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Old labour market theories won’t work
Context:
A substantial transformation in the energy economy could potentially generate new employment opportunities, offering a temporary solution. However, the rapid pace of change may outstrip the workforce's ability to adapt.
Evolution of Economic Theories on Human Labour
- Classical Perspective: Since Adam Smith, classical theories considered human labor essential for production, reducing all processes to labor time.
- Neoclassical View: Modern theories, including neoclassical economics, assume labor and capital as basic factors with substitution possibilities.
- Keynesian Approach: Keynesian theory diverges, making unemployment a central concern and offering measures to address it.
Challenge to Traditional Economic Theories:
- Rise of Automation: Widespread use of robots and AI challenges classical and neoclassical assumptions by making production without human labor a reality.
- Sraffa's Unique Perspective: Only Sraffa's theory allows for a labor-less economy, acknowledging the dynamic of potential unemployment.
- Policy Responses: Traditional economists propose structural readjustment, while Keynesians emphasize demand solutions, and practical approaches may involve a mix of strategies.
Unprecedented Threat of Job Displacement
- Historical Context: Historically, machines increased productivity and created new jobs, countering fears of job loss.
- Current Shift in Energy Base: Massive changes may create new jobs, but the pace and extent of transformation raise concerns about the labor force keeping up.
- Uncertain Future: Unlike past shifts, the rapid and far-reaching nature of change makes the impact on employment uncertain, questioning traditional optimism.
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