The fourth industrial revolution (or Industry 4.0) is upon us. From artificial intelligence to cultured meats to 3D printing, new innovations appear to be on the verge of ushering in a world of both stunning material abundance and human leisure. Such is the forecast of the World Economic Forum, which welcomes this impending technological transformation as an “opportunity … to create an inclusive, human-centered future.”

Yet beneath this positive gloss lies a deep anxiety that Industry 4.0 will actually result in a dystopic future of massive technological unemployment. Celebrity entrepreneurs like Bill Gates and Elon Musk “wring their hands over the negative consequences that artificial intelligence and automation could have for workers,” while a diverse array of public figures, from the former World Bank chief to European trade union leaders, have warned of the dire employment consequences of unmanaged automation. Several troubling studies have buttressed such consternation. One widely-cited investigation claimed that 47 percent of US jobs are at risk of computerization. Another estimated that contemporary technological change — alongside urbanization, population aging and globalization — is unfolding “ten times faster and at 300 times the scale” of the first industrial revolution.

A wave of literature has emerged that seeks to sketch the contours of the automation challenge and offer a way out. Books such as Martin Ford’s Rise of the Robots, Nick Srnicek and Alex Williams’ Inventing the Future and Aaron Bastani’s Fully Automated Luxury Communism suggest that Industry 4.0 will indeed render great swathes of the existing labor force redundant, but this could lead not to generalized misery but to an abundant, leisurely existence. Such arguments often claim that a Universal Basic Income (UBI), whereby governments provide every citizen with a regular cash payment, is needed to reconcile automation and the market economy or even as one step in the direction of a futuristic, post-capitalist society.

Two recent books mount a powerful critique of both the aforementioned literature and the broader discourse on automation: Aaron Benanav’s Automation and the Future of Work and Jason E Smith’s Smart Machines and Service Work. Both books argue that ours is not an age of runaway labor-saving technological change. Labor productivity growth (an indicator of automation’s pace) in the rich economies since the 1970s has been weak compared to the decades following World War II. Far from experiencing unprecedented technological dynamism, we are living through a long period of sluggish innovation.

But just because automation is not about to create mass joblessness does not mean everything is rosy. There is a profound crisis of work, not on the horizon but right now. People the world over are struggling to find secure, decent jobs. The cause of this dysfunctional labor market, Benanav and Smith both claim, is the stagnation of the global capitalist economy.

A decelerating economy

The notion that the economy is stagnating gained traction following the 2008 financial crisis. Initial expectations that economic growth would quickly rebound never materialized: investment and growth remained depressed, despite central banks’ efforts to stimulate the economy. Former Obama adviser, Larry Summers, popularized the term “secular stagnation” to describe today’s paradox whereby governments flood markets with accessible cash but firms fail to channel this money into new investment.

For some scholars this is not just a post-2008 problem: rich economies have suffered from relatively paltry profit, investment and GDP growth rates since the 1970s. For Benanav and Smith, this persistent stagnation explains the labor market hardships. In a slow-growing economy, job growth is slow too. As more people search for fewer jobs, it becomes harder for workers to improve their wages or conditions because they can be easily replaced. The result has been the increasing joblessness, job insecurity and inequality that is often misattributed to automation.

The two books, however, offer differing explanations for economic stagnation, drawing from two luminaries of US Marxism: Robert Brenner and Fred Moseley. Benanav, like Brenner, argues that today’s stagnation has its roots in transformations in the global manufacturing sector following World War II. After the war, the US’ world-leading industrial technologies spread to Europe and Japan, and then to newly-industrialized countries like Korea and Taiwan. This created “industrial overcapacity,” flooding markets with manufactured goods, creating huge oversupply and pushing down prices and profit rates.

As profitability dwindled, manufacturing firms had less incentive to invest. Instead, money was siphoned away into financial markets, while workers were pulled into service jobs. However, the service sector has been unable to replace manufacturing as a growth engine because services are tough to automate — a masseuse’s productivity cannot be raised without compromising the massage’s quality. The result is a lopsided global economy in which manufacturing has exhausted its dynamism, while people are increasingly employed in service jobs that are often precarious and underpaid because of their weak productivity.

Smith, in contrast, follows Moseley in explaining stagnation through Marx’s “tendency for the rate of profit to fall” theory. Companies increase their competitiveness by introducing labor-saving technology. This means that the capitalist class tends to spend ever more money on machinery and raw materials relative to labor. However, Marx postulates that only the expenditure of labor in production generates surplus value. So as less labor is employed in production, relative to overall costs, the result is falling profitability for the whole economy, which discourages new investment.

Yet Smith argues that another important cause of stagnation is the rising proportion of people employed in jobs that are unproductive of value. These jobs do not produce commodities, but either facilitate their production (a factory supervisor), or help to circulate them (a cashier). Over time, capitalism creates relatively more unproductive jobs because such jobs are harder to automate. Yet unproductive workers’ wages constitute a deduction from the total value produced in the economy, depressing profitability and entrenching stagnation.

Despite offering different explanations for stagnation, Benanav and Smith paint a similarly grim picture of its results. In conditions of weak growth, Smith points out that two archetypal companies have emerged: the platform and the zombie. Platforms include tech giants like Google that reap massive rents from monopoly positions. Zombies refers to the rest — companies that struggle to remain profitable in hyper-competitive markets, clinging to life by taking on more debt. What incomes companies do generate tend not to be invested in new industrial capacity, Benanav argues, but are rather used to buy back their own shares, raising the company’s stock market value. This sclerotic, bifurcated business sector has terrible consequences for jobs.

Focusing on the US, Smith charts the rise of a badly-paid “servant class” that includes bar staff and personal carers. With such poor employment prospects, many people have simply stopped looking for work. Benanav’s focus is global. The world’s available workforce has swelled just as the economy has proven less able to create decent manufacturing jobs. Consequently, many people in the Global South must try to survive in the informal service economy — selling crayons on public transport, washing windshields at red lights, and, we might add, selling drugs, sex or organs on the black market.

While Smith is chiefly concerned with diagnosing this catastrophe, Benanav goes further. Assessing policy responses to stagnation, Benanav concludes that Keynes-inspired proposals are ineffectual. The so-called neoliberal period has actually seen repeated attempts at Keynesian economic stimulus that have failed to resolve industrial overcapacity. In addition, he claims, the left UBI proposals advocated by automation theorists misunderstand the strategic terrain. In a stagnant capitalism, the struggle for UBI will quickly become a zero sum battle over fewer economic resources. Capitalists are better placed to win this contest, as their decision to stop investing can derail the economy.

Benanav concludes that the only way forward is to dispossess capitalists of their true power: the ability to control investment. He sketches an inspiring vision of a post-capitalist society in which people coordinate their collective labor in a democratically-planned manner, making use of labor-saving technologies when they are judged socially useful. Such a society would be governed by the principle that no one should lack the things necessary for a dignified life.

Against the automation theorists, Benanav argues that abundance will not be achieved simply by reaching a certain technological horizon. Instead, ‘abundance is a social relationship’ that is graspable through social reorganization alone. A better world is possible now, regardless of whether the promises of Industry 4.0 are realized.

Grounding stagnation

Mainstream commentators and global institutions are in their own ways coming to grips with capitalism’s slowdown. Yet they tend to frame it as a technical hitch to be treated with innovative policies, rather than requiring a radical re-imagining of our society. Summers likens the contemporary economy to a car with a broken alternator in need of repair, but insists that “secular stagnation does not reveal a profound or inherent flaw in capitalism.” Such mainstream diagnoses stand in contrast to Benanav and Smith’s endeavor to capture the world economy’s deeper, structural malaise.

While their books constitute much-needed interventions in this regard, they contain important ambiguities. We argue that their accounts could be better interpreted through a conceptual framework that more firmly grounds the economic problems they document within the capitalist economy’s wider contradictions.

In Benanav’s account, the reasons why capitalism necessarily tends towards stagnation and low labor demand remain under-theorized. Arguably, growth could be reinvigorated by the expansion of new, unsaturated consumer markets. In the aftermath of the Second World War, this role was undertaken by mass production goods such as automobiles and household durables, which led to almost three decades of booming growth and full employment. Benanav, however, insists that new markets and technologies are unable to resolve today’s unfolding global slowdown, as they would quickly face overcapacities. Yet precisely why overcapacity constitutes such an inescapable trap remains unclear.

The theoretical limitations of Benanav’s overcapacity thesis reflect those of its originator, Brenner. Brenner’s thesis essentially attributes stagnation to over-competition: too many manufacturers battling for limited market shares. The more crowded the markets, the more stubborn individual businesses become, as they refuse to abandon their investments and cede their place to more productive competitors. Rather than shutting down, they desperately seek to realize whatever returns they can with the factories and machines already in place. This results in the spiral of dwindling profitability discussed above. According to this thesis, global stagnation stems from the uncoordinated nature of market competition.

Yet if stagnation results from anarchic competition, then escaping it may simply hinge on finding the political will to implement more efficient forms of regulation. A market-friendly approach might suggest the implementation of a stricter regulatory framework that facilitates the liquidation of uncompetitive businesses — preventing overcapacity in “ordoliberal” fashion. A more dirigiste strategy might place its hopes in an enlightened state or supranational bureaucracy that can assert political control over production and plan investment in a more rational way. Alternatively, Keynesian proposals call for stagnation to be addressed by ambitious government stimulus, in order to support levels of demand adequate to soak up the glut of commodities produced by industrial overcapacity.

Benanav’s dismissal of the Keynesian route remains somewhat unsatisfactory, as he suggests that the growth in government debt in the post-1970s era testifies to its inability to spur growth. Yet many Keynesians would object that governments’ debt-fueled spending was not channeled into enhancing ordinary people’s consuming power and thereby directly boosting demand. Instead, especially since 2008, states have provided massive injections of money into their financial systems in the misplaced hope that private lending and investment would follow.

The sorts of public infrastructure spending and wealth redistribution advocated by many Keynesians to reinvigorate economic growth have not been attempted in a sustained manner. Ultimately, it is unclear why industrial overcapacity is necessarily impervious to states’ attempts to regulate competition, plan investment or directly stimulate demand. Why is building a post-scarcity society more realistic than repairing capitalism’s broken alternator?

Smith’s account is at times convoluted and difficult to untangle. Declining profitability, the rise of unproductive labor, abundant cheap labor and technical difficulties in automating the service sector all appear as disconnected sources of the current economic malaise that are not straightforwardly pieced together into an overarching argument. Nevertheless, the notion of unproductive labor plays a key role in his narrative.

The distinction between productive and unproductive labor is more fundamental than that between manufacturing and services, according to Smith. After all, a fast food worker has more in common with an assembly line operator than with a banker. Mainstream economists are bound to mismeasure the economy’s actual health because they lack the tools to account for the growth of this type of work that produces no value (in Marx’s sense), cannot be easily automated, and as such constitutes a growing cost to the system.

However, grounding the contemporary crisis in the secular rise in unproductive work encounters two main difficulties. First, the rise of unproductive activities could be interpreted as a simple hitch to be technologically overcome. For instance, Smith suggests that much of the latest labor-saving technology, such as tracking and monitoring devices, has been implemented to automate unproductive supervisory functions. One therefore wonders whether an AI-driven innovation wave could help achieve a more balanced distribution of unproductive and productive work by automating activities such as accounting, warehousing or even legal counseling.

Second, perhaps the distinction between productive and unproductive work isn’t necessary at all to explain the central phenomenon that Smith explores. In the last two chapters of Smart Machines, Smith describes the rise of the servant economy whereby, quite independently of unproductive work, productivity growth within manufacturing inevitably propels the disproportionate expansion of low-productivity and low-paying sectors.

As machinery replaces human labor in industry, workers have to compete for jobs in other sectors, inadvertently bringing wages down. Consequently, labor-intensive sectors like services tend to absorb an ever larger share of employment, but these sectors have little incentive to raise productivity because labor costs are already so low. Given the labor-expelling nature of manufacturing, even a reduction of unproductive work would ultimately be unable to hold back the mass migration of labor to exploitative, low-productivity service jobs.

Too much productivity

Capitalism is characterized by a fundamental tension, which is not fully captured by a one-sided focus on anarchic market competition nor the notion of unproductive labor. That tension, discovered by Marx, is between wealth and value. The useful goods and services that directly satisfy our needs constitute the real wealth of our society. But in the capitalist market, they are also saleable products that represent a certain value expressed in prices. According to Marx, the value of different goods is the average labor time required to produce them.

The competitive pressures of capitalist society push firms to produce more goods and services using less and less labor. Technologically-advanced firms with above-average labor productivity can reduce costs, competitively price their goods, capture market share and reap handsome rewards. This exercises pressure on other firms to catch up with the productivity standard set by industry leaders.

Firms are thus caught in a never-ending race — they must perpetually chase the ever-advancing productivity frontier or else flirt with ruin. As this competitive process unfolds, it increasingly brings to the fore the contradiction between wealth and value. Society’s stock of wealth grows, as more goods and services can be now produced in less time, but the magnitude of value created stagnates because the average labor time required to produce each good falls.

The contradictory relationship between wealth and value offers a general framework to understand why the capitalist economy tends towards stagnation precisely because of the drive to raise productivity. As capitalism’s productivity race advances, the same amount of human labor can produce a greater volume of goods – in other words, the same magnitude of value is spread across a larger number of goods. For firms to realize the same profits as before, they must sell more commodities. This dynamic presses firms to produce more output than the market can absorb, drives down prices and profitability, disincentivises investment and ultimately generates conditions of stagnation.

The resulting investment slowdown can stunt further productivity growth — a phenomenon that Benanav and Smith identify. To shelter themselves from this downturn, individual companies seek to cut costs, barricade themselves in monopolistic positions or (if they can afford to) steal competitors’ clientele by further raising productivity. Capitalism’s productivity drive results in a sputtering economy in which firms can remain treading water only at each other’s expense.

Benanav’s contention that it is stagnation rather than automation that is the cause of low labor demand creates an unnecessary dichotomy between these two processes, overlooking their intrinsic link. In fact, today’s downturn mirrors yesterday’s high productivity growth. In capitalism, stagnation is not the radical opposite of technological progress, but its necessary outcome. It is the price society must pay for capital’s inability to quench its thirst for profit. Under capitalism, rising productivity neither lightens the toil of work nor frees people from want. It rather contributes to a flagging economy that makes life harder for those who live by the wage.

Periodically, economic booms driven by new markets, massive state investment or a spike in demand might temporarily allay the tendency towards stagnation and underemployment. Nevertheless, the more productivity rises, the greater the disjuncture between wealth and value and the more gargantuan the measures that must be undertaken to ward off decline. Today, the political efforts that would be required to raise growth to levels necessary to fully employ all those currently underemployed in the service sector, hyper-exploited in the informal sector or who have disappeared altogether from employment statistics would test the limits of state capacity.

Benanav and Smith have written vital guides to understanding this impasse, carefully charting how our economic system is unable to deliver further social progress and, in Benanav’s case, setting out a believable vision of a non-capitalist future. Yet the roots of the world economy’s miserable trajectory must be sought in the inner logic of a system whose productive potential grows in proportion to its diminishing economic vitality — a system in which wealth expands only by making life increasingly precarious.