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Technological Progress, your Career, and Karl Marx

Karl Marx may have had a point. That is an attention getting statement for a blogger to make on the opening to a post if I’ve ever heard one. Especially for one who writes on personal finance, the very epitome of Capitalism. This blog is not political and will not attempt to extol anything in the way of a political philosophy, and this post is not about Capitalism versus Communism, but rather how Marx viewed labor and wages over time.

Technological Progress Theories

In 1848 when Marx wrote his manifesto it focused primarily on technical progress and advancement. The more political of his theories focused on the usage of technical progress to hold down the proletariat by shifting the power to those with money. It’s all very morally based, and not without a dose of hypocrisy given he was bankrolled using money from a wealthy cotton farmer. However, if you look past the morality question you see something interesting. At its base it pretends that technological advancement decreases the value of labor. This continues to a point where technological progress comes to a halt, presumably because we have invented almost everything there is, and then we invent a new form of government.

Now, looking at the theory in the context of where we are today we’re in a period of great technological advancement. We’re discussing building robots to drive our cars, cook our food, and do any number of things. The value of labor of an individual has slowly declined as wages have decreased over time according to studies. I don’t see technological progress halting anywhere on the horizon, but I do see more shifts away from the value of labor with one possible exception.

Manual Labor on the Decline, Cerebral Labor on the Rise

While the value of manual labor has been on a decline for decades, the value of cerebral labor has been on a continual increase. I only see this shift increasing as we go forward. It’s eventually going to be possible to build a robot to mow your lawn, clean your house, dig a ditch, or any number of manual things. We are likely further off from automating the person who creates the robot, writes a work of fiction, or designs your financial plan. The disruption of these changes will be tough on those without a good education or pre-existing capital. Even for those with a good education, technological advancement may take forms you can’t predict, obsoleting or lowering the value of types of labor you cannot foresee.

Improving Lives

The reality is that the above can be good or bad depending on your perspective. 50 years from now your kids will probably live an easier life then you or I can even fathom. In the same way that you and I live a better life than 50 years ago. But to get there a lot of people will be left with obsolete skills. I sometimes talk to my grandmother about her first job, which really rams home this point. She was a phone operator for her first job, basically routing calls manually across a switch board to get to the right person. The concept of this job does not even exist these days, yet my grandmother was not an anomaly, it was a very common job for woman of that era. In the same way, many people will end up in jobs in fields that disappear over the next few decades.

Putting it into Action

So what does this mean? Your best course of action is to constantly be learning while building up your capital. When a class is offered at work, take it. Tuition assistance from work available, sign up. Online educational opportunities, use them.  Savings, do it so you have financial independence. Don’t count on what you’re doing today to be here 20 years from now. Build up those traits that allow you to be flexible. Encourage your kids to do the same as they come of age. Ultimately, doing so will ensure you and they will experience the fruits of the advancement.

Maybe one day technological progress will stop, but I sure hope it’s after we’re all driving flying cars on Mars.

What educational options have you pursued recently?


  1. Mustard Seed Money
    Mustard Seed Money October 19, 2016

    I completed my MBA two years ago and so I am taking a small hiatus with formal education. In the meantime though I have been trying to read as much as possible with a wide variety of subjects and authors. Sometimes completely opposing views so that I can really use my critical thinking skills. It’s not always the most pleasurable reading but it is definitely stimulating at times.

    • October 19, 2016

      Always a good idea. I might recommend a book then, “New Ideas from Dead Economists”. I read the book back in college as part of a history of economic thought class. That was the influence for this post.

  2. MrSLM
    MrSLM October 20, 2016

    It’s an unfortunate consequence of technological advancement, but a growing segment of the population will be left behind and unable to find work that can’t be done cheaper and more efficiently by a machine. As you mention, phone operators no longer exist. We’re on the verge of fully autonomous vehicles, which will render taxi and truck drivers obsolete. This is just the tip of the iceberg as AI technology advances, which is why it’s important for people to start having conversations about things like universal income.

    • October 22, 2016

      Thats certainly one approach. I’m honestly not sure what the best policy approach is, I’m just sure I want to prepare myself and family. Thanks for stopping by.

  3. actuary on FIRE
    actuary on FIRE October 16, 2017

    I love a bit of Marx in the blogosphere! I’m glad you pointed this out to me. The example of your grandmother’s job in the telephone exchange was great. To my kids’ kids’ I don’t think they will understand what a human taxi driver was. There are so many jobs falling by the wayside that you have to wonder whether it will fuel the societal unrest that Marx intimated.

  4. Gasem
    Gasem October 29, 2017

    Marx lived in a very casted society without mobility. He applied his dialectic to people. There is an economic theory built on Marx’s dialectic called creative destruction. Instead of people being the proletariat, the proletariat in this case are new technologies rising up to destroy more feudal production systems like happened to phone operators. Creative destruction is pure capitalism. It is the thing that drives economic evolution. It is not something to be feared it is something to be harnessed and ridden.

    The solution is to become an owner not just a worker. I recently did a spreadsheet analyzing BRK.B’s compounded earnings from 1997 to 2017 and a $2000 initial investment adding $2000 per year and compounding yielded a near $5M portfolio. What exactly are we doing in creating these passive income portfolios? We are becoming owners and levering creative destruction. So if you’re worried about robots simply own the robots, one share at a time, and you will do fine. If you’re worried about your kids, buy them some robots one share at a time.

    • FullTimeFinance
      FullTimeFinance October 29, 2017

      Ownership is definitely the most secured long term path. But it’s also an area where you need a long runway before the change arrives. It can arrive quite suddenly. The best we can do is start prepping early. Still I agree it is a great thing for society as a whole.

      Thanks for stopping by.

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