Chris Griswold: For Whom the Machine Toils

Are high wages and worker power in conflict with technological innovation and industrial strength?

Editor’s Note: This essay is adapted from American Compass’s eponymous collection of essays on “Making Technological Progress Work for Workers.” Read the full collection here.

Sometime during 1821, David Ricardo, a member of Parliament and a founding father of classical economics, changed his mind.

At issue was whether the mass deployment of industrial machines was bad for British workers. The preceding decade had seen severe labor unrest, most notoriously the Luddites’ industrial destruction and the deployment of troops in response. After machine-breaking was declared a capital offense and two dozen workers were summarily hanged for it in 1813, the violence diminished. The public’s anxiety about technology did not.

So in 1819 Ricardo had taken to the floor of Parliament to speak his mind: almost by definition, the use of new machinery could not lead to lower employment. In 1820 he responded to his critics in the pages of the Edinburgh Review that the “employment of machinery…never diminishes the demand for labour—it is never a cause of a fall in the price of labour, but the effect of its rise.” To reject technological advancement would be to cut off the very thing that drives national prosperity, including for workers. The press reported that Ricardo “never could think machinery could do mischief to any country, either in its immediate or its permanent effect.”

The publication of the third edition of his seminal Principles of Political Economy in 1821 was therefore a tremendous shock to allies and opponents alike. It contained a new chapter, “On Machinery,” which offered a revised opinion—and a mea culpa. Yes, new technology always adds to national wealth and drives growth. But on whether it benefits workers in the meantime, the great economist now had a new view: it depends. Upon “further reflection,” he was now “convinced that the substitution of machinery for human labour, is often very injurious to the interests of the class of labourers.” If the “extensive use of machinery” throws large numbers of workers into the market without driving a corresponding increase in demand for labor, he warned Parliament not long before he died, it will “operate prejudicially to the working classes.”

The question of technology’s effects on workers remains as fraught now as it was then, and presents an urgent challenge to policymakers. Are high wages, worker power, and broadly shared prosperity compatible with national industrial strength and rapid technological progress?

Many people across the American political spectrum seem to believe that the answer is “no.” Some labor activists treat technological innovation primarily as a threat to forestall. Libertarians and technologists often view worker power as an obstacle to innovation and dynamism. Economists argue that efforts to uphold labor standards and protect the domestic market from unfair trade practices lead mainly to deadweight loss.

They are wrong, in both theory and practice. In the face of public anxiety about artificial intelligence and other technology, even as America also seeks to reclaim technological leadership and revitalize American industry, explaining why they are wrong is a critical task.

A well-functioning labor market in which worker power and techno-industrial power reinforce each other is entirely possible. Rapid technological progress is precisely the formula for rising productivity and economic dynamism. Worker power, properly deployed, forces capital to invest accordingly, improves the return on that investment, and ensures labor enjoys its share of that return. Protection of the domestic market was a central tenet of American economic strategy for decades and ensured that American workers reaped the benefits of American innovation and the expanding American market; when we abandoned it, others claimed economic and technological leadership from us.

But this arrangement is not guaranteed. If a rebuilt American capitalism is functioning properly, oriented toward production and bounded sensibly, then worker power and techno-industrial power can reinforce each other. Under other conditions it will, as Ricardo might put it, operate prejudicially to the interests of American workers.

Dignified Work and the Purpose of Economics

In a March 2025 speech aimed at bridging the divide between techno-optimists and populists—in other words, between those pushing technology forward and those defending American workers—Vice President JD Vance spoke directly to this point. “The role that technology plays in a labor market,” Vance explained, “and whether we greet innovative breakthroughs with excitement or with trepidation depends on the purpose of our economic system in the first place.” He was correct.

A sound approach to economics must accept the basic principle that work matters. Some visions of a technologized future imagine that AI will render work obsolete—or, more positively, that we will innovate our way out of the need for work—and that cash transfers (i.e., a universal basic income) will provide everyone with the resources they need. This cannot be the basis of a healthy economy or society. It is a version of the same mistake made about globalization—that eviscerating the economic conditions that offer dignified work is fine, as long as workers are compensated for their loss.

The American sociologist Musa al-Gharbi, drawing on George Orwell, explains the bankruptcy of this vision:

Socialists often advocate for what is today known as ‘fully automated luxury communism’ – wherein machines have largely eliminated not just privation and disease but also obviated the practical need to work. Orwell argues that this state of affairs would not be a utopia. It would be hell. We can see this, he argued, in workers who are unable to work but have their material needs provided for: they aren’t happy. They’re often quite miserable. And the reason that they’re miserable is that the desire to be useful, to produce, to transform, to add value – these are fundamental human drives that people satisfy through various forms of labor….

[Without purposeful work] people would likely have a void in their life where there used to be meaning and purpose. They’d try to fill it getting high or getting drunk, through gluttony, sexual licentiousness, and other forms of hedonism, or by playing games or consuming ever-more entertainment just to fill up their hours. But spending one’s life just killing time in this way is a horrible way to live — empty and unsatisfying. Again, we can observe this readily in the contemporary world. We can see it in the fact that even people who are rich and don’t have to work typically do – and the ones that don’t often suffer with anxiety, depression, substance abuse and related problems despite (perhaps due to) their affluence.

Healthy capitalism, of course, fulfills the human demand for not only rising consumption, but also meaningful work. As Daron Acemoglu and Simon Johnson point out, the “secret sauce of shared prosperity in the decades following World War II” was in large part a “direction of technology that created new tasks and jobs for workers of all skill levels” fast enough to swiftly replace the old ones rendered defunct by technological innovation.

But that dynamic is not inevitable. Thinking otherwise was the mistake that rattled Ricardo in the early nineteenth century. Regarding the “application of machinery to any branch of production,” he had previously:

…thought that no reduction of wages would take place, because the capitalist would have the power of demanding and employing the same quantity of labour as before, although he might be under the necessity of employing it in the production of a new, or at any rate of a different commodity. If, by improved machinery, with the employment of the same quantity of labour, the quantity of stockings could be quadrupled, and the demand for stockings were only doubled, some labourers would necessarily be discharged from the stocking trade; but as the capital which employed them was still in being, and as it was the interest of those who had it to employ it productively, it appeared to me that it would be employed on the production of some other commodity, useful to the society… it appeared to me that there would be the same demand for labour as before, and that wages would be no lower.

That assumption changed when Ricardo realized that new technology could maintain a given capitalist’s profit levels without having to deploy those now-redundant workers elsewhere—and that in such cases, “it will be injurious to the labouring class.”

That is precisely the outcome the American economy currently incentivizes businesses to make. As Oren Cass writes in “Two Cheers for Automation”:

Deploying technology to boost productivity will always leave a choice between using that higher output per worker to increase output or using it to eliminate jobs. An unfortunate side effect of financialization generally, which encourages managers and shareholders to treat firms as financial assets for generating cash rather than as organizations of people that exist to create value, is that reducing headcount has become an end in itself and a sign of effectiveness.

As important as work’s availability is its quality. New systems of “efficiency” can easily be used to degrade the quality of a task and the wages paid for it. Matthew Crawford notes that when the new principles of “scientific management” were applied to the assembly line in the early twentieth century, the primary aim was not efficiency per se. The separation of thinking and doing “may or may not result in extracting more value from a given unit of labor time. The concern is rather with labor cost.” Frederick Winslow Taylor, the father of scientific management, was clear that the possibilities of his approach “will not have been realized until almost all of the machines in the shop are run by men who are of smaller calibre and attainments, and who are therefore cheaper than those required under the old system.”

The low quality of jobs in America attests to the fact that squeezing more profit out of lower wages remains a standard feature of the current American economy. This is also the connection between how policymakers should understand the economy’s purpose, and how innovators and employers should understand technology’s purpose. Cass concludes: “If technology were for improving worker productivity and job quality, rather than merely for increasing profit, developers would make very different decisions about the tools and applications they created and marketed.”

Work, Productivity, and Wages

Achieving technological dominance and prosperity for workers thus requires orienting the American economy away from the financialized and globalized pursuit of profit divorced from the employment of American workers, and towards investment in domestic production—the sine qua non of both productivity gains that boost wages and the creation of new opportunities for workers displaced from their old ones.

When presented with the option, workers themselves can help push the technological trajectory in a healthier direction. As Michael Lind, Acemoglu, Simon, and many others have pointed out, this is how the postwar era worked. Dynamic innovation yielded rising wages, productivity, and employment all at once, supported in part by high union density. Worker voice pushed technological development towards the creation of new tasks as it eliminated old ones, and reassured workers that they had enough claim on the rewards of productivity for it to be worth pursuing.

It is certainly true that the excesses and intransigence of organized labor have hindered technological progress in some instances. Workers needed to be convinced—like the Longshoremen Union, which (in a remarkable foreshadowing of future conflict) initially strongly resisted the advent of the shipping container in the 1950s. Once persuaded by the opportunities the new technology would create, “Every longshoreman started talking about what can be done under mechanization.” The postwar model does not offer a silver bullet. It was an ongoing negotiated arrangement—exactly the kind of solution a free market is best at delivering, when its participants have equal standing in the market square.

New avenues for worker voice are badly needed if the American economy is to return to that healthy equilibrium, in which workers understand their interests to align with the productivity gains technology can deliver. As Marty Manly argues in “Worker Power in the Age of AI,” in the absence of wholesale reform of U.S. labor law, creative mechanisms like worker representation on corporate boards and collaborative works councils can enhance workers’ ability to participate in relevant decisions about technology—and help forestall labor intransigence. Employee ownership shows great promise as an alternative means of aligning labor with capital around technology adoption, as Jack Moriarty shows in “Don’t Rage Against the Machine—Own Them.” Traditional unions can and must play a good-faith role, as Sean O’Brien, General President of the International Brotherhood of Teamsters, points out in conversation with Oren Cass. They can pursue new models of bargaining, oriented towards improving productivity and then sharing the benefits that follow (see “The Productivity Paradox: New Models for Worker Organizing”).

Structured wisely, worker voice can and does push technology forward rather than holding it up, nudging it towards the creation of new work and securing workers a stake in the benefits of productivity growth. As new technology generates these new opportunities, reimagined workforce development can also play a critical role in aligning the needs of workers and employers alike, as Anthropic co-founder Jack Smith, Burning Glass Institute President Matt Sigelman, and I discuss in “What AI Might Mean for Workers,” and as Ashwin Lalendran and Brent Parton outline in “An Industrious Workforce for the AI Age.”

As with voice, so with wages. As Michael Lind shows in “High Wages and Technological Innovation: There Is No Alternative,” the proper relationship between workers and productivity is a self-reinforcing virtuous cycle. High wages put pressure on employers to pursue productivity, while driving higher demand for the output of domestic innovation and production; drop the pressure on either side, and the growth engine falters. Later American history demonstrates this exact phenomenon, as Daniel Kishi and Paul Cupp explain in “The (Other) Southern Strategy: Domestic Labor Arbitrage and the Road to Globalization.” In the latter half of the twentieth century, a race to the bottom on wages was a strategy that some states found attractive to attract industrial investment. In the long run, however, this did not result in increased productivity—and paved the way for an even more radical labor-cost-saving strategy: offshoring production entirely to jurisdictions like China, where wages could race downward much further.

China, for its part, is also discovering that both sides of the equation matter. Funneling government subsidies into industries beyond what increases productivity, while deliberately suppressing worker wages and household consumption, is a great strategy for capturing market share in the short term. It is not a recipe for long-term productivity growth, as Mark DiPlacido outlines in “Mutual Disadvantage: Why Predatory Investment and Labor Suppression are a Poor Growth Strategy.” The United States is beginning to realize that any American reindustrialization strategy will require disengaging from this dynamic, which has perversely enabled America’s own failed, low-productivity, stagnant-wages strategy of short-term shareholder primacy.

The Task Ahead

If workers are merely factor inputs in competition with other potential (technological) factor inputs, locked in a zero-sum game to preserve their economic security in a failing economic model, then fighting tooth and nail against automation may be rational. If labor arbitrage is the primary means of achieving industrial competitiveness, workers are right to be afraid.

But a positive dynamic in which worker power and technological dynamism reinforce each other is achievable and, as American economic history demonstrates, it is the only viable choice. America must recover its industrial strength, productive capacity, and technological leadership. It must also provide workers with dignified work, decent wages, and a voice in the workplace. Far from representing a tradeoff, America must pursue both, or else we will be left with neither.