To Drive Technological Progress, We Need Worker Power
Technological progress under capitalism always benefits the rich first and the rest of us much later. Technology can address the major problems of our time — if workers are empowered to shape that technology.
Increasing the collective power of workers is the key driver of technological progress. (Getty Images)
The UK economy suffers from low economic growth and stubbornly poor productivity, resulting in stagnant living standards and exposing working people to a spiraling cost of living crisis. Successive governments have tried unsuccessfully to solve the “productivity paradox” by cutting taxes in an attempt to entice business to innovate. To understand why this has failed — and how to fix it — requires a fundamental rethink of how technological innovation is brought about under capitalism that recognizes how increasing the collective power of workers is the key driver of progress.
Productivity Paradox
In the Spring Statement 2022, Chancellor of the Exchequer Rishi Sunak put forward a tax plan for reforming the rules on capital allowances — these are the laws that govern which investments are deductible from a business’s taxable profits and at what rate. Amid the confusion and controversy of the National Insurance contributions hike, Sunak laid out plans to reduce the tax burden for corporations by making changes to capital allowances rates, which will largely counteract the increase in the corporate tax rate going into effect in 2023. The proposed changes are part of an ongoing effort to encourage investment and the adoption of new technologies aimed at improving the UK’s lagging productivity.
Reforms are also planned for research and development credits, designed to reward companies for investing in innovation and to cover cloud-computing costs, with relief being permitted for overseas R&D. This will no doubt prove serendipitous for Sunak’s father-in-law — the billionaire founder of multinational IT company Infosys. It is unclear how much allowances for software and cloud computing will contribute toward improved productivity. As economist Robert Solow quipped in 1987, “The computer age was everywhere except for the productivity statistics.”
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