Job Market in the Era of Illiberalism,Trade Wars,Artificial Intelligence and Big Data: A Study

Introduction

The 21st-century world is witness to the new and surprising themes of illiberalism, populism, big data and artificial intelligence (AI). The world has jettisoned the old clichéd theme of communist agenda, which believed in ‘Big Governments’ and providing jobs to millions of people. Capitalism has stood fast with its roots intact and has taken over the old forts of the Soviet era model of socialism/communism as well as has been rejuvenated by the Chinese as the ‘state-controlled-capitalist model’. After the Great Depression and the World War II, the state embarked upon the humongous task of development and nation-building. This was also true for India. The job market during the Industrial Revolution was driven mainly by colonial expansions. Colonisers required the labour force that was supplied by vassal states, thereby creating huge divisions in the world economy, which led to one of the world’s greatest blunders. With the advent of technology in agriculture and the boom in the service sector, the job market has diversified tremendously. The invention and growth of the internet demanded new skill sets from an employee, hence institution-building by the state was in tune with new realities. The job market and the demands thereof are now quite contrasting and new, as compared to the 20th-century world. The rise of right-wing politics along with illiberalism has resurrected the idea of nationalism and patriotism. We are back to ‘making nations great again’. The open liberalised and globalised world has given way to a world which has much proximity towards a ‘controlled globalisation’ or de-globalisation, which in turn has led to hyper trade wars, based on local apprehensions as well as on certain new and true realities. The apprehensions are regarding technologies that are sponsored by autocratic and rogue states, whereas certain realities such as AI and big data are inevitable. The apprehensions and fears are those of ‘data colonisation’ and ‘digital dictatorship’. The AI, big data and cutting-edge technologies are going to create new challenges and huge disruptions for the job market in the world, along with India. Hitherto, the question was that labour is not skilled enough and let us give him/her more skill, but the question we are now facing is upside down: What to do with the useless labour market whose jobs will be taken up by robots and algorithms? The world in the 21st Century will see new sections of haves and have-nots that shall not be divided only on the basis of wealth but also on the basis of data and technology one has amassed. The new theme/reality of the 21st-century civilisation along which humanity shall live is going to be cyberspace and discreet numbers (zeros and ones) and machine codes. Is the world ready for this epochal transformation? Is India ready to take over the challenges posed by new realities of the world in the job market? What will be the skill set required in the 21st century? This article tries to find answers to these questions and make an attempt to explore the job market since the Industrial Revolution up to the advent of AI.

The job market or labour market since the advent of the industrial revolution has witnessed a humungous transformation in terms of skill requirements, technology incorporation/usage and demand by the market. This division can be broadly classified into supply-side and demand-side requirements by the economy of a particular country or in toto by the world. Over the past century, labour-intensive jobs have given way to technology-driven jobs that are less intense and are more machine- and code-driven. Industrialisation has shaped the world quite dramatically in the last two centuries. Starting in Britain, the process spread across North America, Europe and later to the continents of Asia and Africa. The initial momentum of industrialisation was quite uneven, and hence it created huge divisions on the basis of wealth across the globe. This phase saw the huge development of Britain at the altar of Asian and African nations. The political division was clear: It was the colonisers and colonial nations. The first phase of the Industrial Revolution was built on ‘blood and bones’ of men and women from colonial nations of Asia and Africa. Dr Shashi Tharoor has explained in great detail the drain of the economy of India under Britain (Tharoor, 2016). According to Angus Maddison, a British political economist, from 23% GDP in the 17th century under the Mughal rulers, the Indian economy tanked to 2% GDP in 1947 when the Britishers left India. The contrast is unusual and quite horrifying. This comparison shows that the initial model of development that was based on labour-intense industry that required a lot of physical labour was fraught with inequality and tyranny. This was the phase of uneven growth across Asia and Africa in particular. The ‘discontents of globalization’ came to the fore (Stiglitz, 2002). This gave the anti-developmental theorists an opportunity to attack the West-led developmental model. Escobar (2011) argued that the West-led development was nothing but a convenient way of ridiculing and undermining the Third World countries so that they could not assert their moral and cultural superiority. The basic argument is that development is an ideological export and an act of ‘cultural imperialism’. Thus, the post-development theorists call for ‘authentic development’ that takes care of the labour and job market according to local needs and requirements. Similar was the case with the African continent. The bonded labourers from African shores were shoved in hordes into the inhuman industries of Britain. Capitalism rode on the back of colonialism and inhuman industrialisation. This phenomenon spurred up the resentments not just against colonialism but also against capitalism. The largest and defining criticism of this model was led by Karl Marx. The filthy, inhuman and exploitative character of industrialisation gave way to the germination of ideas of socialism and communism. The Communist Manifesto served as an early impetus to the Russian Revolution led by Vladimir Lenin, Leon Trotsky and Joseph Stalin. The Russian Revolution sought to bring an end to the exploitative and unequal citadels of colonisation and brought home the message that colonisation and exploitation can be defeated. Thus, the early resentment that started against colonisation ended up bringing hatred and reservations against capitalism in toto. Capitalism in itself was not the culprit. It was the crony capitalism in nexus with the Church that provided a fertile ground for communism.

Hitherto, the dominant view has been that industrialisation is because of the prevalent technology, capital and entrepreneurial spirit, but Austin and Sugihara (2013) show that historically, labour-intensive industries have been the defining feature in the East-Asian industrialisation success story. They show that even though labour historically was assigned a passive role, the pace and quality of global industrialisation were ensured through labour absorption and the improvement in labour quality. The centrality of labour has been quite pertinent to understanding the job market since the advent of the Industrial Revolution until the age of AI and big-data revolution.

Soviet Model, Capitalist America and Era of Illiberalism

Liberalism comes with two themes—liberal democracy and constitutional liberalism. The Former set comprises the values that owe their origin to the Enlightenment, the French Revolution and the American Bill of Rights. The latter set comes with the themes of freedom of expression, freedom of religion and various other freedoms enshrined in various constitutions of liberal democracies across the globe (Zakaria, 1997). The American global liberal order led the growth story that gained momentum after the end of the Cold War. This was based on the theme of classical laissez-faire principles, which are as follows:

Price of labour should be determined by the market,

However, the critique of Polyani (1944, p. 3) of the market system visualises and theorises that it is the inherent tendency of market forces to create economic disadvantages. Because of the prevalence of competition, the market creates automatic and self-regulatory institutions of the market economy that lead to the annihilation of human and natural substances of society. This shall not sustain and will turn man’s surroundings into wilderness.

Even with the creation of the communist structure, the plight of labour class did not end, which was the manifesto of the communist revolution. It was again the peasant class which was instrumental in accumulation of capital during the 1930s (Harrison, 1978, p. 2). The Soviet model was autocratic and authoritarian, which impacted the creation of good jobs because of too much centralisation and monopolistic atmosphere. Such concoction is always detrimental to the flourishing of industries. Because it is all about the political class which gives the directions to an economy, hence the party in power in the erstwhile Soviet Union was solely responsible for the dwindling of its economy and clout. The model could not keep pace with the changing realities of the 1980s and 1990s in which Thatcherism, Reaganism and Managerialism (of Christopher Pollit) had already sprouted. The failure of this model was because of the stagnation which was at the heart of the Soviet model (Roeder, 1993). The Soviet model–led societies were incapable of adjusting to the new standards, values and practices that were at the heart of the proliferating capitalist model. However, this analysis fails to find answers to the success story of the Chinese model. The growth of Information Communication Technology and media also dealt a serious blow to this model (Arnason, 1995). The division of labour according to the bourgeois and the proletariat came to the forefront again. The working population and masses did not gain enough from the communist experiment. China’s case is quite unique and distinctive in the sense that economic reforms in China are led by both the state, non-state actors and markets (Otsuka et al., 1999, p. 5). It was after the end of the Soviet-led developmental model that liberal democratic proliferation led by American interventionism gained ground. Globalisation became the buzzword and was seen in proximity with the West-led development discourse. Globalisation proliferated and strengthened the industrialisation and modernisation of agriculture and service sector–led growth. Duch (1993) shows that even in the circumstances of chaos and turmoil, people do not abandon democracy and capitalism regardless of the informative citizenry. People do not resort to or vote for anti-market and anti-democratic measures. Further, this study argues that citizens of the former Soviet Union were able to make a distinction between incumbents and institutions. This shows that the citizens are likely to punish leaders in case of economic hardships but are not likely to take anti-democratic measures or anti-market stances. During the 1980s, even in Latin American countries, which faced acute economic and political crises, citizens’ attachment and preference for democratic institutions were strong (Haggard, 1985; Nelson, 1984).

‘Roaring Twenties’ and Great Depression in Capitalist Hub: The American Age

Between the two World Wars, American history witnessed years of great prosperity and the worst Depression of ages. The decades called as ‘Roaring Twenties’ ensured that American GDP hovered around historic highs (1920–1928). The stock market value rose over 20% per year, and everyone was investing in stocks from a big millionaire to a farmer (Hoffman & Pound, 1962). This story ended quite soon with the Great Depression of 1929. Stocks began to tumble, and the economy tanked to historic lows. People lost trust in banks and markets (Nicholas & Scherbina, 2013). From the 24th of October, the Black Thursday, to 28th of October, stocks fell by 13%, and this phenomenon later continued for two to three years, and by the year 1930, the GDP fell by 8.5% (Miller, 2004). This was followed by the passing of the (in)famous Smoot-Hawley Act, which increased the tariff on thousands of imported goods in order to protect American farmers from overseas economic competition (Hayford & Pasurka, 1992; Irwin, 1998). The problem became so adverse in 1931 that America witnessed the worst kind of climatic hazard that was termed The Dust Bowl, which was the worst drought in North America. People suffered tremendously because of economic crises affecting the job market and employment (Worster, 2004). It was in the 1930s that the United States witnessed one of the most devastating droughts of the century. The drought affected almost two thirds of the country and parts of Mexico and Canada and caused various kinds of natural calamities, which included dust storms that occurred in the southern Great Plains. Schubert et al. (2004) show that the drought was caused by anomalous tropical sea surface temperatures during that decade and because interactions between the atmosphere and the land surface increased its severity. In 1933, the unemployment rate in America reached a historic 25%. This was the advent of the New Deal, a stint with socialistic measures where the state embarked upon financial reforms and certain public work projects. Civilian Conservation Corps was kicked in, the gold standard was abolished and the National Industrial Recovery Act was enacted to provide more jobs and establish a national minimum wage. To prevent risky investments and stopping of bad loans, the Glass–Steagall Act was passed. This plummeting of the American economy and its effects on the job market remained evident and manifest until the World War II. That became the period of upward movement for the American economy and hence in 1940, the real GDP of the US economy rose to 8.8%. The American economy witnessed recession again during the period of the Truman Doctrine era, which was mainly to contain the expansion of the USSR.

The effects of liberal democracy on economic performance are quite evident and defining. Many studies have recently shown that those countries which have working and efficient democratic systems, perform better on various economic indicators. These countries have better employment rates, better healthcare, an efficient insurance system and a better business environment (Bollyky, 2020).

Controlled Globalisation, Chinese Right Orientation and Trade Wars

The rise of populists and strong men across the world has turned the clock back a few decades for the developmental discourse and for the job market in particular. The rising tariffs and controlled economies are again in focus. Trade wars between big powers such as the United States and China are real dangers to the globalisation story. Recently, the issue of Huawei and its operations have been seen with scepticism in America. Thus, adding to a long list of already pending disputes in the US–China trade war. Li et al. (2018) show that China will be significantly hurt by the US–China trade war. Their simulations show that the United States will gain if it takes unilateral action against China but is likely to benefit if China retaliates. In the case of non-tariff trade wars, the negative effects on China shall be more significant than the United States. Quite interestingly, they show that the world in general will gain in terms of welfare and trade but is likely to get hurt in terms of GDP and manufacturing employment.

It is not that globalisation shall/will be reversed. This argument will be naive and ill-informed. Globalisation is here to stay but will definitely come with riders. Controlled globalisation or de-globalisation is the order of the day. Local interests prevail over the global interests. Nationalism and globalism have to synchronise and converge at some point where nations will be able to negotiate for their local interests. The labour market in this context is protected through minimised competition because demagogues do not want migrants in their countries. The concept of a ‘nation-first’ policy is adopted by strong men, be it Trump, Recep Tayyip Erdogan, Putin or President Xi of China.

The Chinese model of economic development is quite unique and is often termed a controlled capitalist model. China brought in a tremendous number of reforms after 1978 (Nee & Opper, 2012). This was mainly to do away with the failures of the central planning system. Although Chinese reforms embraced capitalist principles, they were covertly conservative in their approach. This model achieved great success in the course of time. Between 1981 and 2005, China brought 630 million people out of absolute poverty. It brought down poverty from 81.6% to 10% (Chen & Ravallion, 2008). The capitalist leaning can be gauged from the fact that by 2009, 20% of the gross industrial output in terms of domestic output was because of state-owned enterprises. Forty-one per cent went to private companies working in partnerships, and 25% share was because of limited liability companies of mixed ownership. Forty per cent of the industrial profits were shared by private enterprises that employed nearly 47% of the industrial workforce (Nee & Opper, 2012, p. 3).

China’s GDP has increased more than 30 times at current prices despite its humungous population. At the start/initial phase of reforms, China’s nominal per capita GDP was $150, and in 2018 at nominal rates, it stands at $13.37 trillion, which at the per capita nominal rate is $9,770.85. China’s rise is quite interesting and a major irritant in American trade interests that are impacting the global job market. During the early reform era, when private firms were outside the formal state-run labour allocation system, the creation of autonomous labour recruitment networks was a crucial institutional innovation that allowed them to survive outside the mainstream economic system. Importantly, private entrepreneurs/enterprises needed systems that allowed them to recruit and employ skilled and experienced staff and provided them access to the large pool of unskilled rural workers. This proved to be challenging during the reform days as the central labour allocation system allotted qualified urban workers in state-owned and collective-owned enterprises, thus handling more than 90% of recruitment in these public firms (Parish et al., 1995).

Many workers continued to seek public sector employment for its higher status, better wages and benefits even after the abolishment of central labour allocation system. Strict migration policies were formulated to reserve the best jobs for local urban job seekers (Ma, 2010). Private employers responded to these constraints by creating a diversified network of formal and customised recruitment networks, the former primarily used for unskilled labour, as well as technical staff, and the latter used particularly for managers and professionals. This is broadly similar to the use of recruitment channels in the US labour market (Holzer, 1987; Marsden & Campbell, 1990). As private companies in the Yangzi Delta area have advanced far beyond the limits of family-run businesses, they are using a common combination of various search networks that are also characteristic of Western market economies. According to the 2009 survey, employers in the Yangzi Delta region recruited three-quarters of their technical workforce through structured recruitment networks, in particular direct job seeker applications and human resource fairs, where employers meet potential candidates. Entrepreneurs seeking high-powered management staff are also increasingly dependent on structured recruitment platforms. In the 2006 survey, entrepreneurs who saw skills as significant in managerial personnel selection found an average of 38% of their managers via business search. Managers who consider skills as ‘very relevant’ recruited a considerably higher market share of 53%. ‘Competition is all about human capital’, a machinery builder in Nantong observes. ‘Once we have human capital, we can achieve just about everything. We advertise, and offer high salaries to attract experienced engineers, but it is not easy to compete with the big cities’ (Nee & Opper, 2012, p. 353, interview No. 96).

New Haves, Have-nots and Disruptions in the Age of AI and Big Data

During the 1950s and 1960s, the discussion was around providing a job to a landless labourer. The world has seen an epochal transformation since then. The haves and have-nots were in terms of GDP and income levels, but because of AI transformation, in the future, we are going to witness haves and have-nots in terms of technology. The big-data companies will be new colonisers of the world if left unregulated. This is because fewer people will have the know-how of the sharp technology in the 21st century. Yuval Noah, through his insights, shows how AI shall affect job markets around the world. He argues that the equation of AI with humans shall be the same as the equation of humans with animals. It is quite pertinent to mention that the effects of technology are going to be significant in the coming decades. AI, big-data companies and robotics will impact the job market quite drastically. The know-how of the technology will matter a lot to an individual. In an era when we see few people who are digitally literate, the coming of AI and robotics will make them useless and shall add to new have-nots of the world. AI is going to impact our work in offices, homes and roads. The traffic management and how goods and services are provided by the government will see a big transformation. Technology is going to affect our politics, science, soul, liberty and democracy (Runciman, 2018). Developed countries could be on the brink of a similar transition in the current era. Robotics and machine learning have improved productivity and strengthened many nations’ economies. AI has succeeded in handling banking, transportation, security and energy. High-speed networks and remote sensors enable the internet of things to connect people and businesses (West, 2018). The fact is that in the coming decades, more power will be amassed by corporates, data companies and governments in order to know better their customers and citizens, respectively. This is fraught with dangers. Scholars such as Chomsky and Cosmologist Stephan Hawking have warned against the dangers of AI, and thinkers like Pratap Bhanu Mehta argue that because of powers that AI and technology give to the governments, we might in the near future witness the reality of Panopticism and working of a surveillance state (Singh, 2019). This technological disruption will impact the job market heavily. A two-year study by the McKinsey Global Institute shows that AI is going to impact 30% of the world’s human labour market force by 2030 (Zhao, 2018). The automation revolution will be much more disruptive than the British Industrial Revolution and agricultural revolution and will rival the explosion of the Chinese labour economy. According to the same report, because of automation, 400–800 million jobs shall be displaced by 2030 requiring as many as 375 million people to switch categories (Zhao, 2018). According to Brookings Institution, even if automation is only applied to 38% levels, the disruption will impact democratic countries like the United States and may turn them into authoritarian regimes (Kamarck, 2018). Frey and Osborne (2017) have shown that 47% of US workers have a high probability of being in automated jobs over the next two decades. According to the Brugel Analyses Report, 54% of the jobs in the European Union are going to be computerised, and there will be a huge and significant large-scale disruption in the job market (Bowles, 2014).

The AI creates haves and have-nots in terms of technology, economy, finance and digital literacy. Recently, Paytm, Google and Nike have announced the slashing of thousands of employees, thereby saving billions of dollars because of automation. For big companies, AI and automation have come as a huge messiah, because it increases their profits by slashing their salary bills. Advancements in technology have revolutionised healthcare services such as progress in medicines, equipment, diagnostics and surgical procedures. To ensure better health access to the population, India has launched the Ayushman Bharat programme as well, similar to Obama Care during the Obama administration in the United States. These programmes require better internet know-how and connectivity. Nevertheless, despite efforts from various governments, the general population remains aloof from high-class innovations in healthcare because of lack of accessibility or because they do not have ‘entitlements’. According to India Inequality Report, 2022: Digital Divide by Oxfam, 70% of citizens in India do not have connectivity to digital technologies and 60% of households in India may be digitally illiterate. Similarly, in education, agriculture and rising investments in smart cities, people may get marginalised or be left out because of digital literacy gaps. India still has thousands of villages without connectivity. According to Kar (2023), 43,180 villages in India are still devoid of a 4G network, and the world is fast-forwarding to 5G and 6G networks. Now, imagine the fate of the population living in those 43,000 villages. This leads to one of the biggest stories of haves and have-nots created in the 21st century. According to a similar report, 7,592 villages in Odisha, 3,793 in Maharashtra, 3,734 in Rajasthan, 3,731 in Arunachal Pradesh and 3,240 in Madhya Pradesh are without 4G connectivity (Kar, 2023). According to the Pew Research Centre Survey of 2016, ‘younger, more educated and high-income Indians are more likely to use web than less educated and lower-income Indians’ (Zainulbhai, 2016).

Conclusion

Because of the workforce disruptions and rise of the population, the world is witnessing a lot of change and structural transformation. These transformations are in terms of the job market as well as the political environment within which the world economy is functioning. Disruptions because of AI and technology will lead to a chaotic political atmosphere that shall cut across the ideological divide between the leaders at the helm of affairs. The acceleration in innovations within the disruptive atmosphere will further close the ideological divide between ideological right, left and liberals. Everyone will probably turn to populism, which we are witnessing in the world today. Today, we are in times of a great churn and a defining moment in world history. The world will settle down with new rules and principles before seeing huge undulation across the political axis/curve. Recommendations to deal with these kinds of dislocations have been many but whatever the efforts in order to quell the anxiety because of automation in the job market, we will need a global effort that shall reduce the political polarisations, better social-security measures and global control mechanisms on ‘new’ trade rules. This will include regulation on the AI and big-data companies. The red lines to be drawn are where AI automation will not impact those sectors that involve digitally illiterate populations in continents of Asia and Africa.

More specifically, the jobs affected by AI are receptionists, data analysts, retail and insurance sectors, while jobs ‘less’ likely to get affected are judges and lawyers, teachers, psychologists, surgeons, artists, writers and psychiatrists. Therefore, we must focus on jobs which are creative in nature and require ‘human capacities’ and ‘capabilities’. Prima facie, the case is evident that AI replaces jobs that are more menial and routine, that do not require higher levels of consciousness and self-consciousness. It is better to welcome AI, just like human civilisation welcomed the 19th-century Industrial Revolution. Rather than being cynical, it is important to focus on the ‘job ladder’, which demonstrates that humans must focus on those jobs which give them a greater sense of well-being and meaning in their lives. Demanding and challenging careers must be pursued. Know-how is important, which means that citizens must be made aware of AI disruptions and the careers which AI steals, thereby refraining from those jobs. Human history does not need to repeat the concerns of the Luddite movement of 1811. Moreover, there has to be a responsible usage of AI, which is more ethical, morally sustainable and environmental-friendly. The global risks associated with AI must be gauged, and global minimum common risks must be recognised so that those risks can be dealt with. The effects of AI, illiberalism and big data on the job market are comprehensive and have spilled over from one country to another. Because of the impact of AI on jobs in the developing or under-developed world, migration cannot be expected to those countries which are AI-rich but to those which are labour-intensive. Similarly, we can expect people moving out of authoritarian regimes towards democratic states. To overcome these challenges, there has to be more investment in a democracy all over the world. The investment of under-developed countries and developing countries in upskilling and digital literacy has to increase. In addition, global donors, aid agencies and global development banks can fill in the gaps where necessary, to minimise the disruption caused in the job market.