Category Archives: Sectors

Labor System Shifts: By Industry

In 1776, Adam Smith applauded the free world’s reinvention of the old labor system. Before the fall of feudalism and the rise of the middle class, goods were produced purely for survival or at the request of the king, duke or earl. As Smith points out this method of production, where a smithy may produce everything from nails to knives to cups to plows, is highly inefficient. Specialization allows human beings to make production of a good almost instinctive and therefore more fluid and repeatable. The second triumph celebrated by Adam Smith is the division of labor. This system change allowed complicated tasks like making sewing pins to be broken down into simpler tasks which could be more easily specialized by unskilled labor. Now that cheap unskilled labor is becoming harder to find even on the global market, the labor system is evolving yet again. The automation we see in the manufacturing sector is the final iteration (possibly, nothing is ever final) of this process.

This transition in the manufacturing sector was actually delayed by two factors. First, globalization and the end of the cold war opened the flood gates of cheap labor all around the world. By the 1990s, the industrialized nations had the technology to automate many of their manufacturing processes. But with labor overseas under a dollar a day and the complicated human-machine specialization systems already in place, it was easier to move to China than invest in robots and develop new systems. Second, humans can become very efficient–often surpassing robots–when given a task to do day in and day out. For these reasons, the labor system in the manufacturing sector has been slow to change. Other industries have modernized much more quickly.

Farming was one of the industries which Adam Smith specifically identified as difficult to specialize or divide amongst laborers. This is due to both the seasonal nature and the diversity of crops grown at the time. Automated farming with harvesters, threshers, balers, etc. was developed not more than 50 years after Adam Smith made this observation. Once the motor and engine were invented, farming had self-powered automated all-in-one grain harvesters/threshers. Farming skipped a step. While organized labor was developing assembly lines and other methods of aiding the specialized worker, farming was developing tools that would allow any marginally sober unskilled driver to harvest thousands of acres. The huge turning point for farming automation, as we all know, was the Great Depression. As a result, farms spanned hundreds of thousands of acres and grew crops that could be automated–corn, wheat, sorghum, soybeans and peanuts.

Farming then took the next step, multi-purposing. George Washington Carver turned peanuts into everything from cosmetics to dyes and paints to plastics and even entirely new foods like peanut butter. Soybeans became plastics, milk, tofu, glues and foam cushions. Corn and corn syrup changed the whole processed food industry entirely. Once an industry can’t improve its production processes anymore, it takes the best and most efficient of its range of products and multi-purposes them. Most other systems are only now barely looking at multi-purposing. Only recently have car manufacturers started developing assembly lines which can produce vastly different cars with minor, over-night changes. In the near future, automated factory floors will be able to take in different inputs and produce different outputs with little more than a flipped switch.

The final frontier, so to speak, of automation and labor system shift is the services sector. This is a shift where the United States has the chance of leading. Service automation began with automated calling systems and ATMs. But the services were very basic and generally horrific replacements for actual humans. It wasn’t until the advent of the internet, really only internet 2.0, that automated services became a viable option. Today we have e-file taxes, e-banking, e-bills, e-mail, e-insurance, e-harmony, e-publishing and e-learning. Even Wall Street trading is being handled by automated programs. The automation of services has just begun. Only recently could an online retailer like be considered competition for the epitome of conventional automation: Walmart. So where is the opportunity to be found?

For America as a nation, the opportunity is in generating the programs and automated services which will serve the world for the next 100 years. Automating services requires both an expertise in algorithm coding and a sizable amount of creativity. With one of the best post-secondary education systems in the world, no country is poised to take on the upper-level development like the United States. Sure, 11th graders in Vietnam have the coding skills to work for Google. But Google and Apple didn’t become the tech giants they are today from hiring the cheapest coders. They hired the best and the most creative people they could find. These people simplified interfaces and streamlined processes at a level that requires not only a wide knowledge of the user and the environment but also the technical ability to reduce that to an algorithm. Interfaces became lickable and grandma-friendly. Cellphones became our alarm clocks, gaming systems, instant messengers, personal audio systems, calendars, notepads, cameras, and newspapers. These were the easy and obvious services to automate, the low hanging fruit. Though the multi-purposing has already begun, the vast amount of services that remain unautomated leaves the future wide open for the taking.