Adam Smith was among the first to challenge mercantilism and the guild system by association. Smith believed that the wealth of nations depended on the degree to which nations improved their efficiency in employing labour. Smith and those he influenced, including David Ricardo, developed this worldview and ultimately informed a shift to industrial work.
We have been here before. By ‘here’ I am referring to a critical juncture at which the nature of work evolves into something new on a global scale. The Industrial Revolution, which began at the start of the 19th century saw the transition from guild-regulated employment to specialised work organised in factories. The current change in the nature of work is driven by disruptive technologies that are enabling the ‘sharing economy’ <1> and the ‘gig’ or freelancer economy by automating occupations from the Industrial Age. Here I argue that by looking at previous episodes of massive shifts in work we may be able to draw lessons for how best to understand and cope with the current reality.
During the mercantilist period, <2> prior to Adam Smith’s Wealth of Nations in 1776, the guild system defined standards in different trades. Guilds regulated access to most of the important trades. There were essentially three levels of expertise in any one trade: a young worker would become an apprentice and would train with a master craftsperson, <3> and when the apprenticeship was complete, the apprentice became a journeyman. <4> With enough accumulated experience the journeyman would become a master craftsperson in their own right.
Adam Smith was among the first to challenge mercantilism and the guild system by association. Smith believed that the wealth of nations depended on the degree to which nations improved their efficiency in employing labour. <5> Smith and those he influenced, including David Ricardo, developed this worldview and ultimately informed a shift to industrial work. The traditional sequence of apprentice, to journeyman, to master was displaced by a system in which employees performed a single job or set of narrow tasks. Many of these jobs in mining, shipbuilding, and iron and steel, for example were also brought about by innovations that defined the Industrial Revolution.
The new reality of work in the Industrial Age was best exemplified by Henry Ford’s innovation — the assembly line. In a moving assembly line, the Model T was produced in smaller units, as workers stayed in one place, contributing to a single part of the assembly process. The assembly line had the effect of speeding up slow workers and slowing down those who were too fast. The overall effect was to make the workers more efficient. <6> Adam Smith had outlined the importance of the division of labor in The Wealth of Nations in 1776, but the assembly line brought this to life by subdividing labor to maximise aggregate output.
One would be hard-pressed to find labour intensive operations in today’s smart factories or assembly lines. Instead of factory floor workers we now see a preponderance of post-industrial workers in the sharing or gig economy. The guild system as described above is largely a relic of the past but with the advent of the gig and freelancer economy, it might be making a comeback — albeit in a diluted form. The Independent Drivers Guild, <7> which represents Uber, Lyft, Juno, and other For-Hire Vehicle drivers in New York City is one example of this. Unlike the original guilds which focused on deepening expertise and defining standards, the drivers’ guild is a platform to improve working conditions, earnings and benefits.
The characteristic of guilds that I am largely advocating in the knowledge economy is their emphasis on nurturing expertise. Consider the consulting profession — the consultant plies her trade with various clients, disseminating her know-how and, at the same time gaining experience to ultimately become a master or expert in a field, say management. The latter two stages of the guild system, namely journeyman and master are apparent in this example. The first — apprentice — is now largely the responsibility of the individual in the gig economy. Online tutelage has never been as important as it is today. The apprentice today has at her disposal the power to learn a new skill in record time thanks to platforms such as Coursera, Lynda, Udemy and EdX. Many of these platforms even give verified certificates to signal to employers.
It should be apparent how this individual-centric approach to work can fail.
First, individuals may not have enough information to preempt what skills are in demand. Uninformed learners might spend hours equipping themselves with tools that are not sufficiently in demand to support a decent living. A central authority should be mandated with creating an evidence-based guide of ‘critical occupations’. Indeed, many countries are doing this. Malaysia, for example produces a Critical Occupations List (COL) in conjunction with the World Bank each year. <8> Australia <9> too has one, as does the United Kingdom, <10> and many others. These lists can serve as information-clearing centers for workers in the gig economy to prepare themselves accordingly.
Second, provisions need to be made to ensure dynamism in the way occupations are defined. Malaysia’s COL uses the Malaysian Standard Classification of Occupations (MASCO) list to determine the skill level of occupations. Globally, the International Standard Classification of Occupations (ISCO) <11> managed by the ILO is a model for the development of national and regional classifications of occupations. However, Malaysia’s most recent classification of occupations is as at end-2013. The ILO’s ISCO is as of 2008. We need to keep these lists current and even preempt emerging occupations brought on by the gig economy and emergence of disruptive technologies. Central authorities can do this by applying data mining methods such as scraping job portals to create real time critical occupations lists.
Third, most gig economy workers work as independent, contract workers, not employees. As such, they do not qualify for company-provided benefits or state provided social security and protections. This gap offers an opportunity for enterprising marketplaces for gig economy savings accounts, health coverage and retirement plans. A central authority can promote such initiatives by coordinating guilds and traditional banks or insurance providers, for example.
In conclusion, the changing nature of work offers opportunities and challenges. I hope the reader can see how, by looking back, we can draw some lessons for how to cope and even thrive in the transition to a post-industrial nature of work.
<1> The sharing economy can best be described as peer to peer exchanges via digital intermediaries.
<2> 15th to 18th century during which the dominant economic belief was that progress requires countries to secure their hold on international trade and ensure trade surpluses.
<3> Often, the young apprentice’s family would have to pay the master craftsperson to take them on. Like female live-in servants, an apprentice was forbidden to marry. The system was subject to abuse, and apprentices could find themselves working as unpaid servants with no rights.
<4> The word is derived from the French journée, meaning “day.” Journeymen were paid by the day.
<5> Dr. Patrick N. Allitt (2014). The Industrial Revolution.
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Lelo Nxumalo is a consultant at the African Development Bank in Abidjan. He has earlier worked at the International Monetary Fund (IMF) and the World ...Read More +