- (Leontief, 1983) ⇒ Wassily Leontief. (1983). “Technological Advance, Economic Growth, and the Distribution of Income.” In: Population and Development Review, 9(3). doi:10.2307/1973315
Starting in nineteenth century Western Europe, technological change fostered by private enterprise operating within the framework of a competitive pricing mechanism promoted an unprecedented growth in total output and brought about a favorable system of income distribution. The effective operation of the automatic price mechanism depended critically on the nature of nineteenth century technology, which strengthened the dominant role of labor in the production process. The new wave of technological change -- computerization, automation, robotization -- is progressively reducing the role of labor in production, leading to increasing technological unemployment, and exerting a socially undesirable effect on income distribution. In developed countries, the situation can be remedied by government actions ranging from unemployment relief to full-fledged " income policies " of the Swedish kind. In less developed countries, where direct income transfers can seldom be managed efficiently, more traditional income-maintenance measures -- public works programs, employment of supernumerary hands -- will be necessary.
Using a somewhat shocking but essentially appropriate analogy, one might say that the process by which progressive introduction of new computerized, automated, and robotized equipment can be expected to reduce the role of labor is similar to the process by which the introduction of tractors and other machinery first reduced and then completely eliminated horses and other draft animals in agriculture. The competitive price mechanism played a decisive role in this process.
Even if horses were ready to accept smaller rations of oats or hay per working day, the process of their gradual elimination would slow down only temporarily; more and more efficient tractors would come along, and finally, unable to compete with superior performance of machines, horses would lose their jobs. The outcome would, moreover, be brought about by the perfect operation of the free competitive price system that would automatically compare the cost of different technologies competing with each other. If horses had controlled the government, this would have been a quite different story. But this brings us back to the problem of human technological unemployment and income distribution.