Grasping the political opportunity in automation

In the late 1930s, when Lyndon B Johnson was a lowly congressman, he almost single-handedly brought electricity to the remote Hill Country region of Texas. LBJ went from farm to farm persuading old-timer Texans habitually suspicious of anything new (particularly if it involved debt or the federal government, and electricity did both) that this strange thing would transform their lives immeasurably for the better. There can rarely have been a more successful political exploitation of new technology – electricity came to the Hill Country, the farmers' lives were duly transformed, and LBJ reaped the political capital.

This was a single instance of a wider phenomenon occurring in the US under Roosevelt's New Deal, which was on one level a grand political exploitation of new technologies. FDR sought to rebalance the economy and rescue the country from mass unemployment through public works, which were only made possible by rapid technological advances – not just the advent of electricity, but the engineering techniques associated with highway-building, hydroelectric dams and other major infrastructure.

When new technologies arrive on the scene, political opportunities invariably come with them. Such an opportunity – and challenge – has arisen today, with the ushering in of the so-called Second Machine Age; the wave of tech-led change that is seeing digital technologies, automation and robotics set to transform workplaces in almost every industry. Can these dramatic changes be shaped towards specific political ends? Who is up to the task of doing an LBJ?

At first glance, the impact of these new technologies on the workplace appears problematic for those who identify as 'progressive'. The labour share of income has been falling since the 1980s, at least partly as a result of the more efficient use of capital made possible by new technology. Inequality appears to be growing rapidly across developed economies: the new superstars of the digital economy tend to employ minuscule numbers of people relative to their net worth; automation is happening at such a speed that workers have no time to retrain, making mass technological unemployment a real possibility; and in short, the current technological revolution appears to have a capital bias. The utopian protests emanating from Silicon Valley don't wash: just because all this innovation will lower the cost of living, doesn't hide the fact that the proceeds of growth are not being fairly shared. Is all this new technology benefiting those on the political right by default?

It is not inevitable that the enormous rewards offered by the pace of innovation in the economy should be concentrated on just a few superstars and capital owners. We could go in any number of directions from here. So, how can progressives help shape the Second Machine Age?

To answer this question, you have to identify whose lives are going to be most transformed by the new technology. Then you have to decide which of these constituencies is the most potent, politically speaking. For LBJ in the 1930s, it was the farmers of the Hill Country; for FDR in the US and for early socialist and labour governments in Europe, it was the industrial working class.

Today, the equivalent for British progressives is the professional class. Although things may look bleak for a whole range of demographics, including the low-paid service workers and manual workers who left-leaning parties habitually target, this has been the case for some time, and yet social democratic parties have rarely seemed weaker.

There is another, more fruitful path to electoral success. The professions – law, accountancy, medicine and so on – occupy a special place in British life. The family solicitor in Cheltenham; the chartered accountant in Aberdeen; the GP in Nuneaton: these form the beating heart of the British middle class. Professionals are the dependable rocks around which the chaos of life flows. Family, friends and neighbours tend to respect them. What they think and say tends to be representative of the political mood of the country. Immigrants often want their children to go into the professions, not only for financial security but also as a marker of their acceptance by the host nation. In many ways, professionals are emblematic of Britain itself.

In the past, professionals have been protected from major economic disruption – that stability and dependability is fundamental to their appeal. No matter what happens in the wider economy, they will still get their diplomas and earn their living. Parents urge their children to go into the professions so they will always have something to fall back on. It has been commonly thought that, whatever happens, we will always need lawyers, doctors and accountants.

Parties of the centre-right tend to offer stability; that, after all, is the essence of conservatism. Professionals in the UK have historically tended towards conservatism because stability is in their interest; they usually enjoy a protected economic position and a secure place in society, and they want to keep it. There are plenty of places in the world where professionals are not so conservative (think of the lawyers of Pakistan or Turkey who regularly take to the streets in protest). But in Britain, they tend to be on the side of those who want to maintain the status quo.

But all that stability is about to change. As Richard and Daniel Susskind show, the professions are highly susceptible to massive economic disruption as a result of new technologies. The robots are coming for them.

Many of the tasks performed by junior lawyers and paralegals – such as document review and contract drafting – are already being automated. Tax accountants are desperately scrabbling to avoid redundancy by moving away from compliance – which is increasingly automated – into tax planning. Doctors are coming under pressure from diagnostic and even surgical automation. For perhaps the first time in British history, the professionals are starting to feel insecure about their future place in the economy.

When the heart of the British middle class is starting to worry about its economic position, you have a cast-iron political opportunity. When trying to argue that there should be greater economic security for all, and that the proceeds of growth in the 21st century should be distributed more fairly, having doctors, lawyers and accountants agree with you puts you on the path to victory. Get the professionals on side, and anything is possible.

There are a few stances which professionals could adopt as the coming wave of tech-led change washes over them. They could seek to protect themselves by shutting out new technologies and teaming up against disruptors. But historically, the Luddite position has never been advisable – technological change is too persistent. And recent business history is littered with examples of felled industry titans – in journalism, for example – who responded to the digital threat by trying to shut it out or being too slow to embrace it.

A more fruitful approach for professions in the next few decades will be to look to the bottom line. Some of the things technology is starting to be able to do imply huge savings for professional companies. If the labour-intensive processes of document review, contract drafting and due diligence can be automated, that is a lot of salary hours saved for law firms. If an accountancy firm can offer tax preparation with the click of a button, it doesn't have to hire so many accountants to process the business it wins. So, firms could embrace this wave of change and seek to maximise its attendant profits and lower costs.

In accountancy, for instance, smart tax preparation software like TurboTax is undercutting the market for tax accountants. And some of it is coming from new, innovative firms within the professional field: Riverview Law has invested in a 'virtual assistant' called Kim who can perform numerous tasks that were once the preserve of paralegals and junior lawyers.

There are lots of good arguments for this approach. More efficient businesses will make professional services much more affordable, especially to organisations and individuals who cannot afford lawyers. But professional leaders need to be aware that if they pursue an exclusively bottom-line position, they could become the first generation to oversee the loss of the professional's privileged position in society.

The key question they need to ask themselves is: are we simply providers of services, or are we employers of people as well? No doubt some companies will answer that they are providers of services, and that the employment model they use to provide those services is entirely subsidiary. But there will be others that are aware of the history and value to society of their professions. And they will be troubled by the vision of the future implied by a bottom-line strategy.

Firms that respond to technological change with an exclusive focus on efficiency savings will very likely hollow themselves out and start to resemble the capital- and technology-owning firms of Silicon Valley. Law firms will lose not only their administrative and paralegal staff (to a large extent this has already happened), but their mid-ranking lawyers as well. Those who own the equity will own the machinery that analyses, carries out and even finds the work in the first place. There will be few places left for lawyers – or human lawyers, at least.

A relentless focus on short-term efficiency at the expense of everything else could lead to mass layoffs and a concentration of ownership and success on a tiny number of people within the professions. And that puts the whole incentive structure for pursuing a career in the professions – and therefore the future of the professions themselves – out of kilter.

It doesn't have to be this way. The professions can secure their business for the long term and provide decent incentives to ensure they are admirable 'employers of people'. To do that, they have to embrace and augment the human element in their work – and automate the rest. Few people want to perform a task a machine can do better. Companies will need to make sure their professionals are given the space to do what only humans can do.

In the 21st-century labour market, a premium will be put on uniquely human skills – particularly creativity and empathy. So middle-ranking lawyers and accountants should be encouraged to embrace the fact that many of their former tasks can now be done by machines. They can now focus on coming up with creative solutions to complex problems; on the empathetic handling of clients' cases; and on strategic thinking to deliver a supremely human service.

Without having to spend time drafting contracts and reviewing documents, a junior lawyer could review existing cases and use creative thinking to come up with new strategies that better represent a client's interests; and identify new business opportunities for the firm as legal services become more affordable. The firm could then provide a better service for a larger number of clients, with professional employees using more of their human potential.

Managers, partners and leaders should think about retraining their staff to ensure they can deliver these human skills. And that should be music to the ears of the staff in question. The perennial story of the burnt-out lawyer or accountant who is not prepared to sacrifice their working lives to the soulless pursuit of profit (and who quits, usually to start a cider farm) is becoming more and more common. It used to be mainly the cash and job security that drove people to devote themselves to their firms. But job security is going to be more fragile in the near future, while straight-up financial reward is a much less powerful motivator than it used to be – particularly when it comes to retaining staff, as opposed to attracting them in the first place. Combine that with the potential for technology to concentrate ownership and capital on fewer and fewer people, and the incentives to becoming a professional start to melt away.

Firms will also have to start recruiting the kind of people who can best work with the new technology. In many ways data scientists, systems engineers, process analysts and the like will offer an alternative path into 'professional' life in the future. If the professional firm is to thrive, it will have to open its doors to those without the old qualifications.

Many firms are looking at technology and working out how it can save them money. Some are starting to hire auxiliary staff to work with the new technology they are bringing into use. But few are considering what it will mean to be a professional in 20 or even 10 years' time. And few are worrying about the sustainability of the professions themselves in a world where knowledge is openly available and automatable. Yet by successfully remaking themselves for the next period in our history, they could retain their central place in our social and political fabric.

As the professions begin to transform, there will be valuable political rewards on offer. The 'default' reaction to new technology – whereby firms reap the efficiencies but pay too little attention to their human resources – will create a new class of displaced professionals threatened by the economic reality of the 21st century. A political programme that helped to restore the professional's place in society would be extremely potent, both at the ballot box and in economic terms. And a commitment to a fair and sustainable economy – nominally the preserve of the centre-left – ought to include some provision for economically threatened professionals. But where is the programme that would achieve that?

The traditional big lever-pulling route – a higher top rate of income tax, stronger corporate regulation, better workplace rights – will not interest professionals any more than it has in the past. They will be just as aspirational in terms of earning good money and just as suspicious of over-mighty government as before.

A more subtle but more innovative route would be one which recognised the novel challenges of the 21st century and offered a universal basic income, which, as many have recently suggested, could give people the bedrock they need to operate in a fast-moving, fragmented and insecure economy. But a basic income is scant compensation to the professional who has lost her place in society entirely.

A more promising approach would be to focus on education and skills. There is a whole education agenda implied by the impact of technology on the workplace. As well as being flexible and quick to respond to technological developments, young people need to be equipped with human skills such as creativity, empathy and strategic thinking. Moreover, the system needs to ask what professional qualifications a new lawyer should have. Many of the things taught in law school are already being done by machines; so professional training needs to adapt. There is a role for the state in supporting this and similar updates to our education and skills system. But changing education is a long-term game, the results of which will not be felt for decades, during which the speed of change will continue at a dizzying rate. Besides, what use is educating future professionals to the existing professionals who are about to be made redundant?

Here is a more immediate route to winning the support of professionals: commit to a working relationship with them, one geared towards ensuring they remain some of the most important employers of people in the economy. Offer incentives to firms which nurture human talent within their existing staff. Help bring them into contact with the latest technology, but in an environment that emphasises its benefits to existing employees as well as making efficiencies and productivity gains. Above all, show that you are on the side of the professionals (after all, they are not the first industries to be disrupted by the speed of change in the global economy); and that you have an industrial policy that will support their employers' efforts to secure their long-term future.

Industrial policy has had its ups and downs in recent British history. But this is an opportunity to commit to an approach that will not only secure professionals' influential support in elections, but also demonstrate how to retool an entire industry so that it remains a good employer of people well into the coming century of automation.

This may raise fears of overreach by the state. But the professions are more than just businesses: they are vocations that perform a valued service for society. Perhaps that sense of vocation does not penetrate into every City law firm. Perhaps you may struggle to divine it within the labyrinthine structures of the Big Four accountancy firms. But it is there somewhere. As the professions face up to their future, they have a chance to amplify and celebrate that notion of duty – and government has a chance to help them do it.

This is not about firms 'doing the right thing'. Increasingly, businesses of all types are recognising the value of a long-term, sustainable strategy that leads to social benefits as well as financial success. Similarly, younger generations are more likely to look for meaning in their work (as well as financial rewards and job security). By 'humanising' in the face of tech-led change, firms can secure both their position in the economy and the very future of their professions; they can attract the talent they need; and they can make a real contribution to society – beyond the services they provide – by offering valuable and sustainable employment.

Meanwhile, the political rewards for helping firms to 'humanise' would be bountiful. It would help to counterbalance the concentration of ownership and capital at the top – a process which is likely to accelerate along with the speedy advent of new technologies. It would help provide a seam of sustainable employment for workers otherwise threatened by the realities of life in this century. And last but not least, it would help to bring professionals into the 'progressive' column – with all the political clout that entails. The opportunity is there. The question is, who will take it?