can save the planet, but can the planet survive the human population?