The broad idea is simple. Technology and innovations have been on the march for a long time, creating new ways to release labor from tedious work, and increasing productivity.<sup>1</sup> From the first Stone Age tools, through the creation of basic instruments to hunt more easily and catch fish, the invention of ships that could travel long distances, the steam engine, the airplane, to the computer, the mobile phone, and the Internet. All these innovations have helped us to save on labor and get more with the use of the same amount of labor. An interesting direct indicator of this is the exponential growth of the industrial robot. The number of industrial robots sold worldwide in 2015 was 225,000; 27% higher than in 2014.<sup>2</sup> I point this out because the robot raises a challenging question about the shift in income from those who do labor to those who have the patent on the robot, those who own the robots, and those who own the shares in the company that owns the robots. This is the core of the political economy challenge arising from the march of this new technology that we have to contend with.

The pace of labor‐saving technological innovations has, in all likelihood, increased in recent times. However, what is truly novel in recent times is the surge of innovations pertaining to digital technologies. These innovations save labor, but they do much more. They help labor to link up with demand in faraway places. It is possible now for large numbers of workers to sit in distant places, be it Bangalore, Manila, or Nairobi, and work for corporations located in London, New York, or Sydney, to serve consumers in yet other locations. The rise of this “labor‐ linking” technology, alongside the advance of labor‐saving technology, is what is transforming the global jobs landscape.

What this new technology has done is to make it possible for nations that are not yet rich and industrialized, such as the low‐income economies and lower‐middle‐income economies, to connect their workers with corporations in industrialized nations. If these nations are moderately well‐organized and have basic infrastructure such as power and digital connectivity, their workers can do well by working for companies and customers in rich and upper‐middle‐ income nations. This in turn is creating new competition for workers in rich and some middle‐ income countries, dragging their salaries down and exacerbating unemployment. In brief, while the rise of labor‐saving technology is tending to curb labor demand all over the world, some emerging economies and developing nations are able to offset the decline by taking advantage of labor‐linking technologies.

This will create and is already creating new challenges. The process is likely to increase inequality in individual nations, and hold back labor incomes especially in high‐ and middle‐ income countries, giving rise to political contestation and conflict. We can see manifestation of

> 1 Two recent World Development Reports (see World Bank 2013, 2016) amass large amounts of data on, respectively, the changing nature of labor relations, and the march of technology, in particular, pertaining to the Internet and the digital domain.

> 2 I point to some of these numbers and arguments in my Project Syndicate column, “The World Economy’s Labor Pains”: <u>https://www.project‐syndicate.org/commentary/labor‐automation‐slow‐global‐growth‐by‐kaushik‐basu‐ 2016‐01?barrier=true.</u>

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