Future of work: Re-defining work (Part 4: Creating jobs from information and its ecosystem)
Phuah Eng Chye (8 December 2018)
Economies have made a transition from manufacturing to services and to sharing[1]. But work continues to be rigidly analysed within the traditional paradigm of production despite the dominance of information. David Graeber points out “the percentage of information jobs was already rapidly on the increase even in the latter half of the twentieth century” with the rapid expansion of administrators, consultants, clerical and accounting staff, IT professionals and the like. In addition, the information-based FIRE sector (finance, insurance and real estate) is the fourth largest sector (after farming, manufacturing and service provision).
In this regard, the production paradigm can paint a misleading picture. David Graeber points out that “describing a country’s economy as dominated by the service sector” gives the impression workers were directly providing a service such as making coffee or laundering clothes when it would be more accurately characterised as information work. He explains “most work can’t be said to create anything; most of it is a matter of maintaining and rearranging things. Consider a coffee cup. We produce it once. We wash it a thousand times. Every work that we think of as productive – growing a potato, forging a shovel, assembling a computer – could just as easily be seen as tending, transforming, reshaping and rearranging materials and elements that already exists”.
Hence work is now mostly intangible. But there is lingering prejudice against work that isn’t tied to production. For example, loans channelled to non-productive areas are deemed as speculative. Information work such as the production of PowerPoints and service jobs such as personal trainers are dismissed as non-essential.
For example, David Graeber questions the justification for administrative jobs, particularly those deemed to be bullshit jobs[2]. He refutes arguments these jobs are created in response to the complexity arising from globalisation and government regulation. He cites the example of private universities in the US. Over a 30-year period, “the number of teachers per student remained largely constant…the number of administrators and, above all, administrative staff ballooned to an unprecedented degree. Is this because the process of production – in this case, this would presumably mean teaching, reading, writing and research – had become two to three times more complicated between 1985 and 2005, so that it now requires a small army of office staff to administer it? Obviously not”.
In relation to this, Joe Cantlupe notes “the number of physicians in the United States grew 150 percent between 1975 and 2010, roughly in keeping with population growth, while the number of healthcare administrators increased 3,200 percent for the same time period”. This is due to fundamental change[3] with the expansion of regulations and public reporting requirements. “Supporters say the growing number of administrators is needed to keep pace with the drastic changes in healthcare delivery during that timeframe, particularly change driven by technology and by ever-more-complex regulations…Critics say the army of administrators does little to relieve the documentation burden on clinicians, while creating layers of high-salaried bureaucratic bloat in healthcare organizations”.
Hence, the expanding ranks of information workers is viewed with mistrust. They are perceived as villains who job of creating new information requirements is adding to the burden of the front-line productive workers (e.g. teachers, doctors). This often turns into resentment when it is perceived the non-productive (information) workers are getting rewarded at the expense of productive workers.
But it may have less to do with either production or information and more to do with signalling or status. David Graeber highlights managerial feudalism as a possible explanation. “Under classic capitalist conditions…it does indeed make no sense to hire unnecessary workers…always will insist that our economy can’t really be riddled with bullshit jobs; that all of this must be some sort of illusion. But by a feudal logic, where economic and political considerations overlap…one creates an entourage of followers that is both the visible measure of one’s pomp and magnificence, and at the same time, a means of distributing political favour: for instance, by buying off potential malcontents, rewarding faithful allies (goons), or creating an elaborate hierarchy of honours and titles for lower-ranking nobles to squabble over.”
The usefulness of information work may be debated but there is little doubt that with the resolution of production challenges, work will increasingly revolve around information. Countries that do not manage an expansion of information work will find that they would have retarded their own economic growth prospects. Financialisation, or the ability to monetise value, is a key aspect supporting information expansion. Notably, economies that are unable to increase the level of financialisation tend to be under-developed relative to their potential.
However, it should not be taken for granted that information will necessarily create more work and jobs. This may have been true in the past when the collection of information was largely manual and large numbers of workers were needed to record and process information. Hence, governments and firms maintained large bureaucracies. They provided life-long careers because the accuracy of manual processing and benefits from having such information depended on accumulated expertise. The value of employees thus rose accordingly with their experience. In addition, the rising value of information underpinned the growth of entire industries such as finance, law and accounting.
In recent years, this has changed dramatically. Information is generated by sensors and machines and analysis and decision-making are automated through AI with minimal human interventions. These machine responses are taking place at speeds and accuracy levels that human workers are unable to match. Advances in machine learning and networks are increasingly replacing the need for human experience. Unlike before, information advances may now potentially reduce rather than increase the need for human workers.
However, the view that technology will lead to the end of work overlooks the fact that information itself is a source of work. In this context, the features of work created from information does differ from the features of work created from production. I have drawn on Charles Goldfinger’s analysis to highlight some core principles on how information creates work and supports an ecosystem.
The first principle is that, unlike physical goods, there is no proportionality between input and output. Charles Goldfinger highlights that the equalities between purchase, consumption and production is no longer valid. “For intangible artefacts, purchase does not equal consumption (how many people read all the books they buy?) and consumption does not imply purchase: in newspapers or in broadcast television, the number of free riders routinely exceeds that of paying consumers by a factor of three or four.” “There is no proportionality between inputs and the output. Mass consumption does not imply mass production. Best-selling books, records or movies are created by small creative teams and their revenues are not related to their costs”. In addition, the same intangible artefacts or information can be consumed simultaneously or repetitively by the same consumer or by different ones, and at different locations and at different times.
In the industrial economy, work is built around physical output, infrastructure and on managing the challenges posed by scarcity. In the information society, work is built around intangibility and data and on managing the challenges posed by abundance. Charles Goldfinger explains the “intangible economy is structurally abundant…Intangible artefacts, on the other hand, are not only extremely cheap to replicate but furthermore are not destroyed through consumption. The intangible economy superimposes on the abundance of production the abundance of accumulation. Contrary to a popular belief, intangible does not signify ephemeral. The lifecycle of popular intangible artefacts is considerably longer than that of material goods: we will forever read Balzac books, listen to Bach music or watch Bergman movies”.
The lack of proportionality between input and output implies accounting-based economic models understate the full potential of the information society. For example, reducing expenditures or monetary contraction to balance the budget may cut off spending or financing for information-based consumption. The lack of proportionality (between capital and returns and pay and output) also explains why large companies no longer contribute to capital formation and employment like before. The lack of proportionality also signifies a likely build-up in concentration risks such as inequality and fragility. The main challenge in the information ecosystem is therefore not deficits but concentration risks which can be addressed through mitigation or rebalancing.
The second principle is the ability of information to self-perpetuate production often to the point of being overwhelming. Charles Goldfinger notes “financial systems generate too many transactions, Hollywood, too much entertainment, Internet, too much information. The gap between supply and demand of intangible artefacts is so huge that it has created an infoglut: the inability to absorb the torrential and continuously swelling flood of data, images, messages and transactions. The on-going deregulation of markets for intangibles along with the technological evolution continue to aggravate the overload. For instance, the number of television channels in the European Union has increased from 40 in 1980 to 150 in 1994. Progress in transmission and distribution techniques makes it feasible to increase the number of channels to 500 or even more. Moreover, the overload is self-perpetuating: to navigate through it we need catalogues, indexes, documentation, whose very proliferation calls for more cross-references, hypertext links and so on. Efficient infoglut management requires more rather than less information”.
This leads us to classic chicken-and-egg question of whether it is work that creates information or information that creates work. Directly, information forms the basis for activities such as video games which creates many new jobs. The emergence of the sharing and crowdworking platforms has highlighted the significance of information in creating new work opportunities. In this regard, information has a tendency of triggering requests for more information accompanied by new rules for disclosures, compliance, monitoring, enforcement and adjudication. The regulation of information will contribute to the creation of many new jobs.
The third principle is information expands the public sphere. Charles Goldfinger notes information has features similar to a public or shared good “whose consumption cannot be limited to a single consumer and therefore is inherently collective.” “Many intangible artefacts are produced through interaction between consumers and producers. Consumers not only often provide elements of content but they create their own combination of content as well as a content-support association”. The expansion of the public sphere implies a shift from a paradigm based on production-ownership-employment to a paradigm based on consumption-self-organising-participation.
In theory, increasing public use and sharing increases the quality and value of information. This, in turn, will increase the opportunities for creating work. In practice, there will inevitably be clashes for ownership and control of information goods and to cordon off intellectual space. Private control implies reduced public access and this will, in turn, reduce the quality and value of information and diminish the opportunities for creating work.
The fourth principle is, as Charles Goldfinger points out, “information is inherently incestuous; its producers are also its consumers. If we look around institutions seen as major producers of information, universities, medias, banks or insurance companies, is it not true that they consume internally the bulk of information output they produce? This means simply that the very large share of information generated are consumed free of charge”. As an example, “the bulk of transactions in financial markets are carried out between financial intermediaries rather than between these and non-financial clients”. The incestuous nature of information activities is consistent with the earlier principle that information expands the public sphere. It suggests the prospects for the creation of work are enhanced by self-organising where the bulk of production and consumption derive from monetised interactions among participants.
Information-based patterns of work are common in finance, education and technology. In finance, the top global banks account for the bulk of transactions in markets; i.e. they trade actively among themselves. They also strengthen their ecosystem by fostering a community of fund managers and traders that trade based on common (theoretical) beliefs as well as provide the financial (prime broking) and other forms of support (middle and back office). The ecosystem supports the widespread usage and liquidity of derivatives.
The next big opportunities for creating work lie in further expansion of the number and outreach of information eco-systems. This would involve expanding the number of platforms that can exploit the features of information abundance; facilitate participation and self-organisation; and that can strengthen the interactions between the virtual and physical communities.
Nonetheless, it can be anticipated that there will be discomfort as information-based work crowds out the production share of economic activities. For example, there will be resistance from incumbents who fear being displaced by information disruption. Others will be concerned by the fragility and inequalities associated with financialisation and whether information-generated activities can support secular growth in an economy.
These concerns are valid. But matured economies have little alternative to expanding information work to sustain vigorous economic growth. Hence, it is important to perceive information work for what it is – its strengths and side effects. There is a need to design safeguards against the adverse realities of information work which affects job quality, social equality and financial stability. But we should definitely not miss the opportunity to create many more good information jobs for ordinary citizens.
References
Charles Goldfinger (4th quarter 2000) “Intangible economy and financial markets”. Communication & Strategies, no. 40. http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=C4D6E97EB7C9D254292B4261405F5EAE?doi=10.1.1.461.6988&rep=rep1&type=pdf
David Graeber (2018) Bullshit jobs: A theory. Allen Lane.
Joe Cantlupe (7 November 2017) “The rise (and rise) of the healthcare administrator”. Athena Insight. https://www.athenahealth.com/insight/expert-forum-rise-and-rise-healthcare-administrator
Phuah Eng Chye (7 October 2017) “The sharing economy: Macroeconomic overview”. Economicsofinformationsociety.com http://economicsofinformationsociety.com/the-sharing-economy-macroeconomic-overview/
Phuah Eng Chye (7 July 2018) “Labour share of income (Part 7: The respective roles of wages and profits)”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/labour-share-of-income-part-7-the-roles-of-wages-and-profits/
Phuah Eng Chye (10 November 2018) “Future of work: Re-defining work (Part 2: Bullshit jobs and post-work)”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/future-of-work-re-defining-work-part-2-bullshit-jobs-and-post-work/
[1] Phuah Eng Chye “The sharing economy: Macroeconomic overview”
[2] Phuah Eng Chye “Future of work: Re-defining work (Part 2: Bullshit jobs and post-work)”.
[3] Joe Cantlupe. His article quotes Ben Bache-Wiig who points out “in the 1970s – many physicians were solo practitioners with fairly minimal administrative help…Now, more than 50 percent of physicians are employed by hospitals and work in large specialty groups”.