This is one of a series of posts that will ask what the most pertinent question raised by a prominent influencer of political economy might have been, and what the relevance of that question might be today. There is a list of all posts in the series at the end of each entry. The origin of this series is noted here.
Mark Carney, the former Governor of the Bank of England who is now the Prime Minister of Canada, is someone with whom I had differences over his stewardship of the Bank of England. But he is also remembered for a sharper, more political intervention.
In 2016, he argued that whole communities were being “left behind” by globalisation, automation, and the relentless pursuit of efficiency. The system's accounting, he suggested, was faulty: the books balanced for capital, but the social costs were invisible.
This underpins what I am calling the Mark Carney Question: when technological change and automation eliminate jobs, producing efficiency gains and higher profits, how do we account for the hidden social losses — and why are they absent from our measures of economic success?
1. The promise and peril of automation
Automation and AI are heralded as the engines of the future. The promise appears obvious to the proponents of such moves: the goal is more output with less labour, cheaper goods, and (maybe) more leisure. In theory, entire societies should benefit from this.
But the peril is equally clear:
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Jobs might well vanish, especially routine and middle-skill ones, and there is no guarantee that alternatives will be created.
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Incomes of displaced workers will shrink.
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Local communities that are impacted will lose spending power.
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The dignity and identity that come with employment will be eroded.
- Claims on the government will increase as the income divide increases.
- Social stress will grow.
- Extremism will be encouraged.
Firms will book the savings that they have made as profit. The economy will record it as a benefit of higher productivity. GDP will increase. But, for those who will have lost their livelihoods, the gain will be illusory. The official accounts may show a surplus; however, the lived experience will likely be a deficit.
2. GDP's blind spot
GDP, the sacred measure of modern economics and neoliberal politicians, is profoundly ill-suited to capturing these dynamics. It counts output. It does not ask who gains and who loses. If one factory automates and sacks 10,000 workers, GDP records the cost savings as increased efficiency. The social consequences are invisible.
Nor does GDP measure the indirect effects:
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The lost taxes from unemployed workers.
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The increased welfare costs of supporting them.
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The decline in local demand as spending collapses.
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The knock-on health impacts of unemployment and insecurity.
In aggregate, society may be poorer, even as GDP suggests it is richer. This is the illusion Carney pointed to: a set of accounts that flatter capital while erasing labour's losses.
3. The distributional distortion
The Carney Question is, at root, about distribution. Automation creates winners and losers. The winners are owners of capital — shareholders, executives, asset managers. They pocket the savings. The losers are workers, families, and towns that depended on those jobs.
In a well-governed system, redistribution would correct the imbalance. Tax the winners, support the losers, reinvest in new opportunities. But under neoliberal rules, redistribution is treated as distortion. The result:
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Profits surge, labour's share falls.
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Inequality widens.
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Regional divides deepen.
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Social resentment grows.
It is no accident that populist politics thrives in the very places hollowed out by automation and globalisation. Economic exclusion breeds political revolt.
4. The accounting illusion of capitalism
Company accounts record the efficiency gains of automation as reduced labour costs. National accounts record the same as higher productivity. Neither records the social costs of job loss.
This is not a neutral omission. It is a structural bias. By design, our accounting frameworks prioritise capital and ignore society. The balance sheet of a company is closed once profits are distributed. The balance sheet of a nation is closed once GDP is tallied. But the balance sheet of a community — of lost dignity, rising insecurity, mental ill-health, fractured families — is nowhere recorded.
The Carney Question demands that we expose this illusion. Efficiency is not efficiency if the hidden costs exceed the visible gains.
5. From climate to labour: stranded assets and stranded workers
Carney's most famous intervention before becoming Canadian Prime Minister was his warning of a “tragedy of the horizon” on climate change: markets discount long-term risks, treating them as irrelevant until it is too late. Fossil-fuel investments risk becoming “stranded assets.”
But there is a parallel. Automation creates stranded workers — whole cohorts rendered obsolete without pathways to re-employment. Just as markets fail to price climate risk, they fail to price social risk. The accounts remain rosy until collapse occurs.
We would not accept an oil company ignoring its decommissioning costs. Why do we accept a tech firm ignoring the social costs of mass redundancy?
6. The politics of invisibility
Why does this blindness persist? Because invisibility serves power. To capital, it is convenient that GDP registers gains while masking losses. To governments, it is easier to boast of efficiency than to confront the human toll.
This invisibility entrenches a cruel dynamic:
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Workers are told they must “retrain,” even when no equivalent jobs exist.
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Communities are blamed for being “left behind,” as if decline were their fault.
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Welfare systems are stigmatised, not strengthened, to deal with dislocation.
The result is a politics of blame directed downwards, rather than accountability directed upwards.
7. What would honest accounting look like?
The Carney Question implies a radical task: we need forms of accounting that capture social reality. That could mean:
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Social impact accounting. This would require firms to disclose not only financial savings from automation, but also job losses, regional impacts, and retraining commitments.
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Broader national metrics. Replace GDP with indicators of well-being, distribution, and resilience. If unemployment rises and communities decline, it should be visible as economic damage, not hidden behind aggregate growth.
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Redistributive policy. Tax automation gains through windfall levies or higher corporation taxes, earmarking revenue for universal services, job guarantees, and local investment.
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Public investment in transition. Just as climate change requires state-led green investment, automation requires state-led social investment — in education, care, and green jobs.
Inference
The Mark Carney Question cuts to the heart of twenty-first-century capitalism. Are we content to let our national accounts flatter supposed efficiency while concealing exclusion? Or will we demand an economy whose books are honest, registering not just profits but the impact of activity on people?
Automation is not destiny. It can liberate or it can impoverish. But left to current accounting, it will do the latter, enriching the few while stranding the many. The challenge is to rewrite our economic scorecard so that the costs borne by workers and communities are counted as real.
Carney's warning remains urgent, and also unanswered: a system that ignores the social losses it creates is not efficient, but brittle. And brittleness, in economics as in politics, eventually breaks. That is the risk we face whilst this question remains unaddressed.
Previous posts in this series
Taking further action
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here.
One word of warning, though: please ensure you have the correct MP. ChatGPT can get it wrong.
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“Currently our entire socio-economic system is based on restrictions for the many. Scarcity and restriction are the movers of money; the less there is of anything the more you can charge for it. The more restrictions there are, not least restrictions on the quality, diversity and accessibility of heterodox/alternative socio-economic theories and practices, the more opportunities there are for the few to make money.” (From Peter Joseph)
That’s why I consider my basic opposition to AI to be essentially humane. I see the cost to humans down the line.
Not to mention the current intense use of finite resources to power AI. The energy and water requirements are sickeningly high.
For good or ill AI exists. The genie cannot be put back in the bottle, just as it can’t be for nuclear weapons. 🙁
To me there is no more sense to “opposing” AI than to the Luddites opposing mechanisation. The trick is to use technology for the benefit of the many and not the few. That requires government regulation and taxation.
The good news, from the perspective of those worried about AI, is that it may not be as disruptive as you fear, at least in the short to medium term. A recent government report on using AI for coding (https://www.gov.uk/government/news/government-coders-using-ai-to-each-save-28-days-a-year-and-build-more-tech) suggests that productivity may improve by about 10%. That is significant, but not game changing. Given that the use of AI for coding is probably the best case scenario for AI, this suggests the disruption from AI may be substantially less than some fear.
IMO, whilst AI is an important and significant trend, which is beneficial, it is being over hyped, as is typical for new technologies, and it causing a tech stock market bubble. The bursting of that bubble, which seems inevitable, may be more damaging than the direct effects of AI (which may, in fact, be benign).
My translator friends (3 of them) have already been shafted by AI.
One is now a part-time postman and the other thinking of fast-tracking to become a teacher (but I’m not sure he’ll stick it out).
At my last college, ChatGPT was responsible for 90% of the work handed in. Stupid management still had no ChatGPT protocol so those kids will get a diploma with zero effort.
As the article mentions, we are failing to properly see the costs of AI. Plus the energy demands that I mentioned earlier.
Efficiency gains is another Neoliberal con. We need jobs providing dignity and a liveable wage. The massive uptake of working from home showed us how important work is for the social fabric of a nation.
I’m not a Luddite. I’m a concerned economist.
This and your & PSR’s Ford Question answer so many “But what about…? questions that occur when we compare the local High Street and the experiences of people we know with claims of economic success in the media. This Mark Carney piece complements the Henry Ford piece; Ford recognised that poorly paid workers could not contribute to the economy and buy his goods, Carney said we have to put societal costs on the balance sheet.
I find it hard to imagine why so many who benefit enormously from great riches, do not see that this extraction is destructive – they think they are the fine-feathered, the gilded, but the golden goose is in fact people and planetary resources, both being systematically damaged. Whatever his character, H Ford could see further than most of his class.
The Green Party manifesto 2024 states…
“In the long term, Green MPs will push for the introduction of a Universal Basic Income that will give everybody the security to start a business, study, train or just live their life in dignity. This major change to our tax and social security system is the work of more than one parliament.”
This paragraph rather epitomizes the naivety that characterizes the thinking of some people in the Green Party.
There is a dystopian hellscape where a subsistence UBI would be necessary to ensure sufficient effective demand for the goods and services produced by automated capitalist businesses.
But the harsh reality is that in this automated world, the recipients of UBI would be completely powerless. They could not go on strike, nor could they passively resist. They would be absolutely prey to the whims and caprices of techno-autocrats, like Elon Musk, a keen advocate of UBI.
I have been long-term unemployed myself and, although solvent, experienced some of its harsh reality.
As an activist in the Green Party myself, I have demolished the case for this substantial UBI. But the Green Party is not listening. The Green Party’s proposal is that UBI should apply to all non-pensioner adults. A subsistence UBI at 60 percent of the median UK wage would be £18,000 a year. Forty million UK adults would be eligible. The product of those two numbers is £720 billion a year. This gross cost can be reduced by a more progressive tax system and a cut back on means tested benefits, but the net cost would still be several hundred billion £s a year.
Apart from its sheer unaffordability, the inflationary impact of a subsistence UBI would be enormous.
The Green Party, unlike the other mainstream parties, which espouse neoliberalism, understands and advocates Modern Monetary Theory, although there is no mention of it, or its principles in Manifesto 2024. But advocates of MMT do not also advocate UBI. Instead, like Stephanie Kelton in The Deficit Myth, they generally advocate a federal or state jobs guarantee.
The Green Party should drop UBI and consider advocating a jobs guarantee as the natural complement to MMT and to the Universal Public Services which it also advocates.
As you know, much to agree with
As you know, I agree.
I disagree.
I don’t think UBI need be as dystopian as you envisage and could in fact be highly beneficial.
UBI noes not preclude working too. People don’t have to be stranded on UBI. I would suggest that it does, as the Green Party say, allow people more freedom. UBI strengthens the ability of people, who are also working, to strike. That’s because they won’t have to rely on savings to subsist whilst on strike.
UBI could be “paid for” by more progressive taxation (I.e. the taxation offsets any inflationary effects). Those on higher rate taxation currently pay 40% tax on earnings over the tax threshold. The tax threshold effectively gives them tax relief of about £5000. For standard rate payers it gives only half. So why not pay UBI of £5000 to everyone and abolish the tax threshold. Why pay the higher earners higher benefits than low earners? Sure that doesn’t cover £18k, but it’s a start.
Any programme to initiate a UBI should start small and evaluate the effects. Perhaps you are right that it’s harmful, though I doubt it. But let’s start small, try it, and change it if necessary. That seems to me to be good governance.
Nor do I think UBI is necessarily, or even probably, inflationary (any more than a decent minimum wage, which is also needed, is inflationary). Of course UBI would have to be introduced with other tax changes. That’s to the major point of taxation.
I guess we may have to agree to differ but, I think, it is worth airing the counter narrative that the Green Party may be right; a UBI may be a good thing.
UBI is not technically possible within any acceptable tax ranges.
End of…
The rationale of UBI is that it’s an insurance against the precarity of working life. But that requires that UBI provides a subsistence, rather than a token income, which could anything from £1 a year – the reductio ad absurdum – to say £100 a week. Of course, a small token UBI would be affordable but it would not be an insurance and would not be transformative. It is therefore meaningless as a policy.
UBI is a universalist solution to a non-universal problem. Working life is not precarious for the rich and well-connected. They can fail upward, like Boris Johnson or Liz truss. And it’s not particularly precarious for southerners.
I worked in London for twelve years and, apart from six weeks unemployment aged eighteen when I stupidly quit my first job as a boiler cleaner at Wimbledon Electricity Generating Station, I was never unemployed. My periods of long-term unemployment all occurred when I moved to the North West.
I think middle-class people who don’t experience unemployment may imagine that it’s easy to find work if one has skills which are not obsolete, as mine were not, so that no one need be voluntarily unemployed. But in the USA and UK economies there has been historic involuntary unemployment. In the UK it’s compounded by very poor quality management which always takes the line of least resistance when recruiting, which ensures that long-term unemployed don’t get interviewed.
Under a UBI regime the government is bound to lose interest in voluntary unemployment. A man who walks past a homeless person and puts £1 into his begging bowl can walk on feeling virtuous and is unlikely to worry about the beggar’s prospects.
We clearly live in a world where 2 plus 2 equals does not equal 4 for the likes of Tim Kent. There is no tax system which can offset the inflationary effects of £720 billion a year more effective demand for doing nothing. A progressive tax system will itself be more expansionary because of the balanced budget multiplier from redistribution from rich savers to poor spenders. And the impact is not just on inflation; the UK’s balance of trade deficit would sharply deteriorate too.
Countries prosper when they use the talents of all the people not when they leave them idle.
I recently read “Blood in the Machine” by Brian Merchant. It is an easy enough read – if a bit fictionalised for my taste. It is about the Luddites, and their resistance to the new technology of their day – automated machinery. The author contends that they were not anti-technology (as often portrayed) but very much aware that just about all the benefits of this new automation would go to the very few (already rich) while their cherished ways of life and living would be destroyed or at the very least made significantly worse. And all the ways they legitimately tried to ensure a more fair distribution of the wealth that would arise were blocked by the rich and elite of their time, so the only recourse they saw open to them was to destroy the equipment and / or factories employing it. History does not repeat apparently – but it sure as heck can rhyme.
What always got me about capitalism was the hidden cost element.
Capitalism is so good at making, packaging up stuff and selling it that we neither consider where it comes from and where it goes when we no longer need it.
This is why I found Richard’s ‘resource accounting’ idea so powerful and to be honest I’m led by that, his thinking on this subject.
But this is a really serious problem. We have been led down an alley which is a very narrow definition of ‘success’ or happiness.
It is not just owning the SUV or the Bluray player or having pocketed someone else’s wages and pension having bought them out that is the problem. It is the real hidden cost of having those in the first place and how we treat them when no longer needed. Whether redundant tech or redundant people, we do not factor it in. And then make other excuses as to why this happens (laziness, low aspirations blah blah). In fact – truth be told – we offshore it or pretend it does not exist (it is harder to offshore redundant human beings!). We hide the real costs of all this capitalist bullshit.
BTW, there is nothing fundamentally new here OK? But finding new ways to frame old problems in order to reach people, is much better than shooting speakers we disagree with at an event, would we not agree?
I would…
There is a political problem with extending company accounting to include ‘externalities’ – there have been several studies (eg. https://naturalcapitalcoalition.org/wp-content/uploads/2016/07/Trucost-Nat-Cap-at-Risk-Final-Report-web.pdf) showing that NONE of the world’s major industries would be profitable if they really took into account the costs of their social and environmental impacts.
Much as ‘permaculture’ is really ‘revolution disguised as organic gardening’, so ‘honest accounting’ might turn out to be ‘revolution disguised as book-keeping’ !
Fine by me
I rather like the idea of being a revolutionary gardener! Sow seeds not division.
🙂
I’m interrupting, sorry – just to say that Gary Stevenson is taking questions on LBC Radio (Tom Swarbrick’s show) from 4.30 onwards
Cui bono?
This posting makes the case for elimination of capitalism because the issue at hand is distribution not the magnitude of the aggregation of resources. Wellbeing is measured in distribution not aggregation (GDP). Capitalism/ists don’t care about the the former unless it is to them rather than us. Capital and its handmaidens, the politicians, pundits and legacy media endlessly talk of GDP but never distribution. Reminds of the old ragtrade expression: “Never mind the quality, feel the width.”
For humans It’s all a status game that has never graduated from the schoolyard.