Accelerating Latin America – Between Industry 4.0 and the Post-Wage Society

Even among multilatinas, the degree of private investment in product, process, and service innovation is low. The lack of entrepreneurial interest shifts the full burden of innovation to universities, which currently develop 50 per cent of research. Eighty per cent of scientific publications absorb 30 per cent of the R&D budget and monopolize human resources training. Projects like the precision agriculture program at the Institute of Automation of the University of San Juan (Argentina) that develops mobile land and aerial robots to map crops, or the Irazú Satellite Project developed by the Technological Costa Rica to monitor climate change in forests, are good examples of regional public efforts in a sector (agricultural robotics) that aspires to a worldwide annual turnover of 1.5 trillion US dollars. When 67 per cent of Brazilian firms confirm that they have problems finding qualified personnel, they seem to be omitting their part in this problem.

A place in the world

Economists like Dani Rodrik have admitted that the new conditions of technological development do not facilitate incorporating new players. If in the 1970s the crisis of Fordism enabled offshoring, today technologies such as 3D printing and robotics have reversed the trend: production processes are returning to the central countries. It will no longer be possible to repeat the developmental achievements of regions like Southeast Asia. The extent of this relocation process, known as reshoring or insourcing, is disputed among economists. One study from Bianca Pacini and Luca Sartorio on the automotive industry between 2006 and 2015 has concluded that there was no reshoring, but rather that the volume of trade between the center and the periphery had actually increased.

"Today Brazil must content itself with assembling iPhones manufactured and designed in other countries; the country has been left with little more than low-skilled workers and a meager re-export balance."

In order to know the place that a region occupies in the world, it is necessary to pay attention to global value chains, i.e., what Gaaitzen De Vries has defined as the set of activities directly or indirectly necessary to produce a good distributed in different countries and industries. Within these chains, countries can export their own goods, re-export goods without changes in value, or scale the production process of a good within the same firm. This third option seems to become restricted as new technologies shorten value chains.

Between 1995 and 2011, Mexico and Brazil increased their participation in global value chains by around 50 per cent, at the expense of old industrial centers like the United States and Germany. But between 2011 and 2014, the trade in intermediate goods decreased by half. Today Brazil must content itself with assembling iPhones manufactured and designed in other countries; the country has been left with little more than low-skilled workers and a meager re-export balance. Economists like John Van Reenen believe that this trend could be reversed with trade agreements that plan for the transfer of technology and innovation and avoid the reprimarization of the economy.

The labour market

What effect would the arrival of Industry 4.0 have on Latin American labor markets? Many Latin American unions are resisting it, or at least warning of jobs at risk from automation. Their reasons come from Carl Frey and Michael Osborne, economists at the University of Oxford: according to Frey and Osborne’s calculations, 47 per cent of current North American jobs are vulnerable to automation, as are 57 per cent of jobs in the countries that make up the Organisation for Economic Cooperation and Development (OECD), and 77 per cent of jobs in China. The most sensitive sectors are the textile, electronics, automotive, and agriculture industries, and especially transport, which in Latin America alone could push 44 million workers out of their jobs.

In Latin America, Argentina and Uruguay top the World Bank's list of countries with redundant work, i.e., work replaceable by technology, with 60 percent. In the detailed information for both countries, men aged 15 to 30 years with incomplete primary or secondary education appear to be the most threatened group. Another way to measure it is the percentage of work time spent on tasks that could be automated: 53 percent in Colombia and Peru, 52 percent in Mexico, 50 percent in Brazil, 49 percent in Chile, and 48 percent in Argentina.

"The most sensitive sectors are the textile, electronics, automotive, and agriculture industries, and especially transport, which in Latin America alone could push 44 million workers out of their jobs."

Some have debated the projections of Frey and Osborne with the argument that less than five per cent of jobs can be completely automated, and that most can be automated by an average of 30 per cent. They also claim that the same Industry 4.0 is creating new jobs through electronic platforms, in forms of “collaborative capitalism” such as Uber and Airbnb, the gig economy, small jobs, “zero-hours contracts”, etc. All of these are more unstable forms of labor that lack social security. Many of these new jobs show up in different regions than the old ones, and that geographical displacement has an individual and collective cost. In Latin America, these changes would take place against the backdrop of job insecurity (60 per cent of the jobs waiting for Latin American youth are informal). Paradoxically, this hinders the diffusion of technologies on the one hand, yet on the other runs the risk of growing worse alongside the new forms of work favored by Industry 4.0.

At this point, it is clear what accelerationism has to offer to the Latin American debate: accelerating a region that is lagging behind is hardly going to bring on post-capitalism. Perhaps its most optimistic horizon could be to achieve a more modern capitalism. In the context of Latin American structural duality, however, the asymmetry of the process forces us to think about non-wage forms of subsistence such as a universal basic income, not only to temper the socioeconomic impact, but also to facilitate training in human resources by democratizing access to new technologies. The struggle for a post-wage society is an accelerationist banner that the Latin American left should embrace, instead of clinging to defensive technophobia. Those interested in the capitalist modernization of the region would do well to follow suit.

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Alejandro Galliano is an essayist and journalist. Translated from Spanish and adapted for style, this article first appeared in Nueva Sociedad.