This report will be investigating the impacts the rise of machines is having on the economy. There will be also a discussion about the current age of robots and about job survival today and in the future. The Essay will have sections where it will be focusing on the causes and the results of the increased usage of machines and how they will affect a country and its economy. This report will also be assessing how machines can affect the rate of unemployment.
Information on this subject has been found by internet researching. This secondary research method is a great way of gathering a lot of information about machines and has many different perspectives on this matter from experts. The report uses sources that have been carefully considered on how reliable they are, for instance how current an article is. Articles have also been evaluated based on the author’s backgrounds. For example, some of the more reliable sources are written by the futurist Martin Ford, who focuses on Technology and the Economy.
Books are also a great way of getting hold of information. The Book that has been used was “The Rise of the Robots: Technology and the threat of Mass Unemployment”1 written by Martin Ford. This Book has Historical references and Data.
This Essay has used methodologies such as the Case study of the Ford Factory in Dagenham. This Case Study has been chosen as it will be focusing on unemployment and will help to address the questions of why many people are becoming jobless. This report will also link this topic to the first Industrial Revolution that occurred in the 18th century. Furthermore, this essay will also discuss about the second industrial revolution (the technological revolution) which happened in the 19th and 20th century. The Industrial Revolutions are the perfect example of how the Industries started differentiating and developing through the idea of speeding up manufacturing processes.
There is a new age of the Robots and it has been said that 2 Billion Jobs are going to disappear by the year 20302.
Over the last few years, there has been a rise in the usage of machines. Machines, is an apparatus that has one or more functions that operate together to complete a task, whether small or massive it is being used everywhere around the world. Modern machines have developed the world so much in many ways. The rise of the machines has created new jobs but also destroyed jobs, and has played a key part in the economy.
These complex mechanical appliances can be used to increase the rate of production and complete tasks faster. Machines can be relied on a lot because of their performance and efficiency compared to an average human being. For example, using modern sewing machines would produce and perform better than an individual trying to produce a good by hand.
Machinery has been growing over time and changed many Industries. For instance, the first sewing machines have been invented in 1790 to reduce manual sewing work and to increase outputs. However, compared to a modern sewing machine it would be less reliable. As the machinery developed, Industries such as the clothing market have grown bigger and more successful.
Simple machinery are tools that can be by mostly anyone to improve performance and productivity. There was a Greek mathematician and physician known as Archimedes of Syracuse (287 – 212 B.C.) Among his advances in physics are the foundations of Hydrostatics, statics and an explanation of the principal of the lever. Archimedes screw3 or screw pump. The purpose of this Historical machine was to be able to transfer water more easily. Screw pumps were used for relocating water from low lying areas to higher grounds generally for irrigation.
A key Historical event was the Industrial Revolution4in the 18th century which began in England and in the late 18th century the Industrial revolution soon spread to neighbouring countries such as Germany and France. During this period the manufacturing process has changed dramatically. For example, instead of producing goods by hand, machinery started being introduced to more industries and increased the production rates of firms. All the industries that handled raw materials such as agriculture and mining have altered. The rapid increase in the products being made had increased the demand for manufactured goods. As a result, many factories started focussing on producing at larger scales with better-innovated machinery to satisfy customers. The inventions have aided with the speeding up of the production process.This has enabled factories to meet the customer’s needs and wants.
The second industrial revolution
The first industrial revolution, as discussed above, is the introduction of using machinery to manufacture goods. Industries started using chemicals and sources of energy that are generated by water, steam, coal which increased the efficiency and output level produced by workers. However, as the countries in Europe (mostly western) and North America started developing, a second Insdustrial revolution began in the 19th century. In this revolution, countries were able to adopt the techniques from the first revolution and innovate and use much more efficient machineries. For example, steam powered and coal powered machines were used at a larger scale than the first industrial revolution which resulted in better incomes and a healthier economy. During this period, mass productions occurred, this resulted in many new inventions to be created. For example, automobiles and chemical usages were developed at a greater extent and also electricity was also created and being used more.
Machines are being used everywhere today in the 21st century. Many businesses use this equipment due to the benefits they will gain and to also reduce any “human effort”.
Machines have been created to reduce the manual work a man has to do. The advantages are that they are much more reliable than a human being producing the same good. Therefore, many businesses require them to progress in the industry. Depending on the machine, they can all have different attributes however a more generalized idea about machines is that they can produce goods much quicker than a worker. Machines also produce goods with very high (consistent) accuracy. The reason for this is because machines are set and program to do the same things over and over again. They have the ability to produce goods at a very fast pace while maintaining accuracy where as it would take a worker to create the product a very long time while having a larger chance of making mistakes. Firms in the manufacturing industry want machines over workers because of the durability of a worker. Moreover, machines are constantly powered meaning they have to take not many rests, allowing them to maximise their production rate or work rate.
On the other hand, machines can have also disadvantages. For example, even though it seems as if machines have the ability to work with almost no issues but just like humans, they also have their limits. Machines need to be always maintained and checked which can be expensive. An example would be, machines that produce goods with masses would always need to checked as the wrong masses in the product can lead to major losses to a business.
Machines are simply very expensive to own and operate which is a problem for start-up businesses who have very low funds. Machines need a lot of energy to operate and this makes them very unfriendly towards the environment. Energy since the industrial revolution has been used majorly from non renewable sources (a source that is finite and can not be reused once used) such as oil and coal. When using non renewable sources of energy like coal, they need to be burnt in order to release the stored energy. Even though it generates a very large amount of energy compared renewable methods such as using solar powerings or wind turbines, they release waste gases.Waste gases such as Carbon dioxide ( a greenhouse gas) contributes to global warming which in the long term will impact many countries. Global warming will indirectly impact the economies as a result of the increased usage in machines. For example, global warming will melt the ice glaciers which results in a rise in the sea level. This will be terrible to many cities and towns in the Uk as they are surrounded by water. The UK will have to be able to repair all the damages that will occur which will put a train in their economy. However, developed countries like the UK will be able to cover most issues over time where as developing coutnries such as Bangladesh that have a lower gross domestic product will not be able to recover as easily.
The Economic Agents and the economy
Machines have affected economic agents both positively and negatively and some of them indirectly. An economic agent can be defined as a decision maker that influence the Economy. The economic agents are the Government, Businesses and an Individual (or a Consumer).
Businesses that try to produce goods at larger scales worry about their cash flow. Cash flow can be defined as how much money is coming in and out of a Business. Machinery have enabled businesses to generate revenue and also earn a profit by cutting any costs ( for example, cost of producing the goods and services). This results in fewer disruptions in the cash flow of the business.
A mass manufacturing company would have been producing goods and services by having a very large workforce. Even though it benefits the company financially, the condition of the workplace is often terrible. Countries that dominate in the manufacturing industries have inhumane conditions. For example, China is a very populated country (1.379 billion people recorded in 2016) and Despite China having the second largest economy, after the United States, they have not been classified as a ‘fully’ developed country. The quality of life in China is not great and has large populations of people who seek for jobs to provide for their family. This resulted in many firms taking advantage of the situation. Many factories in China have large amounts of workers and overwork them. Since all businesses try to manage their cash flow, these firms pay workers very little under dangerous environments in factories. This happens in most developing countries, another example would be Bangladesh. Bangladesh has recently been classified as an LMIC ( lower-middle income country) as their gross domestic product has started increasing, on the other hand, their quality of life is still very poor. Bangladesh is one of the countries that dominate the clothing manufacturing industry where clothes are being produced for large clothing companies such as “Primark”. Since Bangladesh is a very densely populated country with many people living below the national poverty line, firms have taken similar steps as the Chinese firms and benefitted financially.
As shown above, businesses have the objective of being able to generate very large revenue while trying to minimise the disruption in their cash flow by trying to avoid or reduce liabilities like loans/debts or even paying workers. That is why we can say that these mechanical equipment have aided businesses to reduce their expenses. The costs would start declining in the manufacturing businesses as fewer workers are needed to operate the business meaning the companies are able to keep more of their revenue. Even though machines can be very expensive, in the long term the benefits these equipment provide will outweigh this cost. Machinery have enabled businesses to produce goods and services much more efficiently than a singular worker. As time goes past, machines become more developed giving businesses various opportunities. The innovations (improvements upon already established machines) of these apparatus means that businesses can rely on them more because of the work rate. This results in businesses needing less people working as only a few will be needed to manage the machines and the systems of the firm. As a result of this, companies will be able to meet needs and wants of large amounts of consumers.
Heavy usage of machines will give the individuals many benefits. For example, individuals who are a consumer would be able to have products being made for them that meet their criteria of needs and wants. As a country develops, they will start having many jobs created as well. This will result in many people being hired by the businesses which will grow the economy as unemployment rates are bing tackled. A rise in employment would lead to rise the economic growth, the reason for this is because as more people get employed the more spending ability and opportunity they will have. As a result, the consumers will spend more on goods and services resulting in the demands for products to increase. Businesses will eventually then expand their business to meet more consumers needs and wants.
On the other hand, an individual will have many issues when businesses start replacing men and women with machines. Many people work to earn money and make a living. Workers in the manufacturing industries are manual skilled workers and they work at a job that they are very specialised in. As a result of machines and robots taking places of workers, there will be a rise in the unemployment rate. Unemployment is one the factors that will affect the economy, for example, if there is an increase in unemployment it means that more people will have fewer money. This will mean that individuals would start saving and spend less on goods and services. As a result of this, businesses will not be able to have many sales and generate enough revenue which could potentially lead to bankruptcy (not being able to manage liabilities such as debts and loans).
Also the jobs that are being created are very selective on who they hire. This is because most new jobs are being now based on technology, IT and researching. As a result of this many new businesses start hiring educated individuals. Many manual type jobs are getting destroyed as the country develops. This leads to many people ,who are skilled manual workers, to not be able to find jobs that they are specialised in.
The government will also be impacted by the the rise of machines indirectly. As the business starts repalcing workers and unemployment increases, the government will also start getting less back. For example, as individuals become unemployed they do not have that much money, the government then can not tax those individuals as they are not earning enough or have a stable income.
One of the ways the government generates funds are from taxing therefore, a massive increase in umeployment would result in the government being able to tax less.
On the other hand, the rise in machines will also benefit the government. This is because as the businesses start getting more machines, they will be more capable of producing goods. As more goods and services get produced the higher the gross domestic product (GDP) of a country will be. More goods and services will be available for sale meaning that the businesses will start generating larger amounts of revenue. As a result of this, the government can tax these businesses at a hgiher rate.
Machines create a lot of jobs but also destroy them and thye have allowed many sectors of the employment structure to change within a country. There are four sectors and they are primary, secondary, tertiary and quaternary.
Every country started from somewhere and progressed over time. However, there are still a lot of countries that have not developed and are progressing much slower than other countries. From the figure above conveys how the employment structure of the UK changed over time.
From the figure above we can see that in the 1800, the UK was in the pre-industrial stage which is the stage before industrialisation occurs. At this stage the primary sector was very high as the UK was still developing and the industrial revolution has not started in the UK yet. The primary sector is about agriculture and working on land and raw materials and at that time in the UK most people worked at jobs related to farming. At this period of time there was a lot of people farming and mining in order to get a living and provide for their family. In the pre- industrial stage there is also a very low percentage of employment in the secondary sector and tertirary sector. The secodary sector is the manufacturing stage and the tertiary sector invloves employment in jobs that provide services. From the employment structure model we can see that over time the primary sector is falling and the secondary and tertiary sector is increasing as the UK moves closer to the industrial stage. During the pre-industrial stage there was a lot of agriculturig as there were not that many reliable systems like machines that can produce at mass scales. This is why many people who were in poverty worked in traditional jobs as it was the only job available suited best to them.
The second level is the the industrial stage. Currently in the 21st century most developing countries are in this stage. The industrial stage is where a country moves on from agriculture to manufacturing. In the figure above we can see that there is a fall in the primary sector. This suggests that many traditional jobs such as farming (agriculture) and mining (for coal and ores) have been destroyed and the workers are movig onto another job. The traditional jobs were very low paid and therefore, most workers moved from the coutnryside to cities for a hgiher paying job. At this period of time the second Industrial revolution (also knows as the technological revolution) has begun. During the industrial revolution many factories started opening up to produce mass goods. The reason the industrial revolution began was because of the innovation of machines. It was a great opportunity for businesses to progress at a faster rate due to the fact that many workers could be hired for low pays.
From the figure above we can see that at the second stage that the secondary sector in employment was increasing over time and as discussed above the reason for this was because of the industrial revolution. From analysing the employment structure we can see that the secodary sector had increased but then began declining midway in the industrialisation period of the UK. At this period of time in the UK, around the early 20th century, the industrial revolution started to slowly end. There were a couple of factors that led to this point. For example, there were very poor education systems leading to yound children to work early to be able to provide for their family. However, as the UK kept on developing, the government started getting more money leading to more investments into schools. This leads to more kids getting better deducation meaning more people had a better opportunity of finding jobs. Another factor was that the idea that as more good and service started being produced, the country started becoming healthier economically. These factors convey that as the UK started developing rapidly, less manufacturers were needed as the UK was able to start getting resources from abroad.
The factors that have been talked about above of why the secondary sector started declining after it increased, were also the same causes of why the other sector known as the tertiary sector started rising. The tertiary sector is the involvement of jobs that provide services for example, doctors in hospitals. During the early 20th century more people started getting better education which helped individuals find jobs suited to their qualifications. This is why throughout this century more people were getting employed in the tertiary sector.
The least stage in the employment structure is the post-industrial stage, which is based around the late 20th century and the early 21st century. During this period of time the UK was a very fast growing economy and was very developed and had a better quality of life.
Ford factory in Dagenham
The ford factory in Dagenham is a case study related to the changes in the employment structures (change in the sectors) and unemployment.
The purpose of a business is to generate lots of revenue and make profits and therefore, the introduction of machines in firms has aided businesses to become more successful. The invention of machines has allowed mass productions of goods and services to be made which enabled countries to develop and improve their economy. Machines are tools that have permitted a nation’s economy to grow as their gross domestic product (GDP) increases. The gross domestic product is the monetary value of all goods and services produced within a country’s border. As the production rate increases, gross domestic product rises, as a result, the country becomes more economically healthier. This shows that machines have many uses in the business world and the benefits the business gain can be a positive achievement for an economy.
A progress in the Gross domestic product of a country means that there is an increase in the production rate. A few years ago, to be able to increase these production rates, industries had to work more in the inputs to get better outputs. Therefore, businesses started hiring more workers which meant the business lost some profit by paying workers. However, that sum was insignificant to the profit they make after having increased their inputs. The Increase in the workforce caused unemployment rates to fall. This meant that more people had disposable income (income available for spending, saving or investing after income taxes). As a result, more people had the capability of spending money and this increased the demand for goods. As the demand for goods increased, more goods had to be produced and led to a higher gross domestic product.