20.10.2018

Accelerating Latin America – Between Industry 4.0 and the Post-Wage Society

The struggle for a post-wage society is an accelerationist banner that the Latin American left should embrace.

Photo: iStockphoto.com / classenlayouts

Read this article in Spanish.

The phenomenon termed "Industry 4.0" is a new stage in the trend toward automation. It brings together a wide range of technologies, from well-known forms of artificial intelligence and robotics, to 3D printing. Its progress in Europe and Asia is clear. In Latin America, however, the process has been delayed by technophobia. The left should stop fearing progress and embrace the advantages that this new acceleration of capitalism brings: the prospect of building a post-wage society that contributes to greater freedom and happiness among citizens.

What is it with the left and technology? Every time we hear the words "progress", "robotics" or "Industry 4.0", we think that these ideas have no place in Latin America. They seem alien to our world, distant and impossible to apply—as if they were only feasible in developed countries.

"The basic debate on accelerationism is a discussion about whether one way to revitalize the left would be to radicalize the acceleration of current trends in technology to carry them beyond capitalism"

Only a few months ago, Caja Negra published a book called Acceleracionismo. Estrategias para una transición hacia el postcapitalismo (Accelerationism: Strategies for a Transition Toward Post-Capitalism). This was perhaps the first time these debates have been the subject of such attention in the region. The book is a compilation of analytical works by Armen Avanessian and Mauro Reis in which they propose to think about this "new future" called accelerationism. The basic debate on accelerationism is a discussion about whether one way to revitalize the left (which has essentially been on the defensive for years) would be to radicalize the acceleration of current trends in technology (automation of labor, development of a post-wage society) to carry them beyond capitalism.

So what is the current status of these technological trends in Latin America?

The phenomenon termed "Industry 4.0" is a new stage in the secular trend toward automation. It brings together a wide range of next-generation tech, from well-known forms of artificial intelligence and robotics, to 3D printing. The change is so impressive that it influenced economist Ariel Coremberg to expand the list of factors of production, dividing them into tangible ICTs (information and communication technologies, e.g., hardware); tangible non-ICTs (machinery); intangible ICTs (software, databases), innovation technology (research and development), competences (marketing), and non-reproductive capital (real estate and unskilled labor).

Asia versus Latin America: The American lag

The "glorious fifteen years" of good international prices and redistributive policies between 2000 and 2014 allowed Latin America to grow and to reduce social inequality. But the continent continues to lag behind the world in terms of productivity, which has grown by 0.4 per cent in the last fifty years. This puts Latin America at the same level as the Middle East, behind Africa (0.7 per cent), the former Communist bloc (1.5 per cent), Europe (0.5 per cent), North America (0.9 per cent), and Asia (5.5 per cent).

The brutal contrast with Asia merits a look back at the past: both regions began their process of industrialization in the 1960s, taking advantage first of North American development policies in the context of the Cold War, and then of the cycle of cheap debt and offshoring that led the leading firms in the developed world to move to its periphery in search of lower labor costs. Since then, notes Irmgard Nübler, Latin America and Asia have shared a position as "middle-income countries" but little else. Asian countries took advantage of their delayed development to better incorporate technological innovations, as Japan and Germany did in the mid-nineteenth century. Robotization and the post-Fordist hiring methods of the 1980s found a formidable laboratory in Southeast Asia, to the extent that right now South Korea has the most robotized industry on the planet.

"Latin America cannot continue to rely on its reserve of cheap workers and natural resources if it is to join Industry 4.0."

Latin America, on the other hand, leaned on its comparative historical advantage: its natural resources. After the political and economic crises of the 1970s and 1980s, the continent returned to world trade as a supplier of primary products to China. To use Coremberg's terminology, Latin American growth was sustained by non-ICT capital, the development of databases, and the incorporation of workers. This last factor is running out: the number of young workers entering the market is decreasing as the region’s birth rate plummets, from 3.6 births per woman in 1985 to 2.1 today. A way out of this situation would be to make better use of women’s labor, currently underutilized in the region.

But Latin America cannot continue to rely on its reserve of cheap workers and natural resources if it is to join Industry 4.0. The region suffers from structural problems with research, development, and human resources training: less than one out of every ten poor Latin American households has an Internet connection, according to World Bank data. Freelance work is underdeveloped in the region, and most of its entrepreneurism is subsistence-level. Latin America, says Senén Barro, is a region with many entrepreneurs and little innovation.

Even among multilatinas, the degree of private investment in product, process, and service innovation is low. The lack of entrepreneurial interest shifts the full burden of innovation to universities, which currently develop 50 per cent of research. Eighty per cent of scientific publications absorb 30 per cent of the R&D budget and monopolize human resources training. Projects like the precision agriculture program at the Institute of Automation of the University of San Juan (Argentina) that develops mobile land and aerial robots to map crops, or the Irazú Satellite Project developed by the Technological Costa Rica to monitor climate change in forests, are good examples of regional public efforts in a sector (agricultural robotics) that aspires to a worldwide annual turnover of 1.5 trillion US dollars. When 67 per cent of Brazilian firms confirm that they have problems finding qualified personnel, they seem to be omitting their part in this problem.

A place in the world

Economists like Dani Rodrik have admitted that the new conditions of technological development do not facilitate incorporating new players. If in the 1970s the crisis of Fordism enabled offshoring, today technologies such as 3D printing and robotics have reversed the trend: production processes are returning to the central countries. It will no longer be possible to repeat the developmental achievements of regions like Southeast Asia. The extent of this relocation process, known as reshoring or insourcing, is disputed among economists. One study from Bianca Pacini and Luca Sartorio on the automotive industry between 2006 and 2015 has concluded that there was no reshoring, but rather that the volume of trade between the center and the periphery had actually increased.

"Today Brazil must content itself with assembling iPhones manufactured and designed in other countries; the country has been left with little more than low-skilled workers and a meager re-export balance."

In order to know the place that a region occupies in the world, it is necessary to pay attention to global value chains, i.e., what Gaaitzen De Vries has defined as the set of activities directly or indirectly necessary to produce a good distributed in different countries and industries. Within these chains, countries can export their own goods, re-export goods without changes in value, or scale the production process of a good within the same firm. This third option seems to become restricted as new technologies shorten value chains.

Between 1995 and 2011, Mexico and Brazil increased their participation in global value chains by around 50 per cent, at the expense of old industrial centers like the United States and Germany. But between 2011 and 2014, the trade in intermediate goods decreased by half. Today Brazil must content itself with assembling iPhones manufactured and designed in other countries; the country has been left with little more than low-skilled workers and a meager re-export balance. Economists like John Van Reenen believe that this trend could be reversed with trade agreements that plan for the transfer of technology and innovation and avoid the reprimarization of the economy.

The labour market

What effect would the arrival of Industry 4.0 have on Latin American labor markets? Many Latin American unions are resisting it, or at least warning of jobs at risk from automation. Their reasons come from Carl Frey and Michael Osborne, economists at the University of Oxford: according to Frey and Osborne’s calculations, 47 per cent of current North American jobs are vulnerable to automation, as are 57 per cent of jobs in the countries that make up the Organisation for Economic Cooperation and Development (OECD), and 77 per cent of jobs in China. The most sensitive sectors are the textile, electronics, automotive, and agriculture industries, and especially transport, which in Latin America alone could push 44 million workers out of their jobs.

In Latin America, Argentina and Uruguay top the World Bank's list of countries with redundant work, i.e., work replaceable by technology, with 60 percent. In the detailed information for both countries, men aged 15 to 30 years with incomplete primary or secondary education appear to be the most threatened group. Another way to measure it is the percentage of work time spent on tasks that could be automated: 53 percent in Colombia and Peru, 52 percent in Mexico, 50 percent in Brazil, 49 percent in Chile, and 48 percent in Argentina.

"The most sensitive sectors are the textile, electronics, automotive, and agriculture industries, and especially transport, which in Latin America alone could push 44 million workers out of their jobs."

Some have debated the projections of Frey and Osborne with the argument that less than five per cent of jobs can be completely automated, and that most can be automated by an average of 30 per cent. They also claim that the same Industry 4.0 is creating new jobs through electronic platforms, in forms of “collaborative capitalism” such as Uber and Airbnb, the gig economy, small jobs, “zero-hours contracts”, etc. All of these are more unstable forms of labor that lack social security. Many of these new jobs show up in different regions than the old ones, and that geographical displacement has an individual and collective cost. In Latin America, these changes would take place against the backdrop of job insecurity (60 per cent of the jobs waiting for Latin American youth are informal). Paradoxically, this hinders the diffusion of technologies on the one hand, yet on the other runs the risk of growing worse alongside the new forms of work favored by Industry 4.0.

At this point, it is clear what accelerationism has to offer to the Latin American debate: accelerating a region that is lagging behind is hardly going to bring on post-capitalism. Perhaps its most optimistic horizon could be to achieve a more modern capitalism. In the context of Latin American structural duality, however, the asymmetry of the process forces us to think about non-wage forms of subsistence such as a universal basic income, not only to temper the socioeconomic impact, but also to facilitate training in human resources by democratizing access to new technologies. The struggle for a post-wage society is an accelerationist banner that the Latin American left should embrace, instead of clinging to defensive technophobia. Those interested in the capitalist modernization of the region would do well to follow suit.

###

Alejandro Galliano is an essayist and journalist. Translated from Spanish and adapted for style, this article first appeared in Nueva Sociedad.

Popular posts

  • 25.09.2018

    Make the United Nations patriotic again? Donald Trump at the General Assembly

    In a reshaped multilateral order, democracy on the national and global levels are mutually reinforcing and a reformed, well-resourced and more...

    more

  • 25.09.2018

    Extracting value: Banks, the mining industry and access to justice

    The global extractives industry is under increasing pressure to rein in its widespread violations of labour, environmental and human rights.

    more

  • 24.09.2018

    SADC-EU Economic Partnership Agreement: What role for Civil Society?

    The opportunity remains for civil society organizations to ensure implementation is development-orientated, and facilitates sustainable development,...

    more

back to top