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Technological Progress and Unemployment: Luddism and Beyond

Author

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  • Adam Koronowski

Abstract

The aim of this paper is to reconsider the role that technological progress plays in bringing about growing economic inequality and "secular stagnation." The main part of this paper is a theoretical analysis of the impact that technological innovation has on income distribution. The author argues that standard assumptions related to the production function, though seemingly neutral, have far-reaching consequences for economic reasoning concerning income distribution. Wages and employment are not subject to precise solutions resulting from economic optimization reflecting the technical properties of the production process, but are a result of an interplay of social and political factors at any level of employment. Moreover, technological innovations are labor-economizing in nature and eliminate any grassroots competition due to advantages of scale. As a consequence, the share of labor income declines. The second step of the analysis concerns the consequences of evolving income patterns for aggregate spending. Along the lines of reasoning typical for Kalecki, the author argues that the declining share of labor income gives rise to stagnation and persistent unemployment. As a whole, the analysis helps explain the "secular stagnation" and persistent unemployment combined with high profits, a process that breeds confusion in contemporary economics. Finally, the author reconsiders possible corrective policy measures. Globalization shows to be a major obstacle to any action that an individual government might decide to undertake with respect to the problem at hand.

Suggested Citation

  • Adam Koronowski, 2016. "Technological Progress and Unemployment: Luddism and Beyond," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 5-22.
    • Handle: RePEc:sgh:gosnar:y:2016:i:4:p:5-22
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    References listed on IDEAS

    as
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    6. Michael Kumhof & Romain Rancière & Pablo Winant, 2015. "Inequality, Leverage, and Crises," American Economic Review, American Economic Association, vol. 105(3), pages 1217-1245, March.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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