From Pyramids to Robots

The value of labor has shifted dramatically from a scarce, physically intensive resource to an abundant, skill-differentiated commodity. This change has been driven by technological substitution, institutional reforms, and monetary evolution. In pre-industrial times, labor’s value came from its necessity and scarcity. A single worker’s output was limited by muscle and daylight. Building a pyramid or harvesting a field required hundreds of workers, often forced into labor through slavery or serfdom because free labor rarely justified market wages in gold-backed economies. From an economic view, this behavior was driven by practical benefits, making it almost unavoidable despite moral costs. When capital (tools, draft animals) was primitive, human time was the main limit, so governments and rulers used coercion to keep cash expenses low.

The Industrial Revolution changed this economic balance drastically. Steam engines, mechanized looms, and later electricity increased output per worker massively. A British textile worker in 1850 produced 200 times more yarn than a hand-loom weaver in 1750, collapsing labor’s relative cost. Firms could pay wages in depreciating silver or early fiat money and still gain surplus value. Countries shifting from slave to wage labor—Britain after 1833, the U.S. after 1865—saw leaps in GDP per capita. Britain’s doubled between 1820 and 1870, fueled by voluntary labor markets that encouraged skill learning and migration. Positive effects followed: literacy rose, child labor declined as wages outpaced subsistence, and a middle class emerged. However, negatives came too: brutal factory conditions, wages lagging productivity, and structural unemployment among displaced artisans.

Twentieth-century automation sped up this trend. Assembly lines, tractors, and computers took over routine tasks, increasing the value of skilled labor. A 1960s autoworker earned 20 times a farmhand from the 1860s because his work using pneumatic tools was far more productive. Economics shows technology didn’t destroy jobs overall but shifted them to design, maintenance, and services. From 1940 to 1980, U.S. manufacturing jobs held steady while output tripled, with services absorbing the rest. Living standards soared—life expectancy rose from 47 in 1900 to 72 by 1970.

The 1971 Nixon shock ended gold convertibility and brought new problems. Fiat money caused ongoing inflation, eroding labor’s purchasing power even as wages rose nominally. From 1973 to 2023, U.S. median real hourly wages stayed flat despite doubling productivity because housing, healthcare, and education costs rose faster. Firms faced higher input costs—wages, materials, debt—without matching output in low-skill sectors. Offshoring added pressure: in 2000, a Chinese worker earned just 3 percent of a U.S. worker’s pay for identical work thanks to container shipping and information and communication technology. This global labor arbitrage suppressed developed-world wages while lifting billions out of poverty in emerging economies.

Positive outcomes remain. AI and robotics now handle dangerous or repetitive jobs—drones spray fields, warehouse robots pick orders—freeing humans for creative or interpersonal work. Yet negative effects intensify. Technology that favors skilled workers has worsened income inequality. Since 1980, the richest 10 percent of U.S. workers captured 90 percent of income gains. Some see automation as job loss, but economics says if institutions adapt, jobs shift instead of vanish. The challenge: making that shift work for everyone. Without training or wage support, displaced workers risk long unemployment, fueling unrest. Monetary overreach risks stagflation: when central banks print money to cover deficits, labor’s real value shrinks, discouraging effort and investment. The 1970s stagflation, post-2008 secular stagnation, and COVID lockdowns all show this problem: wages that don’t keep up with inflation, low real returns, and fewer people working or seeking work.

Universal basic income isn’t a long term solution, and policy alone can’t fix things. What’s needed is more private investment and helping people save more. That means lower taxes and easing the high living costs caused by inflation and crowded cities. Without these, people struggle to improve lives or grow the economy. Protectionism and unchecked money printing can trap economies in a low-productivity cycle, where technology advances but workers’ real wages don’t rise. Looking at the economy, the value of work isn’t fixed. It changes based on how much machines replace people, how skills complement technology, and the stability of money.