Page - (000066) - in Disrupted Development and the Future of Inequality in the Age of Automation

5 AUTOMATION AND STRUCTURAL TRANSFORMATION … 59 “Malthusian trap” which had kept living standards stagnant throughout most of preindustrial history (see Clark, 2008). Had there been policies to prevent the agricultural revolution because of job losses, the industrial revolution may not have unfolded in the same way. Historical structural change thus holds lessons, both for how hitherto unknown sectors can absorb labor from shrinking sectors, and what potential risks are involved in counteracting structural change. The Industrial Revolution provides another point of reference for the digital transformation. Avent (2017, p. 162) argues that the digital revolution is set to repeat the experience of the Industrial Revolution which “bypassed the developing world for long decades.” In Avent’s view, integration into global supply chains which enabled rapid catch-up growth in the South (“export-led industrialization”) was a transitory phenomenon that will soon be replaced by both “reshoring”—the repa- triation of outsourced production—or will be limited to small high-tech clusters in developing economies (cf. Yusuf, 2017). Such clusters might not create the large-scale job opportunities that broad-based industrial activity provided historically. According to Avent (2017, p. 163), the digital revolution will thus “make it more difficult in the future for poor countries to repeat the performance of the past twenty years. Once again, rich economies will enjoy a near-monopoly on the sorts of social capital required to generate a rich-world income” such as democracy, property rights, and accountable governance. One could call this the threat of a “disruption” of the catch-up development process.6 5.3 the fourth industriAl reserve Army What can be said about the characteristics of a labor surplus? Lewis (1954), in his seminal text on unlimited supplies of labor, saw himself working “in the classical tradition” of Karl Marx and Adam Smith. In Das Kapital, Karl Marx (2012 [1867]) posited that there is a “progressive production of a relative surplus population or Industrial Reserve Army” (ibid., p. 274) as both a condition and an outcome of the capitalist mode of production.7 Overpopulation, in Marx’ view, pro- vides a “mass of human material always ready for exploitation” (ibid., p. 276), holding the wages of the active labor force in check and thus feeding a process of capital accumulation. Throughout this process of accumulation, the productiveness of labor constantly expands with grow- ing employment of machinery. This accelerating capital accumulation